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1.14 pm
Mr. Robert Syms (Poole) (Con): I beg to move amendment No. 6, page 1, line 2, at beginning insert—
‘(1) In section 45(1)(c) of the Local Government Finance Act 1988 (c. 41) (unoccupied hereditaments: liability) after “year” insert—
“(ca) none of the conditions in subsection (1A) applies”.
(2) After section 45(1) of that Act insert—
“(1A) The conditions are that—
(a) the whole hereditament has, subject to subsection (1B), been unoccupied for a continuous period not exceeding three months;
(b) its owner is prohibited by law from occupying it or allowing it to be occupied;
(c) it is kept vacant by reason of action taken by or on behalf of the Crown or any local or public authority with a view to prohibiting the occupation of the hereditament or to acquiring it;
(d) it is the subject of a building preservation notice as defined by section 3 of the Planning (Listed Buildings and Conservation Areas) Act 1990 or is included in a list compiled under section 1 of that Act;
(e) it is included in the Schedule of monuments compiled under section 1 of the Ancient Monuments and Archaeological Areas Act 1979 (c. 46);
(f) it is a qualifying industrial hereditament;
(g) its rateable value is less than £2,200;
(h) the owner is entitled to possession only in his capacity as the personal representative of a deceased person;
(i) there subsists in respect of the owner’s estate a bankruptcy order within the meaning of Parts VIII to XI of the Insolvency Act 1986 (c. 45);
(j) the owner is entitled to possession of the hereditament in his capacity as trustee under a deed of arrangement to which the Deeds of Arrangement Act 1914 (c. 47) applies;
(k) the owner is a company which is subject to a winding-up order made under the Insolvency Act 1986 or which is being wound up voluntarily under that Act;
(l) the owner is entitled to possession of the hereditament in his capacity as liquidator by virtue of an order made under section 112 or section 145 of the Insolvency Act 1986.
(1B) Where a hereditament which has been unoccupied becomes occupied on any day and becomes unoccupied again on the expiration of a period of less than six weeks beginning with that day, then for the purposes of ascertaining whether the hereditament has been continuously unoccupied for the period mentioned in subsection (1A)(a) it shall be treated as having been unoccupied on that day and throughout the period.
(1C) For the purpose of subsection (1A)(a), a hereditament which has not previously been occupied shall be treated as becoming unoccupied—
(a) on the day determined under paragraph 8 of Schedule 1 to the General Rate Act 1967, or
(b) on the day determined under Schedule 4A to the Act, or
(c) where neither (a) nor (b) applies, on the day for which the hereditament is first shown in a local rating list,
“qualifying industrial hereditament” means any hereditament other than a retail hereditament in relation to which all buildings comprised in the hereditament are—
(a) constructed or adapted for use in the course of a trade or business, and
(b) constructed or adapted for use for one or more of the following purposes, or one or more such purposes and one or more purposes ancillary thereto—
(i) the manufacture, repair or adaptation of goods or materials, or the subjection of goods or materials to any process;(ii) storage (including the storage or handling of goods in the course of their distribution);(iii) the working or processing of minerals;(iv) the generation of electricity; and“retail hereditament” means any hereditament where any building or part of a building comprised in the hereditament is constructed or adapted for the purpose of the retail provision of—
(a) goods, or(b) services, other than storage for distribution services, on or from the hereditament.”.’.What joy we are going to have debating this Bill this afternoon! It is my pleasure to move amendment No. 6 and, first, I declare an interest: my entry in the Register of Members’ Interests shows that I am a director of a property company and a building company and a fellow of the Chartered Institute of Building. When the amendments were tabled, an “R” should have appeared after my name to signify those interests. Could those with a pen please append an “R” in brackets after “Mr. Robert Syms”? I apologise to the Committee for that omission. The Bill has proceeded fairly quickly; it had its Second Reading only last Thursday, amendments had to be tabled earlier this week and we are dealing with the Committee stage less than a week later. I am sorry that my registered interests were omitted in all that haste.
The Government committed themselves to making this change in the March 2007 Budget, as a result of the Barker review of land and planning that was produced in December 2006. There are different views about the benefits or advantages presented by Kate Barker. The Government also asked the Lyons inquiry to look into this matter, and when it published its report at the same time as the Budget, it broadly supported the measure.
Today, we are trying to amend this extremely short Bill. Essentially, it has only one clause—we have seen many examples of one-clause Bills—and that is a cause for concern for many of those affected by it. We tabled amendment No. 6 because the implications of the Bill are far-reaching. According to the Government papers explaining the Bill, it is expected that the changes will raise £1 billion—no small amount. Indeed, business rates in their entirety raise half as much as the total corporation tax take, so this is very big money in terms of what the Treasury raises. We are not talking about small change. The exemptions that the Committee must consider are very important.
