Local Government Finance (Unoccupied Properties etc) (Scotland) Bill
The next item of business is a debate on motion S4M-04598, in the name of Derek Mackay, on the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill. Before I invite the Minister for Housing and Welfare to open the debate, I call the Cabinet Secretary for Finance, Employment and Sustainable Growth to signify Crown consent to the bill.
For the purposes of rule 9.11 of the standing orders, I advise the Parliament that Her Majesty, having been informed of the purport of the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill, has consented to place her prerogative and interests, so far as they are affected by the bill, at the disposal of the Parliament for the purposes of the bill.
Thank you very much, cabinet secretary.
We now begin the debate. I call Margaret Burgess to speak to and move the motion in the name of Derek Mackay.
16:17
I am pleased to open the stage 3 debate on the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill. I thank the Local Government and Regeneration Committee, in particular, for its scrutiny of the bill throughout its parliamentary stages, and I thank all those organisations and individuals who provided oral and written evidence to the Parliament.
The bill is a key part of our wider work to reduce the number of empty properties, whether homes or non-residential properties, so that we can make best use of existing buildings and minimise the number of properties that fall into disrepair and become a blight on our communities. Long-term empty homes frequently fall into disrepair and can attract vandalism and other forms of crime. They reduce the value of surrounding properties and can affect the perception of a neighbourhood as a good place to live, which, in turn, reduces residents’ quality of life.
At the same time, we are determined to reduce the number of homes that sit empty in the long term—of which we have more than 25,000—while around 140,000 families are on waiting lists for a social rented home. Bringing many of those homes back into use will help, directly or indirectly, to free up more homes for those who really need them.
Giving councils the flexibility to increase council tax charges for certain long-term empty properties will help, encourage or, where needed, push owners not to leave their property lying empty. Councils will also be given the flexibility to target any additional revenue at delivering key local priorities, which will provide a useful additional tool, alongside the other measures that councils can already use. For example, the Scottish Government has been funding the empty homes partnership to provide support to councils in tackling empty homes. In addition, we are part-funding three empty homes officers, who are shared across seven councils, on a pilot basis. Those officers are having considerable success in developing a blueprint for successful empty homes engagement work that could be replicated across Scotland, and we should all support the fact that their interventions have already seen a number of empty homes brought back into use.
We recognise that some owners need financial assistance to bring their homes up to a standard that makes them suitable for letting. That is why we have made £4 million available through the empty homes loan fund.
The fund will make at least 160 empty homes available for affordable housing—more, I hope. I am pleased to say that we have had a good response to our call for bids for the fund. Many of those homes could be made available for intermediate rent, which, in turn, would help to grow a more vibrant private rented sector, providing tenants with a greater choice of good-quality homes.
We have listened to stakeholders—Parliament and others—throughout the development of our proposals for the council tax increase and we have amended our proposals as the policy has been developed through active engagement. Examples of changes include limiting exceptions to the increase to only those who are actively trying to bring their homes back into use—whether they intend to sell or rent them—and bringing forward stage 2 amendments to increase the maximum level of penalty charge. A council can charge an owner if they fail to provide information about whether their home is unoccupied. That charge has been increased from £200 to £500. There is also now a limit in the bill itself, restricting the maximum amount of council tax increase to 100 per cent of the applicable standard rate, rather than placing that restriction in regulations.
We have also recently consulted on our proposals for draft council tax regulations and I thank everyone who gave their views. Responses are currently being analysed and we are considering some changes in the light of the comments that have been made. I recognise some of the administrative challenges that implementing a council tax increase is likely to bring and I am keen to make sure that the new regulations can be enforced to help tackle owners who deliberately leave their property empty. At the same time, I want to leave enough flexibility to avoid penalising those who are genuinely trying to bring their property into use, for example by renting or selling it. I hope to be able to lay a set of revised regulations in December.
The bill will enable us to bring forward regulations to reduce the level of empty property relief for empty commercial properties once they have been empty for more than three months.
Will the minister consider, under secondary legislation, changing that period of time—for small businesses only—from three months to six months? It is a short period and my desire is really to try to support small businesses because often when small businesses change hands it can take up to three or four months simply to change the suitability of the premises. Small business owners would welcome that relief.
Many of those businesses would be exempt from business rates in any case, but the Minister for Local Government and Planning has said that he will review the regulations, and that issue may form part of his review. As the Minister for Local Government and Planning—I keep mentioning him—has said, he is continuing to talk to stakeholders about the provisions as the regulations are taken forward.
Regulations made under the bill will allow reductions to be made to the discount that empty properties receive after the first three months to 10 per cent from April 2013. However, unlike in England, industrial and listed properties will continue to receive 100 per cent relief for as long as they are empty. As a result of a stage 2 amendment lodged by Derek Mackay, we also intend to provide a new relief for properties that have been empty for a year or more and which are subsequently brought back into use. Together, those changes will create new incentives to reduce the prevalence of empty properties that blights our high streets.
I am grateful to the Local Government and Regeneration Committee for its strong support for the abolition of the housing support grant. The grant has become an anomaly since the introduction of the prudential borrowing regime, as the regime requires councils to ensure that they borrow funds only if they are confident that they can pay them back without seriously compromising service levels.
Ending the housing support grant will allow us to make better use of our funding for housing by focusing only on key priorities, including funding new homes for people who need them rather than helping to pay interest on councils’ historic debts. We recognise, however, that Shetland Islands Council has continuing high levels of housing debt and that the council has been working hard to reduce that debt. As I said earlier in response to Tavish Scott’s amendment 2, I can confirm that the Scottish Government has made Shetland Islands Council an offer of transitional funding that will assist the council in tackling its housing debt. I am pleased to say that that offer has been accepted by the leader of the council.
If members vote to pass the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill, they will be voting for a key tool to assist and complement our wider efforts to reduce the number of empty properties, whether they are homes or shops or other commercial premises.
