Rating Surcharge on Unused Office, etc. Property

Local Government Bill – in the House of Commons at 12:00 am on 22nd January 1974.

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' The following sections shall be inserted after section 17 of the principal Act:—
"Liability to progressive surcharge in respect of unused office, &c., property
17A.—(1) If for a continuous period exceeding six months a commercial building is not used for the purpose for which it was constructed or has been adapted, its owner shall pay in respect of that period (the ' period of non-use ') a surcharge additional to the rates (if any) payable apart from this section.
(2) Subsection (1) of this section shall not apply where—
(a) the owner has tried his best to let the building, or
(b) the condition of the building makes it unfit for use for the purpose for which it was constructed or has been adapted, and it cannot be rendered fit at a cost
10which is reasonable in relation to the value of that use.
(3) Where the owner is in occupation of the building throughout the period of non-use, the surcharge shall be levied in the form of rates by doubling the normal rates for the first twelve months of the period of non-use, trebling the normal rates for the second twelve months, quadrupling the normal rates for the third twelve months,
13and so on progressively while the period of non-use lasts.
In this subsection 'the normal rates', in relation to any period, means the rates payable in respect of that period apart from this section (taking rates as accruing uniformly from day to day); and where the period of non-use extends through part only of any twelve-month period, the surcharge shall be calculated by reference to
20the normal rates for that part.
(4) Where the owner is not in occupation of the building throughout the period of non-use—
(a) the amount of the surcharge shall be the same as it would have been if the owner had been in occupation of the building throughout the period of
25non-use, and
(b) the surcharge shall be levied in the form of rates of that amount as if they were payable by the owner in respect of that occupation.
(5) In determining whether or not the owner has tried his best to let the building, regard shall be had to the following, as well as other relevant factors—
30(a) the rent sought, compared with rents of similar properties in the area,
(b) the other covenants and conditions required by the owner to be contained in any proposed lease,
(c) whether or not the owner indicated to prospective lessees that he was prepared to let the building in parts,
35(d) the number and resources of the firms of estate agents retained for the purpose of letting the building, and
(e) the nature and extent of advertising of the building by the owner or those agents

There are many such instances in which local authorities can operate the powers of this clause to relieve people of a great deal of distress and misery, particularly when they run into unexpected hardship. I thank the Government for tabling the clause and am certain that it will be welcomed by local authorities throughout the country.

Photo of Mr Hugh Rossi Mr Hugh Rossi , Hornsey

Subsection (5) permits advances to be made for mixed premises which are both residential and commercial. That is to meet the case of the small shop with living accommodation over it. To that extent, perhaps we have gone a little further than even the hon. Gentleman hoped.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Supplemental provisions as to section 17A.

17B.—(1) A rating authority may serve a notice on the owner of any commercial building requiring him to make a written return containing such particulars as may be reasonably required by the authority for the purposes of section 17A of this Act ; and subsections (3) to (6) of section 82 of this Act shall apply to a notice under this subsection as they apply to a notice under section 82, as if—
(a) the reference in section 82(3) to the valuation officer were a reference to the
45rating authority, and
(b) the penalties laid down by section 82(4) and (5) were—
(i) on summary conviction, a fine not exceeding £400; and
(ii) on conviction on indictment, imprisonment for a term not exceeding two years, or a fine, or both.
50(2) References in section 17A of this Act and this section to a commercial building are references to a hereditament (not being a dwellinghouse, or a hereditament having a floor space not exceeding 240 square feet and used as a lock-up garage) whose net annual value falls to be ascertained under section 19(2) of this Act; and if during a period of non-use a commercial building is divided into two or more
55hereditaments, the amount of any surcharge imposed under section 17A of this Act in respect of any of those hereditaments shall be the same as if it had been a separate hereditament from the beginning of the period of non-use.
(3) A surcharge imposed under section 17A of this Act in respect of a hereditament shall until recovered be a charge on the land comprised in the hereditament;
60and for the purposes of the application to such a charge of section 15 (registration of local land charges) of the Land Charges Act 1925 this Act shall be deemed to be a similar statute to the Acts mentioned in subsection (1) of that section.
(4) Where a hereditament which is not used for the purpose for which it was constructed or has been adapted becomes so used on any day and becomes not so
65used again on the expiration of a period of less than six weeks beginning with that day, then for the purpose of ascertaining any period during which the hereditament has been continuously not so used, it shall be deemed to have remained not so used on that day and during that period.
(5) A hereditament shall be taken to be used on any day for the purpose for
70which it was constructed or has been adapted if, but only if, not less than four-fifths of it was so used on that day.
(6) Schedule 1 to this Act (except paragraphs 1, 2(c) and (d), 6, 12 and 14) shall apply for the purposes of section 17A of this Act as it applies for the purposes of section 17 thereof, as if—
75(a) references to paragraph I of that Schedule were references to section 17A of this Act,
(b) references to a relevant hereditament or a relevant period of vacancy were references to a commercial building and a period of non-use respectively, and
80(c) references to three months were references to six months.
(7) In section 17A of this Act and this section ' owner ' means the person entitled to possession, and where different persons are entitled to possession of a hereditament during different parts of a period of non-use, a surcharge in respect of that period shall be apportioned between them according to the length of each part and levied
85accordingly.
(8) In the application of section 17(A) of this Act to the City of London, ' rates ' means the aggregate of the poor rate and the general rate.
(9) Section 17A of this Act shall not apply to any period before the passing of the Local Government Act 1974" '.—[Mr. Graham Page.]

Brought up, and read the First time.

8 p.m.

Photo of Mr Graham Page Mr Graham Page , Crosby

I beg to move, That the clause be read a Second time.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

There are also selected for discussion the following sub-amendments: (c), in line 20, at end insert:' (3A) Notwithstanding the provisions of subsection (3) above, the rating authority may with the consent of the Secretary of State after the first 12 months of the period of non-use levy by greater multiples of the normal rates than those specified above while the period of non-use lasts '.(d), in line 38, at end insert;'(f) whether or not the owner has made attempts to obtain planning consent to use the building for housing purposes as an alternative to commercial development and, if successful, has advertised the housing accommodation for sale or rent '. It is also convenient to discuss Amendment No. 9, in page 18, line 41, 'Clause 15 ', at end add: ' (6) Power shall be given to the rating authority to apply to the Secretary of State so as to impose an additional penalty rating of 50 per cent. where a property has remained unoccupied for a period in excess of two years '. and Government Amendment No. 21, in page 39, line 6, Clause 40, after 'II', insert: 'other than sections (Rating surcharge on unused office, etc., property) and 21 '.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

On a point of order, Mr. Deputy Speaker. May I ask for separate Divisions on sub-amendments (c) and (d) at the appropriate time?

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Yes, I think that that is in order.

Photo of Mr Graham Page Mr Graham Page , Crosby

I said in Committee when we were dealing with the subject of empty property that it was, on average, as great a responsibility to local authorities as occupied property, and that local authorities should have the power to rate empty property in full. That is dealt with in Clause 15(3)—100 per cent. rating of all kinds of empty property, and the discretion of the local authority to adopt that—apart from that, the keeping of commercial property vacant, with the inevitable result, at present, of an increase in capital values was an affront to society that warranted some penalty. I undertook at that time that if what I had in mind was capable of being drafted into good legislation I would ask the House at this stage to accept it in the Bill. It is here in the new clause. I regret that it takes up so many words, but it achieves its purpose.

The clause imposes a penal rating surcharge only on any commercial property not used for the purpose for which it was constructed, or for which it has been adapted, for six months, and which the owner has not tried his best to let. It may be that the phrase "tried his best" is new in legislation, but it expresses the intention. Elsewhere in legislation the phrase "used his best endeavours" and similar phrases have been used, but the phrase "tried his best" is good, ordinary English and it defines the occasions when a penalty should be imposed.

The surcharge will be 100 per cent. of the full rates on the property for the first year of un-occupation, the percentage rising by an additional 100 per cent. for each subsequent year. If I might touch upon one of the amendments to the new clause, I contend that we ought at this stage to lay down the specific penalty. We are laying down a penalty, and therefore Parliament should be specific about it. It would raise considerable difficulties if we gave local authorities, even with the Secretary of State's permission, a right to vary a penalty so that there might be different penalties in various districts. Therefore, we have laid down specifically this progressive increase of 100 per cent. for each year that a property remains unoccupied, provided that the other conditions which I have mentioned apply.

The surcharge is to be levied as if it were rates, additional to any rates for which the owner is liable in respect of rateable occupation not amounting to use for the purpose for which the premises were constructed or adapted, so that the clause should bite on the owner who puts carpets or curtains into the building. That would be a rateable occupation but not a use for the purpose for which the building was constructed. The surcharge is levied in addition to any empty property rate levied where the rating authority has resolved to adopt the provisions of the General Rate Act 1967, which relate to empty property rating.

