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The hon. Gentleman commented on the consultation, on the relationship between Her Majesty’s Treasury and my Department, and on the important issue of regeneration and the way in which the Bill interacts with those matters. Again, he put
words in my mouth when he claimed that I described speculative property developers as wicked individuals. May I repeat that the Bill is not based on the premise that there are deliberate attempts to construct buildings that remain empty? It does, however, give people an incentive to put buildings into the market. None of those matters, however, are dealt with in the amendments.
At the core of the debate is the issue of planning, and the hon. Gentleman contended that buildings that are subject to planning application or which are awaiting decisions should be exempt. If we accepted the amendments, every sensible business person in the country—and business people are sensible—would whack in a planning application, and the non-domestic rating system would collapse, because people can submit such applications as often as they want and for as many different schemes as they want to. The amendments would therefore not achieve the objective claimed by the hon. Gentleman.
I listened carefully to the hon. Gentleman’s argument about planning delivery incentives. If we followed his logic, businesses could exempt themselves from rates by submitting a planning application, and most of them would do so. Consequently, local authorities would face a funding crisis, because the amount of money they receive from business rates constitutes, off the top of my head, about 20 per cent. of their income. They would therefore have to deal with applications in a matter of seconds, public consultation would go out the window, and the vicious circle would continue. Of course, that is hypothetical and would not arise, but that is the logic of the hon. Gentleman’s argument, so the amendments would not achieve what he said they would. He tempted me to describe our planning law proposals, but I will resist the temptation because, first, it is outside the remit of the amendment and, secondly, I am not daft. He will therefore have to wait to see the proposals.
Michael Gove: The Minister is indeed not daft, but he is unnecessarily evasive. As he kindly acknowledged, the amendments deal specifically with a requirement that properties that are the subject of planning applications should be exempt. The Government are about to undertake one of the biggest upheavals to the planning system, perhaps since 1991 and certainly since 2004. Given that they say that the planning system will be made more efficient as a result of those changes, it is irresponsible of the Minister to leave that gaping void at the heart of the debate.
Mr. Woolas:
If the hon. Gentleman listens to the whole argument, he will find that I answer that point. First, however, I shall attempt to answer his specific questions. He raised the issue of self-vandalisation and companies that deliberately take the roof off, as it were. In discussions with industrial organisations and representative bodies, including the British Property Federation, the Royal Institution of Chartered Surveyors, which is often prayed in aid, and the Rating Surveyors Association, we were told that the phenomenon of taking the roof off, albeit important, was rare. However, representations by those bodies
prompted the anti-avoidance measures on which we will consult in detail next month. To repeat my argument about the consultation, the Bill arises from a finance measure, but its provisions are not part of the Finance Bill, because they deal with local government finance. The usual consultation periods have therefore been changed. However, I assure the hon. Gentleman that full consultation on the “taking the roof off” issue will take place. We listened to representations on that.
Michael Gove: I note the gracious way in which the Minister has acknowledged that consultation will take place on the “taking the roof off” issue, but he will remember from Second Reading what we might characterise as the “windy night” debate. I should say, for the benefit of Hansard, that that is “windy night” as in a night when it is windy, not Wendy Knight, whoever she may be— [Interruption.] From Palma, no doubt—a Balearic dance queen, perhaps.
The windy night debate was all about intent. Amendment No. 5 seeks to protect those whose intent to take a roof off is clear. May we have an assurance that intent will be taken into account?
Mr. Woolas: 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.
4.15 pm
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.
Michael Gove: I am grateful to the Minister for making his case, but he invites us to take on trust his assurances about amendment No. 5 and to accept his argument on amendments Nos. 2, 3 and 4. We cannot do that. He accepts that amendment No. 5 serves the purpose about which we agree, but prefers us to wait for subsequent secondary legislation, while we want the provision to appear in the Bill.
Mr. Woolas: I am grateful to the hon. Gentleman for accepting that we agree about the purpose that we are trying to achieve. However, the way in which the amendment is drafted means that it would provide for the opposite, because development issues would be perceived as anti-avoidance measures. That is my fear.
