Empty Property Rates (SMEs)

Lord Stunell Excerpts

Wednesday 11th January 2012 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

It is good to serve under you today, Mr Davies. I commend the persistence of my hon. Friend the Member for York Outer (Julian Sturdy) in getting this matter before the House. It is interesting to see how many other colleagues share his concerns.

I want to begin and, bearing in mind the time, it might be very nearly where I finish as well, by picking up one of the points that my hon. Friend the Member for York Outer made about the financial situation facing the country. He drew attention to the fact that £120 million a day is spent servicing the interest on the outstanding public sector debt; I wish that that was the whole story, but unfortunately it is not even half of it—it is only a quarter. In the 2009-10 fiscal year, the signed-off accounts showed a deficit accumulation of £164 billion of extra debt added to the national debt for that year. That sounds like a lot of money, but people find it very difficult really to understand how much it is. Looked at on a daily basis, it is £450 million added to the national debt for every day of that financial year, and it was in that context that the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) left his famous note: the money has all gone.

I want to make it very clear that the Government recognise the vital role that small businesses play in building a sustainable economy, but a sustainable economy depends on having a sustainable financial system and sustainable public expenditure. I am sure that my hon. Friend the Member for York Outer, and our other hon. Friends who have contributed to the debate, would be even more enthusiastic than I am, as a member of the coalition Government, to see the fiscal and financial situation brought under control. We have a coalition commitment to rebalance the economy and to support businesses to provide the growth and jobs that the country needs, and Members have eloquently pointed out the particular role of small start-up companies in doing so. This Government have made an excellent start and are doing a great deal, but there is always a balance between putting the finances right as a short-term necessary foundation and providing the right springboard for growth.

This Government fully recognise the problems that were caused by the outgoing Government’s so-called reform of empty property rates. Members have spoken eloquently today about the problem, and have allocated the blame correctly to the outgoing Government. From 2008, the exemption period was restricted to three months for non-industrial property and six months for industrial property, with ratepayers being liable for full rates once that period had lapsed. The previous Government claimed that the purpose of the reforms was to increase the cost of holding empty property and thus to encourage owners to relet or redevelop empty commercial properties, or to sell them on to people who would do so. That argument was based on an economic theory that was, and still is, not fully accepted by the business community; hon. Members have pointed out that even in good times it would be unrealistic to think that every commercial property in the country would be full—there would always be churn and vacancies.

The Government fully understand and appreciate that ratepayers would like us to undo the previous Government’s so-called reforms, or to continue with the temporary measures, but our ability to take action needs to be balanced against the very high costs involved. We are, however, also providing targeted support on business rates, and there is an overriding need to reduce public expenditure and support the economy generally by reducing the deficit. Had any Labour Members been here today, and that is perhaps something of a statement in itself, I can imagine that they might have said, “Why don’t you do it anyway, it’s only another day’s deficit borrowing?” Restoring the relief would cost somewhere between £400 million and £500 million a year—just another day’s borrowing. I believe that those of us present are more mature and responsible than that, and would not simply say, “Oh yes, it’s just another day. Let’s do it.” That is the challenge the Government face because, as my hon. Friend the Member for York Outer made clear, the Government have to balance getting the economy straight financially and fiscally with providing the springboard for business growth.

I have a long list of the very wide range of help we have provided to businesses, and had time permitted I would have read it out, but I would be happy to pass it on to Members who have contributed to the debate. The help focuses on getting new businesses started and on getting existing businesses to expand. We have to set priorities. Although changes to the empty property rate are currently unaffordable, we recognise that the problems caused by the previous Government’s reforms are still there, and we will certainly keep the matter under review.

We have already taken some major actions, particularly on business rates, to demonstrate our commitment to providing targeted support for the business community. Yesterday, the Local Government Finance Bill, which reforms business rates, received its Second Reading. When the measure comes into force, it will give every local authority the capacity to rebate business rates at their discretion in their local area. I hope that Members here today will support that legislation with great enthusiasm, and that they look forward to the day, in April next year when the measure comes into force, when they can go to their local authorities and make as eloquently as they have today the case for empty property business rate relief, which can then be targeted and shaped to local circumstances.

Although I would like to spend time on the long list of good things that the Government have done to support business, I hope that in the limited time available I have been able to explain why the Government have set rigorous priorities and feel obliged to stick to them through these 12 months. I hope that there is a glimmer of light at the end of the tunnel, when the Local Government Finance Bill becomes law, for my hon. Friends to approach their local authorities and put their case strongly to them.