Rating authorities will have no discretion whether to impose the surcharge. The penalties must be definite, and must not be left to the discretion of a rating authority. It would be inappropriate for a rating authority to have such discretion, as this is a matter of national policy and not primarily a matter of recompense to the local authority involved. It will be for the rating authority to decide where circumstances render an owner liable to surcharge. As a form of rates the income from the surcharge will accrue to local government and rating authorities will be responsible for recovering it from the owner.

There will be two avenues of appeal open to the owner if he wishes to dispute liability to surcharge. Hon. Members who were in Committee will recollect that one of my anxieties when we were discussing the proposal was that we ought to allow the innocent a proper right of appeal against the surcharge. Therefore, in the first place, because the surcharge is in the form of a rate, the owner could appeal against it to the Crown Court under Section 7 of the General Rate Act 1967. Alternatively he could wait until the rating authority endeavoured to recover the surcharge and make an appeal by way of defence to the authority's action for recovery, either as a simple contract debt in the county court or High Court, or as a charge on the property.

The clause is divided into two new sections, 17A and 17B. It would be wearisome if I went through them in detail. Generally speaking, their drafting is self-explanatory. Section 17A(2) exempts from surcharge any building which is unfit for use for the purpose for which it was constructed or adapted and which cannot be made fit at reasonable cost, and any building which the owner has tried his best to let.

Subsection (3) deals with the case I have mentioned, of rateable occupation which does not go so far as to put the property into use for the purpose for which it was constructed or adapted. If it is merely put into rateable occupation, without being put into use, the surcharge can be imposed on the owner.

Subsection (5) provides that in determining whether an owner has tried his best to secure a letting of the property the rating authority must consider, in addition to any other relevant factors, the rent in relation to the levels of rent locally ; the rent that the owner has been asking as compared with local rents ; and the other covenants and conditions which the owner has endeavoured to impose when offering the property on lease. It must consider whether the building is offered for letting as a whole or in parts, and whether it is reasonable perhaps to withhold the letting of parts with a desire to let the whole. It should consider the number and resources of firms of estate agents retained by the owner into whose hands he has put the property for letting, and the nature and extent of the advertising.

I think that we have included the relevant matters which should be considered. I shall not try to argue against an amendment which has not been put to the House. I say only at this stage that I think we have covered all that is necessary, but I shall listen to the argument on the amendment.

In Section 17B, subsection (2) is of importance. That defines what is a commercial building for the purpose of Section 17A. The definition we have used there has been used in other legislation. It is, unfortunately, defined rather by cross-reference and exclusion of other properties from a definition given in a section in the General Rate Act 1967. But I am assured that it covers what are generally known as commercial premises and the sort of premises which in common sense we wish to tax by the surcharge.

The surcharge will be calculated on any part of the original hereditament as if it had not been used from the beginning of that period of non-use, if the property is divided into two or more separate units of occupation and there is an effort by that means to escape from the surcharge

Subsection (3) makes the surcharge a charge on the land comprised in the hereditament registered as a local land charge, and provides for all that follows from the normal business of registering any charge on property as a local land charge.

Subsection (4) seeks to prevent the avoidance of the surcharge by making arrangements for short-term letting. It provides that if during the period of non-use the building is used for a purpose for which it was constructed or adapted for six weeks or less, that period is to be ignored in calculating the liability for the surcharge.

Subsection (5) defines the measure of use which is to be counted as use for the purpose of escaping the surcharge. The figure of four-fifths has been chosen to allow for the genuine user who is unable to put to good use a small part of those commercial premises, but to prevent an avoidance of the surcharge by putting only, say, 55 per cent. to proper use and ensuring that on balance nothing more than the 100 per cent. empty property rate could be levied. Subsection (7) defines the owner for the purpose of Section 17A.

Subsection (8) deals with a peculiar discovery we made, that the City of London charges not only general rates but poor rates. It obtains its revenue under two headings. If we had not spotted that, we should have had the extraordinary position that people in the City of London would have escaped a large part of the surcharge if they had had commercial property empty. That would have been a nonsense, and I am glad that my advisers discovered that little discrepancy.

8.15 p.m.

Subsection (9) excludes for the purpose of the new sections any period before the Bill becomes law, because it would not have been right to make it retrospective.

I shall not try to answer another amendment before it is put to the House. I shall listen to the points my hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg) wishes to make on his Amendment No. 9 and answer them later, with the leave of the House.

Amendment No. 21 is a Government amendment, purely consequential on the new clause. It is intended that the new Sections 17A and 17B shall be operative from the date of the Royal Assent. Amendment No. 21, to Clause 40, about commencement, provides that accordingly.

In Clause 21 the interpretation provision has also to come into operation at the same time of Section 17A and 17B are coming into operation at the date of the Royal Assent. Therefore, I ask the House to accept that amendment, consequential on the acceptance of the new clause.

It has not been an easy matter to draft what I think it is agreed on all sides we should try to do. It is easy enough to say in a few phrases what we want, but the drafting was not easy. I am extremely grateful for the advice I have received. I think that we have the clause watertight now, and that it will cause considerable satisfaction to the public by tackling what I have described as an affront to society, the practice of keeping properties vacant when they could be put to good use.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

Can my right hon. Friend confirm that the definition of the type of property includes warehouse and industrial premises in the word "commercial"?

Photo of Mr Graham Page Mr Graham Page , Crosby

Not industrial premises. We are tackling only the commercial premises. I should have to take advice on whether a warehouse is commercial or industrial, but my impression is that a warehouse used purely for the storage of industrial goods is industrial, not commercial.

Photo of Wing Commander Sir Robert Grant-Ferris Wing Commander Sir Robert Grant-Ferris , Nantwich

The two sub-amendments may be spoken to now and dealt with along with Amendments Nos. 9 and 21. But they will not be moved unless or until the new clause is given its Second Reading.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

I am obliged for that ruling, Mr. Deputy Speaker. I asked your predecessor in the Chair for a separate Division on sub-amendments (c) and (d), when the time comes, if necessary. But I appreciate that I do not move them now.

I welcomed the two previous new clauses introduced by the Government, but the honeymoon must now end. Although I think that the Minister is genuine when he says that to leave property such as Centre Point and other commercial properties obscenely empty in areas of acute housing and commercial need is an affront to society, the clause does little in the way of penalty for leaving them empty.

The present Secretary of State for Trade and Industry breathed fire and fumes in the House about the unacceptable face of capitalism and the Harry Hyams and Centre Points of this world. He threatened dire things that he would do instantly about such properties. He then left the Department of the Environment and the present Secretary of State for the Environment came in. We heard nothing about the terrible penalties that would be inflicted upon those who leave properties empty in this way.

Then along came the Chancellor of the Exchequer with his famous Budget Statement in December. There was a great deal of window-dressing. The right hon. Gentleman spent a lot of time talking about the dire penalties that he would inflict on the profits made on such premises, but when we analysed his statement we found that there was nothing that the property developer had to fear from the imposition of taxes. There was nothing in the right hon. Gentleman's statement to persuade the property developer to let or sell his property, because even after paying tax he could make more money merely by sitting on the property and doing nothing with it.

Now we have the right hon. Gentleman and the Bill hitting the property developer over the head with a feather duster. That is what the clause does. The capital gains on the property far outweigh any doubling, trebling or quadrupling of the rates, because at the current rate of inflation the capital value of the property itself doubles or trebles within the same period as the rates are increased, and there is therefore little pressure on or inducement for the property developer to use his property.

I should now like to deal with some of the phrases in the clause. I have never before seen in an Act of Parliament the phrase "tried his best". It may be, as the right hon. Gentleman said, that the simpler we can make the legislation and the more we can use ordinary English in it, the better it will be because everyone will understand it, and that includes the courts. But the right hon. Gentleman and I, as members of the legal profession, know that if one uses a phrase such as "tried his best"—which might almost be described as colloquial—in court, one makes a gift to the property speculators.

The legal advisers of the property speculators will twist those words inside out, because there is no proper legal definition of what is meant by "tried his best". I know of no statute which uses those words, nor do I know of any judicial definition of them. The point will be seized on quickly by the highly-paid professional advisers of property speculators and owners of empty property to defeat the clause even though it does not impinge upon the enormous capital gains being made. The phrase "tried his best" is an almost amateurish way of trying to deal with the problem. I am sure that Opposition Members, without the help of skilled parliamentary draftsmen, could find a more watertight expression than "tried his best". The clause goes on to try to define what is meant by that phrase. Who will make the decision? Will it be the rating authority, the local authority or the valuation court, or will some other court decide whether the owner has tried his best?

The whole of subsection (5) is fraught with difficulties. I appreciate the right hon. Gentleman's statement that it is difficult to find words to stop the loopholes which these property speculators find in almost any Act of Parliament, in the same way as rats and mice find holes into a dwelling-house. The Government are trying to tighten the legislation, but the use of the phrase the rent sought, compared with rents of similar properties in the area will give rise to difficulties. I say that because very often there are no similar properties in the area. It is, therefore, almost impossible to arrive at a determination of the proper rent because there is nothing with which to make a comparison. The other properties in the area may be old office buildings. We are dealing with a skyscraper and a different type of office building. There are no other skyscrapers in the area with which to make a comparison.

