Business Rate Supplements Bill

I rise to support the noble Baroness in her Amendment 48B but also to speak to amendments standing in my name and that of the noble Earl, Lord Cathcart. They are probing amendments which give us an opportunity to put some real concerns on record. The amendments deal with the sections of Clause 15 relating to the application of relief and would impose a requirement to grant relief for empty property in this category. In the 2007 Budget and without proper consultation, Gordon Brown peeled back the empty property rate relief for commercial and industrial premises. The rise in empty property tax raised an estimated £950 million net in extra tax in 2008-09. There was no offsetting reduction in the rates elsewhere. The tax changes came into effect in April 2008, just as the economic downturn was starting to bite. The tax rise is particularly harmful in a recession, as firms are unable to rent out vacant properties due to a lack of demand in the economy. There are many cases of this up and down the country. It is axiomatic that a policy which may have seemed appropriate to the then Chancellor in the 2007 Budget is entirely inappropriate during the downturn. Last week, I walked around an office building in Darlington where every single unit used to be occupied. The business there was very good and well maintained, and the office space was available on a kind of flexible leasing basis. You used to be able to walk along all three corridors and find the place bustling with businesses. Now, in that same business building in Lingfield Point in Darlington, many units are completely empty. As a result, the owners are carrying the extraordinary additional burden of the empty property rate. Although this does not apply in the case that I have just mentioned, and draconian as it may seem, many people are knocking down entire sheds, as they are known in the commercial property world, to avoid paying that rate. That is happening in much the same way as I suppose was the case when the window tax was levied and people started bricking up their windows. The fact that landlords take such draconian action indicates just how near to the bone many of them are with their business premises at this time. I think we need to put on the record just how dangerous the decision to abolish empty property rate relief was and the damage that it is doing. We have rehearsed some of these arguments before but I want to put them on the record. We talk about raising additional funds through the business rate supplement but this will be entirely additional. In the previous debate, I referred to the fact that business growth initiative funding has been cut by almost £700 million. Here, we see empty property rates raising an extra £950 million. It seems very likely that here we are seeing already hard-pressed businesses being asked to shoulder the burden of additional taxation to cover a gap in the Government’s finances. That point needs to be put on the record. In the 2008 Pre-Budget Report, the Government announced that they will increase the threshold to £15,000 for 2009-10 only; yet they are merely exempting some small firms from this tax for one year and continuing with the tax hikes in 2010-11. The reduction in revenue from the temporary threshold increase is only £185 million in 2009-10. This compares with a previous forecast of £900 million in 2009-10—hence, the net increase from the change in empty property rates is still an additional £715 million. I think that the Government have recognised how disastrously poor the timing of the abolition of the empty property rate was, and they have taken steps, as best as they are able when they are running a £170 billion deficit, to try to recover some ground. However, it is too late for many businesses that have gone under and many landlords are taking the draconian steps that I mentioned earlier. The point of tabling this probing amendment was to provide an opportunity to put on the record that, when we introduce these charges, they impact on real businesses in a very real way. It cannot be assumed that boom and bust has been abolished because bust may be with us for some time. We hope not—we pray not—but it may well be. It is therefore absolutely right that we should be cogniscent of the impact, intended or otherwise, that such measures can have upon businesses in this country. I beg to move.