Rating (Empty Properties) Bill

The hon. Gentleman raises a fair point. I shall come to that. I shall deal first with the reason why charities and community amateur sports clubs are exempted in the Bill. Section 45 of the 1988 Act placed those two categories in primary legislation. I imagine—I do not say this to impugn the intention of the Secretary of State at the time—that he wanted to highlight those exemptions, so he wrote them into the Bill. If I got my newspapers from 1988 back from the Library, I am sure there would be headlines such as ““Government exempts charities and amateur sports clubs””. It is because they were specified in the Act and because we are reducing the rate from 10 per cent. to 0 per cent. that we must amend primary legislation and cannot deal with that in regulations. I should have made that clearer before, and I am sorry I did not do so. Amendments Nos. 2, 3 and 4 would together have the effect of granting a 50 per cent. relief from rates for any owner of an empty property who makes any planning application or appeal. The intention of the amendments, as the hon. Gentleman explained, is to protect owners from having to pay full rates when they are redeveloping an empty property in order to bring it back into use, which is a desirable objective. That is the overall purpose of the Bill. Let me therefore reassure the hon. Gentleman that, under the existing system, in most cases owners of empty property will not pay any rates while permitted development work is under way. From the point that a builder lays a hand on an empty property to start development work, the property can generally be removed from the rating list, and the owner’s rates liability will be zero. The Government have no intention of changing that. The amendments seek to offer relief from empty property rates from the point at which a planning application is made, rather than the point at which the work to develop the property begins. The effect would therefore be to subsidise owners to keep property empty throughout the planning process, however long it takes, and regardless of whether the owner genuinely intends to redevelop the property. That would provide a huge incentive for owners of empty property to make a planning application even if they did not intend to redevelop the property, in order to avoid rates. That would not only create a massive loophole, enabling avoidance of empty property rates on a major scale, but would generate a huge volume of spurious planning applications, potentially clogging up the system and slowing down decisions for those who have made genuine applications. I appreciate the concerns expressed by hon. Members about the time it can take to gain planning permission to redevelop empty property, which we have discussed in previous debates. The Government, to be fair—I am always keen to be fair to the Government—set out proposals to improve the speed and responsiveness of the planning system in the planning White Paper published in May. The hon. Gentleman tried to tempt me down that road. However, there is no case for subsidising owners to keep property empty while it is the subject of a planning application or appeal. Until development work actually begins, empty property is quite capable of occupation by an active business, and owners should therefore be liable for the full reformed empty property rate to provide a strong incentive for them to re-let the property, on short-term, flexible terms if necessary. On Second Reading, my hon. Friend the Financial Secretary to the Treasury drew the House’s attention to the views of a firm that attempts to place small businesses into available commercial property. Let me remind the Committee that in that firm’s professional opinion, the reformed empty property rate will create new opportunities for smaller companies and more innovation and flexibility on the part of landlords. The amendments would create a loophole that would wreck the benefits of reform, in terms of lower rents and better access to premises, that are anticipated not only by the firm that I mentioned but by the Federation of Small Businesses, Sir Michael Lyons, Kate Barker, the Government, and the right hon. Member for Suffolk, Coastal (Mr. Gummer), who in the previous debate expressed his support for the principal aim of the Bill. The amendments would subsidise owners to keep property empty and place an equivalent burden on to other taxpayers, and they would enable rates avoidance to take place on a major scale. For all those reasons, I have great difficulty with them. Although I accept the Opposition’s objective in seeking to smooth the planning system and to ensure that delays do not cause undue financial penalties on companies, I fear that the proposal would have the opposite effect. Amendment No. 5—the guard’s van amendment, as the hon. Member for Surrey Heath described it—also deals with planning matters. It relates to paragraph 4 of schedule 1, which inserts new section 66A into the 1988 Act. Let me briefly explain the purpose of that new section. It empowers the Secretary of State and Welsh Ministers to make regulations to deal with rate avoidance tactics that could potentially be employed by owners of empty property, such as the removal of roofs, which we have already discussed. The amendment deals with the application of anti-avoidance regulations in circumstances where property is altered in the course of permitted development work. I assume that the hon. Gentleman wants to prevent the application of anti-avoidance measures if an empty property is damaged when it is genuinely being redeveloped to be put back into use. Let me assure him and the rest of the Committee from the outset that the Government wholeheartedly agree that work carried out under planning permission should not be classed as avoidance activity. The hon. Gentleman may be surprised to hear that the amendment would achieve the opposite effect of what he and I now agree we want to do. It would require anti-avoidance measures to be applied to properties that were being redeveloped with planning permission, meaning that the valuation officer would have to disregard the change in the state of property for rating purposes. If the amendment were accepted, owners of properties that were being redeveloped could end up paying more in rates than they otherwise would. The amendment has highlighted that point, and I am grateful to the hon. Gentleman for that. However, I reassure him, on the main point of his argument, that the Government agree that work carried out under planning permission should not be classed as avoidance activity. That will be made clear as the weeks go on. On that basis, I ask him to consider withdrawing his amendment.