Paragraph (c) says whether or not the owner indicated to prospective lessees that he was prepared to let the building in parts". What is the size of a part? If someone proposes to let five floors at a time, he may have the greatest difficulty in finding a lessee who can afford to pay for such a large chunk of the building. How will this provision be determined? Will it be on the basis of floor space, the number of storeys or the number of rooms? How will this be defined by whoever has to make the decision on whether the man has tried his best?

The next factor is the number and resources of the firms of estate agents retained for the purpose of letting the building". I query the phrase "resources…of estates agents". I do not know what that means. I do not know that the number of estate agents is particularly relevant. It is the activities of the estate agents in trying to let or sell the property that matter. What the people who have to determine whether a man has tried his best have to decide is whether the estate agents—one or more of them—have tried their best to let or sell the property.

It does not matter whether it is a small firm of estate agents with little or no resources or whether there are one or 20 estate agents. What matters is the degree of endeavour in trying to let the property. A great deal of covering up could be done by estate agents who have the property on their books. When a prospective purchaser came along they could do nothing to advance the claims of the property or to push it in the way they might push other properties. The key determining factor should be the amount of effort that has been put into letting or selling the property, not the number of estate agents involved or their resources. A tiny firm of estate agents could do a better job than a multiple firm in letting or selling a property.

The next factor is the nature and extent of advertising of the building". This is a much better way of deciding what endeavours the owner has made to let the property, but does this go far enough in determining whether he has genuinely tried to let or sell his property? I do not think it does.

The provision needs to be strengthened, and we shall be endeavouring to do two things in the amendments to which we shall come later. The first is with regard to the penalty levy. Under the clause as it stands, in the first year the rates on the property will be doubled. The next year they will be trebled, the year after they will be quadrupled, and so on progressively year by year. That is the design of the clause.

8.30 p.m.

What we endeavour to do in amendment (c) is to say that in certain circumstances it is not enough merely to double, treble or quadruple year after year the rates of property, because the property speculator, just as he can under the Chancellor of the Exchequer's measures, can pay penal rates on property and still find it far more profitable to leave it empty rather than sell it. It does not go far enough in some cases, but we leave that clause in in the general run of cases.

I am certain that it would be no deterrent to the owners of Centre Point and such buildings to put them under the effect of the clause. It would not secure the letting of a single office or room in an unused building because its capital appreciation was so great and rising so rapidly that it would be no penalty.

I believe that the right hon. Gentleman is genuine when he says that this is the unacceptable face of capitalism. It is the unacceptable face in our society today. We want to provide that, notwithstanding the doubling, trebling and quadrupling of rates, a rating authority may, after the first 12 months, up-rate the non-use levy by even greater multiples. If it feels that a property is being left empty in the obscene way that some of these properties have been left empty, it should multiply the normal rates after the first year by 10. That is the way to get to grips with the situation. The rating authority could then force a developer to let his property, because he would be paying penal rates.

In case a local authority acted unreasonably, I have added the proviso that, if it wished to use rating multiples greater than those laid down in the clause, it could do so only with the consent of the Secretary of State. The onus would then be firmly on the Secretary of State, on the man who says that it is entirely wrong for those properties to be left empty as many are today. If the local authority concerned with a building like Centre Point wanted to impose a multiplier of 10 or 15 times the normal rates, it could tell the Secretary of State, who could agree, so as to see what the developer would do when faced with that kind of bill. It would mean that the rates could be adjusted to take account of the capital value accruing year by year to the developer who found it more profitable to leave property unused.

There are two other considerations which are not included in the clause, the first being the problem of alternative use. Last Sunday there was a peaceful demonstration at Centre Point. I know that things went wrong afterwards, but I have no hesitation in applauding the peaceful side. The breaches of the peace I would not applaud. The peaceful side of that demonstration was basically by people who care and who were concerned that this monument to capitalism should stand there mocking the people in the area, many of whom have no home.

The second consideration is that there ought to be a way of deciding whether the man has "tried his best" to let his property and whether he has considered letting it for an alternative use such as housing.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

The hon. Gentleman said that he applauded the peaceful part of the Centre Point demonstration. Does he mean that he gives his approval to people who got in under false pretences by pretending that they were security guards and were thus guilty of deception?

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

Yes, indeed I do. They got in peacefully, used no violence and left after their peaceful demonstration had been concluded. I have no time for the people who got involved with the police outside the building afterwards although one could possibly feel the strength of their irritation. But the others focused public attention on the building which has stood empty for so long, and to that extent, and since they used no violence and left the premises peacefully after 24 or 48 hours' occupation, they did a great deal of good.

What they were concerned with—I am sure that the hon. Member for Hampstead (Mr. Geoffrey Finsberg) agrees—was not whether the property should be double, treble or quadruple-rated. They were concerned not even with its emptiness but with the fact that this huge building has stood there while people in the area have been homeless. Therefore, if the owner is trying his best to let the property, he should say "I have built a big white elephant which I cannot sell. I have tried with estate agents and I cannot use it for commercial development, so I will put in a planning application for housing development." If the application is granted and he genuinely tries his best to let or sell the housing accommodation, he will probably have little difficulty.

Thus, in addition to the tests relating to commercial development, Amendment (d) would provide for consideration of whether that man had done his best to obtain planning consent for housing and, if successful, had advertised it for sale or rent. The Government should accept this proposition if they want to come to grips with this problem of empty properties, which exist in many other cities than London—almost invariably the areas of greatest housing need.

The hon. Member for Hampstead asked me whether I approved of what was done by people who did not want to leave that building empty as a provocation to people in the area. One can well understand their annoyance, which led them technically to break the law of trespass. That is all they did in going in and then going out ; they did no damage to the building.

The Government should consider giving the new clause teeth in the way that I have suggested. As it is, it goes no way towards forcing the developer to do what both sides want him to be forced to do. The amendments will help ; I commend them to the House to give the new clause teeth.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

I am glad to follow the hon. Member for Widnes (Mr. Oakes) because it allows me to deplore immediately his declaring himself in favour of the events of last weekend. I think he agreed that it was trespass and unlawful entry. Approval of such an episode in any circumstances is surely bound to prejudice the whole basis of the law of private property and security against entry. It is a slippery slope, certainly for someone in his position as a member of the Law Society, to support this—[Laughter.] That seems to cause great amusement. I am amused that he should have the effrontery to support those actions.

The hon. Member's attitude is a dangerous surrender to unlawful behaviour. The slippery slope on which it takes him will not be limited to Centre Point. It cannot do other than involve private residences and property of all descriptions. He would find it difficult to draw a line which the country would consider proper.

I should be interested to hear my right hon. Friend's definition of commercial property. I noted his reply, that it does not include industrial premises, but what about warehouse premises and shop property?

Photo of Mr Graham Page Mr Graham Page , Crosby

Perhaps I can answer right away the question that I failed to answer when my hon. Friend put it to me earlier. A warehouse is commercial property.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

But industrial premises are not?

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

This is jargon. I share the criticisms of the draughtsmanship of the new clause. I take it, then, that it also includes shop properties, which are commercial premises.

Therefore, the only exclusion is that of industrial premises. One wonders why industrial premises are excluded. If they are erected and not let it can be said that that is a misuse of resources, and the local authorities have to provide local government services for their protection, and so on. Why does this new clause not extend to the whole range of property?

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

While I am with the hon. Member so far on what is meant by the definition of commercial buildings I would ask whether the definition also excludes flats and residential accommodation. Flats and residential accommodation are being built and left empty so that they appreciate, and they are not caught by the clause, a matter to which, I hope, the House will direct its attention.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

I am sure we shall listen to the hon. Member's advocacy and logic later.

This is a difficulty with which the Government are faced in trying to deal with what, I am sure, is a small problem in relation to property as a whole in the United Kingdom. I know that it is accentuated by one or two properties in London, but we have not heard of the extension of the problem across the country as a whole. I cannot remember that in Committee there was any reference to any property but this one which has been mentioned tonight. To what extent is this a problem throughout the country? What possible justification can there be for dealing with it in this omnibus fashion?

We are in a period in which a property such as that to which reference has been made can escalate in value, and with no effort on the part of the owner, but what has led to these exceptional increases in values, not attributable to the owners, is Government policy. It is an exceptional situation which has led to the escalation of property values, and over that situation property owners have no control at all and no judgments of it on their part are required.

What happens when property prices and values are stable? What happens if we revert to a very common state of affairs between the wars when large numbers of properties were developed and left empty? What happens in those circumstances? What happens in the circumstances with which I know that my right hon. Friend is trying to deal by the new clause—that is, the circumstances in which it is impossible to let property?

In exceptional circumstances in which, as we have seen in the whole of the postwar period, property development takes place, one can get away with an imposition of the character of this one in this clause, but to generalise over a substantial period of years in this way cannot be wise. It is a reflection of the inadequacies of ODP control, especially where office premises are involved. In trying to hit the office premises the Government, with this inadequate and blunt instrument, are affecting all properties—with the exception of the industrial and domestic, as has just been mentioned by the hon. Member for Birmingham, Small Heath (Mr. Denis Howell). What is to happen to the developer? Will he, by an imposition of this character, be deterred from development, whether he is an office builder or a warehouse developer?

