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

Debate between Neil O'Brien and Michelle Donelan

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

[Michelle Donelan (Chippenham) (Con)]

I am delighted to follow my hon. Friend the Member for Walsall North (Eddie Hughes), who gave an informed and energised speech. I cannot elaborate enough on how much we all enjoyed it. I reiterate his point about St George’s day and congratulate the royal family on the birth of another child.

I welcome the opportunity to speak about the Bill, which is pro-business and therefore will support job creation and which seeks to help to increase our housing stock. Those are two issues that my constituents regularly raise with me in my surgeries and when I am at events.

The staircase tax has been the top issue raised with me by a number of local businesses, including at events I have attended, such as at Corsham chamber of commerce, local Inspire events and other networking events around the constituency. I am delighted that the Bill seeks to rectify the bizarre situation that we have found ourselves in. Although we must not criticise the Supreme Court, I welcome the Government’s initiative to right a wrong today and to honour the commitment made in the autumn Budget. The Bill will mean that all ratepayers who lost small business rate relief directly as a result of the judgment will have their relief reinstated to their bills retrospectively.

As we all know, the staircase tax means that business rates in England and Wales are being set depending on how many rooms are being used and how they are linked. That really is arbitrary. Companies with offices linked by a communal lift, corridors or stairs are being charged. In fact, some of those businesses would have been eligible for 100% rate relief were the case different. That has led to an increase in bills, which concerns a number of businesses. Some have faced charges being backdated to 2010. If you owned your own business, Madam Deputy Speaker, can you imagine the shock and the horror of getting a massive bill that you had not budgeted or planned for and that could stifle your small business? That is what has happened in businesses in my constituency and up and down the country.

[Neil O'Brien]

While talking with the Market Harborough chamber of commerce just last Friday, I met a business owner in my constituency who runs a small fishmonger and has a whole set of offices connected by a staircase in a tall building in the most expensive part of the town. Were this ruling to have affected her, she would have been completely clobbered. In fact, even in the current business rates environment, because it is a rather archaic tax, she is already paying a lot, and without measures such as this, she could have been paying an awful lot more.

[Michelle Donelan]

I thank my hon. Friend for his very valid point and I completely agree. We all have sympathy with the case he outlines and have heard many similar examples throughout our constituencies. This is not just about existing businesses; it is also about people who are looking to get into business—the entrepreneurs and business owners of tomorrow, who will look at this tax and think the risk is too high.

--- Later in debate ---

[Michelle Donelan]

I completely agree. My constituency has four market towns and our high streets have suffered. The Bill sends a message out to local high street business owners and all small businesses that this Government are behind them, supporting them, and recognise that they are the backbone of our economy.

[Neil O'Brien]

Does my hon. Friend agree that this is a good example of the Government addressing some of the most egregious problems with the business rates system, and that it is a further improvement following the revaluation, which has seen 5% cuts in the business rate bills of shops in the east midlands?

[Michelle Donelan]

I completely agree. As I said before, the Bill is righting a few wrongs.

Last Friday in my constituency, I met the regional director for the south-west of the Federation of Small Businesses, who estimates that, while the staircase tax has affected around 30,000 businesses, it has actually impacted around 80,000 properties. Sometimes we think too much about the number of businesses and do not think about the number of properties affected. These properties and businesses have been unfairly and illogically punished for sharing facilities such as communal staircases, corridors or even car parking with another business. In fact, Mike Cherry, the chairman of the FSB, said last September that some small business owners were knocking holes in their walls or trying to put staircases on the outside of their premises to try to get around these rules. That is a bizarre and ludicrous situation that we cannot tolerate any longer, so I am delighted that the Bill will rectify it and that we are sorting out a sensible solution.

--- Later in debate ---

[Michelle Donelan]

I completely agree. The Bill is also about providing more business confidence and more confidence for entrepreneurs who want to grow their business and develop it, rather than the opposite. It is important to reiterate that small business is the lifeblood of our economy.

[Neil O'Brien]

Harborough is a place of small businesses and does not have one dominant employer. There is a lot of demand for large buildings which are broken up into much smaller office spaces. Does my hon. Friend agree that that would be much more difficult if we did not address the problems with the staircase tax that we are addressing and the absurdities that she has pointed out?

[Michelle Donelan]

I completely agree and I thank my hon. Friend for another interesting and to-the-point intervention.

My constituency, as I have said, has four market towns—Chippenham, Corsham, Melksham and Bradford on Avon—and the staircase tax has affected each one of them, as well as our villages. It has impacted on high streets. It is important to remember that there are office spaces above shops and that members of staff go out for lunch in the high street. If they are impacted, there are job losses and if there is no extra recruitment round, those people will not be out for their lunch in the high street. The tax has also affected some of our shops. Our high streets are suffering up and down the country, so we should do everything we possibly can to promote and support them to avoid having dormitory towns.

--- Later in debate ---

[Michelle Donelan]

I agree. It is a two-point strategy: it is about the money that is raised and incentivising people to stop leaving those homes empty.

The point about exemptions has been made by other Members, but it is important to labour it, because I do not want my Chippenham constituents to be unduly concerned or worried that they might be penalised by the policy. They will not because it has exemptions for people in the military, for carers and for people who are going into hospital which are designed to help them. If a home is left empty because of probate, the people concerned will be protected. This is not an arbitrary measure—it is smart and fair.

[Neil O'Brien]

My hon. Friend is listing some sensible exemptions. Does she agree that it is important that we remain localists and do not impose the measure on every council? We should give them the power to make the decision for themselves.

[Michelle Donelan]

I completely agree and I will come on to deal with that point.

