Levelling-up and Regeneration Bill

Baroness Hayman of Ullock Excerpts

Committee stage
Monday 20th March 2023 Lords Chamber

Moved by

[Baroness Hayman of Ullock]

166: After Clause 75, insert the following new Clause—
“Long-term empty dwellings: England - estimatesThe Secretary of State must publish an annual estimate of the number of long-term empty dwellings in England.”Member's explanatory statement
This means that the Secretary of State must publish an annual estimate of how many long-term empty dwellings exist.

[Baroness Hayman of Ullock (Lab)]

My Lords, this group of amendments is important as it directly relates to one of the housing missions. This mission states that more first-time homebuyers will be created in all areas and the number of non-decent rented homes will be reduced by 50%. I agree that good quality housing is the cornerstone of levelling up.

We are in a severe housing crisis, with a lack of supply of affordable homes for young people and little opportunity for families to get on to the property ladder. We therefore must make the best use we can of the properties we already have and maximise opportunities for everybody in every part of the country. There are large numbers of long-term empty houses. The Bill as it stands will not give local authorities sufficient tools to start to get a grip on the situation, so despite the Government saying they want to act, this is a missed opportunity. We have tabled amendments on both long-term empty dwellings and short-term empty lets to see what we can do to help the situation.

My Amendment 166 asks the Secretary of State to publish an annual estimate of exactly how many long-term empty dwellings exist. If we are serious about tackling the issue, we need fully to understand the extent of the problem and which areas are particularly affected.

There are a number of other amendments in my name, and in the names of my noble friends Lady Taylor of Stevenage and Lord Blunkett. My noble friend Lady Taylor has tabled an amendment to increase the maximum premium chargeable on second homes from 100% to 300%. This is a probing amendment to look at where the figure should be set.

My Amendment 171 would allow the Secretary of State to give CCAs the power to restrict short-term holiday lets, and my Amendment 442 probes the question whether local authorities may request that the Secretary of State limit the number of short-term lets in their area. My noble friend Lord Blunkett’s Amendment 172A would ensure that:

“No change in existing council tax levy can be introduced without an independent economic evaluation”.


Clearly, there are complexities relating to second and unused homes. We believe that local authorities need more flexibility over council tax premiums. Surely, it must be for local authorities to decide whether or not they will charge premiums and how much these should be, depending on their local circumstances. This has been a difficult issue for local government, particularly in coastal and rural areas such as Cumbria, where I live. Locals are often priced out of the market as houses are increasingly being turned over to Airbnb or continue to be marketed as second homes. This is putting even more pressure on the housing situation. Communities can be completely hollowed out when this happens. There are villages near where I live in which the majority of houses are second homes or holiday lets. This hollows out local services and infrastructure. We lose bus services, the local school, shops and pubs, all of which are threatened when the number of people living permanently in the community diminishes.

We believe that this Bill is an opportunity to create some innovative solutions, both through the financial regime and the planning system. At the same time, we need to be aware of any unintended consequences. Loopholes exist through which properties can be pushed into the business rates category, thereby avoiding council tax. This happens too often, and we need to ensure that these loopholes are closed.

My Amendment 445 would allow regulations to be introduced to license short-term rental properties. The Labour Party believes that one way to tackle the challenge of second homes in coastal and rural areas is to introduce a licensing system that identifies genuine holiday lets, as opposed to second homes whose owners leave properties empty while pretending to rent them out to holidaymakers.

The Labour Government in Wales are planning to introduce a similar scheme, which would also allow councils to set a limit on the number of second homes. I ask the Minister whether the Government will take account of what is happening in Wales and use it to inform decision-making in England.

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In relation to the contribution of the noble Lord, Lord Mann, I will have to take away that very sad story and ponder on it a bit further. But with those comments, I hope I can persuade noble Lords not to press their amendments.

[Baroness Hayman of Ullock (Lab)]

My Lords, perhaps I ought to start by saying that I am also not a vice-president of the LGA, seeing as other noble Lords seem to have made that clear. This has been a very good debate with a lot of speakers, and I thank all noble Lords who have taken part. One of the things that has come across is the significant recent increase in short-term lets and the fact that something does need to be done around this.