I move,
That the Parliament agrees that the Local Government Finance (Unoccupied Properties etc.) (Scotland) Bill be passed.
16:25
I thank those who gave evidence to the committees that dealt with the bill, the organisations that lobbied us, and the committee clerks.
From the outset, Labour has been clear that we share the objective of bringing empty properties—whether they are commercial or residential—back into productive use. It is in no one’s interests that properties lie empty, bring down an area and are vulnerable to vandalism, and that the best use is not made of them. We also understand the financial pressure that the Scottish Government faces, and particularly the minister’s challenge of trying to deal with the reality of the finance secretary’s decisions on his budget. We have been prepared to listen to the arguments, to consider the representations that have been made, and to judge whether the bill can be made fit for purpose.
In relation to the handling of the bill, there is a huge contrast between the provisions on non-domestic rates and those on empty housing. I will take them in turn.
On non-domestic rates, we know of the experience of similar measures in England. Since those measures were introduced, we have had a recession and a banking crisis, and it is clear that they have not delivered on ministers’ aspirations; indeed, they have actually made things worse. On the basis of the evidence that has been presented, we do not believe that the proposals in the bill will do what the minister believes they will do.
Throughout the process, there has been a lack of rigour in calculating the bill’s potential impact, particularly in relation to non-domestic rates. The financial projections that were initially submitted to the Finance Committee were woefully unconvincing and fell apart under scrutiny. The revised projections to the Local Government and Regeneration Committee were more back-of-the-envelope stuff. Every time we get another projection, we know that there will be a big hole in it and that the key issues will not have been properly looked at.
We have not had a proper business and regulatory impact assessment, which would have let the Parliament test the evidence in the light of comments on the projections by interested parties. That is a fundamental weakness, because the financial projections are simply untested assertions. Moreover, the experience in England does not show only the impact on business; it shows that the amount of money that the minister has claimed will be raised will not actually materialise.
The business community simply does not believe that the proposals will help; rather, it believes that they will make matters worse at a terrible time for Scottish business. The main reason why business and commercial properties are unoccupied is that there is a lack of demand, and the proposals do not address that basic problem, even with the minor changes that the minister has made.
Compared with the overall budget, the projected amount that the Scottish Government claims the measure will raise is relatively small. However, in the current economic climate, given the lack of demand and the difficulty of securing finance for development, the proposals have the ability to have a disproportionate effect on business and the public sector. A proper assessment should have been carried out.
We made those points during the Tory debate on the proposals for empty property non-domestic rates, during stages 1 and 2 and again today, and I am deeply disappointed that the minister has not been prepared to acknowledge the weight of criticism or the weight of the evidence that has been put to him.
The regulations that will follow will be submitted on a take-it-or-leave-it basis. There will be no opportunity to amend them, and Scottish National Party ministers will use their majority to push them through, regardless of their impact. We all know that.
The truth is that our local councils are struggling. They took 83 per cent of the Scottish Government’s budget cuts last year, they are facing an underfunded council tax freeze, and we all know that thousands of jobs are disappearing in them.
The figures are not true, of course—but even the figure that the Labour Party has conjured up excludes £2.3 billion of non-domestic rates from the local government settlement. The member cited evidence of the experience in England. Let us put assertion and opinion to one side. What evidence is she referring to?
The evidence that was presented to the committee and MSPs. There are not only demolitions in the industrial sector; there are demolitions in the commercial sector.
Will the member take an intervention?
No. I have answered the minister’s question. He asked about the evidence, and I have told him what it is.
We have been told—by town centre managers, I think—that the amount of speculative development has fallen off the face of a cliff. Therefore, there have been problems.
Will the member take an intervention?
No. I want to get on and address the minister’s other point about estimates.
Glasgow City Council estimates that, on its own, it will take more than £1 million of the hit from the increase in non-domestic rates. I wonder whether the minister disagrees with that estimate.
Sorry. Can the member say that again?
I will repeat it for the minister’s benefit. The information that was submitted to me by Glasgow City Council is that it alone will have to pay more than £1 million as part of the non-domestic rates increase.
I am happy that the member will take my intervention. Perhaps she would like to have another go at citing exactly which evidence she was talking about when she said that there was substantial evidence.
If Glasgow City Council is right, that suggests that more than half of all empty properties are in that city, which should be a call to action to do something about it. I suspect that the Scottish Government figures are absolutely correct.
I gave the minister the source: I said that it related to town centre managers. I am sure that that was the reference that we got. I will certainly check the evidence after today.
The minister has not disputed the information from Glasgow City Council. The council will potentially pay a big chunk of the projected £16 million. I cannot see how that will automatically bring empty properties back into use. There is a reason why properties are empty, and just clobbering people is not going to help.
This short bill will produce major financial problems for businesses that are struggling to get through these tough economic times. Only this morning, the Clydesdale Bank reported that it had suffered an 80 per cent increase in bad debts due to the drop in the value of commercial property. That is the real backdrop to the bill. The most that we can hope for is scrutiny after the bill is enacted so that Parliament can return to the proposals.
In relation to the provisions on bringing empty housing back into use, the proposals on their own are not likely to be enough, but they may be useful to local authorities as an option and as part of the kit that they have in their toolbox to regenerate communities. Although we do not believe that the proposals as they relate to housing are perfect, at least they have been the subject of consultation, so stakeholders have been able to submit their views, a number of which have improved the bill that is in front of us.
It is the detail that will be important. Shelter’s empty homes campaign has highlighted that there are thousands of properties that could be rented or sold and brought back into productive use. The principle of using councils’ flexibility in relation to council tax to act as a stimulus alongside other assistance to house owners is one that we support. The test will be whether councils have the staff and resources to make use of the provisions.
The bill that is in front of us is deeply flawed and will remain unfinished business for us. We will go back to the minister and repeat the evidence that has been given to us through the committee and by a number of stakeholders. We do not believe the minister’s figures, and we do not believe that his proposals will deliver what he claims. We do not believe that the bill will deliver on bringing back empty properties into productive use.