Is the new clause to apply to local authority schemes? Many local authorities have town centre development schemes. There is no guarantee that upon their completion the properties will be tenanted or required by tenants. What happens to the joint schemes of local authorities and private developers, and which are an increasing part of town centre development schemes?

This is a grave matter to which the Government have given inadequate attention. They are not having regard to the almost immediate consequences in terms of development and certainly not to the long-term considerations.

8.45 p.m.

My other point is one which I raised in Committee. To deal with a problem of this character by means of rating is an absurdity. I agree that vacant properties require services, and to that extent local authorities, properly, should have rights to levy rates on empty properties. That right was introduced some years ago but was not widely adopted because the cost of collection of even 100 per cent. of the annual rate was considered by many authorities not to be worth while as a financial proposition. But why should the income that local authorities will secure if there are many schemes in which there is application of these penal rates of taxation—which is, after all, what it is—to go into the rate fund? Surely this is a Central Government problem and one which is unrelated to local government revenues? What possible justification can there be for associating empty properties—beyond the 100 per cent. rate—with anything to do with local government services?

I should have thought that a far better avenue for dealing with this problem would have been the new Housing Bill which we are likely to see later this Session. It is most inappropriate for the problem to be dealt with under this Bill. The outcome will be a whole series of arguments about the definitions, which will be quite inadequate, and this will lead to a tremendous amount of litigation in addition to the other consequences which I have mentioned.

Photo of Mr Michael Cocks Mr Michael Cocks , Bristol South

The hon. Member for Northants, South (Mr. Arthur Jones) struggled manfully to put on a progressive veneer, but occasionally such a veneer becomes punctured. The almost Pavlovian reaction to the very mild endorsement by my hon. Friend the Member for Widnes (Mr. Oakes) of an entirely peaceful demonstration to draw attention once again to the problem about which the Government were promising blood and thunder well over a year ago is an example of how any mention of property touches deep springs in the rather withered hearts of Conservative hon. Members.

I should like to follow up the point made by the Minister when he said that to give discretion in this matter is inappropriate as a matter of national policy. The whole point about the amendment which my hon. Friend the Member for Widnes has touched upon is that it gives a flexibility and means that because of that flexibility it destroys any possibility of a developer making calculations as to his outgoings, in paying the punitive rates suggested by the Government and the appreciation in value which he may expect by leaving premises empty. It produces an uncertainty in his mind which means that he can no longer draw up a cynical balance sheet and decide that it will pay him to leave premises empty for years.

The hon. Member for Northants, South said that we talk much about Centre Point. He asked how many other examples there were. For years in Bristol we had an enormous block known as Clifton Heights. It stood empty for years. It was the subject of a great deal of adverse comment in the newspapers, because we have a desperate housing situation in Bristol. In the vicinity of Clifton Heights there was no property with which that block could be compared.

In addition to that matter, there is a weakness in the clause in that it does not deal with blocks of flats. During a recent by-election at Hove there was a great deal of Press comment about a block of 13 flats which had been empty for three years. A number of these flats had been improved through improvement grants provided from public money, yet the flats had never been occupied. The state of play at Hove during the by-election was that the developer and owner of the flats had applied to the planning committee for permission to demolish the lot and to erect a new block.

There are abuses which need to be tackled. I commend to the right hon. Gentleman, who I know is always open to argument and persuasion, the increased flexibility which my hon. Friend has pressed on him, particularly through the medium of sub-amendments (c) and (d).

Photo of Sir Sydney Chapman Sir Sydney Chapman , Birmingham Handsworth

I very much welcome the clause. I should like to think, in all modesty, that it is at least in part the result of an amendment moved by my hon. Friend the Member for Devizes (Mr. Charles Morrison) and supported by myself, my hon. Friend the Member for Hemel Hempstead (Mr. Allason) and eight Opposition Members in Committee. The clause, complex and complicated as it is, seems to me, although I am not a legal expert or an etymologist, to fit the bill. Whatever its defects, it goes considerably further than did what I considered to be a watered-down amendment moved in Committee by the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) which sought merely power to double the rate.

When I heard the hon. Member for Widnes (Mr. Oakes) speak of multiplying the rates ten or fifteen times, I wondered whether he had been converted to the view of my hon. Friend the Membr for Devizes and myself by the eloquence of our speeches in Committee and had come to realise that perhaps this clause was the way to deal with an unsavoury and unsocial development which has been referrred to by the hon. Member for Widnes as the Centre Point scandal.

Photo of Mr Gordon Oakes Mr Gordon Oakes , Widnes

Yes, I have been converted. My amendment in Committee was far too weak. The amendment moved by the hon. Member for Devizes (Mr. Charles Morrison) was much stronger than is the new clause. When a Conservative supporter put forward a good idea I was converted and was prepared to support it. I prefer the amendment moved in Committee to the clause.

Photo of Sir Sydney Chapman Sir Sydney Chapman , Birmingham Handsworth

I am grateful to the hon. Gentleman. I accept his reservations about the wording of the clause to make it watertight. If those reservations are proved then my hon. Friend's amendment is much tougher, but, if not, the clause is adequate.

Although I was disappointed that sub-amendments (a) and (b) were not taken with the clause, the purport of the amendments was covered when my right hon. Friend said that the new Section 17B(5) more than met what I set out to do in my sub-amendments (a) and (b). If that is not so, what worries me is that someone might be able to let one floor of the building to get round the clause, which would not be a satisfactory solution. Sub-amendment (a) refers to 50 per cent. of the total floor area, but in his remarks about the new Section 17B(5) my right hon. Friend mentioned four-fifths of the building.

We were invited to comment on possible loopholes. It may well be that the circulation space in a commercial property—by that I mean not only the corridor spaces, but the lifts, staircase circulation and ancillaries such as store rooms and toilets—might of themselves constitute a sizeable proportion of a building such as this. It might be said in a court of law that those parts of the building should be included in the total when only a relatively small part of the office space has been let to a tenant. I put that forward as a suggestion on which it might be necessary to make some explicit statement clarifying the meaning of subsection (5) of 17(B) of the new clause.

When local planning authorities give permissions, particularly for commercial premises and, of course, office blocks, they base their decision—and I speak as a town planning consultant—on whether to grant or refuse permission on three factors. The first matter is whether a building is in an area, within the development plan of a town or city, which is intended for the use to which the application applies, so that one does not have offices in residential areas or heavy industry in recreation areas. In other words, there must be the land use application test. Secondly, planning applications must be judged on aesthetic or visual merits. Thirdly, in considering applications for office blocks and other commercial premises, few local planning authorities will give permission unless there is a need for them.

Since Centre Point has been referred to—and I understand that it is owned by Oldham Estates, of which Mr. Harry Hyams owns a substantial part—I refuse to believe that Camden Borough Council or its predecessor a few years before 1964 would ever have given permission for Centre Point if it had known that it was to remain unoccupied for a decade.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

Perhaps I may tell my hon. Friend that that permission was given by the Labour-controlled LCC, without consulting what was then the metropolitan borough of Holborn.

Photo of Sir Sydney Chapman Sir Sydney Chapman , Birmingham Handsworth

The House will be grateful for that information. That building has been left unoccupied for 10 years. If one wanted to make a political point—which I would never wish to do—one would say that if this matter exercises the Opposition so deeply, they could have taken some action before 1970. At least I congratulate my own side, if somewhat belatedly, on taking action now. It is a scandal to have allowed that building to be unoccupied. Surely no hon. Member of this House is naive enough to believe that the owner of those premises had made any real attempt to tenant at least a portion of it in the last ten years. I believe that subsection (5) of the new clause will be a proper way to test whether an owner has made a real attempt to let the building. I accept what was said by the hon. Member for Widnes about the etymology of the phrase "tried his best". I do not know the answer to that but doubtless than can be tested in a court of law.

In commending the clause to the House unamended, I believe that people who perhaps talk a shade too glibly about the ease with which office blocks could be converted into dwelling units or flats should examine all the technical problems involved. In many cases such a change would mean a complete alteration of the building. I do not say that this cannot be done, but I suggest that it cannot be done merely by a new planning application for a change of use. An office building such as Centre Point—although it has 36 flats in it—in terms of the vast majority of its total floor area is impracticable for conversion into much-needed flats in that part of London unless a great deal of money is spent on it.

These points apart, on behalf of my hon. Friend the Member for Devizes, who cannot be present for reasons already explained to my right hon. Friend, and as one who supported the original amendment in Committee, I give the new clause every support.

9.0 p.m.

Photo of Mr Arthur Blenkinsop Mr Arthur Blenkinsop , South Shields

I welcome a great deal of what the hon. Member for Birmingham, Handsworth (Mr. Sydney Chapman) said in his very balanced view of the position. I rise to intervene simply because I am amazed to think that any hon. Member of this House is prepared to criticise these proposals and the seemly and very proper action the other weekend of the enforced occupation on grounds of trespass.