Michael Gove: That is merely a variation of the argument that the Minister powerfully deployed against amendments Nos. 2, 3 and 4, which is that planning would be used as an anti-avoidance measure. We contend that no one would willingly go through the planning system unless they had to, given the system’s scale, complexity and cost, notwithstanding the changes that the Government will try to make—in good faith, I am sure—to planning legislation.
Given that the amendments will provide some protection to those who honestly make changes to empty property to the benefit of the wider economy, we stand by them.
Question put, That the amendment be made:—
The Committee divided: Ayes 134, Noes 236.
AYES
Afriyie, Adam
Ainsworth, Mr. Peter
Alexander, Danny
Amess, Mr. David
Atkinson, Mr. Peter
Bacon, Mr. Richard
Baldry, Tony
Barker, Gregory
Baron, Mr. John
Barrett, John
Beith, rh Mr. Alan
Bellingham, Mr. Henry
Bercow, John
Bone, Mr. Peter
Brady, Mr. Graham
Brazier, Mr. Julian
Browning, Angela
Burns, Mr. Simon
Burrowes, Mr. David
Burstow, Mr. Paul
Cable, Dr. Vincent
Carmichael, Mr. Alistair
Clark, Greg
Clifton-Brown, Mr. Geoffrey
Cormack, Sir Patrick
Cox, Mr. Geoffrey
Curry, rh Mr. David
Davey, Mr. Edward
Davies, Philip
Djanogly, Mr. Jonathan
Dorries, Mrs. Nadine
Duncan Smith, rh Mr. Iain
Evennett, Mr. David
Field, Mr. Mark
Foster, Mr. Don
Francois, Mr. Mark
Fraser, Mr. Christopher
Garnier, Mr. Edward
Gauke, Mr. David
George, Andrew
Gibb, Mr. Nick
Gillan, Mrs. Cheryl
Goldsworthy, Julia
Goodman, Mr. Paul
Gove, Michael
Gray, Mr. James
Green, Damian
Greening, Justine
Grieve, Mr. Dominic
Gummer, rh Mr. John
Hammond, Stephen
Hancock, Mr. Mike
Hands, Mr. Greg
Harper, Mr. Mark
Harris, Dr. Evan
Hayes, Mr. John
Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Herbert, Nick
Hollobone, Mr. Philip
Holloway, Mr. Adam
Horam, Mr. John
Hughes, Simon
Hunt, Mr. Jeremy
Hurd, Mr. Nick
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Jones, Mr. David
Keetch, Mr. Paul
Kennedy, rh Mr. Charles
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Lamb, Norman
Lansley, Mr. Andrew
Liddell-Grainger, Mr. Ian
Lilley, rh Mr. Peter
Luff, Peter
Mackay, rh Mr. Andrew
Malins, Mr. Humfrey
May, rh Mrs. Theresa
McIntosh, Miss Anne
Mercer, Patrick
Miller, Mrs. Maria
Murrison, Dr. Andrew
Neill, Robert
Öpik, Lembit
Paice, Mr. James
Paisley, rh Rev. Ian
Pelling, Mr. Andrew
Penning, Mike
Pritchard, Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Rifkind, rh Sir Malcolm
Robathan, Mr. Andrew
Robertson, Mr. Laurence
Rogerson, Mr. Dan
Rosindell, Andrew
Ruffley, Mr. David
Russell, Bob
Sanders, Mr. Adrian
Scott, Mr. Lee
Selous, Andrew
Smith, Sir Robert
Spelman, Mrs. Caroline
Spring, Mr. Richard
Stanley, rh Sir John
Steen, Mr. Anthony
Swayne, Mr. Desmond
Swinson, Jo
Swire, Mr. Hugo
Syms, Mr. Robert
Teather, Sarah
Vaizey, Mr. Edward
Viggers, Peter
Villiers, Mrs. Theresa
Walker, Mr. Charles
Wallace, Mr. Ben
Waterson, Mr. Nigel
Watkinson, Angela
Whittingdale, Mr. John
Wiggin, Bill
Willetts, Mr. David
Williams, Mr. Roger
Willis, Mr. Phil
Willott, Jenny
Wilson, Mr. Rob
Wright, Jeremy
Young, rh Sir George
Younger-Ross, Richard
Tellers for the Ayes:
Mr. Robert Goodwill and
Mr. Tobias Ellwood
NOES
Ainger, Nick
Ainsworth, rh Mr. Bob
Allen, Mr. Graham
Anderson, Mr. David
Anderson, Janet
Atkins, Charlotte
Bailey, Mr. Adrian
Baird, Vera
Balls, Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Begg, Miss Anne
Benn, rh Hilary
Benton, Mr. Joe
Berry, Roger
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blizzard, Mr. Bob
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Brown, rh Mr. Nicholas
Bryant, Chris
Buck, Ms Karen
Burgon, Colin
Burnham, Andy
Butler, Ms Dawn
Byers, rh Mr. Stephen
Byrne, Mr. Liam
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Chapman, Ben