16:33
I cannot pretend that it gives me any pleasure to speak in this stage 3 debate on the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill, which will in effect rubber-stamp the final stage of the bill—given the Scottish National Party majority in the Parliament, it is a foregone conclusion that the bill will be passed at decision time this evening.
This is a bad bill that should never have seen the light of day, based as it is on the false premise that commercial property is empty through choice. No matter how often or how dogmatically the minister and the SNP Government make that assertion, it will not alter the fact that the vast majority of commercial properties are unoccupied due to a lethal combination of lack of demand and the current economic climate.
During the passage of the bill, the Scottish Conservatives have done everything that we can, including drafting amendments, to try to mitigate the adverse consequences and to ensure that the provisions will apply only to the few, but notable, examples throughout Scotland where properties have been wilfully left empty. In response, the SNP has systematically and arrogantly watered down all those amendments, which would have given the bill some legitimacy.
From the outset, the approach to the abolition of the non-domestic rates relief discount has been particularly shambolic. There was no formal consultation on the non-domestic rates relief reform proposals, which will cost Scottish businesses millions of pounds each year. The minister has claimed that £18 million is a modest saving but, for those businesses hit by the new tax, the provisions are anything but modest and could result in devastating consequences, precipitating the closure of businesses.
In light of what the member has just said, does she have a view on the United Kingdom Government’s intervention on listed properties, which will be exempt from rates? Meanwhile the UK Government has slapped VAT on those who choose to refurbish properties to try to bring them back into use. Does the member support that UK Government intervention?
The UK Government proposals that the minister is talking about are not part of the bill; they are not relevant. What the UK Government is doing is looking at the proposals that it inherited from the Labour Government and seeking to amend the policies that this Government is going ahead and introducing, which are absolutely preposterous.
As the Confederation of British Industry stated, the bill introduces a “tax on distress”, with a cash grab on organisations and businesses that can least afford to pay. The adverse consequences of the new tax will not be borne by the private sector alone; the impact will also be felt by the public sector at a time when national health service boards, local councils and other service providers in Scotland are coping with stringent financial constraints on their budgets. As such, the bill will affect the delivery of public services to people throughout Scotland and will lead to job losses and all the misery and dire consequences that that means for families in Scotland.
The minister and his Government have repeatedly heard the legitimate concerns expressed by the CBI, the Scottish Chambers of Commerce, the Scottish Property Federation and the Scottish Retail Consortium—to name but a few—about the adverse effects of the reduction in rates relief on commercial empty property. Despite that, the SNP has continued to use its parliamentary majority to force through what the Scottish Property Federation accurately described as
“the wrong tax at the wrong time.”
It said that
“if it goes ahead”,
we will
“see yet more businesses going into administration on our high streets.”
Scottish Land & Estates stated that the proposal
“will further penalise owners of business premises who are already experiencing real financial difficulties through loss of rental income.”
Members should forgive me, therefore, if I and all those affected by this legislation take with the proverbial pinch of salt the Scottish Government’s contention that it has been listening throughout the progress of the bill. Significantly, the Scottish Government has succeeded in uniting the business community in Scotland as never before—in opposition to the bill. [Interruption.] I am not surprised that the cabinet secretary does not like what he is hearing. It will get much worse in the next few months as the bill’s provisions kick in.
The legislation will not only punish property owners, who are already suffering in the current economic climate; it will also punish Scottish businesses and put them at a competitive disadvantage with the rest of the UK, deter speculative development, stifle inward investment, and further hinder the construction industry.
No business and regulatory impact assessment has been carried out and there is no evidence to support the contention that empty properties will be brought back into use as a result of this legislation. The vast majority of empty properties are not wilfully left unoccupied but unoccupied due to lack of demand.
This is bad legislation, which will only add to the problems already faced by the business community and others. Consequently, the Scottish Conservatives will vote against the bill this evening.
We now move to the open debate. I remind members that speeches are four minutes. If everybody keeps to their four minutes, it will ensure that everyone who has requested to speak will be called.
16:39
I come to this debate as a relatively new member of the Local Government and Regeneration Committee. I was not a member of the committee when the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill was debated at stage 1. That said, it is clear to me that not all property owners have been vigorous in their approach when dealing with long-term empty properties.
The proposal to give local authorities a provision to increase council tax charges on long-term empty properties will have the effect of positively dealing with long-term empty homes. Equally, I know that various agencies, including the national review of town centres, have been involved in the discussion around how best to regenerate town centres.
There was general agreement by the Local Government and Regeneration Committee of the principles as outlined in the legislation, although some clarification of the proposals was desired.
Clearly, some sectors of the business community, such as the Scottish Retail Consortium, are not satisfied with regard to the business rates relief issue. The proposal has been described by some as contentious. With regard to the proposal that businesses will get a 10 per cent discount on unoccupied properties, the actual situation is that business have not shown sufficient incentive while they have received a 50 per cent discount on unoccupied properties.
I know that the minister gave a commitment at stage 2 that confirmed the Government’s intention to introduce future regulations to reform empty property rates relief and create a new incentive for new occupation of long-term empty shops and offices. The fresh start scheme aims to provide business rates relief for a year and encourage new occupants of offices and shops that are lying empty.
At stage 2 of the bill, the Government allayed the concerns that were noted during the stage 1 debate, particularly in relation to the fine for not registering an empty property going up from £200 to £500. I know that that is a matter of discretion for local authorities, but I hope that the minister keeps it under constant review and thinks about whether the revised figure is sufficient, as it is not even a week’s rental income for some owners.
The light-touch regulation that is associated with the landlord registration scheme came in for some criticism from me and others in the previous session of the Parliament. I trust that we can move forward and that the legislation assists in that process.
The intention of getting empty properties back into use is of real merit as, according to Shelter, there are around 23,000 long-term empty houses. The issue is brought home to me when I see people who seek housing looking enviously at an empty property in a village of pressured-area status, wishing that they could call that their home, but that property has been lying empty for a number of years and the owner has no intention of letting it or selling it on.