I am one of many who have trespassed in one way or another on a number of occasions in the past on to private land. I am glad to say that many advances in our legislation have been achieved after mass trespass. They have provided one or two glorious pages in our history. I like to believe that this trespass will lead to an equally glorious move.

The clause is a faltering step towards the recognition of social values as against the most extreme view of property values. I am a little sorry that the hon. Member for Hove (Mr. Sainsbury) is not with us on this occasion. He made a remarkably impassioned speech in Committee in defence of the property owner and in general opposition to any suggestion of penal legislation in however modest a form. It would have been interesting to have a repetition of that point of view today, however archaic.

Unless we are prepared to move in this way and to express clearly the predominance of social values over the extreme and out-dated view of private property values, I am sure that we shall see a great many more demonstrations, and it is questionable whether they will necessarily be as peaceful as earlier ones have been.

I have heard it said that the great achievement of those who ruled this country in the past was that they were wise enough to see the writing on the wall in time to realise that they had to adapt themselves to the obvious public demand of the day. Here we have a welcome and modest gesture towards the attitude that we must take. I hope very much that these amendments will be accepted and that there will be many other ways in which we shall demonstrate in the future in support of the predominance of social values while maintaining public good will in our institutions.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

I condemn unreservedly the remarks made by the hon. Member for Widnes (Mr. Oakes) joined now, I am sorry to say, by the hon. Member for South Shields (Mr. Blenkinsop), a former Minister of the Crown. If the public are beginning to wonder whether Parliament intends to uphold the law, the speeches by those two hon. Gentlemen clearly demonstrate that the rule of law has little interest for the Opposition Front Bench and many of their supporters.

The law of trespass is the law of the land. I condemn as much as anybody else the activities of the owners of Centre Point, as I shall show later. But the Opposition do not do their argument any good by encouraging people to break the law.

Photo of Mr Arthur Blenkinsop Mr Arthur Blenkinsop , South Shields

I should be interested to know whether in his condemnation of land trespass the hon. Gentleman goes so far as condemning demonstrations against the evils of private ownership of land in certain places such as the Peak District in the past?

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

We are talking about a demonstration that took place last week when people trespassed, having gained access by pretending to be what they were not. The country will draw the inference from what has been said that the Labour Party encourages law breaking.

I welcome new Clause 14, even though I had tabled my Amendment No. 9 before the Government put it down. I think that I am the only Member in the Chamber who has taken an active part in dealing with the penalty rating on Centre Point. Long before right hon. Gentlemen opposite were talking about it, some of us were taking action to get money in. I shall come to that later.

I think that the House should support the new clause fully. It carries into effect some of the intentions behind the Unoccupied Property (Increase of Rate) Bill that the House gave me leave to introduce on 23rd May 1972. On that occasion I said: … I hope that my remarks will enable the Government, in their promised review of local government finance, to remedy some of the existing defects and to adopt at least some of the ideas proposed in the Bill."—[OFFICIAL REPORT, 23rd May 1972; Vol. 837, c. 1240.] That Bill, amongst other things, called for a penalty rating of up to 125 per cent.

The Labour Party talks and makes noises, but, as my hon. Friend the Member for Birmingham, Handsworth (Mr. Sydney Chapman) said, when it had an opportunity to take action to amend the General Rate Act 1967 it did nothing. Therefore, the country should again remember that it takes the Labour Party a long time to wake up on this sort of issue.

On Centre Point I take issue with my hon. Friend the Member for Northants, South (Mr. Arthur Jones) who said that it costs a lot of money to implement the empty rating provisions. On 23rd May 1972, at column 1238 of HANSARD, I pointed out what had been done by the London Borough of Camden. We implemented at the first opportunity—that is, the beginning of the rating year 1968—the provisions of the 1967 Act, and by May 1972 we had collected over £2,138,000 in empty property rates at a cost of less than £85,000. No less than £300,000 came from Centre Point.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

I am delighted that my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) is present, because she was a colleague of mine on the Camden Council when the action was beginning to bring money in to the ratepayers.

Photo of Mr Arthur Jones Mr Arthur Jones , Northamptonshire South

My hon. Friend is dealing with properties in Camden of very high rateable value. This is not general throughout the country. He is quoting an exceptional circumstance. I know from my own experience the truth of the remark that I made in my speech.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

I was not suggesting that my hon. Friend was inaccurate. I said that I believed that he was not perhaps following logically the point that I am making. There are many rural areas where the cost of collection is too high. But in the major conurbations—not merely Bristol and London, but other places where I have seen some of these empty properties—the cost of collection is a small percentage of the amount that can be got in.

I believe that it is right to do something in order to secure penalty rating for local government in the case of this type of property. But if the aim is to get more than the quadruple or quintuple rates proposed by my right hon. Friend, it should become a matter for income tax and should not necessarily mean that a local authority is fortunate enough because the property is in its area, to get that amount of money. At this stage it is necessary to decide that the balance should go to the central Government.

It is a good thing that the clause has been introduced. I noticed that the hon. Member for Widnes said in his opening remarks that, having welcomed the two previous clauses, he felt that the honeymoon was over. I am not sure whether the words "honeymoon was over" and his disappearance have any connection but I should like to know whether, cutting away the frills of his speech, he intends to advise his right hon. and hon. Friends to vote against the clause or whether, having led all his troops up the hill by that most eloquent speech, he will decide that the clause is worth while and that he will not vote against it.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

Then when the whistle is blown we shall see precisely what the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) thinks. The Opposition should accept with much better grace than their speeches convey the good intentions behind the clause.

I am certain that my right hon. Friend will be the first to say that no legislation, not even that drafted by parliamentary draftsmen and introduced by him, could be 100 per cent. foolproof without any sort of loophole. But the House does no good by deciding that it wants to widen the issue because there might be a loophole. It is much wiser, I suggest, to let the clause go through and to give the Government an opportunity in 12 months' time to say that the loophole has appeared. Virtually every Finance Act contains provision to stop a loophole, and no Government are inhibited from introducing 12 months later a stopper for a loophole which has been exposed. The clause is good and it will work. If loopholes appear, I rely upon the Government to close them on the basis of evidence and not on the basis of idle speculation. I use that word without intending any pun.

What happens to a building where the owners have put in a planning application which involves considerable modifications to the interior and where the local authority sits on the planning application? After two months an owner may, if he wishes, take a deemed refusal. By doing so he condemns himself in many cases to waiting nine or 10 months at least for a public inquiry and a further 12 or 15 months for the result of that inquiry. Some local authorities are sitting on planning applications for four or six months. They are saying to the owners that, if they do not like it, they should take a deemed refusal. But such a course would cost money because the case would have to be fought, and in the meantime the property would remain empty. Some councils are doing this for political purposes, and I have given evidence of that fact to my right hon. and learned Friend the Secretary of State.

If the owner can show that his planning application has been sat on, that he will not take a deemed refusal because of the additional delay and that the local authority is holding up the application for no good reason, will my right hon. Friend exercise discretion to say that the conditions of the clause are not fulfilled and that the owner will not necessarily have to pay the penalty rating?

9.15 p.m.

Photo of Sir Brandon Rhys Williams Sir Brandon Rhys Williams , Kensington South

My right hon. Friend, in introducing the new clause, is seeking to respond to overwhelming public demand that something should be done about Centre Point. It is right that the House should take note of the fact that that is not the only example of a place where cubic feet are available which the public is not able to use. It is a wider problem than Centre Point or even a handful of modern office blocks. The same problem can be detected regarding residential property.

I did not have the advantage of serving in Committee as have most other Members who have spoken. Therefore, if I do not understand fully the issues which have been raised, I hope that my right hon. Friend will excuse me. As I listened to the hon. Member for Widnes (Mr. Oakes) my doubts about the new clause turned into virtually a conviction that it should not pass into law as it stands. I do not like the phrase: the owner has tried his best to let the building … I feel, with my hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg) that there may well be occasions, particularly when conversions or when planning applications are involved, when the owner may be innocent. I am concerned that local authorities appear not to be allowed to have any discretion when they themselves may be the cause of a building remaining unlet.

It occurs to me—and it may be that I have not read the clause sufficiently thoroughly—that there is no limit to its application. It can apply to a skyscraper, which is the sort of building very much in the public mind, or to a village shop in a remote community. It seems that the clause could be much improved by excluding small premises and perhaps old premises as well when the Centre Point situation does not apply.

Commercial property might be left open because of redecoration or modernisation plans, because of redevelopment scheme or because a building might be awaiting demolition. I can think of such a case in a conservation area where there is good cause for demolition, but while the matter is being decided it would be irresponsible to try to attract tenants as the tenancy might be very short.

I am concerned about the precedent which the clause sets. I think that it bears the signs of having been set down at haste. It is a long clause, but that does not mean that it is well or tightly drafted. I think that lawyers will make a meal out of it. Possibly it might be much improved if in another place the matter were considered at length. That may be in doubt.