I thank the noble Lord, Lord Young of Cookham, for his support, his amendments and his speech. He made the very important point that a registration scheme is a good first step, but we do need to make faster progress on this. As he said, a consultation to get a better balance between first homes and second homes would be a very good start. I also congratulate him on his small victory, which the Minister just announced. The noble Lord, Lord Foster of Bath, made the important point of the significant impact on prices and affordability of more homes going to short-term let, and the fact that the Bill does not go far enough as it stands, as far as we are concerned. Again, I thank him for his support for our amendments.

I would also like to thank my noble friend Lord Blunkett for his support for my Amendment 170 regarding bereavement. And, while I am on Amendment 170, I am really pleased that the Minister said that there is going to be further opportunity to look at this, and perhaps some consultation. I would be really pleased to be kept informed of any developments on this area, but it is very good that people are listening and taking account of this particular consideration.

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Moved by

[Baroness Hayman of Ullock]

168B: Clause 76, page 85, line 14, at end insert—
“(10) In the case of a billing authority which is a district council in a county for which there is a county council, the increase in council tax arising from a determination under section 11B or this section must be paid into the collection fund.(11) Except to the extent that a billing authority decides that any proportion of the amount paid into the collection fund under subsection (10) should be paid from the collection fund to one or more major precepting authorities which issue a precept to that billing authority, the amount paid to the collection fund under subsection (10) must be paid to the billing authority.” Member's explanatory statement
This amendment seeks to ensure that, in the case of a district council for which there is a county council, all of the income from the supplements under section 11B or 11C of the Local Government Finance Act 1992 would be retained by the district council as it is the housing authority. The amendment allows the district council to decide to allocate some of the supplement to any of its major precepting authorities if it so chooses.

[Baroness Hayman of Ullock (Lab)]

My Lords, my Amendment 168B seeks to ensure that, in the case of a district council for which there is a county council, all the income from the supplements under Section 11B or new Section 11C of the Local Government Finance Act 1992 would be retained by the district council as it is the housing authority. The amendment allows the district council also to decide to allocate some of the supplement to any of its major precepting authorities if it decides to do so. I will not go into much detail about this amendment; I think what it is trying to achieve is pretty self-explanatory.

Previous days in Committee have included a lot of discussion about the important role that district councils play in delivering services to our communities. Noble Lords have talked about the fact that, in many parts of the Bill, they feel that district councils are being shut out. They will not have access to the same opportunities within the proposed combined county authorities, and they are not then going to get the support they need to continue to deliver services, including housing and planning. We believe that if the district council is the housing authority, it should be able to keep all the income from these sections of the Local Government Finance Act. It should also be in the district council’s gift to decide how that income should be used. In the previous debate, the noble Earl, Lord Lytton, and the noble Lord, Lord Foster of Bath, talked about local authorities being able to decide how funds are spent in other areas. Again, we absolutely agree that this is important.

My Amendment 169 would give the owner of a dilapidated property up to a year after acquiring the property to refurbish it before additional council tax rates are incurred. We touched in the previous group on dilapidated properties but, I suggest, from a different perspective. This is an issue that came to me when I was a Member of Parliament in the other place. Constituents would come to me because they were having financial difficulties in being able to update a dilapidated property, which sometimes they had inherited, because of the amount of council tax they were being clobbered with—to be blunt—which made it much more difficult for them to have the funds they needed to do up the property in good time. It was taking them a long time to do it up.

We know that bringing old, dilapidated buildings back into use will benefit the whole community. However, as I said, it can take a long time, depending on what is needed—for example, if there are problems with damp or you need a new roof. It can take a long time for properties to be restored to a good condition. My Amendment 169 recognises that there can be circumstances in which houses will not be occupied while work needs to be carried out. It is also designed to encourage people to bring homes back to a decent standard without being hampered by having to pay higher council tax rates, which, as I said, can impact on people being able to pay the costs of refurbishment.