The issue of regenerating our existing town centres is a tall order, especially when there are out-of-town shopping centres that are geared towards cars, which makes the retail decision for some consumers not exactly a difficult choice. There is a lack of parking spaces in towns throughout certain parts of—
You need to start to bring your remarks to a close.
Thank you, Presiding Officer.
In many ways, the traditional town centre has been losing out as a result of wider societal change, and the challenge is for it to find new ways of doing things differently and better. I hope that the bill will be a step in the right direction and will encourage landlords to think seriously about renting out properties so that the market can gain a foothold in the town centres that are currently being blighted by the number of empty properties that exist.
16:45
I want to express my concerns on the challenging process and the questionable content of the bill.
As a member of the Local Government and Regeneration Committee, I have been involved with the progress of this bill from its inception, and I have consistently been disappointed by the lack of compromise on the part of the Scottish National Party Government at each stage. Not one Labour amendment has been accepted during the process.
With more than 100,000 empty properties in Scotland, I recognise that there is a serious issue and that the regeneration of these buildings must be a priority. High streets and city centres are too often blighted by derelict buildings, unoccupied properties and abandoned offices. That must be addressed, and I encourage the Scottish Government to invest in our town and city centres in order to tackle that growing problem.
However, a principal aim of the bill is to encourage economic growth and allow our local communities and small businesses to develop. How can that be achieved when councils across Scotland are telling the Scottish Government that they will have to demolish buildings in order to survive the economic implications of this ill-considered bill?
In such a challenging economic environment, the Scottish Government’s proposals fail to take into account the many public bodies that will have either to sell off or to pull down buildings simply to maintain current budgets. The proposals also fail to consider the negative impact that the measures will have on future planning processes, where buildings have been designated for long-term reallocations. Local authorities, health bodies and other public bodies are deeply concerned by the uncertainty and unnecessary challenges that the measures contained within the bill will bring.
Despite that, the Scottish Government continues to claim that the bill will have a positive impact on our fragile economy and somehow encourage growth in our town and city centres. The bizarre belief that charging small businesses and public bodies more for disused buildings will result in fewer unoccupied properties is both misinformed and unfounded. The assertion that the measures will generate much-needed funds for the public purse is shamefully short-sighted, given that the Scottish Property Federation has estimated that around 20 per cent of the additional revenue generated by the bill will come directly from public bodies.
The Scottish Government has consistently sidelined the concerns of public bodies, small business owners and town planners. It is shameful that there has been such poor-quality dialogue and discussion from the SNP Government and, if passed, the bill will be poorer and substantially less effective as a direct result.
16:46
I am extremely pleased to speak in this debate. I do so not in a cold or academic way, because the town that I represent, and in which I was born, has already been mentioned today in a rather negative tone by a Labour front bencher. For me, the town of Paisley provides a perfect example of how we can use this bill as a tool to regenerate our town centres.
In Paisley, we have a situation where about half a mile of the high street is owned by about 90 different individual landlords who have shops that are now just sitting empty. No one knows who currently has the lease if there is a need to gain entry to those properties. During the election campaign last year, I said that I would represent the people of Paisley—I made a pact with them that I would put their case forward—and the high street in Paisley is one thing that has constantly been discussed in the town over the past 10 to 15 years. With the bill, we are going beyond just talking about the issue and are actually doing something about it. Instead of just sitting and constantly complaining and debating backwards and forwards, we are putting something forward that will make a difference in towns across the whole of Scotland.
Earlier today, I met two young constituents who were in the public gallery. They are not there now—stage 3 was obviously just too exciting for them—as they have left to meet the Kingston bridge. They came here and they wanted to see the debate because, the minute that we mentioned the bill, the two of them right away, without prompting or anything else, said, “That’s the bill that could make the difference in our high street.” Now, this is the vision thing that we have to remember: none of us in this chamber got involved in politics to stand here for two-and-a-half to three hours debating non-stop for no reason. We came here and we got involved to make a difference in our communities, and that is exactly what the bill will do.
The member mentioned that he consulted two children. Did he actually consult any businesses in Paisley regarding empty properties?
Ironically, anyone who had listened earlier would know that our problem in Paisley is trying to retain people because of previous Administrations in Westminster, including Labour Administrations.
Does the member welcome the fact that we consulted businesses on this issue, including the business improvement district steering group, which supports our direction of travel in relation to empty property rates relief?
Yes.
We have talked about Mr Hume’s contributions to the debate. We must remember that some organisations take a purely business perspective and do not consider the greater good of a community or town. Some people involved in the property cartels that own properties in my area probably do not know where Paisley, Penrith or Perth is. They own property purely because it is part of their property portfolio, and they do not consider the community. The bill will make a major difference for towns such as mine.
The bill will be part of an on-going programme from the Scottish Government that looks at practical ways to regenerate our town centres. That means delivering on a promise that I made to the voting public in Paisley. The bill will benefit the whole country. Some see debates as some academic way of hitting each other. For me, they are about the people whom I represent—the people of Paisley—and about the people of Scotland. The bill will go a long way towards us delivering for them.
16:51
I supported the bill’s objectives, but I have not been convinced that it will achieve those objectives. The lack of evidence for and the shakiness of some of the assumptions that underpin the bill are such that the jury is still out on its effectiveness and on whether some actions could be counterproductive.
As I have previously said, I am disappointed by the way in which the bill has been handled, which has been disrespectful of our democracy and our Parliament. Was it acceptable that information that the Scottish Government promised to supply on finance to assist with stage 2 deliberations was not received until the evening before the meeting when the Local Government and Regeneration Committee was to debate amendments? That was far too late to shed light on issues that had a bearing on amendments, and it followed a late response at stage 1 and difficulties in obtaining the Finance Committee’s assessment. We also had to contend with committee changes at stage 2; new members had not been involved in the evidence gathering and the debate.
