Rating (Empty Properties) Bill

I am grateful to my hon. Friend for pointing out the true way in which we should look at the FSB’s case, and the fact that it is capable of more than one interpretation. The devil can quote scripture for his own purposes, and Labour Ministers can always pray in aid submissions from small business organisations at any time they choose. The truth is that the measure will not encourage the more efficient use of land, and it will not promote regeneration: it will actively work against both. If we look at regeneration projects overall that benefit businesses large and small, as well as the residents of areas that are run down and require investment, we can see that when people attempt to put such a project together, it is sometimes difficult to get all the parcels of land in one place before they can press the button, get the green light and go ahead with a significant regeneration project in, for example, Stoke-on-Trent. It is sometimes difficult to align all the investors that one needs for a project until different parcels of land have been brought together and investors are satisfied. By their very nature, such projects operate on the margins of viability and profitability for some investors—they are high-risk options. For many investors considering whether to press ahead with regeneration schemes, the existence of the relief is vital in making viable schemes that would not otherwise be so. The removal of the relief will imperil future regeneration projects, and a number of regeneration practitioners, developers and others have made crystal clear in the pages of Property Weekly, the Estates Gazette and other publications the direct threat to future regeneration, particularly in the most vulnerable areas of the country, posed by the measure. I should therefore like to ask the Minister, when we reconsider the measure in due course, whether he would contemplate amending it to ensure that the areas of greatest vulnerability or areas where regeneration is most needed can enjoy a measure of relief that is not extended to other areas. Is there any opportunity to achieve cross-party consensus to ensure that regeneration in vulnerable areas is not affected by the measure? Another of the Government’s justifications for the measure is that it will help the small businesses to which the Minister referred by compelling property owners to let properties that they are perversely keeping empty. The belief is that because property owners will lose the relief, they will be compelled to lower rents to fill their properties: that is the case that the Minister has made for the measure. The truth, however, is that smaller businesses will find that owners have to take steps to safeguard their properties against the risk of companies that take leases failing, and those properties being left empty. Those businesses will therefore be liable for additional rates without commercial activity taking place on those premises. A case that has been put to me and, I am sure, to Ministers by people with a direct interest in the commercial sector is that the system of leasing commercial property will become more rigid and onerous for smaller companies. Landowners who are concerned about the additional risk of sites falling empty, will frame their leases in such a way as to make them significantly more rigid and more difficult for smaller companies to accede to. I accept that the Minister said that the Government have consulted and want to make life easier for people who want to take on commercial leases. All that good work, however, could be undermined by large property companies wishing to insulate themselves from risk and framing leases that work against flexibility and act as a barrier to entry for precisely the small shops that, I suspect, both of us want to occupy a healthy high street. Another justification for the measure concerns the overall economic benefit that it is supposed to bring by encouraging the more efficient use of resources and increasing the amount of commercial property and commercial activity. However, as was pointed out by my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), the measure has another economic effect that could be profoundly deleterious, as it impacts on pension funds. Pension funds, as we all know, hold significant property assets—a point acknowledged by the Financial Secretary. If he is right, and the measure leads to the lowering of rents, that will mean that the capital value of those property assets will decline and the yields from those properties will decline. That means—[Interruption.] It is the Financial Secretary’s argument, and I am merely pointing out that if it is correct, it will have an unfortunate effect on pension funds. The Government made a tax change before when they were in a hurry to get revenue for a pet project. They were warned by pension funds and investors in those funds that the tax change would have a deleterious effect. They pressed ahead regardless, and the effect on pension funds was significantly greater than even the most profound pessimists had imagined. There is therefore a serious risk that the value of pension fund assets will be adversely affected by the changes. It is clear that those involved in the commercial property sector fear that as a result of future projects becoming unviable, of costs increasing and of the greater rigidity of leases, the value of their assets will be lowered. That will have a direct effect on every saver in this country.