Ways and Means

I am tempted to say, ““What a splendid day to bury bad news,”” but I do not want to go there, because I want Ministers to listen carefully to what I have to say and to take it seriously. So far, this has been an urban debate about the impact of the change, but I want to change the focus and consider the impact on the countryside and the greater proportion of the United Kingdom’s land area. In other words, I want to focus on the impact on rural economies. We need to start from the point that my hon. Friend the Member for Surrey Heath (Michael Gove) made, which is that the measure is really no better than a window tax. It is a revenue-raising tax, and it is none the worse for that—Governments of all colours introduce taxes. They need the money and it is amazing, really, that we have avoided the measure thus far, but as a grab on a particularly vulnerable area, the proposal is not much better intellectually than the window tax. Under the window tax, windows were blocked up and light was kept out of the lives of hundreds of people across the country, and I fear that the proposal might have the same impact. The Economic Secretary pointed out, fairly, that he is making special provision for what he called low-demand areas. Of course, those are not just the assisted areas to which he referred. Indeed, it is only nibbling at the edges to talk about land that qualifies for remediation relief. He referred to us to the planning White Paper, and I want to talk about the impact on, and interaction with, planning. It is important to realise that a vacant property tax hike will hit the rural economy. It will discourage the farming sector from diversifying and from changing old farm buildings into business units. The Country Land and Business Association has commented that there will be an impact on rural business. It says that the measure will"““slow down and reduce the overall growth of the rural economy””." Interestingly, it estimates that the measure will reduce the tax take for the Treasury over time. My hon. Friend the Member for Surrey Heath mentioned the consequences of having derelict property, which we experienced in the 1970s—property that is not capable of beneficial occupation is exempt from business rates, and I fear that we could find ourselves staring that same situation in the face again if we are not careful. I am sure that we all wish to avoid that. The National Farmers Union also has reservations. It points out that the situation in urban areas is different from that in rural areas and that both converted buildings and new build"““can stand empty for months awaiting a suitable tenant in some rural areas.””" There is a fair consensus on that point, but I want to back up my arguments with three cases taken from my constituency that illustrate my fears. The first case concerns hard-to-let village premises. Anyone with a rural constituency will know the problem of a pub closing and the owner applying to convert it into a house. The village usually reacts by setting up some sort of co-operative venture to try to buy the pub and run it. The problem is that if people do not buy their beer in the pub, it does not matter who owns it—if it does not make a profit, it is going to close. There are implications, too, for the village shop and post office, which are in a similar situation. As someone who spent a very happy nine years living near South Newton in my constituency, I was familiar with the post office in that village. However, it did not thrive. It was run by a wonderful couple—Mr. and Mrs. Hutchinson. Heather was born in the village, so there was no question of a lack of loyalty to the village. However, the Hutchinsons decided that the time had come to retire, so they tried very hard to let the property. As far back as 2001, in fact, they tried to do so. They put the property on the market for six months, as required before a change of use, but they did not make a sale. They waited and they eventually found a tenant. They invested £14,000 to adapt their property so that it could be used as a hairdressing salon, which involved a change to A1 use. Sadly, however, the tenants’ business failed, so the Hutchinsons were left with nothing. Mr. and Mrs. Hutchinson took professional advice again and they submitted an application to the planning authority. The planning committee agreed, but the regulatory committee threw out the application. They have now been told, some seven years after the original decision, that they must go back to square one. They have spent almost £20,000 because of the planning system, which impacts on such matters, as my hon. Friend the Member for St. Albans (Anne Main) rightly said. I referred the matter to the head of development services and asked which planning policy was causing apparent distortion in the market. It was Salisbury district planning policy PS3, which says that"““The change of use of premises within settlements that are currently used, or have been used for retailing, as a public house or for providing community facilities central to the economic and or social life of the settlement, will only be permitted where the applicant can prove that the current or previous use is no longer viable.””" That is the justification for the distortion. The fear is that as a consequence of the proposals, in the intervening period after the planning authority, acting on behalf of the local community, has decided that people should not be allowed to stop a shop being a shop if no one wants to buy anything there, the owners must pay business rates on the property for years. It is not their fault—it is because the planning system has introduced a distortion in the market allocation of resources. That is a very important issue that I hope Ministers will consider. My second case concerns redundant farm buildings. Late last year, my constituent, Philip Kitson of Manor farm in Chilmark, referred me to a problem with a unit in his farm buildings. He has wonderful farm buildings, but they are completely useless for farming. They were built in the early 19th century, and one could not get a quad bike in there, let alone a modern tractor. The Kitsons did what the Government wanted and diversified. They sought to convert the property, and they did so professionally and successfully. However, tenants move on, so they were left with a building—in this case, a B1 workshop and office premises. They therefore had to find money for business rates for an unoccupied building . Mr. Kitson pointed out to me:"““We are a farming business, not a property company, and have no alternative sources of income to offset any loss of rental income…we have invested a considerable amount of time and money renovating buildings for rental which have rarely been empty.””" The district council has benefited hugely, at no risk to itself, because those buildings are bringing in business rates. In the end, the matter went to the desk of the Minister for Local Government—I am pleased that he is in the Chamber today—and he and I have been in correspondence for some months. Referring to the Lyons report, he said to me in a letter of 17 April this year:"““We understand that these reforms will increase the liability on owners like Mr Kitson. However, as the Chancellor’s announcement made clear, the purpose of reform is to enhance the supply of commercial property, reducing rents and improving access for new and existing firms. Downward pressure on rents will have significant benefits for UK business and wider UK competitiveness.””" That is not what the local market says in my constituency, where there is already overcapacity. It is all very well saying that that might be the impact in urban areas, but in scattered rural communities in south-west Wiltshire there is already overcapacity in such units, and I fear that the measure will make matters worse. Can we be quite sure that when Ministers are working out the process and the machinery for introducing the change, they take due account of the need to be careful about rural proofing the measure? The least they should do is introduce it over a number of years and not say, ““From 1 April 2008, wham! Bang! You’re going to have to pay the bill.”” My third example is a very particular example.