It should be noted that reviews of business rates, local taxation and town centres are being undertaken, all of which have a bearing. Despite that, the reasonable request for more time and further information was given short shrift.
As a result, we are being pushed to sign a blank cheque with inadequate information about what it will be used for and what the impact will be. What does that say about the careful and proper consideration of legislation that we are supposed to undertake? It says that, despite the battering that it has taken, the Government is determined to undermine its credibility further and reduce it to a new low.
We are left with legislation that could have an adverse impact and do more harm than good. The affirmative procedure has been denied us, but the regulations can still be given proper scrutiny, if SNP members do not block that. I say to them, “Don’t be afraid—accountability and scrutiny are supposed to be part of the democratic process.”
16:53
I thank all the folks who gave evidence to the Local Government and Regeneration Committee and I thank the members of that committee and the clerking team.
One of the most pleasurable aspects of dealing with the bill was that some of us took a trip to Shetland and gained a huge amount of knowledge in the short time that we were there. I am really glad that the Government has recognised the plight of Shetland Islands Council and has moved to try to alleviate some of its difficulties. That is to be applauded and shows that the Government has listened to the Shetland case.
The Government has listened on a number of other issues, too. As George Adam does, I want to see empty properties being brought back into use. The target is 5,500 properties across Scotland, and I hope that that is achieved. The fact that the Government has listened is shown by the fact that it has said that it will introduce the fresh start scheme. That scheme will operate similarly to the scheme that was introduced earlier in the year in Northern Ireland; it will provide 50 per cent relief for 12 months for properties that are brought back into use after being empty for a year. The Federation of Small Businesses said:
“A rates discount for properties brought back into use is a great idea that we hope can be made to deliver for Scottish town centres and high streets ... The details of the scheme will be crucial to its success and we hope that all sorts of small enterprises can benefit.”
I am sure that the minister will continue his discussions with the FSB and others to ensure that the fresh start scheme is a success.
We did not hear much—I mean in particular from the Con-Dem partners—today about the situation in England and Wales. The scheme that operates there is somewhat different, and I have to say that it is not as good as what is proposed in Scotland. Robert Neill, who was a junior minister at the Department of Communities and Local Government, has said that the coalition has
“no immediate plans to reverse”
the 2008 reforms—reforms that I believe are not as good as the bill that we are debating today.
If we look around our constituencies and nearby, we see that there are, without doubt, property owners who deliberately keep their properties empty for whatever reason. They are being subsidised to do that by not having to pay the rates that they should be paying. I will give an example. In my old council ward of Northfield in Aberdeen, which is in Brian Adam’s constituency of Aberdeen Donside, there is a set of shops that have been empty for 13 years. It is not as though offers have not been made for them; for example, there was a suggestion that they could be taken over for community use, but that was rejected by the owners, for whatever reason.
Although a lot has been said about the doom and gloom in the economy, in many parts of the country—including my patch—where the recession has not hit as hard as it has hit elsewhere, we have property owners who are deliberately keeping properties empty. That has to be resolved.
As I said at the start of my speech, the Government has listened. It has listened in the case of Shetland Islands Council and it has listened to small businesses and has come up with the fresh start scheme. I hope that the Government will continue to listen to those who are affected—I see the minister nodding—and that we will see 5,500 empty properties being brought back into use sooner rather than later.
16:58
I start by expressing my appreciation of the minister’s last-minute announcement about her phone call today with Shetland Islands Council. Although there is no detail on that, it is proof that my colleague Tavish Scott’s amendment has pushed the Government to act, finally, on the Shetland question.
This has been a disappointing day for business and for jobs in Scotland. The bill is a clear message from the Government that it is not open for business and that it wants to tax businesses at a time when we should be encouraging them. In particular, we should be encouraging them to invest in commercial property so that Scotland can be primed and set to grow out of the recession.
The Government did not carry out a timeous business impact study on the consequences of the bill and it failed to deliver a consultation on time and it has not considered the committees’ views on the implications of hammering hard-hit businesses that employ people. The bill will make it more expensive to provide job opportunities, and businesses that are at the heart of our struggling town centres will struggle to invest to bring life back into the hearts of our communities.
The Government has a majority, just, but it is intent on bulldozing its ill-thought-out plans into the very parts of Scotland that are struggling just now—our town centres and businesses that employ Scottish people.
I used a lot of quotations in my previous speech, and could use others. Members have said that the bill will have a devastating impact on Scotland’s most economically vulnerable regions, that it will be a deterrent to new commercial development, that it will be a barrier to investment in our ailing town centres and that it will stifle and suppress growth. Therefore I do not agree with Kevin Stewart; the Government has not listened fully to those who know better. Instead, it has shown its true colours in being neither open for business nor having considered the effects of poor legislation on the economy and on jobs that are much needed at this time.
The bill in no way encourages businesses to let their properties to other businesses, and it positively discourages investment in the commercial property that is, as I have stated, needed to boost Scotland out of recession and to boost our town centres, and which is at the heart of job creation in Scotland.
Why ignore concerns and threaten jobs only to gain some rates from business in the short term? If this Government had listened and consulted—
Will the member give way?
The minister can address my comments in his summing up. If this Government had done that, it would not be threatening business growth as it is today.
At question time this afternoon, Fergus Ewing stated that
“small businesses are the backbone”
of Scotland and that they create jobs. However, those are the very small businesses that are being kicked in the back today. We will not support the bill.
17:01
In 13 years as a member of this Parliament, I have seen quite an array of legislation go through. Some of it was vital, and some of it was technical in nature and, at times, bewildering in its meaning and outcome. Some of it has tested my loyalty to the maximum and some that this Government has introduced since it came to office has tested my ability to treat it at face value and give it my support. I have supported some legislation and afterwards regretted having done so.
However, without doubt, the bill that is before Parliament today is the worst that I can recall in respect of its policy intention and technical merits. It has been badly conceived and intransigently pursued in a way that I have never experienced and hope never to encounter again.