Clapham, Mr. Michael
Clark, Ms Katy
Clarke, rh Mr. Charles
Clelland, Mr. David
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Cook, Frank
Cooper, Rosie
Corbyn, Jeremy
Crausby, Mr. David
Creagh, Mary
Cryer, Mrs. Ann
Cunningham, Mr. Jim
Curtis-Thomas, Mrs. Claire
David, Mr. Wayne
Davidson, Mr. Ian
Davies, Mr. Dai
Devine, Mr. Jim
Dismore, Mr. Andrew
Dobson, rh Frank
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Dunwoody, Mrs. Gwyneth
Eagle, Angela
Eagle, Maria
Ellman, Mrs. Louise
Engel, Natascha
Field, rh Mr. Frank
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, Caroline
Flynn, Paul
Follett, Barbara
Foster, Mr. Michael (Worcester)
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
Gerrard, Mr. Neil
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hain, rh Mr. Peter
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Harris, Mr. Tom
Havard, Mr. Dai
Healey, John
Hendrick, Mr. Mark
Heppell, Mr. John
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, rh Keith
Hillier, Meg
Hodge, rh Margaret
Hodgson, Mrs. Sharon
Hoey, Kate
Hope, Phil
Hopkins, Kelvin
Howells, Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Irranca-Davies, Huw
Jackson, Glenda
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jowell, rh Tessa
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Alan
Keen, Ann
Kelly, rh Ruth
Kemp, Mr. Fraser
Khan, Mr. Sadiq
Knight, Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Laxton, Mr. Bob
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Lucas, Ian
MacShane, rh Mr. Denis
Malik, Mr. Shahid
Mann, John
Marris, Rob
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McDonagh, Siobhain
McFadden, Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McIsaac, Shona
McKechin, Ann
McNulty, Mr. Tony
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Miliband, Edward
Moffatt, Laura
Moon, Mrs. Madeleine
Morgan, Julie
Mountford, Kali
Mudie, Mr. George
Mullin, Mr. Chris
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
Norris, Dan
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Purchase, Mr. Ken
Purnell, James
Rammell, Bill
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Reid, rh John
Robertson, John
Roy, Mr. Frank
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, Joan
Salter, Martin
Seabeck, Alison
Shaw, Jonathan
Simon, Mr. Siôn
Singh, Mr. Marsha
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Angela E. (Basildon)
Smith, rh Jacqui
Snelgrove, Anne
Soulsby, Sir Peter
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Stuart, Ms Gisela
Tami, Mark
Taylor, David
Thomas, Mr. Gareth
Thornberry, Emily
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Turner, Dr. Desmond
Ussher, Kitty
Vaz, rh Keith
Vis, Dr. Rudi
Waltho, Lynda
Ward, Claire
Wareing, Mr. Robert N.
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, Mr. Michael
Winterton, rh Ms Rosie
Woodward, Mr. Shaun
Woolas, Mr. Phil
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Noes:
Tony Cunningham and
Mr. Alan Campbell
Question accordingly negatived.
Mr. Syms: I beg to move amendment No. 1, page 2, line 22, at end insert—
(a) the ratepayer is a community owned village hall or community centre, and
(b) it appears that when next in use the hereditament will be wholly or mainly used for community benefit.’.
We have had a long and detailed debate about exemptions this afternoon. A key part of the Bill is the Government’s exemption for charities and sports clubs. We tabled amendment No. 1 because, although 86 per cent. of village halls are vested in some kind of charity, a number still might not fall within that definition. Even if 86 per cent. are covered as charities, an awful lot of village halls and community centres are still not covered.
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