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Stewart Hosie (Dundee, East) (SNP): I agree that terrorism poses an unprecedented threat and is continually evolving. I welcome the Home Secretary’s approach to strengthening the counter-terrorism capability,
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while putting in place corresponding parliamentary and other scrutiny as a bulwark against arbitrary misuse of powers. I welcome also his intention to proceed on the basis of consensus, and his statement that in advance of a new Bill there would be a content paper, the sharing of clauses and early engagement with the Select Committee on Home Affairs and the Joint Committee on Human Rights. Will he undertake early communication with the Minister for Justice in Scotland, who I know shares our concerns on these matters? There are some issues in today’s statement that we will need to consider more fully, such as the use of DNA, but we welcome things such as post-charge questioning with the correct legal protections. We would welcome the use of intercept evidence, but I understand the Home Secretary’s caution and support the Privy Council approach.

Might not pre-charge detention post-28 days still run counter to the right not to undergo arbitrary detention? Is it not still the case that evidence gathered after 28 days may not be admissible in a court of law? If he has not already done so, will the Home Secretary commit to having a legal opinion prepared by the Government’s Law Officers and published, so that all of us in the House can see the legal position in respect of post-28 day pre-charge detention?

John Reid: The hon. Gentleman has raised a host of points. It is not normal to publicise the advice of the Law Officers, for obvious reasons, and I will not break that convention. I thank him for the welcome that he gave to various aspects. We look forward to receiving any contributions to the consultation from him and his party. I have no doubt that in the course of that we will be in contact with the Scottish Executive. I have already briefly met the First Minister and congratulated him—at the Scottish cup final, in which we both took an interest. I am sure that we will contact all the devolved institutions—Northern Ireland, Wales and Scotland—on these matters because although the responsibility is at the level of the nation state, at the national level as opposed to nationality, it affects everyone in our community.

Miss Julie Kirkbride (Bromsgrove) (Con): Has the Home Secretary examined the French system of disruptive arrest without charge, and can he tell us whether it is likely to form any part of the proposals to be put before the House in the forthcoming Bill?

John Reid: One of the difficulties of comparing the length of time for which people can be detained without charge is the fact that we all have very different legal systems. The French have an inquisitorial system that allows them to detain for a considerable period—certainly for a lot longer than 28 days, and in some cases for years. It has been suggested to me that we should look further into having an inquisitorial-type system for terrorist suspects. That would be a pretty fundamental thing to do, but we are prepared to look into any suggestions that come forward. At the moment, however, we have no plans to do anything of that nature.

Dr. Evan Harris (Oxford, West and Abingdon) (LD): I welcome in particular the Home Secretary’s
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indication that he wishes the Joint Committee on Human Rights to be actively involved in scrutiny of this matter and I hope that he will accept that knowing the Government’s actual position on possible amendment of the European convention on human rights is critical. On two occasions now, the right hon. Gentleman has indicated that, in the absence of the reversal of the Chahal judgment, he believes that there may be a need to amend the European convention, but in giving evidence to our Committee Lord Falconer specifically said the opposite. May I genuinely suggest that the Home Secretary add that to the limited list of matters for internal Government consultation, so that before we consider the draft legislation we can know the Government’s backstop position on that very important human rights convention?

John Reid: The Government’s position is quite clear. We think that the Chahal judgment is wrong and we are appealing against it. That is our position and if we are not successful in that appeal, we will have to look further into it. It is as simple as that. What I have done today is say that no one in government takes the view that any alternative, however hypothetical, amounts just to abandoning the terms and principles of the European convention on human rights. We all have an obligation to make sure that legal conventions—domestic and international—accord with today’s reality. That is what we do in every other walk of life. Taking the view that any particular piece of legal or constitutional apparatus is somehow unchangeable, irrespective of the changes in the world around us, is not a sustainable position.

Mr. Ben Wallace (Lancaster and Wyre) (Con): Some of the technologies that UK counter-terrorist agencies use for intercept and surveillance are so sensitive and advanced that we do not even share them with some of our closest allies. Is the Home Secretary convinced that bringing intercept evidence into court will not undermine the ability of those agencies to carry out their job by giving away some of their methods, therefore putting into doubt our ability to counter future operations?

John Reid: No, I am not convinced that this can be done without the disadvantages outweighing the advantages. I am in the opposite camp, as I am persuaded—certainly at present—that the disadvantages would outweigh the advantages. I agree with the intelligence and security services in that case. However, it is obvious that others, including the hon. Gentleman’s own spokesman and party leader, take a different view. We think that the best way to deal with this, at the suggestion of the hon. Gentleman’s party leader, is to have some independent assessment based on Privy Council terms. My personal view at the moment is exactly as the hon. Gentleman outlined. We ought to be very careful to ensure that we do not win the minutes in a few of these cases but by following those methods lose the hours in the fight against terrorism.

Patrick Mercer (Newark) (Con): I used powers to stop and question extensively in Northern Ireland in the 1970s, ’80s and ’90s and as far as I am aware I never once got any useful intelligence from them. I believe that those powers were often misused to harass people
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and I know that they alienated parts of the population who were entirely innocent. All in all, in my opinion, they were thoroughly useless and dangerous. May I ask the Home Secretary to look at the lessons of history before going any further with what I consider to be deeply flawed proposals?