I strongly opposed the Offensive Behaviour at Football and Threatening Communications (Scotland) Bill and take pride in having voted against it. However, in doing so, I was always prepared to believe that the Government was genuinely seeking to address a major problem in Scottish society, even if I fundamentally disagreed with the efficacy of the proposal and its potentially detrimental unintended consequences.
However, this bill has nothing whatever to commend it. It is not properly evidenced. In fact, it is not just poorly evidenced; it contains no evidential sustenance at all. Previous speakers have highlighted the root-and-branch flaws in the bill, but I will quote the Scottish Chambers of Commerce to highlight just how badly the bill sits. It said that
“the Scottish Government is demonstrating, at best, a total lack of understanding of the pressures facing business in Scotland today”.
Although evidence on the legislation that was introduced in England in 2008 is there for all to see, the Government refuses to take it on board. There are truly none so blind as those who will not see.
I will ask Michael McMahon the same question that I asked Sarah Boyack. What evidence is he specifically referring to?
I refer the minister to the evidence that was given to the Finance Committee by the Scottish Property Federation, but there is more than that. The CBI, among others, has looked at and provided evidence on what happened in England—the detrimental impacts and the businesses that have been knocked down instead of being regenerated. The evidence is there, but the minister does not want to see it.
As far as England is concerned, the evidence that was received by the Finance Committee was that no one knows whether the problems with property are a result of the downturn in the economy or the legislation. There is no evidence.
You have taken interventions, Mr McMahon, so I can give you a little more time.
Thank you very much, Presiding Officer.
John Mason was at the Finance Committee and heard the evidence to which I have just referred. The Government was asserting that the bill will bring 5,000 empty properties back into circulation, but there is no evidence whatever to back that up. Whatever John Mason wants to say about what has happened in England, we know that the legislation there has had a detrimental impact. It was introduced at the wrong time and in the wrong way—and it was a Labour Government that introduced it. Why would the Government want to copy what is being done at Westminster when that has not worked?
The fact is that the Government evidence that was brought to the Finance Committee was shot through with holes that were created by false assumptions and downright mistakes in the costings that were presented.
After listening to the arguments that were conveyed clearly by the business community, local authorities and others, and which have been reiterated in the debate this afternoon, and in the absence of any credible rebuttal from the Scottish Government, there is no course of action available to me today other than to oppose the bill as vigorously as I can, and that is what I will do.
17:05
The first fundamental question to ask about any bill is whether there is a problem that needs to be addressed. The obvious answer in this case is, “Yes.” It is clear that there are far too many empty homes and properties throughout Scotland, and I think that there is political support throughout the chamber and the country for that issue to be addressed.
However, the second question that we must ask about any legislation is whether it will solve the problem that it is designed to tackle. In answer to that question, there is a resounding “No.” No evidence whatever has been presented, either in written form or at committee, or even at a late stage by the Government, to suggest that the legislation will have any impact on the problem.
We keep hearing the magical figure of 5,500 properties. Kevin Stewart repeated that figure, saying that the target is to bring back into use 5,500 properties. However, when the bill team was asked about the figure, it said clearly that 5,000 is the number of properties that will be affected by the increase in the tax. That is the number of properties that will be hit, not the number of properties that will be brought back into use.
Will the member give way?
I will accept an intervention at any time—even from Mark McDonald.
Looking at the issue purely on first principles, does Mr Brown believe that subsiding empty properties is a justifiable and good use of taxpayers’ money?
Scottish National Party members keep referring to “subsidising empty properties”. The position is very clear; there are several thousand properties throughout Scotland that the owners are, because of market conditions, unable to let or sell, through no fault of their own. If we look at the numbers of such properties 10 years ago in comparison with the numbers today, it is apparent that the vast majority are empty because of market conditions. I will turn the question round, and ask whether it is fair to penalise those people by almost doubling their tax overnight purely because they happen to be unlucky. As Margaret Mitchell said, it is a “tax on distress”.
The minister wanted to talk about evidence. The Scottish Government has provided no evidence at all that the bill will have any impact on the number of properties in use. We heard time and again evidence to that effect in the Finance Committee and in the Local Government and Regeneration Committee. I have read every single submission that was made to each committee, and I sat in on every evidence session in the Finance Committee and read the Official Report of every evidence session in the Local Government and Regeneration Committee.
I cannot identify a single person—other than the Government or a minister—who thinks that the bill is a good idea. Every single organisation—not just the business organisations, as Patrick Harvie pointed out—presented its fears and concerns. The submissions included evidence from business organisations, as members have outlined. I will not repeat the names, but it was pretty much all of them. However, the submissions also included evidence from organisations such as the Association of Town Centre Management and the enterprise trusts. The Convention of Scottish Local Authorities was slightly cagey about the bill, and councils such as Glasgow, Falkirk and Fife expressed serious concerns about it. We even heard an NHS body express deep concerns about it.
For those reasons, there is a broad consensus against the bill. The only people I can find who think that the bill is a good idea are from the Government and the team that presented the bill to us.
Earlier this afternoon, I spoke on the subject on the BBC alongside Mr Brown’s colleague, Jackson Carlaw. The BBC had spoken to representatives of the Aberdeen business improvement district who welcome the legislation and think that it will be beneficial in bringing empty properties back into use. Perhaps Mr Brown wishes to take that on board.
If that is correct, perhaps that organisation should have submitted evidence to the committee when it was considering the bill. However, I would be astonished if any business organisation thinks that the legislation will bring empty properties back into use, because there is no evidence to suggest that it will.
Let us consider the Scottish Government’s own enterprise body, Scottish Enterprise, which is charged with helping the economy and business across the country and has a fairly large budget with which to do so. As of yesterday, it has 400 empty properties across Scotland that it has been unable to shift. If the enterprise body has 400 commercial properties that it is unable to shift, how on earth can we expect smaller organisations and businesses to shift their properties?
Will the member take an intervention?