Mr. Greg Knight (East Yorkshire) (Con): Before my hon. Friend turns to the exemptions, may I take him up on his good point about the amount of money that the provisions are likely to raise? Is he satisfied that those who represent the people and companies affected by the provisions were properly consulted before this Committee stage? It seems to me that the Government are rushing this measure through.
Mr. Syms: My right hon. Friend makes a good point.
Amendment No. 6 deals with exemptions, which would affect the amount of money raised by the provisions. Money will therefore be a key part of the debate on the amendment. There is no doubt that the Bill has been introduced relatively quickly. As I said earlier, the Barker review, the Lyons inquiry and the Budget all contributed to it, but there has not been full and proper consultation. That is regrettable. As we go on to explore amendment No. 6 in more detail, we shall see that the Bill will affect a wide range of individuals. A consultation process would have benefited the Government and, certainly, the Opposition. It would also have created much more awareness of the legislative agenda in Parliament. Sometimes people do not appreciate what measures are going through the House until they become law, and they do not therefore have the opportunity to influence Government and Opposition Members when we are framing legislation.
The amendment is about exemptions. It is a pity that there has not been widespread consultation, because it means that we might not have sufficient information on the bits and pieces that we are debating today and cannot fully appreciate how strongly people feel about these topics. As I said in my opening remarks, £1 billion is a lot of money, and has a big impact on businesses and our constituents. It is therefore a pity that the consultation has not been fuller.
Although the Bill is short, with essentially one clause, its schedules also cause concern, especially given that the Government are going to change some of the ways in which property has historically been valued. With regard to paragraph 4 of schedule 1, concern has been expressed that people might do things to their property to try to avoid the business rate. As a result, the CBI, the British Property Federation and the Royal Institution of Chartered Surveyors have raised concerns about definitions and how that aspect of the Bill will be implemented.
As we are dealing with a fairly short Bill in a short time span and without full consultation, many questions remain unanswered. The Minister has a great opportunity today to set out more fully how the provisions will operate, especially paragraph 4 of schedule 1. Will properties that have been flooded, burned down or bombed be affected by the definitions? If a firm moves out of a property, and a roof or wall must be taken down to extract machinery to move it elsewhere or to put it up for sale, will that be caught by the scope of paragraph 4? That point will be of great concern to people up and down the land.
“The Government attempts to deal with the deliberate vandalising of property by introducing Paragraph 4 Schedule 1 of the Bill which disregards changes in the state of a property. RCIS is concerned that this clause fundamentally changes the basis for rating valuations, rather than simply preventing
deliberate vandalism of empty property. It is a long established principle that rating valuation is based on the actual property to be rated and the property must be valued as it is.”
I hope that the Minister will acknowledge the need to sort out those concerns. Within the narrow scope of the amendments and the limited time for debate, we have an opportunity today to explore some of the issues and get things on the record from him.
“This throws up a range of potential issues to do with the removal of plant and machinery or the removal of a tenant’s changes to a building after the lease has expired. It would appear that under the proposals it would be acceptable for a tenant to take these actions while the property was occupied but would be unacceptable once it becomes vacant.”
That is a key point. It went on:
“Individuals could potentially be penalised for not doing something which becomes a particular concern when the occupier is in financial difficulty. This part of the Bill is likely to lead to increased litigation and an increase in the number of appeals to Valuation Tribunals.”
RICS is particularly exercised about that part of the Bill.
Amendment No. 6 was crafted and tabled by my hon. Friend the Member for Surrey Heath (Michael Gove), who will join our deliberations a little later. It is important to get the proposed exemptions and, in that regard, we have a concern. I have a lot of time for the Minister; we have served in Committees for many happy hours together.
The Minister for Local Government (Mr. Phil Woolas): Only two more weeks.
Mr. Syms: I note the Minister’s comment. I remember a famous interview between Sir Robin Day and Sir John Nott, in which Sir John Nott took off the microphone and marched out when he was accused of being a “here today, gone tomorrow” politician. Between the time when the Bill is passed and the regulations are made by statutory instrument, we may have a fresh—or older—face; I do not know. The Minister may even retain his job. There is concern, however, that a change of personnel will mean that the regulations will be brought in by a different individual. The Opposition have therefore tabled a detailed amendment that would put the provisions in such regulations on the face of the Bill.
If I may, I will go through my hon. Friend’s amendment in detail. It states:
“Clause 1, page 1, line 2, at beginning insert—
(1) In section 45(1)(c) of the Local Government Finance Act 1988 (c. 41) (unoccupied hereditaments: liability) after “year” insert—
“(ca) none of the conditions”—
The First Deputy Chairman of Ways and Means (Sylvia Heal): Order. It might be easier if the hon. Gentleman just quotes the reference on the amendment paper.
