The government’s removal of empty property rate relief has been universally recognised as a wicked and ungodly act. Even Alistair Darling seems to have grasped this
One of the many delights of a Presbyterian upbringing is an early introduction to hellfire and brimstone sermonising. From an all too young age I had imprinted on my mind the chilling consequences of failing to heed fair warnings.
From the pulpit I heard the story of the miserable sinners who, on arrival in Hell, feebly protested that they were not aware their sins would condemn them to the sulphurous pit. “We didnae ken, we didnae ken,” they wailed. To which Auld Nick replied with unseemly relish, “Well, ye ken noo …”
There are all too many cases where this government was given fair warning that its actions would pitch us into a hellish mess. From the level of public borrowing, to the failure to equip our servicemen properly there have been loud cries of pain raised even before it acted. Well, with our deficit ballooning and every service chief pleading for more resources, we all ken noo.
Supporters of the government, like the eminently fair-minded Nick Raynsford, might argue that the government’s spending strategy, like its defence strategy, had supporters outside the Labour party – although they’re more difficult to find than freshly frozen snowballs in Hell.
But there’s one choice this government made that nobody, but nobody, who knew anything about the subject thought was a good idea. And that was the removal of empty property rate relief in the 2007 Budget.
As I asked in the Commons at the time, how many landlords were masochistically turning away tenants because of a quixotic desire to keep a property unoccupied?
It was one of Gordon’s last acts at the Treasury. It was designed to generate hundreds of millions of pounds to give as a present to the next prime minister. Whoever that was. Of course, it wasn’t sold as a smash-and-grab raid on the commercial property sector. It was advertised as a regeneration measure to encourage landlords to find tenants for sites that would otherwise remain vacant.
But as I asked in the Commons at the time, how many landlords were masochistically turning away tenants because of a quixotic desire to keep a property unoccupied? The answer, of course, was none. But if anyone in commercial property had wanted to reduce their income in 2007, they would risk being incarcerated for their own good now – because in this economy nobody in their right mind could possibly want to do anything but get tenants in occupation as quickly as possible.
What the changes to empty property rate relief have done is encourage destruction. Just as I predicted, exasperated landlords have simply taken the roof off buildings, or demolished them, rather than pay for an empty asset.
I took the trouble to warn the government because regeneration matters to me, and I am particularly keen to see devastated urban areas transformed for the better. But everyone involved in regeneration knows that it can be difficult to get a project off the ground until you’ve got the sites you need in order. That sometimes means waiting, while some properties are empty. By definition, those areas that most need regeneration are those areas where investment is most difficult to secure. By increasing the cost of holding on to empty sites, and adding to the risk involved for all investors, this measure was bound to imperil regeneration projects.
And so it has. As the British Council for Shopping Centres and the British Property Federation have made clear, the regime has exacerbated the crisis on our high streets.
It was one of Gordon’s last acts at the Treasury. It was designed to generate hundreds of millions to give to the next prime minister. Whoever that was
Now Alistair Darling, as a new boy in the Treasury, maybe didnae ken what he was getting in to. A sign that he kens noo came in the pre-Budget report this time last year when he raised the threshold at which empty properties become liable for business rates.
The partial u-turn blows a hole in the logic of the government’s initial position. If this tax change was so good for regeneration and commercial activity, why reverse any of it?
We are in the run-up to the pre-Budget report again and we’ll all be waiting to see if Alistair repents further of his neighbour’s sins. I wouldn’t hold my breath if I were you: the government needs every penny it can get from taxation just to service the public debt.
But the government isn’t the only one finding life tough at the moment. So is the entire commercial property sector and everyone who believes in urban regeneration. Can they afford to have this government remain in place when it was responsible for a measure at once so short-sighted and so destructive? Before the last election people could say they didnae ken what was in store. Well, we all ken noo …
Michael Gove is shadow secretary for children, schools and families