I am afraid, Mr Brodie, that my time is up.
We are left with a total turkey of a bill. On that basis we will oppose it, come decision time.
17:11
Members have highlighted their fears about the impact that the bill is likely to have on our hard-pressed business community.
Labour members started from the principle of supporting the idea behind the bill of bringing empty properties back into use, so we interrogated the proposals and listened to the concerns that were raised by stakeholders. John Pentland and Michael McMahon both highlighted the procedural problems with the handling of the bill and the evidence that was presented on the bill.
No doubt the minister will remonstrate with those who bring him unhappy news, but the number of major shopping centres being constructed is at a 20-year low. That is partly due to the recession but, in representations to us, the organisation that deals with the construction of shopping centres in the UK has been firmly of the view that the additional burden that would result from businesses losing their empty property rates relief once they had built new properties is a financial risk that they cannot afford to take. Their financial calculations have been altered not only by the impact of the recession—by people not shopping—but by the lack of finance from banks.
Problems in the business sector have been reported to us. We know that the number of empty properties in England and Wales has increased from 5 to 15 per cent during the period concerned.
We welcome the changes with regard to empty housing that have been made to the bill. Local authorities will now have the appropriate discretion and can decide when, how and where to use the provisions in the bill. They will be able to place more realistic penalties on those who do not co-operate by providing the appropriate information. However, we all know that the provisions in the bill on their own will not be enough to bring back into use the estimated 23,000 homes that Shelter estimates are lying vacant. Shelter is right to say that a package of measures is needed, including advice and information for the owners of empty homes and incentives such as loans and grants to bring homes back into use.
Glasgow City Council has suggested that the power to use enforced sale procedures, which exists in England, should be included in the community empowerment and renewal bill. I hope that the minister will give that suggestion serious consideration. Such a power would enable the council to force a property sale without the requirement for a public inquiry, and the council would not have to own the property. I hope that the minister will look at the proposal positively.
We all know that councils are cash strapped. One of their main concerns is whether they have the staff and the resources to put in place the mechanisms that will enable them to use the powers in the bill in practice. Councils are working extremely hard to deal with the huge pressure on them, particularly on their housing departments, to help people who are struggling to make ends meet and keep their houses, following the Tory welfare reforms.
Those are the circumstances in which the legislation will be tested. We question how extensively the powers will be used by local authorities. They will not be a magic bullet. The Scottish Government could do more to provide publicity and information so that the legislation is drawn to householders’ attention and they are informed about the provisions. The minister should make a commitment on that. When the statutory instrument is passed by the Parliament—as it no doubt will be—clarity for householders and other affected stakeholders will be crucial, so that they understand the process.
As a result of the massive unpopularity and problems on the non-domestic rates side, the housing element of the bill has not received the same representations and lobbying as it might otherwise have done. The minister will have to ensure that there is maximum publicity and that local authorities are supported by decent guidance on how the statutory instrument will be implemented.
There is a supreme irony in the fact that the Scottish Government is using the council tax—a tax that it does not believe in or think credible, and which it is committed to abolishing—to bring empty homes back into productive use. I would be interested to hear from the minister in his closing remarks how he thinks that abolishing council tax and introducing the hated local income tax would help in the circumstance of bringing empty properties back into use.
As many members have said, the bill contains fundamental flaws. We think that the SNP should have taken the non-domestic rates element off the table and explored it properly before bringing it back to the chamber.
The bill will be voted through, regardless of the representations that have been made. The minister will not get his £18 million—he has already revised that down to £16 million—but businesses will take the hit for this policy. It will make their struggle to get through the economic times in which we are living and to create jobs harder.
There have been some positive elements in the housing provisions, but not enough to make us vote for the bill. The NDR proposals are fundamentally flawed and the SNP Government is letting down the business community by not acknowledging the problems that the bill will create.
It is right that local authorities will have access to new powers on housing, which they think will make a positive difference. However, we believe that the Scottish Government has set the potential increase too high, and we hope that local authorities will reflect on that view when they come to use those powers. Council flexibility and local strategic approaches will be vital, because the powers on their own will not be enough. House owners will need support. People with empty properties have not automatically decided to have those properties empty; there are many reasons why people’s properties are unoccupied. People will need support with marketing their properties and with gaining tenants, which is why we think that a proper approach is needed. The bill will not be sufficient. The guidelines that will accompany the proposals will be crucial and the Scottish Government needs to get the detail right.
The key point is that this will be unfinished business for all of us. There are many unanswered questions and concerns about the proposals, and the detail will be absolutely crucial. I do not believe that this will be our last discussion on the bill. We will have to come back to the bill, because it will create more problems than it can ever solve. It will be Parliament’s job to scrutinise the minister’s actions and put pressure on him so that the bill will not be left where it is, and so that more action will be taken to give businesses and hard-pressed householders practical help, not just give them a problem with the bill.
I call Derek Mackay to wind up the debate. Minister, I would consider it a favour if you would continue until 17:29.
17:18
I would consider it a pleasure to continue until that time—[Laughter.] After those popular opening remarks, I begin with the least controversial part of the bill—the housing support grant. Shetland Islands Council has benefited from that and indeed will continue to benefit from it, as a result of an offer made to the council and accepted by its leader. I would say to Tavish Scott—who is not here at the moment—that that goes to show how strong ministerial assurances are in the Scottish Government, and that we can deliver on our promises, as we have done in this instance. I believe that the policy intention of the other elements of the bill will be delivered, too.
There is a great deal of consensus around the empty homes action and it is right that local authorities will have the discretion to choose which level will be appropriate for their local circumstance. Anne McTaggart made the point that perhaps 50 per cent will be more appropriate in some circumstances, but it will be for local authorities to choose whether they apply 0, 50 or 100 per cent on top of the council tax for empty properties.
It has been suggested that we have not taken on board many of the Opposition’s comments. In fact, at stage 2 I moved a number of amendments on behalf of the Government that were a consequence of listening to stage 1 proceedings and other contributions to the debate. For example, we capped the council tax increase at 100 per cent at the request of the appropriate committee.