I am concerned about the use of the rating system to achieve this social purpose. I should not complain if people felt that no concessions should be given in a Centre Point situation or in similar instances. In such circumstances, of course, the owner should be called upon to pay 100 per cent. rates as though the building was fully let. There could be said to be a case for the local authority demanding something more than 100 per cent. rates where, upon defiance of its development plan, it was put to expense in another way. If it provided land for office development which was then not made available for such use, it might have to put itself out to find other land which could be so developed. When the point is reached when the rates double, treble, quadruple and so on, I get more than an uneasy feeling that we are misusing the rates because we have not been able to think of anything better with which to solve the problem.

I am not saying that we do not have to solve it, because public opinion has spoken absolutely clearly. Hon. Members in all parts of the House are agreed that a solution must be found. I would have thought that we could explore the possibilities of compulsory purchase more fully and that, subject to suitable safeguards, that would have given a much more direct weapon to the Government or to local authorities. I emphasise "subject to suitable safeguards".

Here we find what is a vindictive use of the rating system to impose fines. It may be that our indignation and frustration over Centre Point will make the House decide to approve this clause as it stands or as amended. I am bound to say with regret that I cannot support my right hon. Friend because I do not like the drafting of this clause. He is using the wrong weapon to deal with the problem and I hope that in the remaining time left he will think again to see whether some better solution cannot be found.

Mr. James Aliason:

I should like to declare an interest as an owner and manager of commercial property. I hasten to say that I have no particular interest here since I do not have any empty property. I am glad that the amendment moved in Committee by my hon. Friend the Member for Devizes (Mr. Charles Morrison), which I supported, has grown into this clause, which I trust will have the force of law. In London we have excessive rates for office premises arising from the restriction on the free building of further offices which are so much needed.

Since 1965 we have had the office development permit system and in consequence there is an artificial shortage. It is made all the worse if we have office blocks in London artificially held back from the market. I find Centre Point and similar office blocks offensive. Consequently we need action. The question is, what is the best form of action? The opposition constantly complain about huge untaxed profits accruing to owners of property, the implication being that someone is making a huge profit and putting it into his pocket.

But it is untaxed because it is unrealised. While it may be the position that Centre Point has risen in value from £5 million to £50 million, I heard it suggested that as a result of this clause it has dropped by £15 million. That shows that this is the way to move. It is not satisfactory to seek to impose a capital gains tax on unrealised profits, but it is possible to have some form of penal taxation. That is what this is. It is in the form of rating rather than taxation because the rating system is better attuned to locating empty commercial property and then to applying a penal rate to it. That imposition reduces the value of a property, which is a move in the right direction. If these properties are left unlet, they will attract increasing penalties and their value will drop further. Thus we will have fewer empty properties at a time of scarcity. I am happy to support the clause.

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

We have had an interesting debate on what has come to be known as the Centre Point clause. The Opposition recognise that the Minister has gone out of his way to meet the wishes of those who served on the Committee. We have criticism of whether he has managed to achieve what all of us wished him to achieve, but he has had a good cockshy at trying to meet our wishes.

The hon. Member for Birmingham, Handsworth (Mr. Sydney Chapman) rather chided one of my hon. Friends about marching forward at a late stage. It is clear that, while my hon. Friend is marching forward, the hon. Gentleman is marching backwards. This is in every way typical of the division between the two sides of the House on these matters. We are dealing, as all hon. Members who have spoken have recognised, with an abuse which gives great offence to most decent people. The ability of people to put up large buildings and see their value appreciate—without genuinely trying to let them—with the eventual hope of reaping a capital appreciation probably gives greater offence than almost anything else in our society.

The hon. Member for Hampstead (Mr. Geoffrey Finsberg) sounded a rather strident note in the debate. He also said that, when I gave my advise to the House, I should be blowing a whistle. Bearing in mind the effect of the clause on Mr. Harry Hyams, I cannot resist saying that the hon. Member has got the wrong sport. We do not need the blowing of a whistle. Rather do we need a declaration of no contest.

As the hon. Gentleman knows—I take it from what he said that he served on Camden Council—the firm which got permission to build that block of offices must have engaged in a degree of deception with the planning authority in the first place. I cannot believe that any planning authority would have given permission for the building of Centre Point—or for Centre Point-type buildings anywhere else—had it thought that the prime object of the exercise by the applicants was to obtain capital appreciation on the building.

Photo of Mr Geoffrey Finsberg Mr Geoffrey Finsberg , Hampstead

Is the hon. Gentleman aware that one of the major shareholders in Centre Point all along has been the Co-operative Insurance Society? Is he accusing that body of taking part in deception?

Photo of Mr Denis Howell Mr Denis Howell , Birmingham Small Heath

I do not know who are the major shareholders in Mr. Hyams's firm. If the Co-operative Insurance Society, which has my investment, is behaving in that way, it is in my view equally to be called to account for not insisting on a proper and more responsible method of investing its money. There may be many other companies, corporations and pension funds involved. I hazard a guess that when they agreed to make an investment for what they thought would be a lucrative return they did not know that they would be involved in anything like this. I do not believe that the Co-operative Insurance Society would have thought that for one moment. But had the society been involved I would have hoped that it made a greater representation about this issue than appears to have been the case.

I return to the planning point, which is the essence of the matter. No one can erect a building of any sort without planning permission. The case of Centre Point might cause us to examine planning procedures to see whether adequate information has been provided. Where an authority gives planning permission for the building of a Centre Point or similar edifice, if that building is not used for the purpose for which permission was sought I agree that the proper order is a compulsory purchase order. It is not necessary to deal with the matter in the way proposed.

9.30 p.m.

A compulsory purchase order on Centre Point is being considered, I understand. We did not wish to pursue the matter, because to a certain extent it must be improper for the House to do so while the reasonable judicial processes of compulsory purchase orders are being conducted outside. Therefore, I will spend no more time on that aspect.

The hon. Member for Hampstead (Mr. Geoffrey Finsberg) told us that Camden Council had collected from Centre Point more than £300,000 in rates. That underlines our concern. Rates of £300,000 have been paid on an empty building and, as far as I can judge, that has made not an iota of difference to the intention of Mr. Hyams to let the building. Therefore, the hon. Gentleman is saying what we are saying—that, far as the Minister has gone to try to meet us, we are still left with every reason for misgivings about whether super-rating of the premises will meet the situation.

I also agree with the hon. Member who said that we should not become totally bogged down about Centre Point. There are many other buildings where the same sort of thing is going on. The clause deals only with commercial premises and not with residential properties. Perhaps it should be changed to cover residential properties. There has recently come to my attention the story of a block of flats within a very short walking distance of the House where, as the lease of the individual flats has run out, the landlord has been refusing to re-let them. He has been keeping them empty for long periods because he knows that within four or five years the whole building will be empty and will bring him a tremendous capital appreciation. That is probably in many ways even more offensive than the Centre Point case.

A number of hon. Members have drawn attention to the phrase "tried his best" in the clause. If a developer can show that he has tried his best to let the premises, he can escape the financial penalties. I do not know where the phrase comes from. I have encountered it only at school. It seems to me to be a headmaster's phrase. That led me to the conclusion that it was drafted by the Secretary of State for Education and Science, and that it has nothing to do with the Department of the Environment, which I have always thought, after my experience there, was able to draft better than that. The point has been made very truly that the lawyers will have great pickings from defending cases under the clause. I hope that better phraseology can be provided in another place.

We place great store on our two sub-amendments. The first deals with the inadequacy, proved by the experience of the hon. Member for Hampstead, of the financial penalties, even though they go further than anything contemplated in Committee, for which I express my appreciation.

I shall not advise my hon. Friends to vote against the clause, because we are not marching our troops up the hill and down again. That is what the Prime Minister does every now and again when he decides to have an election and then has to reverse his strategy to take account of the fact that he cannot have an election on the day he has chosen. It is normal that, although we regard the clause as inadequate, we recognise that it is better than anything else we have. It represents a genuine attempt by the Government to meet the wishes of both sides of the Committee. It would be churlish in those circumstances to vote against the clause. We shall, therefore, confine ourselves, if our amendments are not acceptable, to vote for it.

The first of our amendments deals with the super-rating of these properties. The reason why we want to go further than the Government propose is because the rate of inflation is galloping on under them and because their proposals do not take account of the rate of inflation on empty properties.

The other amendment, which we regard as even more important, should be a factor when local authorities determine whether there is any willingness to convert empty properties into flats or homes for people. Indeed, in my constituency we know that a number of properties were built because the local authority encouraged developers to build as it believed that there would be a lot of redevelopment. The result is that we now have probably too many empty flats in Birmingham. The answer to the problem is to convert those buildings for the homeless. Such action is desperately needed. The test is whether the developers are prepared to convert commercial premises into domestic residential premises.

I hope that the Minister will accept sub-amendments (c) or (d). If not, I must ask my hon. Friends to record their support of our case in the Lobby.

