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

Scott Mann Excerpts

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

[Eddie Hughes]

The hon. Gentleman makes a powerful intervention given the fact that yesterday, only 24 hours ago, he ran 26.2 miles, and look at the man we see before us this evening—not a break of sweat on him. Clearly, he is not just an incredible athlete, but a gifted intellectual, and I acknowledge what he says, but completely disagree with him.

As I was saying, we have moved from 300,000 empty properties down to 200,000 empty properties, and that is, in no small part, owing to the fact that we previously introduced this council tax premium.

[Scott Mann (North Cornwall) (Con)]

I am aware that the issues in Walsall North might not be the same as those in Cornwall, but I do appreciate and share the view that we have a mutual interest in making sure that these vacant properties are brought back into use. Does my hon. Friend think that his local authority, like mine, will appreciate these changes?

[Eddie Hughes]

I agree entirely with my hon. Friend, not least because this Government, being the free-thinking Government they are, are not imposing this duty on councils, but giving them the opportunity to apply this measure should they choose to do so, so they will have the opportunity to increase the premium from 50% to 100%. No doubt, Madam Deputy Speaker, you are thinking, “What might they do with that extra money?” I personally suggest that they use that extra money for services for their local constituents in order to drive down bills, increase efficiency and make sure that they either optimise their use of council tax, or possibly decrease their council tax in order to ensure that hard-working families benefit from the change to the law.

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[Eddie Hughes]

My hon. Friend makes a very valid point.

Let me borrow a slightly amended phrase from Shelter, which said, “The housing crisis isn’t about homes—it’s about people.” I agree with that principle completely. When people see that there is an increase in demand for property and know that properties in their neighbourhood have been left vacant for a long time, they are probably scratching their heads and thinking, “This Government are so progressive and so able in so many areas—why are they not tackling this issue?” Well, today they are.

[Scott Mann]

My hon. Friend talks about the individual. The property of an individual who fell on hard times might become run-down because they had run out of money. Does he think that at a later stage the Government might consider investing money to bring back into use vacant properties that have fallen into disrepair?

[Eddie Hughes]

My hon. Friend has suggested an innovative solution to some elements of the housing crisis. However, we should bear it in mind that there is flexibility with regard to the application of the enhanced rate. Whereas councils can currently apply a premium of 50%, clause 2, which amends section 11 of the Local Government Finance Act 1992, introduces the flexibility for them to apply a premium of between 50% and 100%. That flexibility with regard to the interpretation and application of this law will allow some scope to cover the sorts of cases that he mentioned.

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[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.

[Scott Mann]

I appreciate that my hon. Friend represents a rural constituency similar to mine that is made up of small businesses, which are the lifeblood of our rural constituencies. She is laying out a futuristic vision of businesses cobbling together under the same roof. If this part of the Bill were not implemented, all those businesses would be charged retrospectively under a different format. The Bill is supporting our rural economy.

[Michelle Donelan]

I completely agree. It is true that the Bill will particularly help new models of business. It is also important that the Bill will have retrospective effect. Businesses that have been affected can have the amount owed to them recalculated and backdated.

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[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.

[Scott Mann]

I am interested in the point that my hon. Friend the Member for Havant (Alan Mak) made about local authorities ring-fencing some of the money for better use. We have a big problem in the south-west with affordability. Does my hon. Friend the Member for Chippenham (Michelle Donelan) agree that local authorities could consider ring-fencing some of this money so that we can deliver affordable houses for people who live and work in her constituency and in mine?

[Michelle Donelan]

I completely agree. The housing crisis is one of the biggest challenges that we face in this country, so it is right that local authorities would look to ring-fence funds. I am sure that a number of them appreciate the fact that this is a key issue for their residents and will prioritise this. They are best placed to understand their residents and to make decisions based on the local area, because every area is different.

I want to stress the point that locally people are sitting on properties, waiting for their value to go up. They do not want to rent them out because of the hassle, inconvenience or stress that that can cause. That is a problem because, if they are not selling them, those properties are left empty while people are waiting to get a property. That situation cannot continue. However, I think that the two-year period is fair.

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[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)]

I thank the hon. Members for Denton and Reddish (Andrew Gwynne) and for Oldham West and Royton (Jim McMahon) for their constructive comments on the Bill, and I will address some of their specific points shortly. We have had an incredibly interesting and entertaining debate, and one of the more succinct that I have heard in my time at the Dispatch Box. It has been extremely helpful to hear Members’ views today, ahead of further scrutiny of the Bill in Committee. It was great to hear some thoughts on what we can do to make progress on this issue.

The Bill will take forward two specific, short and important measures to promote fairness. It will provide fairness for hard-pressed businesses facing an unjustified tax hike, backdated where necessary. Those businesses have already paid their fair share, and deserve our support rather than being burdened by sudden and unreasonable demands. The Bill will deliver the Government’s goal of supporting those businesses, by restoring accepted and understood practice in the business rates system.

The Bill will also help those seeking a place to call home. It cannot be right that so many in our society are struggling to find somewhere to live while properties lie empty across the country.

