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

Jim McMahon Excerpts

2nd reading: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 23rd April 2018 Commons Chamber

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Happy St George’s day to you and to the rest of the House, Madam Deputy Speaker.

I thank the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Richmond (Yorks) (Rishi Sunak), for meeting me last week to go through some of the Bill’s more technical aspects, which will save other Members the headache of hearing some of them today.

The Opposition broadly welcome both of the changes in the Bill. Clause 1 seeks to address the Supreme Court’s 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 position than they would have been before the court ruling. Clause 2 will give local authorities the power to increase council tax on homes that are deemed to be long-term empty.

While the Opposition support clauses 1 and 2, we need assurances from the Government that they will not cause detriment to local authority finances. That is particularly the case with clause 1, which will reinstate features of business rates valuation practice that applied prior to the Supreme Court case. The Housing, Communities and Local Government Committee has been clear that the effects of the provision on individual local authorities ought to be quantified and supported. The Government have not been clear about how individual local authorities will be affected or about those that will be picking up the tab as a result of the reforms. It has therefore been difficult to give the measures adequate scrutiny at this stage, so we hope to explore some of them in Committee.

Some wider issues also need consideration. The Federation of Small Businesses has illustrated the problems facing smaller firms that necessarily operate in large premises but do not qualify for small business rate relief. For example, childcare providers require space by the nature of their activity, but that takes them above the small business rate relief threshold. Far more also needs to be done to protect the high street, and town and city centres. Business rates are a significant cost and can be the difference between surviving or failing. We recognise that a taxation system cannot sit in isolation and must support the Government’s broader policy objectives, and we have seen some of the largest corporations get away without paying their fair share of tax while premises—the property-based businesses that are the lifeblood or foundation of many of our communities and are essential for town centres to thrive—are taxed through business rates before they earn a single penny.

Turning to clause 2, we welcome the move to bring long-term empty properties back into use by incentivising the owners of such homes to act, but we are also keen to tackle the shortage of available housing in some areas. It has been Labour policy for some time now—the Government’s policy falls short of this—to see 300% council tax charged under the measures that are being put forward today. There are currently 200,000 empty properties in England, and we have seen homelessness increase steadily over the past eight years. As we speak, 120,000 children have nowhere to call home. They are staying with friends and family, and many of them do not have a bedroom of their own. Meanwhile, the evidence of rough sleeping and homelessness is plain to see in towns and cities up and down the land. Councils, particularly in London, which has the highest concentration of empty properties, are battling to meet their statutory obligations and housing duties due to increasing demand, rising unaffordability and the effects of eight years of Government cuts to local authority revenues. It is absolutely right that owners of empty properties pay a premium if their property is suitable to let but they fail to do so. However, any move must form part of a wider strategy to bring empty homes back into use, including positive, proactive support to get homes back on the market.

We welcome the Government’s acknowledgement of some of the faults in the system and their move towards adopting Labour’s policy on empty homes, but they could of course have gone further. Housing is one of the most pressing issues facing this country, and eight in 10 people think the Government ought to do more to address the housing crisis. We know that, which is why my right hon. Friend the Member for Wentworth and Dearne (John Healey) has launched a Green Paper on affordable housing—a framework to change the country’s approach to affordable housing—as part of a new national mission to solve the country’s housing crisis. From planning to funding right through to delivery, we need a comprehensive, joined-up strategy to tackle the housing crisis.

The Conservative-chaired Local Government Association —I declare an interest as one of its vice-presidents—agrees that there is more to be done. It would like the Government to go further and give councils greater power to borrow, to build and to deliver the homes that we need—not on a case-by-case basis, but by trusting local authorities to understand their areas and to get homes built quickly.

[Mr Jim Cunningham (Coventry South) (Lab)]

Like me, my hon. Friend has experience of local government, and he will know that if the Government are serious about dealing with this country’s housing crisis, they would free local government to build social housing on a major scale. That would determine the Government’s level of commitment. So far, however, they have not shown that commitment. There are families in my constituency in Coventry who cannot get accommodation, which is a terrible situation for people to find themselves in.

[Jim McMahon]

Absolutely. In some areas, the housing crisis was a significant factor in why people voted to leave the European Union. People do not feel confident about this country’s future, and housing is a vital part of that. If people do not have the security of a home or a secure tenure, they will rightly be nervous about what the future may bring, so the Government need to do much, much more. However, the idea that they can command and control from Whitehall and expect every community to benefit has been disproven time after time. As my hon. Friend pointed out, we should empower local government to get on. Councils know their areas. They have the local partnerships and know the sites. They have planning departments that need greater support. If they were given the resources, they could do far more, but this must be about giving them independence and freedom, not making them wait for the Government to offer crumbs from the table, which is how many councils feel.

[Justin Tomlinson]

I agree with much of that principle, but that is what local plans are for, and we have cross-party support in my patch of Swindon. This Government are empowering local communities to shape future development if they choose to engage with the opportunities.

[Jim McMahon]

I accept that point, but we also need to accept that local plans are limited in that, by and large—of course they do more than this—they are about land supply to support the number of housing units that will be built. They do not discuss the mixture of tenure or go into detail about the funding plan that will support the proposals. A local authority could identify, based on its population and demographics, that it needs a certain proportion of affordable or social housing, for example, but there will be no funding plan to deliver on that. A local plan could sit on a shelf for 10 years, but if the council’s ability to borrow is curtailed, it cannot lay the bricks to build social housing. Like the hon. Gentleman, I know my local area and the council knows the area too, but it is constantly under the cosh of funding cuts. It does not have the capacity and it needs it to be freed up.

[Mr Jim Cunningham]

My hon. Friend is generous in allowing me to intervene again. If the Government really believe in local democracy and want to encourage a property-owning democracy, they should do what used to be done. Local authorities used to give out mortgages and build houses for sale, and they used to build social housing. That is how to do it if the Government really mean to tackle the problem, and that is what they are not doing.

--- Later in debate ---

[Jim McMahon]

That is a fair point and, bringing it back to the Bill, we will see the rigour that local authorities apply to understanding what clause 1 means for their base funding requirements and what clause 2 means for how much money can be generated to support bringing more rental homes back into use. We know local government will deliver because, time after time, it has really stepped up and done what is asked of it.

Finally, the Bill feeds into the wider debate about the viability of local government finance. Issues such as the staircase tax have raised important points, but we need to move away from the uncertainty and the reliance on favourable Government decisions to fund local services. Any new responsibilities must be backed up with the resources to guarantee that councils can meet their statutory duties.

By the end of the decade, local government will be facing a funding gap of £5 billion which, time after time, the Chancellor seems to be wilfully ignoring. I understand that Ministers have been trying to get an audience with him, but they have failed. The consequence is that our councils often face financial uncertainty.

As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), my boss, says, you cannot empower local government if you impoverish it.