Photo of Mr Graham Page Mr Graham Page , Crosby

I am grateful for the constructive debate on the clause. I knew only too well that in embarking on a new idea in legislation I was bound to be criticised. To call it "cockshy" was unkind. I do not think I have made a "cock" of it. I think that it will achieve its purpose.

The hon. Member for Widnes (Mr. Oakes) said that the new clause does little to tackle the mischief of the empty property and the hon. Member for South Shields (Mr. Blenkinsop) said it was a faltering step. But they have forgotten that this is part of a package. Although it is not an occasion to discuss the other parts of the package here, I must necessarily mention the heavy taxation liability, which my right hon. Friend the Chancellor of the Exchequer has indicated he will impose on capital gains from these properties. There was also the announcement about the Housing Bill which will be before the House in a matter of days and which will include provisions for taking over management of those properties and letting them so that they serve the purpose for which they were erected.

This is the package—the taxation liability, heavily increased power to take over the management of property and the surcharge rating.

The phrase "Try his best" has been criticised, although it expresses in decent English, without terrible legal complications, what we intend through the clause. If an owner has not "tried his best" to let property the clause should apply to him. The hon. Member for Widnes asked who would decide whether an owner had tried his best. In the first instance, of course, the rating authority would do so in imposing the surcharge. But there are two ways in which this can be questioned and brought before the court—either by an appeal under Section 7 of the General Rate Act 1967 or by defence to an action by the local authority to recover the surcharge.

The hon. Member also said that, in many cases, when one is considering the guidance to be given about whether an owner has tried his best, there are no similar properties with which to compare it so as to ascertain a comparable rent. He asked what was meant by it being let "in parts" and asked questions about estate agents. But this subsection is intended only as guidance. It says that "regard shall be had" to those subjects, … as well as other relevant factors". These categories are not meant to be exclusive of any other considerations. All the considerations which would help a court, or in the first instance a rating authority and then a court, to decide whether someone had tried his best to let a property should be taken into account. The matters that the hon. Member mentioned would all be relevant and admissible in evidence, I should have thought, if the rating authority's claim to surcharge were questioned in the court.

On sub-amendment (c), the hon. Member for Widnes said that it was not enough to double, treble or raise even higher in progressive increases the surcharge—that this was an insufficent deterrent. His sub-amendment would enable a rating authority, with the Secretary of State's consent, to increase the amount of the penalty after the first 12 months of non-use of the commercial building.

I must repeat that the new clause creates a penal surcharge and there should not be a different penalty in one area as against another. Any Secretary of State would also have a difficult job to know how to discriminate, when to give his consent to a special rating of this sort in one area. The sub-amendment suggests no basis on which his discretion should be exercised and leaves the way open for entirely arbitrary action by the Secretary of State in such a situation. Parliament should fix the rates of the surcharge and leave it at that in this part of the package against an owner who is keeping his property empty deliberately.

Turning to sub-amendment (d), if property stands empty, surely it should attract the penalty. It should not matter whether the owner has tried to switch the use of the property. If he wants to change the use, let him do so ; let him get planning permission and carry out that change. Until he has done so, he should be liable to the penalty.

Sub-amendment (d) would produce quite the wrong result. It would encourage applications to convert to housing, but applications which perhaps were doomed to failure and were made for that very purpose.

Photo of Mr Idris Owen Mr Idris Owen , Stockport North

We have been discussing penalties in the context of massive profits, assuming that they are going on ad infinitum, but we are rapidly reaching the stage of stabilisation and perhaps even de-escalation of property prices. If we are thinking in terms of penalties, the interest charges on the capital cost could be penalties in themselves. Many homes built on a speculative basis at the moment are being sold at less than cost so that the small developer can recover some of the capital on which he has to pay fantastic interest charges. To add to that the penalty that my right hon. Friend suggests would drag people into bankruptcy. We must be fair.

9.45 p.m.

Photo of Mr Graham Page Mr Graham Page , Crosby

I find difficulty in fitting that into what I was saying. My hon. Friend has made a very good speech in his intervention, but perhaps I may continue with the point I was making on the sub-amendment.

I was suggesting that a phoney planning application might be put in merely to delay the position and escape the imposition of the surcharge. I think it best to leave the clause as it is, and then nothing is weakened. Add the words of the sub-amendment, and an evasion device is built into the clause.

I must advise my hon. Friends to resist both these sub-amendments and stick to the clause as we have it.

My hon. Friend the Member for North-ants, South (Mr. Arthur Jones) asked why it did not apply to industrial premises. We do not think that there is a comparable mischief there and we would not wish to extend it to that kind of property. The same remarks apply to residential property, although we have the sort of case mentioned of the flats in Hove. Where a residential property like that is left vacant there is power of compulsory purchase for housing purposes. This might easily apply to the sort of case which has been mentioned and we do not need the penalty in that case ; we have other methods. We are creating this new penalty. I do not think we should extend it to penalise those against whom there is little if any public distrust or antagonism. The ordinary 100 per cent.—mentioned in Clause 15—on empty properties should suffice.

My hon. Friend the Member for Northants, South also asked whether the new clause applies to local authority schemes or joint schemes between local authorities and private enterprise for building offices in city centres. Of course, a local authority would be liable, as anybody else, if it deliberately kept vacant commercial property which it built, but I think it stretches imagination a little far to think a local authority would deliberately do that. I do not think that that is a very important point for the purpose of the mischief with which we are here dealing.

The hon. Member for Bristol, South (Mr. Michael Cocks) said that sub-amendment (c) would give flexibility, but I do not think that it is right, when one is dealing with the creation of a new penalty, that one should give that flexibility to the local authority concerned.

My hon. Friend the Member for Birmingham, Handsworth (Mr. Sydney Chapman) raised points included in sub-amendments which he had on the Paper but which have not been discussed, but I will deal with the points as he put them in his speech. His first sub-amendment, in line 2, after "building", to insert or over 50 per cent. of the total floor area of it is, I can assure him, quite unnecessary. The new Section 17B(5) in the new clause provides for the purposes of the surcharge that a hereditament shall be considered as being used on any day for its purpose if only four-fifths of it were so used on that day. That covers the point with which my hon. Friend was concerned. The same point arises in his second sub-amendment. Section 17B(5) covers that.

My hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg) has long crusaded on this subject and has very considerable knowledge of it, and he raised again the question of planning applications for modification of premises, and a local authority holding up a planning application as an excuse for getting out of surcharge. In a proper case it would come within another relevant factor to be taken into account in deciding whether the man had tried his best to let the property. But I should not like to introduce a specific subparagraph on this matter for fear that we would build in what I called just now a "phoney" device or a "phoney" planning application in order to delay matters.

My hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) also raised the question of residential property. I say again that we can deal with this under compulsory purchase for the purpose of housing if necessary. I would not be satisfied to deal with this subject purely on the basis of compulsory purchase because in many cases that is exactly what the owner wants—someone to take the property off his hands at the market valuation which the district valuer may put at a figure which is quite satisfactory to the owner, who may be quite prepared to get rid of it. We want the property to be used for the purpose for which it was built and the power to take it over for management will satisfy that desire.

I was grateful to my hon. Friend the Member for Hemel Hempstead (Mr. Allason) for supporting the idea of doing this through the rates. There is every reason to say that the local authority in these cases should have the benefit of the surcharge. This is a form of rating. I

