Commercial Property

Philip Davies Excerpts

Wednesday 17th November 2010 Westminster Hall

[Lorely Burt (Solihull) (LD)]

I discussed the repercussions of the change with the previous Government on many occasions. I think that the level is £18,000 now, but in Solihull one cannot rent a broom cupboard for rates of £18,000 a year, as I know to my cost. I criticise the previous Government tremendously for the repercussions. I have constituents in Birmingham who are trying to rent out property for £1 a square foot just to absolve themselves of their problems with the rates. Will my hon. Friend exhort the Minister to consider whether, in this current economic climate, some form of marginal relief might be possible, just for the time being?

[Philip Davies (in the Chair)]

Order. I remind Members that interventions, particularly in a half-hour debate, should be as short as possible.

[Mark Pawsey]

I am grateful to my hon. Friend for her contribution. I know that even in areas where rents have been reduced to the level that she mentioned, there are still no takers. If no businesses are willing to take the premises, the price is irrelevant. We know that the situation must change.

The regulations have been in force for more than two years and have had a number of effects, some of which the property industry expected and warned the Government about at the time of the change. On the failure to provide services, it can be argued in the interest of fairness that business rates are a tax on occupation with the intention of raising funds, in the same way as the council tax. However, clearly, if a property is not occupied, no services are being consumed, and it follows quite reasonably that no tax should be payable.

In many cases, the tax has become a tax on ownership rather than a tax on an income stream. Taxes are usually based on income streams, which means that they can be paid from profits earned. Again, where a commercial property is vacant, there is no income stream on which that tax can be levied.

--- Later in debate ---

[Robert Neill]

My hon. Friend has stolen one of my lines. I appear to have lost any form of shadow. It is interesting indeed—

[Philip Davies (in the Chair)]

Order. We ought to reflect that, in a half-hour debate, one would not necessarily expect anyone from the shadow ministerial team or, indeed, any other Member to be present.

[Robert Neill]

I understand that, Mr Davies, but there are criticisms of the previous Government’s approach that I intend to make, and it is interesting that it is coalition Members who have attended to support the interests of businesses.

The Government, recognising the difficulties that we inherited when we came to power, have done much to support business. In the June Budget, we announced that we would reduce both the main rate and the small profits rate for corporation tax, which is another major outgoing; increase the threshold for employer national insurance contributions; and reduce employer national insurance contributions for new businesses in targeted areas.