John Reid: Yes, indeed, the hon. Gentleman may. In anticipation of his remarks, I have decided to do precisely that.

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Orders of the Day

Rating (Empty Properties) Bill

Order for Second Reading read.

1.35 pm

The Financial Secretary to the Treasury (John Healey): I beg to move, That the Bill be now read a Second time.

This is a short, specific Bill, but it contains a reform with important economic, social and environmental merits. The basis for that reform is twofold: competitiveness for UK businesses and the economy and efficiency in our use of land. All right hon. and hon. Members with an interest in the future of the UK economy, the protection of our green spaces or the efficient use of previously developed land to provide for housing needs will want to support this important reform. I hope that there will be all-party support and consensus this afternoon.

I shall deal first with competitiveness. A series of recent reports by firms such as Jones Lang LaSalle, King Sturge and CB Richard Ellis have shown that the cost of property in the UK is high. Perhaps we should expect that to be the case in London, which is now the principal location for the financial services sector not just in Europe but worldwide. More strikingly and perhaps more surprisingly, the price of property—either industrial or for office firms—in cities such as Birmingham, Manchester, Leeds and Bristol is actually more expensive than in locations such as Manhattan, Madrid, Frankfurt and Singapore. Clearly, competitiveness in any modern global economy includes ensuring that incentives are properly aligned to offer good quality property at the right price—to new firms, to growing firms and also to firms that are looking to invest in our country.

Mr. Philip Dunne (Ludlow) (Con): The Minister has just argued that this country is enjoying—if that is the right word—a very high level of rents for office premises. Does he recognise that commercial rents, particularly in the office sector, fluctuate very rapidly, reflecting economic activity, and that it is only relatively recently that the property market has recovered from the significantly lower rents prevailing in the early part of this decade?

John Healey: It is right that supply of property fluctuates as it reflects and responds to demand. That is precisely the efficient operation of the property market that we want. Empty property relief was introduced during the 1980s, when the economic circumstances and therefore the demand for property and the level of economic activity were really very different, so we are returning to the issue again. We judge now to be the right time—in totally different economic circumstances, I am happy to say—to introduce the sort of reforms proposed in the Bill.

Rather than properly aligning or encouraging investment and expansion of new firms, high rents dissuade businesses from starting up, act as a limit on growth and provide a barrier and disincentive to those who might otherwise be looking to invest in the UK
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from overseas. We therefore need our stock of commercial property to be used efficiently, and in doing so we need to increase the supply and reduce costs to businesses. That is precisely the purpose of the Bill.

Robert Neill (Bromley and Chislehurst) (Con): The Financial Secretary talked about the need to invest, which we all understand and appreciate. There is concern, however, among my and many Members constituents who have investments in pension funds—many of which are dependent on their property portfolios—that the proposals might affect the net yield from property. If we also take into account the issues in relation to tax dividend credits and so on, will the proposals be advantageous to such people? What reassurance can the Financial Secretary give that they will not suffer?

John Healey: The properties in any well-managed investment portfolio, whether of a pension fund or other property investor, are generally typified by low vacancy rates. The measures in the Bill create a greater incentive to ensure that vacancy rates are lower rather than higher. Those who fear an impact on their pension fund returns misinterpret the likely impact, and certainly the purpose, of the Bill.

Ann Coffey (Stockport) (Lab): On the issue of higher rents, my constituency has a number of old mills divided into units for small businesses. Those have a high level of vacancies because the upper stories are difficult to let. I have some concern that the Bill might add to the management costs for owners who are not deliberately leaving units vacant. I am also concerned that those costs might be passed on to small businesses in higher rents, which is not to be welcomed. Will my hon. Friend assure me that he will consider the problems of old mills and of letting space in them, which will not be improved by simply penalising owners for vacant units?

John Healey: Our assessment and modelling of the macro-impact of the measure, especially in the context of other reforms that we are putting in place, suggest that rents are likely to come down. If my hon. Friend is not aware of it, she, her local authority and property owners in her constituency might find relevant a consultation launched recently on the future of tax incentives for the development of brownfield land. The closing date for that consultation is 14 June, and if she or her constituents wish to make points in that context, I and my hon. Friend the Minister for Local Government would be pleased to receive them.

Clearly, as I said to the hon. Member for Ludlow (Mr. Dunne), it is high time to consider again the rating of empty property. Since the 1980s, that has been limited to a 50 per cent. rate on empty office and retail space and a complete relief on empty industrial space—reliefs that continue without time limit. That level of rates was set, in the words of the 1983 White Paper on rates, in “a period of recession”. That same White Paper clearly argued that the rating of empty property,

It is right that we consider those reliefs in the current situation, which, after 10 years of strong, steady, stable
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economic growth, is clearly not comparable to that in the 1980s, which saw such a deep recession and sluggish economic activity. That is not to say that the Government need not support regeneration and support communities in areas where demand for commercial property is lower—that is essential. That is a commitment of the Government, and a personal and political commitment shared by me and my hon. Friend the Minister for Local Government from a constituency perspective. In a moment, I shall refer to several parallel policy measures and reforms that we are putting in place alongside the empty property relief reform in the Bill.