Division No. 32.]AYES[9.53 p.m.
Albu, AustenFisher, Mrs. Doris (B'ham, Ladywood)Mackie, John
Allaun, Frank (Salford, E.)Fitch, Alan (Wigan)Mahon, Simon (Bootle)
Armstrong, ErnestFletcher, Ted (Darlington)Mallalieu, J. P. W. (Huddersfield, E.)
Ashton, JoeFoot, MichaelMarks, Kenneth
Atkinson, NormanForrester, JohnMarquand, David
Austick, DavidFraser, John (Norwood)Marsden, R.
Bagier, Gordon A. T.Galpern, Sir MyerMarshall, Dr. Edmund
Beaney, AlanGolding, JohnMellish, Rt. Hn. Robert
Berth, A. J.Gordon Walker, Rt. Hn. P. C.Millan, Bruce
Bidwell, SydneyGourlay, HarryMiller, Dr. M. S.
Bishop, E. S.Grant, George (Morpeth)Mitchell, R. C. (S'hampton, Itchen)
Blenkinsop, ArthurGrant, John D. (Islington, E.)Molloy, William
Boardman, H. (Leigh)Griffiths, Eddie (Brightside)Morris, Rt. Hn. John (Aberavon)
Booth, AlbertGrimond, Rt. Hn. J.Oakes, Gordon
Boothroyd, Miss BettyHamilton, James (Bothwell)Oram, Bert
Bottomley, Rt. Hn. ArthurHamilton, William (Fife, W.)Orbach, Maurice
Brown, Robert C. (N'ctle-u-Tyne, W.)Hardy, PeterOswald, Thomas
Brown, Hugh D. (G'gow, Provan)Harper, JosephPalmer, Arthur
Brown, Ronald (Shoreditch & F'bury)Harrison, Walter (Wakefield)Parker, John (Dagenham)
Butler, Mrs. Joyce (Wood Green)Hatton, F.Price, William (Rugby)
Campbell, I. (Dunbartonshire, W.)Hooson, EmlynProbert Arthur
Carmichael, NeilHoram, JohnRadice, Giles
Carter, Ray (Birmingh'm, Northfield)Houghton, Rt. Hn. DouglasRoberts, Albert (Normanton)
Carter-Jones, Lewis (Eccles)Howell, Denis (Small Heath)Roberts, Rt. Hn. Goronwy (Caernarvon)
Clark, David (Colne Valley)Huckfield, LeslieRose, Paul B
Concannon, J. D.Hughes, Mark (Durham)Ross, Rt. Hn. William (Kilmarnock)
Conlan, BernardHughes, Robert (Aberdeen, N.)Rowlands, Ted
Cox, Thomas (Wandsworth, C.)Janner, GrevilleSilkin, Hn. S. C. (Dulwich)
Crossman, Rt. Hn. RichardJohn, BrynmorSillars, James
Cunningham, Dr. J. A. (Whitehaven)Johnson, Walter (Derby, S.)Silverman, Julius
Dalyell, TamJones, Dan (Burnley)Skinner, Dennis
Davidson, ArthurJones, Rt. Hn. Sir Elwyn (W. Ham, S.)Smith, Cyril (Rochdale)
Davies, Ifor (Gower)Jones, T. Alec (Rhondda, W.)Smith, John (Lanarkshire, N.)
Davis, Clinton (Hackney, C.)Kaufman, GeraldSpriggs, Leslie
Davis, Terry (Bromsgrove)Kelley, RichardStallard, A. W.
Deakins, EricKerr, RussellSteel, David
de Freitas, Rt. Hn. Sir GeoffreyLamborn, HarryStewart, Rt. Hn. Michael (Fulham)
Dempsey, JamesLamond, JamesStrang, Gavin
Dormand, J. D.Lawson, GeorgeSwain, Thomas
Douglas-Mann, BruceLee, Rt. Hn. FrederickThomas, Jeffrey (Abertillery)
Duffy, A. E. P.Lever, Rt. Hn. HaroldTinn, James
Dunn, James A.Lomas, KennethTope, Graham
Dunnett, JackLoughlin, CharlesTorney, Tom
Eadie, AlexLyons, Edward (Bradford, E.)Tuck, Raphael
Edelman, MauriceMabon, Dr. J. DicksonVarley, Eric G.
Ellis, TomMcBride, NeilWainwright, Edwin
Evans, FredMcElhone, FrankWalker, Harold (Doncaster)
Faulds, AndrewMcGuire, MichaelWeitzman, David
Fernyhough, Rt. Hn. E.Machin, GeorgeWellbeloved, James

should like to see that go to the local authorities to benefit the rate revenue.

I think that I have dealt with all the points that have been raised in the debate. I commend the new clause to the House.

Question put and agreed to.

Clause read a Second time.

Amendment proposed: sub-amendment (c) in line 20, at end insert— ' (3A) Notwithstanding the provisions of subsection (3) above, the rating authority may with the consent of the Secretary of State after the first 12 months of the period of non-use levy by greater multiples of the normal rates than those specified while the period of non-use lasts '.—[Mr. Oakes.]

Question put, That the amendment be made to the proposed clause:

The House divided: Ayes 155, Noes 166.

Wells, William (Walsall, N.)Williams, W. T. (Warrington)
White, James (Glasgow, Pollck)Wilson, Alexander (Hamilton)TELLERS FOR THE AYES:
Whitehead, PhilipWilson, William (Coventry, S.)Mr. Michael Cocks and
Whitlock, WilliamWoof, RobertMr. Donald Coleman.
Williams, Alan (Swansea, W.)
NOES
Adley, RobertGurden, HaroldNormanton, Tom
Allason, James (Hemel Hempstead)Hall, Sir John (Wycombe)Oppenheim, Mrs. Sally
Archer, Jeffrey (Louth)Hamilton, Michael (Salisbury)Owen, Idris (Stockport, N.)
Astor, JohnHaselhurst, AlanPage, Rt. Hn. Graham (Crosby)
Atkins, HumphreyHastings, StephenParkinson, Cecil
Awdry, DanielHavers, Sir MichaelPercival, Ian
Baker, W. H. K. (Banff)Hawkins, PaulPike, Miss Mervyn
Batsford, BrianHayhoe, BarneyPink, R. Bonner
Beamish, Col, Sir TuftonHicks, RobertPowell, Rt. Hn. J. Enoch
Bell, RonaldHiley, JosephPrice, David (Eastleigh)
Benyon, W.Hill, John E. B. (Norfolk, S.)Proudfoot, Wilfred
Biffen, JohnHolland, PhilipRedmond, Robert
Biggs-Davison, JohnHolt, Miss MaryReed, Laurance (Bolton, E.)
Boardman, Tom (Leicester, S. W.)Hornby, RichardRees-Davies, W. R.
Boscawen, Hn. RobertHowe, Rt. Hn. Sir Geoffrey (Reigate)Rhys Williams, Sir Brandon
Bowden, AndrewHowell, David (Guildford)Ridley, Hn. Nicholas
Bray, RonaldHowell, Ralph (Norfolk, N.)Roberts, Michael (Cardiff, N.)
Brinton, Sir TattonIremonger, T. L.Rossi, Hugh (Hornsey)
Brown, Sir Edward (Bath)Irvine, Bryant Godman (Rye)Sainsbury, Timothy
Bryan, Sir PaulJames, DavidScott, Nicholas
Buchanan-Smith, Alick (Angus, N&M)Jones, Arthur (Northants, S.)Shaw, Michael (Sc'b'gh & Whitby)
Burden, F. A.Jopling, MichaelShelton, William (Clapham)
Butler, Adam (Bosworth)Kaberry, Sir DonaldShersby, Michael
Campbell, Rt. Hn. G. (Moray & Nairn)Kellett-Bowman, Mrs. ElaineSimeons, Charles
Carlisle, MarkKershaw, AnthonySkeet, T. H. H.
Channon, PaulKimball, MarcusSoref, Harold
Chapman, SydneyKing, Evelyn (Dorset, S.)Spence, John
Clark, William (Surrey. E.)King, Tom (Bridgwater)Sproat, lain
Clegg, WalterKinsey, J. R.Stainton, Keith
Cockeram, EricKirk, PeterStanbrook, Ivor
Cooke, RobertKnight, Mrs. JillStewart-Smith, Geoffrey (Belper)
Coombs, DerekKnox, DavidSutcliffe, John
Corfield, Rt. Hn. Sir FrederickLamont, NormanTaylor, Frank (Moss Side)
Cormack, PatrickLane, DavidTebbit, Norman
Costain, A. P.Le Marchant, SpencerThomas, John Stradling (Monmouth)
Davies, Rt. Hn. John (Knutsford)Lloyd, Ian (P'tsm'th, Langstone)Thompson, Sir Richard (Croydon, S.)
d'Avigdor-Goldsmid, Maj.-Gen. JackLoveridge, JohnTugendhat, Christopher
Deedes, Rt. Hn. W. F.Luce, R. N.Turton, Rt. Hn. Sir Robin
Dykes, HughMacArthur, Ianvan Straubenzee, W. R.
Eden, Rt. Hn. Sir JohnMcCrindle, R. A.Vaughan, Dr. Gerard
Edwards, Nicholas (Pembroke)McLaren, MartinWaddington, David
Elliot, Capt, Walter (Carshalton)McNair-Wilson, MichaelWalder, David (Clitheroe)
Elliott, R. W. (N'c'tle-upon-Tyne, N.)Madel, DavidWalker-Smith, Rt. Hn. Sir Derek
Eyre, ReginaldMather, CarolWard, Dame Irene
Fidler, MichaelMawby, RayWells, John (Maidstone)
Finsberg, Geoffrey (Hampstead)Maxwell-Hyslop, R. J.White, Roger (Gravesend)
Fletcher, Alexander (Edinburgh, N.)Meyer, Sir AnthonyWinterton Nicholas
Fletcher-Cooke, CharlesMiscampbell, NormanWolrige-Gordon, Patrick
Fookes, Miss JanetMitchell, David (Basingstoke)Worsley, Sir Marcus
Fowler, NormanMoate, RogerWylie, Rt. Hn. N. R.
Gardner, EdwardMoney, ErnleYounger, Hn. George
Glyn, Dr. AlanMonks, Mrs. Connie
Gower, Sir RaymondMonro, HectorTELLERS FOR THE NOES:
Gray, HamishMontgomery, FergusMr. Marcus Fox and
Green, AlanMorgan-Giles, Rear-Adm.Mr. A. G. F. Hall-Davis.
Griffiths, Eldon (Bury St. Edmunds)Mudd, David
Gummer, J. SelwynNeave, Airey

Question accordingly negatived.

It being after Ten o'clock, further consideration of the Bill, as amended, stood adjourned.