The other amendments in this group, Amendment 428 in the name of the noble Baroness, Lady Pinnock—I look forward to her introduction of the proposed new clause—and Amendment 474 in the name of the noble and learned Lord, Lord Etherton, look at the business rates system. Amendment 428 proposes to review it, and Amendment 474 proposes to review it and include consultation to look at how we can bring economic support to businesses, especially in high streets and town centres.

This issue is incredibly important. We know that business rates have had a very negative impact on many of our high streets and town centres, and I am sure we will debate that when we come to the group on high streets later in Committee. Noble Lords know that I feel very strongly that good public consultation and participation for communities is important when we are looking at these kinds of issues. We know that business rates are one of the most important taxes for local government, but they have also been blamed for the struggles of retailers, for the death of the high street and for exacerbating the country’s economic divides.

I suggest that there are three fundamental problems with business rates, which I ask the Minister to take away for further thought and discussion. First, they do not always reflect local economic realities. That became extremely clear during the pandemic, when many businesses struggled to keep going. Secondly, business rates can be far too complex; we do not need them to be that complicated. Thirdly, at the moment they actually disincentivise investment, which is crazy—they should be doing exactly the opposite.

We support these amendments, as we believe that we need a reformed system which will support towns and cities in improving their business environments, raise productivity and boost prosperity.

[Lord Etherton (CB)]

My Lords, I will speak to Amendment 474. I am grateful to the noble Baroness, Lady Pinnock, for allowing me to speak first. We both have the same objective in mind: that there should be a review of non-domestic business rates. The main differences between us are twofold: first, the noble Baroness’s amendment is slightly more prescriptive than mine; secondly, and more importantly, my amendment would provide for a public consultation. Those are the only two differences, really; there is nothing much more than that.

I should declare my interest as the owner of high street investment retail properties, and I am grateful for the support of noble Lords across the House who have signed my amendment. The objective of my amendment is stated in its proposed new clause: to make business rates

“fairer to businesses and to sustain economic activity and growth, especially in high streets and town centres.”

The Bill is an entirely appropriate vehicle for such a provision, since one if its major concerns is that there are empty high street retail properties and failed retail businesses both on the high street and in town centres.

I acknowledge the steps taken in the Autumn Statement to ease some of the economic burden of business rates but, if we want flourishing high streets, we need to look at the system as a whole and not rely on ad hoc changes. Those who invest in retail properties, whether they run small businesses there or otherwise, will want to know what their liabilities are—not what might happen in future—either to raise or reduce business rates or to introduce new ones. This is the one outgoing that is not negotiable. You can negotiate your employees’ wages; you can negotiate the rent; you can go to one of a number of power and energy suppliers; however, you cannot negotiate the rates.

The Government said by way of a manifesto commitment that they would reduce the overall burden of business rates. In fact, the Office for Budget Responsibility reported last year that the Government are

“forecasting that income from business rates will rise to nearly £36bn by 2027/28 (from £28.5bn in 2022/23)”—

a very significant increase that is quite contrary to that manifesto commitment.

There are numerous reasons why it is appropriate to have a review of—and, I would say, a public consultation on—non-domestic rates. Let me mention a few. The uniform business rate multiplier, which is used to calculate rate bills, is running much higher than its historical level, which was 34p; currently, it is 51p or 49.9p for small businesses. Consideration also needs to be given to the empty property rates relief; there is a question as to whether the six-month empty property rates holiday should be extended from the warehouse and industrial sectors to include retail and offices.

Then, there is the question of how often revaluations should take place for the purpose of fixing the level of rates, the suggestion being that it should be yearly. Another question is what is or is not rateable in relation to plant machinery. Finally—these are only a few of the considerations that need to be addressed—there is the question of the appeals system, which is too lengthy, not transparent and not accessible. Those are reasons why it seems essential to me that, if we are to have full and flourishing businesses and retail properties on the high street, we need to look at this one non-negotiable expense, which is running at an historical high, notwithstanding, as I said, the ad hoc reliefs granted in the Autumn Statement.