When London is the world’s most expensive place to which to locate, and its rents are the highest in the UK, can it be right that we offer a tax relief on empty property in Westminster, for instance, costing the public purse more than £70 million a year, or in the City, costing £60 million a year? Instead, we have fully accepted the arguments made to us by the Federation of Small Businesses in its review of business rates. It said that we should

Robert Neill: The Financial Secretary makes the point about London, and I do not dispute the basic situation that he sets out. Does he accept, however, that London has two economies? There is the economy of the City and the west end, with very high rates, but there is also that of the many suburban town centres in London, which is often much more fragile and where vacancies often occur not for any improper reason, but because of the difficulties that landlords sometimes have in attracting new businesses. What assurance can he give us that they will not end up losers?

John Healey: I shall refer in a moment to such circumstances and cite the assessments of one or two significant experts on the likely impact of the reforms.

There are strong competitiveness arguments for the reforms.

Mr. Dunne: If I heard the Financial Secretary correctly, he said that owners would be encouraged to move on their properties more rapidly than they would if they benefited from the relief. That might apply when the owner is a developer of property put up for speculative purposes, which might be the case for much of the central London property to which he has just referred. What analysis has the Treasury done of the proportion of empty space to which the relief applies for occupiers—tenants of buildings—rather than owners? Outside speculative development, it is largely tenants of properties—and their predecessors, which I shall talk about in my speech—who might be unable to continue trading in those properties, who end up paying the bill.

John Healey: The hon. Gentleman makes an important point—there is a distinction. Clearly, the measures in the Bill are designed to reinforce the incentives for owners of property to look to re-let more quickly than they might do otherwise, or to sell on, reuse or develop the properties that they hold. In
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relation to tenants of properties that have fallen empty, who are sometimes caught by inflexible and onerous lease terms that prevent them from making judgments in the same way, the hon. Gentleman might want to consider our commitment to consult later this year on reforms to the treatment of tenants who are subject to what might be termed “onerous lease arrangements”. He is right to point to the problem, and we need to examine that potential barrier to more efficient use of property.

The second purpose of the Bill is to encourage more efficient use of the property stock already developed in this country. It will be a common observation across the House that land is scarce. In a growing economy, with a growing population and an increasing demand for housing, particularly with the rising number of households, we need to ensure that land is used as fully as possible. That is essential if we are to be competitive and to provide the housing that we need, while protecting our green spaces. The shortage of land is also a key concern for the house building industry, which is why the Home Builders Federation’s view is that that supply of land is the major factor that will determine whether the Government are successful in meeting their target of increasing the number of new homes by 200,000 a year by 2016. The same message about the central importance of land supply was conveyed very clearly today by the newly established national planning and housing advice unit. I am pleased to see that the hon. Member for Surrey Heath (Michael Gove) is nodding.

As the Government increase the supply of housing to meet the needs of households across the United Kingdom, a tax relief for properties sitting empty on developed sites makes little sense. It makes little environmental sense, little social sense and little economic sense.

Joan Walley (Stoke-on-Trent, North) (Lab): In the south-east there is a real need for affordable homes, but the position is slightly different in parts of the country that have not benefited from the investment provided for big cities such as Manchester and Birmingham. Those areas contain industrial land that is not let. There is a danger that the letting of such land would become beneficial only if it were used for residential purposes, and there is no point in residential use if there are not the jobs to go with the homes. Economic and social development must go side by side. I am rather anxious about the fact that we do not seem to be viewing the situation holistically, in a joined up way. I hope to say more about that in my speech.

John Healey: As I shall explain more fully later, the Bill is not a policy measure designed to deal with a problem located only in the south-east. What my hon. Friend says is true, but this is a specific Bill with a specific purpose.

I know that my hon. Friend has taken an interest in a much wider review that the Government are conducting on reinforcing the capacity of areas to lead and encourage more redevelopment and regeneration. I welcome the contributions that she has already made from a Stoke-on-Trent perspective, and I look forward to hearing her speech.

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Robert Neill: I understand the Financial Secretary’s point about the need to make land available when appropriate, but what proportion of vacant buildings, potentially developable sites and brownfield land is being withheld for speculative or other purposes? Have the Government established the extent of the problem with which the Bill would deal?

John Healey: As the hon. Gentleman probably realises, the answer to his question is problematic. We can never be certain about the intent of landowners and their possible reasons for keeping property vacant. What we do know—because they have been published by the Department for Communities and Local Government—are the vacancy rates of properties that are eligible for empty property relief, which show some striking patterns.

In Birmingham, where I do not think anyone would argue that demand for property is particularly low, a fifth of rateable value property is not just empty but the subject of claims for empty property relief. In the City of London, the proportion is 16 per cent. The existence of such oddities in the system underlines the argument for reform and a more sensible and efficient regime. That was certainly Kate Barker’s conclusion in her analysis of land use in England. She outlined the beneficial effects of reform of the rating of empty property, stating, for instance:

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