Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill

Lord Kennedy of Southwark Excerpts

2nd reading (Hansard): House of Lords
Monday 4th June 2018 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, first, I draw the House’s attention to my registered interest as a vice-president of the Local Government Association. Generally, the Opposition support the changes proposed in this three-clause Bill. That is not to say that we do not have questions, and we will be moving amendments both in Committee and on Report as we consider it in your Lordships’ House.

As outlined by the Minister, Clause 1 addresses the Supreme Court decision on the staircase tax relating to how unconnected units occupied by the same business are treated. The measure will put businesses in no worse a position than they would have been in before the court ruling, by retrospectively reinstating the business rate valuation practice that applied prior to the Supreme Court judgment.

As we have heard, the practice of the Valuation Office Agency since the judgment has been that separate units of property in a shared building should be treated as separate rating units. In the autumn 2017 Budget, the Chancellor of the Exchequer announced the reversal of this position and the return to previous practice, and Clause 1 implements that.

Business would further be allowed to ask the Valuation Office Agency to recalculate valuations so that business rate demands would be based on previous practice and backdated to April 2010. The Budget papers confirm that local government will be fully compensated for this loss of income, but the Government have since changed their mind and view the extra income that local government may have received as an unexpected windfall, with no associated liability for compensation for councils.

Can the Minister set out how he will ensure that local government will be, at least, no worse off as a result of the Bill? What sort of assessment are the Government undertaking or have they undertaken of the impact on local authorities piloting the 100% business rate retention scheme in 2018-19? Can he confirm that those authorities will not have to refund money that they never gained as a result of the judgment? Can he also state clearly whether the Government are making any additional funding available to local government as a result of the consequences of this ruling? The Federation of Small Businesses has illustrated the problem facing smaller firms that necessarily operate in larger premises but do not qualify for business rate relief. Perhaps the Minister can comment on that in response to the debate.

Far more needs to be done to protect the high street in our town and city centres. Business rates are a significant cost and can be the difference between a business surviving or failing today. This is a matter we have discussed many times in your Lordships’ House. The noble Lord, Lord Naseby, who is not in his place, has raised it many times, particularly at Question Time, and I have supported him in his endeavours. The noble Baroness, Lady Pinnock, also referred to the issue in her remarks this afternoon.

We have seen some of the largest companies get away without paying their fair share of tax across a whole range of taxes, while high street-based businesses, which are central to our communities thriving, are taxed through business rates before they earn a single penny. That imbalance between companies is unfair and needs to be addressed.

The noble Earl, Lord Lytton, is very experienced in these matters, and his contribution to these debates will be invaluable. He raised a number of very important technical issues that need to be explored further as we consider the Bill. I certainly welcome his contribution at further stages.

Clause 2 will give local authorities the power to double the council tax premium on homes deemed long-term empty by increasing it from 50% to 100%, in addition to the usual council tax charge that applies to that property. That is a welcome move, and I hope it will prove an incentive to the owners of long-term empty properties to bring them back into use. I can see a case for increasing this further when properties have been left empty for two, five or maybe even 10 years. I shall move amendments to enable the House to debate that in Committee and on Report. Some of those concerns were outlined by the noble Baroness, Lady Pinnock, and raised by my noble friend Lord Campbell-Savours. It is an important area that we need to get right.

The noble Baroness, Lady Thornhill, referred to local government’s powers to charge additional council tax for empty properties. I very much agree with her comments about the difference between the north and south. There are issues in London and the south-east that may not apply in the north, and we need to explore those fully.

In this House, we regularly discuss housing, the shortage of housing, the failings of the Government and their continued resistance to local authorities to playing their full part in building homes. The Government will not meet their targets unless they get local government fully engaged in building. We have over 200,000 empty properties in England; I very much agree with the noble Lord, Lord Patten, that we should get it down to a much lower figure. I think he mentioned a figure of just over 100,000, and we need to get government working together to achieve that.

We also have 120,000 children not living in permanent accommodation. The noble Earl, Lord Listowel, made the important point about not placing additional burdens on councils, because of the importance of early intervention when dealing with children. Councils’ funding is now so stretched, and we know that many are already struggling to do all the things they need to do.

We are one of the richest countries in the world, and homelessness is at truly shameful levels. The Government have to do more to get a grip on the situation. While not part of the Bill, the Government should consider what they can do to allow councils to keep 100% of the capital receipts from the homes sold under right to buy to help to alleviate the problem by reinvesting that in new housing.

Housing is one of the most pressing issues facing this country—I think we all agree on that—and eight in 10 people think the Government ought to do more to address the housing crisis. Those calls are led by the Local Government Association, led by the Minister’s noble friend, the noble Lord, Lord Porter of Spalding, who agrees that more should be done. It would like the Government to go further and give councils greater power to borrow, build and deliver the homes that we need, not on a case-by-case basis, but by trusting local authorities to understand their areas and get homes built quickly. I agree with the Local Government Association’s comments on these matters.

This is a small, three-clause Bill, but it is important none the less. As I said at the start of my contribution, I am very happy to support it. We have some concerns and suggestions and will propose them in Committee and on Report, but we wish the Bill well at this stage.