I want to reiterate the point that empty homes attract squatters, which can result in vandalism and antisocial behaviour. That helps to bring down areas and can be upsetting for local residents. Residents often come to my surgery asking, “Why is that property still empty and what can we do about it?” Today, we have an example of what we can do about it, with a measure to incentivise people to use those empty homes.

--- Later in debate ---

[Michelle Donelan]

I completely agree. I have said that these properties are more susceptible to vandalism and there is antisocial behaviour around them. It is uncomfortable for neighbours and people in those communities.

The two-year period is fair. It allows homeowners sufficient opportunity to sell the property, rent it out or complete major renovations that might be required. The Bill is an example of the Government supporting localism because local authorities, as has been mentioned by many hon. Members, will still make the decision on whether to apply the premium and the exact rate that is to be charged. They can review the empty housing stock and the housing supply and demand locally, and make an informed decision. That is an example of this Government trusting local authorities.

I am confident that the majority will continue to use that power. In fact, 2017-18 figures show that 291 of the 326 local authorities chose to apply the empty homes premium. In addition, there is scope for them to assess on a case-by-case basis—for example, where a homeowner is struggling to rent out or sell a property or to do the repairs. This is not a punitive measure, but a fair and measured one. The 2013 guidance will still stand, reminding local authorities to take into account the reasons a property is empty. As I have said, this is about protecting rather than penalising owners of homes. This Government do not want to stop or discourage people from getting into the property market and on to the housing ladder; it wants to encourage and facilitate them. That is the very nature and essence of this Bill.

I agree with my hon. Friend the Member for Harrow East (Bob Blackman) that we must be careful that this is not abused. We do not want people to find a loophole whereby they tinker with the property as they approach the two-year marker. I would like to hear the Minister explain how we will address that because it is very difficult to protect those homeowners who are doing the right thing, as opposed to those who are trying to avoid the rules. We need to seriously tackle our housing crisis.

My only ask of the Minister is to review the impact of the increase and to later look at increasing it again. I believe that, to truly incentivise homeowners to rent out or to sell their property, the cost must be quite high, especially in areas of London or other places where the housing market is very high, because people will sit on those houses and their value will go up considerably, month after month, and they can then write off the increase in the empty homes premium if it is not high enough. There is an argument to review it and increase it times five. If someone is doing the right thing and renting the property out, selling it or doing it up in a timely fashion, they will not be punished at all. There is an argument for looking at whether we have gone far enough today and whether in the future we could go further and build on this.

[Neil O'Brien]

My hon. Friend is making her case with great passion on an issue about which so many people care. Will she join me in congratulating the campaign groups that have worked so hard to put it on the agenda, in particular The Big Issue and its “Fill ’Em Up” campaign and Empty Homes?

[Michelle Donelan]

I completely agree with my hon. Friend that it is important to recognise the work done by campaign groups and all bodies with a vested interest in the issue. It is not just about urban areas. In fact, Graham Biggs, chief executive of the Rural Services Network, a body representing 143 rural local authorities in England, has said:

“Anything that enables councils to bring empty properties back into use is welcome.”

It is also interesting to discuss this Bill in relation to homelessness. We have an odd situation whereby there are thousands of empty homes in the country but also a dreadful and rising problem of homelessness, although the Government are tackling it. As the chief executive of Shelter has pointed out, addressing the situation is not as simple as swapping or flipping those two elements around, because often homes are in different areas from those with the core homelessness problem.

--- Later in debate ---

[Michelle Donelan]

I completely agree that it will be very interesting to watch the actions of the Mayor of Manchester and the impact of his work, and to look at other cities around the country.

[Neil O'Brien]

I entirely agree with my hon. Friend’s point about the mismatch between empty properties and the homeless, but does she agree with me and the estimate by The Big Issue that in some parts of the country there are 10 empty properties for every homeless family, so surely the Bill can play an important role, along with other measures such as Housing First, in addressing the problem of homelessness?

[Michelle Donelan]

Yes, it will have an impact. It is one of a number of ingredients in a recipe for tackling homelessness, an issue on which my hon. Friend the Member for Harrow East has led considerably and on which I worked with him on the Homelessness Reduction Act. We also have the homelessness taskforce and Housing First. All of those together will help to tackle homelessness.

I want to air caution, however, because Opposition Members have talked frequently about seizing empty properties and giving them to the homeless. That is not a solution. The answer is about incentivising the owners of those empty properties and encouraging them to put them into the housing stock, not seizing them. We are not a Government who want to downgrade or derail property rights; we are a Government who want to promote and protect property rights, and also ensure that we can get that housing stock up and tackle the housing crisis.

--- Later in debate ---

[Michelle Donelan]

I completely agree. That is exactly what we need people to do: we need them to think twice about whether it is a sensible decision for their pocket, and then the issue can be resolved for our country.

[Neil O'Brien]

Further to the question asked by my hon. Friend the Member for Bexhill and Battle (Huw Merriman) about the role that corporately owned empty properties might be playing in the problem, does my hon. Friend the Member for Chippenham (Michelle Donelan) agree that the situation might be more severe than we think, given that previous measures against it, such as the annual tax on enveloped dwellings, brought in by this Government, have raised far more than we expected because there were more of them than we thought?

[Michelle Donelan]

My hon. Friend makes yet another very interesting point. He has made several interesting points and is very informed and articulate. I thank him for his contribution.

In conclusion, this Bill will be welcomed by my constituents in the Chippenham area, because it seeks to right two ludicrous wrongs. It seeks to support local businesses and to boost our housing stock. It will help our job creators and help to tackle our broken housing market. I urge the Minister to explore further the opportunity of increasing the empty housing premium in the future and I hope that this will act as a first step. I look forward to supporting the Bill tonight.