Sarah Boyack asked about local income tax. We will consult on that during our current term in office. We would want to look at any policy implication, including how we could bring further properties back into use.
On a more controversial subject, we must tackle the blight of empty commercial properties, particularly in our town centres. I am still at a loss to explain why Opposition members do not get the rationale that it is simply unfair for a Government to make it cheaper to keep properties closed than it is to open them up for economic regeneration in local communities. It would be wrong to suggest that there is no support for our policy. There is a great deal of support for the policy, whether it is for travelling to business improvement districts or from local communities who do not see why their taxes are contributing to a subsidy to keep properties closed.
Margaret Mitchell was wrong to suggest that the rates relief system in Scotland is less generous than the system in any other part of the United Kingdom. In fact, the relief that we give to Scottish business is more generous than the relief in any other part of the United Kingdom. It now costs more than £0.5 billion but is targeted appropriately at local businesses. Three in five premises in the commercial sector pay zero or reduced business rates as a result of the policies of this Government, which the Conservatives used to support but voted against at the last budget.
Can the minister confirm that, as a result of the Government’s policies, businesses in Scotland are now facing more than £150 million more in taxation than businesses south of the border, in the form of the retail levy and the unoccupied properties tax?
I can confirm that the rates relief offered in Scotland is more generous than the relief offered in any other part of the United Kingdom. The poundage delivered by this SNP Government was matched to the poundage in England, which was more generous than the position under the previous Labour Executive or the Conservatives.
On the subject of consultation, I would argue that to have ticked a box on a BRIA and left it at that would have been unacceptable in the circumstances. That is why I have engaged with many members in the private sector—
Will the minister give way?
I would like to make progress. There are a number of questions to which Gavin Brown wanted answers.
There has been on-going consultation, engagement and refinement of our policy, such as the fresh start initiative. I cannot believe that the Liberal Democrats will vote against that, as it delivers an incentive to provide rates relief to those people who bring unused properties back into use, which is a position that they supposedly support.
I will return to Parliament to ensure that the regulations are given the robust interrogation that members would expect, consistent with equivalent reliefs such as the small business bonus scheme. I have committed the Government to post-legislative scrutiny so that we can test the impact of the policy in our communities.
The Conservatives have talked about “a tax on distress”. I bow to their experience in delivering taxes that cause distress. For example, the VAT rise cost Scottish business and Scottish consumers £1 billion. Where was the BRIA for that? Their approach was to apply VAT when people were trying to refurbish listed properties in Scotland. This is not an operational tax; it is a property tax.
If I heard the minister correctly—I wrote down what he said—he suggested that carrying out a BRIA would have been just ticking a box. BRIAs came about as a result of the regulatory review group—an outstanding group that was set up by the Government and by Mr Swinney in particular. The group is an excellent idea that can make legislation far better. Will the minister retract his statement that carrying out a BRIA is simply ticking a box?
I support the BRIA approach, but the level of engagement that I have deployed in relation to empty property rates relief is better than that which it would have received through a BRIA.
Will the minister give way?
Please let me make some progress.
I asked a number of Opposition members for the evidence and the response was, “You know, the evidence.” I have looked at the evidence and, in particular, the Lambert Smith Hampton report that was published by the Royal Institution of Chartered Surveyors, which Margaret Mitchell wanted me to look at. That report identified that there had been an impact in England and that there had been demolition of properties to avoid non-domestic rates. However, that related to industrial properties, so this Government’s response was to exempt them from the variation. That shows that we have responded to concerns.
I have further evidence in support of the Government’s position. The Association of Town Centre Management Scotland has been mentioned. Its most recent statement welcomes the plans to offer businesses entering long-term vacant property a 50 per cent discount for the first 12 months under the fresh start scheme as a credible package of measures to support town centres and high streets that is being introduced by the Government. It states:
“We think this can help stimulate growth in the economy.”
The minister, rather flippantly, waved about the Lambert Smith Hampton report. Where in that report does it say—as he said—that only industrial property had been demolished?
The bottom paragraph of page 2 states:
“The sector most impacted by APR was industrial property.”
“Most impacted”. Right.
It seems a logical response for the Scottish Government to exempt industrial property, just as we have done with listed property. Our range of reliefs will still be more generous than that in any other part of the United Kingdom.
I have cited other areas of support, but it was the UK Conservative Government’s command paper that said that there was no evidence to suggest that the variation caused any disturbance in the private sector because of the other factors that were in play. Indeed, it said that to change the policy would be “unaffordable”.
The Labour Party’s responses were most disappointing, because the legislation is about incentivising the use of empty properties. It is about making savings, too. The £2.3 billion that is raised through non-domestic rates goes to public services. Why does the Labour Party talk in terms of what is on and off the table? Why does it say that free prescriptions are not to be delivered and that free education, personal care, travel and a council tax freeze for hard-pressed families are unaffordable, but that the £18 million subsidy to businesses to keep their premises closed is on the table and affordable? That says much about the Labour Party’s sense of priorities.
Will the minister give way?
I am in my final minute.
It is fair to say that an empty property rates relief policy, which was invented by the Labour Party and continued by the Conservatives and the Liberals, is not one that the SNP Government would naturally feel a sense to adopt—and we have not adopted it in the form in which it affected England. We have refined the policy and we have mitigated the impacts in Scotland by providing exemptions. In considering the most generous package of rates relief in the United Kingdom and in looking at the incentive scheme in Northern Ireland, we have ensured that we have the right balance to tackle the blight of empty properties in our town centres and empty homes across Scotland. We have ensured that we deploy appropriate policies that contribute to the regeneration of our country and which, importantly, sustain the budget that Mr Swinney has balanced for a number of years.
All that we have heard from the Opposition is opportunism and a lack of alternatives. I commend the bill to Parliament to ensure that we tackle the issue of blight across Scotland.