Ways and Means

I am grateful for the other historical comparisons being drawn to my attention. One consequence of the removal of rate relief introduced in 1974 was that empty properties were not proposed for development or deployed for commercial use. Instead, some properties were wrecked or left to become dilapidated so that people could escape paying rates on them altogether. What guarantees can the Minister give that the change will not create a perverse incentive? Can he assure the House that empty properties will not be turned into derelict sites rather than being proposed for productive economic use? Secondly, the presumption inherent in the Economic Secretary’s speech was that business is deliberately keeping property idle instead of using it, because it wishes to earn that relief. Will the Minister for Local Government give us the evidence base for that assumption? Can he point to specific examples of companies that have not put sites to productive use because they prefer to earn the tax relief rather than create viable economic activity? I can understand the theoretical justification behind the Minister’s argument but he produced no practical examples, from any business sector or from any part of the country, to show that landlords or owners were deliberately sitting idle to earn the relief. Production of that evidence base would certainly be useful for the House. The change in timings goes to the heart of the measure so, thirdly, what assessment have the Treasury and the Department for Communities and Local Government made of the genuine turnover in the business cycle? For example, the British Retail Consortium argues that it can often be 21 months between one business winding up and another being economically active on the same site. Have the Treasury and the DCLG conducted a proper survey into the speed with which vacant and void sites become not just occupied but economically active as new tenants take them over? What evidence base is there to justify the change? Fourthly, there is a real risk, which has been outlined by both the BRC and the Royal Institution of Chartered Surveyors, that the change will hit the areas of the country most in need of redevelopment. Property developers face the greatest risk in those areas, because by definition that is where there is the least current demand for property, whether commercial or residential. By removing the relief, the risk of making an investment in those areas increases, because one would have to be absolutely certain of securing occupancy to make the same investment viable. What assessment has the Minister made of the impact on areas most in need of regeneration of, in effect, introducing an extra cost and an extra risk for development in those areas? Fifthly, the change could have a particularly adverse effect on businesses in the event of a recession, as my hon. Friend the Member for Peterborough pointed out. It will add lead to the economic pendulum, because it will mean that businesses that have to relinquish property to downsize during an economic downturn will face an additional cost just as the economic weather is turning. Has the Minister factored into his calculations the impact of an economic downturn on the commercial property market once the reliefs have gone? Sixthly, there is a clear disincentive for certain businesses to take on leases. Given the operation of the commercial leasehold market, taking on a lease could involve bearing additional cost and risk in the event that commercial activity means that the property becomes vacant at any point in the future. Again, what assessment has the Minister made of the likelihood of companies shying away from taking on leases because they have to take into account on their balance sheet an additional risk factor? Overall, I have spelled out a number of ways in which there is increased risk. My seventh, and final, point about the genuine, practical, real-time effect of the measure is that increased risk may have an effect on property values. If there is a downward effect on commercial property values as a consequence of increased risk, it may have an effect on the share price and on the dividends paid by commercial property companies. Given what has happened elsewhere in the economy, especially in equities, over the past 10 years, more and more pension funds—public and private sector—rely on commercial property as part of their portfolio. If there is downward pressure on the balance sheets of companies that operate in the commercial property sphere and if it has a knock-on effect on the portfolios of pension funds, what is that effect likely to be? What calculation has been made? We know from the past that there can be, and often are, dangerous unintended consequences of changes made by the present Chancellor that have a knock-on effect on pension funds and the capacity of individuals who have saved to receive an appropriate rate of return? I would like answers on those seven practical points, as well as the two theoretical matters that I mentioned. I look forward to the Minister’s clarification before the debate concludes.