Mr. Syms: I can certainly present the amendment in a less specific way. It has been tabled in extremely fine detail; every punctuation mark is important for Her Majesty’s Opposition.
The amendment covers several aspects. The Opposition want certain important conditions to appear on the face of the Bill to ensure good, decent legislation. The first of those conditions is proposed new subsection (1A)(a), which refers to the condition that
“the whole hereditament has, subject to subsection (1B), been unoccupied for a continuous period not exceeding three months”.
That is an important aspect—that is what applies at present, but it is not on the face of the Bill. We therefore have concerns, because consultation has not taken place.
Mr. Greg Knight: What is magic about the period of three months? I envisage a situation in which a family have an unoccupied property, perhaps because a business has folded, and the family, who are not particularly wealthy, intend to put the property on the market. They might have to deal with a liquidation or bankruptcy of one of the partners, and there might be a delay in marketing the property. In many cases, a good argument could be made for the exemption to run for six months.
Mr. Syms: My right hon. Friend makes a good point. Some of the legislation goes back many years. More recently, in the 1980s, the period was three months for most property, and six months for industrial property. There has been long debate about the right length of time for an exemption before the tax kicks in. Clearly, if there had been public consultation before the Bill was introduced, we would have more information. Her Majesty’s Opposition have picked the current period, but if it were extended beyond three months—the amendment would not do that—that would have an implication for the overall tax take and the additional £1 billion that the Government are trying to raise.
I suspect that three months is not long enough; a property might have to go through new planning permissions or be marketed by estate agents, and sometimes people drop out. It is a tight timetable, but, historically, it has been the normal period for most categories of property, so we opted for it. I suspect that there is not much difference between the Government and the Opposition on that point, which is why we have tabled the amendment. The provision ought to be on the face of the Bill.
Proposed new subsection (1A)(b) is the second provision that should be on the face of the Bill. If an owner cannot occupy a property for a legal reason, he should be exempt. That is the existing situation. It is important that that is made clear for the many thousands of people who will be affected by the Bill. The exemption should be specified.
1.30 pm
Mr. Knight: I was critical of my hon. Friend for drafting paragraph (a) too narrowly, because three months is inadequate. However, I am concerned that paragraph (b) is drawn too widely. For example, an owner may be regarded as prohibited by law from occupying his property if he is serving a prison sentence. The sentence might well be in relation to defrauding the business that used to occupy the property, so why should he be exempt in those circumstances?
Mr. Syms: My right hon. Friend makes an extremely good point. We have drafted the amendment on the basis of existing legislation. I am not tempted down the road that he suggests, because we want to make progress and need to speed up. However, his point is reasonable and now on the record. If someone cannot occupy a property for a legal reason, it would be sensible for them not to pay the business rate.
Paragraph (c) sets out what has always been the position and it is important that it is stated on the face of the Bill. The exemption should remain part of the legislation. Paragraph (d) is also important. As Members of Parliament, we all know the importance of conservation and listed buildings. Many of them are in prominent areas of our towns, and we are lucky to have many beautiful and historic towns. Our legislation has always been ahead of the legislation in many other countries in that it recognises an exemption for such properties.
Mr. Robert Goodwill (Scarborough and Whitby) (Con): Will my hon. Friend confirm that although agricultural buildings are not rated under the business rating system—I must declare an interest as an owner of agricultural buildings—one of the recommendations of the Lyons inquiry was to bring them within this tax? In those circumstances, many buildings in the countryside that might be listed or might contribute to the rural environment would come under the empty buildings regulation. That could result in increased pressure on farmers or demolition of the very buildings that people want preserved.
Mr. Syms: My hon. Friend makes an important point. Substantial changes have been made to the position of agriculture in legislation overall. Many buildings were de-rated in the 1930s as a result of the depression and the hard time that agriculture experienced then. There is an argument for change, but that is not part of the amendment. I wish that he would not tempt me off the amendment, because some important points need to be put before the Committee.
Mr. Philip Dunne (Ludlow) (Con): I do not want to interrupt my hon. Friend’s flow, but will he clarify whether a particular example would be caught by his amendment? A building in the town of Craven Arms in my constituency has been unused, unoccupied and unsafe for decades. It is situated in a prominent part of the high street and has been a blight on that town for many years. The reason for that situation is that the ownership of the property is uncertain. It was believed to have been donated from one body to another a number of years ago, but neither will accept—
The First Deputy Chairman: Order. I remind the hon. Gentleman that interventions should be brief. Perhaps he could come to the point so that the hon. Member for Poole (Mr. Syms) can answer.
Mr. Dunne: With great pleasure, Mrs. Heal. I apologise for extending my example. To conclude, the building in question was supposedly donated by the railwaymen’s union to the Labour party, which in Craven Arms is effectively defunct, unloved and unwanted, and it will not take responsibility for the building because of the cost of its upkeep.
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