[Scott Mann]

My hon. Friend is aware of the challenges that we face in rural areas, especially in Cornwall, where we welcome the vacant homes premium, but how will local authorities be able to differentiate holiday homes and vacant properties? Some holiday lets are not let for a long period of the year.

[Rishi Sunak]

My hon. Friend makes an excellent point and the issue of housing in rural areas was also raised by my hon. Friend the Member for Copeland (Trudy Harrison). He is right to highlight the issue. Legislation makes a distinction between long-term empty homes, which have been unfurnished and unoccupied for two years—those that the Bill seeks to address—and homes that are considered to be second homes, which are at least partially furnished and occupied on occasion. My hon. Friend the Member for North Cornwall (Scott Mann) will know that the coalition Government ended the presumption of a council tax discount for such second homes and levied a stamp duty surcharge on them. I will return to those measures when I respond to some of the other points raised.

My hon. Friend the Minister for Housing deserves enormous credit for the energy with which he has approached his new portfolio to make good on the Government’s commitment to fix our broken housing market, and the Bill is a small part of the process of doing that. Since 2010, we have introduced measures, including the £7 billion new homes bonus scheme, that have reduced the number of properties empty in England for six months or longer by a third, as we have heard tonight. But there is more to do, and the Bill will allow councils to levy an additional 50% premium on long-term empty homes, leaving the discretion on that decision with local authorities for all the reasons hon. Members have mentioned.

I pay tribute to my hon. Friend the Member for Harrow East (Bob Blackman), who has incredible experience of local government and brings it to bear on these matters. I join him in paying tribute to the hon. Member for Sheffield South East (Mr Betts), who we were all happy to see back in his place tonight. My hon. Friend raised the issue of pre-legislative scrutiny of the Bill and I am grateful for his comments. I also put on record my thanks for the work of the Housing, Communities and Local Government Committee in engaging extensively me with and my officials on the various technical issues raised. In particular, the Committee was right to pick up on the issue of voids and whether the Bill would capture the definition accurately. As my hon. Friend will have seen, the Bill takes into account the question that the Committee raised and we have worked with experts in the sector to tweak the definition. I think that will address the Committee’s concerns.

My hon. Friend rightly highlighted the issue of small businesses and cash flow, and urged us to press on as fast as we can. That is what we are trying to do. In response to letters from the Committee questioning the timing of the pre-legislative scrutiny, I said—and I repeat to the House tonight—that that is why we moved as quickly as we did. Instead of the normal process of 12 weeks, we had a slightly shorter process of eight weeks for that scrutiny, so that we could get the Bill on to the statute book as soon as possible and bring some relief to the small businesses facing cash-flow issues.

I turn to the oratorical tour de force from my hon. Friend the Member for Walsall North (Eddie Hughes). He said that the Bill is not sexy, but on the contrary these are the matters that keep local government Ministers, and the hon. Member for Oldham West and Royton, up at night. My hon. Friend will be pleased to know that we are focused on the detail. He was right to highlight to all hon. Members the particular delights of Beechdale, which they will all want to join me in visiting at the earliest opportunity, not least to shop the delights of Rob Mullett Butchers and the grocery store run by Jane and Phil. My hon. Friend also made a broader point about the importance of regenerating our urban centres, which was picked up by my hon. Friends the Members for Cheadle (Mary Robinson) and for South Suffolk (James Cartlidge). I can assure my hon. Friends that the Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for Rossendale and Darwen (Jake Berry), who has responsibility for high streets, will have listened carefully to everything they said and will use their remarks as he develops policy to benefit our high streets around the country.

My hon. Friend the Member for Walsall North asked specifically about exemptions. I am pleased to tell him that council tax exemptions are already in place for people living in service accommodation or for those in the armed forces who are serving elsewhere and whose homes are therefore empty. Indeed, there are specific statutory exemptions for properties left empty for a purpose, for example when a person goes into care. There are also discretionary discounts for houses that are empty because of special circumstances such as hardship, fire or flooding, and I hope that addresses Members’ concerns on that point. My hon. Friend also kindly paid tribute to the drafting of the Bill, for which I cannot take enormous credit—I pay tribute to the officials, the ratings agencies and other experts who helped to draft the legislation to make it ready for today.

My hon. Friend the Member for Chippenham (Michelle Donelan) outlined yet again why she is a strong champion of small business in her constituency and around the country. She talked about entrepreneurship, and it is exactly right that our tax system and our policy supports the entrepreneurs not just of today, but of tomorrow. Supported by my hon. Friend the Member for Havant (Alan Mak), she, as ever, made a compelling case for why this Government and this measure will continue to support entrepreneurship across our nation.

I turn to some of the questions raised by the hon. Member for Oldham West and Royton. He asked specifically about the amount that will be raised from this measure. The stats are that 60,898 properties were subject to the measure in the last year, and 291 of 326 local authorities—90%—levied the premium. All but three of those levied the full 50%. That raised about £38.7 million, so an additional 50% would obviously double that. Just so that he has the full picture, if all local authorities used the full premium, that would equate to about £42 million and therefore, in total, £84 million.