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[Baroness Scott of Bybrook (Con)]

I am sorry; I cannot tell the noble and learned Lord that, but I will make sure that I look into who, including the public, was consulted as part of that review. I will make sure that I get an answer to him and will put it in the Library.

As I said, in response to the concerns of businesses in England, the Government will introduce the transitional relief scheme for 2023. This will mean that 300,000 ratepayers seeing reductions in their rateable value at the revaluation also see an immediate fall in their bills from 1 April this year, rather than seeing those changes phased in over the life of the list. This will make the rates system much fairer and more responsive, and ensure that ratepayers benefit from the revaluation as soon as possible.

The Government also announced a supporting small businesses relief scheme, which will ensure that ratepayers losing some or all of their small business or rural rate relief as a result of the revaluation see their increases capped at a maximum of £600 in 2023-24. This is worth more than £0.5 billion over the next three years and will protect an estimated 80,000 small businesses. This is again on top of generous existing packages of statutory support provided to small businesses through the small business rates relief, which ensures that over 700,000 of our smallest businesses pay no rates at all.

The Levelling-Up and Regeneration Bill provides additional measures to address empty properties on the high street, such as the high street rental auctions. These measures will empower places to tackle decline by bringing vacant units back into use and will seek to increase co-operation between landlords and local authorities. Auctions will make town centre tenancies more accessible and affordable for tenants, including SMEs, local businesses and community groups. A review has only recently concluded and the Government remain committed to delivering on its conclusions. The £7 billion reform package announced at the end of that review and the £13.6 billion package of support announced at the Autumn Statement 2022 will, alongside the 2023 business rates revaluation, deliver vital help to those most in need, such as our high streets, and rebalance the burden of our business rates. In the light of these explanations, I ask noble Lords not to press their amendments.

[Baroness Hayman of Ullock (Lab)]

My Lords, I thank everyone who took part in the debate. I have two specific amendments in this group, but the debate has focused mainly on business rates. The noble and learned Lord, Lord Etherton, was right when he said that we need to look at the system as a whole and that business rates are not negotiable. That is part of the problem. If the Government are looking to reduce business rates, and they say that quite often, they need to look at how local authorities are funded, because so many are reliant on business rates. The debate has also demonstrated that the appeals system does not work at all. The noble Lord, Lord Ravensdale, talked about the need for economic dynamism for high street regeneration and said that business rates are a problem to achieving it. I completely agree with this.

When introducing her amendment, the noble Baroness, Lady Pinnock, was right to refer to the mission to which this relates, which is about increasing pride of place. On that note, I point out that there is not currently any incentive for local authorities to improve their town centres and increase the business base, as they are subject to tariffs. This perverse system actually discourages proper investment.

Again, the noble Baroness, Lady Pinnock, talked about e-commerce’s advantage over town centre premises and said that we need a fair competition. I am sure that the Government accept that. The challenge for all of us is what to do about it—how do you make that level playing field? I do not think there are necessarily easy answers to that.

I also thank the noble Baroness, Lady Pinnock, for her supportive comments regarding my amendments. She asked a question on Amendment 169 around dilapidation and the grace period that councils can bring in. The Minister mentioned something along these lines. What I found, when I had constituents coming to see me who were in this position, was that you only got that reduction or grace period if the council agreed that there was an issue of dilapidation; they do not always do that. You can get people being unstuck if the council will not agree it—then that reduction does not happen, and people get stuck. That was one of the points that I was trying to make.

The noble Lord, Lord Shipley, rightly drew attention to the fiscal devolution document that is being published for the north. I think this is really important because we do not believe that levelling up is going to be successful without fiscal devolution.

I thank the Minister for, as always, her detailed and thorough response to my amendments; it is appreciated. I will make one final comment on business rates following the noble Baroness’s response. Rather than tinkering with reliefs and temporary measures, we believe the whole system urgently needs a complete overhaul. It needs replacing with a fairer system that actually works for business. The current system, unfortunately, does not. In the meantime, I beg leave to withdraw my amendment.

Amendment 168B withdrawn.