Rating (Empty Properties) Bill

I beg to move, That the Bill be now read the Third time. In earlier debates on this Bill, my hon. Friends the Economic and Financial Secretaries to the Treasury and I explained why the Government consider this Bill to be such an important piece of legislation. The current policy on the rating of empty properties is based on a set of economic circumstances that simply does not exist in the UK today, and which does not fulfil the requirement for the efficient use of property and the regeneration of brownfield sites to meet our housing needs. The Government’s commitment to regeneration and to meeting those needs cannot be faulted, and I assure the House that that will remain the case, but I have also made it clear that devoting more than £70 million in tax relief every year to the owners of empty properties in Westminster is simply unjustifiable. Consequently, it is time to reform the blanket relied extended to empty commercial property. In place of that relief, the Government are moving their support for regeneration and renewal towards a brand-new, and much better targeted, 100 per cent. capital allowance for the renovation of property in our assisted areas. I strongly believe that that meets the points made by hon. Members such as my hon. Friend the Member for Stoke-on-Trent, North (Joan Walley), Opposition Members and Liberal Democrat Members in interventions and in speeches. We have introduced this new allowance now, so that owners of unlet property in these areas can take advantage of the new incentive before the changes to empty property rates. Furthermore, we have consulted on a wider application of land remediation relief to a much broader range of contaminated and derelict brownfield sites specifically in order to promote efficient use of our developed land and to help protect greenfield sites. I believe that those two measures allow policy to meet the reasonable and correct objection made by a number of hon. Members on both sides of the House that there are different types of market in different parts of the country. That point was made by constituency Members of Parliament as well as by hon. Members speaking on a wider policy agenda. I ask the House to consider the other measures that I have mentioned in the round with this measure. I hope that my hon. Friends, and Opposition Members, will see that the Bill is part of a much wider package of measures, supporting regeneration but also meeting the needs of business and our communities for active property markets and efficient use of land. We have decided that for charities and community amateur sports clubs there will be 100 per cent. relief from empty property rates. These organisations play such a key role in our society, often leading regeneration efforts, and the Bill offers substantial additional help to them. For the rest of the business community, this Bill will reduce rents and provide opportunities for new companies, expanding companies and companies wanting to join the most successful economy in the G7. I repeat what I said in the Ways And Means debate and on Second Reading. We have the successful policy of linking business rates—or non-domestic rates as they are properly called—to the retail prices index cap. As that business rate is based on rental value, not capital value, the successful implementation of the policy in bringing rents down over the years will indeed, as the Red Book acknowledges, see a diminution in the revenue that it generates, the more successful it becomes. That is the serious answer that my hon. Friend the Financial Secretary gave to the serious objection that the hon. Member for Surrey Heath (Michael Gove) has raised. This is, of course, a revenue-raising policy. It was a policy announced as part of a Budget package and its process through the House has been unusual. I am grateful to the House authorities for their guidance and advice in this regard. However, it is far from the case that the Bill is simply a matter of raising revenue. It also embodies a policy on land use and properties, and our own Red Book acknowledges that there will be a diminution in the revenue raised. As the cap on business rates exists, the total yield from business rates cannot rise higher than inflation. It is undoubtedly the case that my right hon. Friend the Chancellor has made a huge contribution to growth in the UK economy and to moving it into a state fit to compete with the best in the 21st century. He has provided research and development tax credits, a boost to science budgets and lower rates of corporation tax—which of course have to be taken into account when considering the proportion of revenue raised from business rates, because corporation tax has come down, and come down again this year. In addition, there are new investment allowances for all firms. Those are all parts of an economy that can also deliver a minimum wage, expanded support for child care and greater protection for the elderly and most vulnerable in society. There is one league table that we are not willing to sit atop—the ranking of rents paid by firms to locate in our towns and cities. High rents might be a sign of companies recognising the attractiveness of locating in the UK, and to some extent a marker of how successful we are, but in a global economy they are not the measure of success we want, nor something we can afford in the long term. Let me reiterate: we are not saying that high rents are a result of landlords deliberately playing the market. We recognise the value and importance that property investment and property developers play in our economy. Nevertheless, we have been presented with recommendations from the Barker report—Kate Barker is one of the country’s top economists—and from Sir Michael Lyons, the leading expert on local government finance and incentives, both of which pointed to what my hon. Friends at the Treasury would call the ““supply side”” advantages of reducing tax relief for empty property, so as the Chancellor made clear to the House on Budget day, we are introducing the Bill both to answer criticisms that supply is distorted by the current relief and the different treatment of types of property, and to provide new opportunities for start-up and expanding firms. However, we are not insensitive to the possibility that conditions can change, which should not be seen by the hon. Member for Surrey Heath as a weak link or an admission that we are heading for recession. That would be unfair and ridiculous, but of course I know that he would not say such a thing. I pick up The Times every day to see what he has written. I enjoyed his column about ““Big Brother””, and strongly agreed with him; I was grateful that he did not write about the Bill—although not as grateful as his readers will have been. Unlike the last time such a policy was considered, I am not suggesting to the House that the rate of tax be set in stone so that it is impossible to respond to changing situations. That is why we took the approach in the Bill—the point came out during our debate on the first group of amendments. Similarly, we know that leaseholders holding unwanted property are an important group for special consideration; hence our agreement to consult on how best to introduce in the tax system recognition for payments made by companies to rid themselves of onerous leases. Nor are we attempting to remove the returns from property that many investors enjoy; a Government with a track record of introducing real estate investment trusts, providing a framework for parallel treatment of property held by authorised investment funds and maintaining the stable growth in the economy that is the basis of strong demand for property could not fairly be accused of that. I hope, therefore, that our willingness to look at the issue in the round and to be flexible in our legislation, as well as the package of measures and ongoing consultations, will serve as proof to the House that this really is a measure to expedite change for the better, and that we will continue to provide help where it is most needed. This is a short Bill, but it will deliver important economic, social and environmental results so I hope that Members on both sides of the House will wish it speed. I commend it to the House.