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ASDA joins campaign against 'Bombsite Britain' tax

Major retailers, led by the supermarket chain Asda, are backing a campaign by the British Property Federation (BPF) against a stealth tax on empty property.

Dubbed the ‘bombsite Britain’ tax by the media, in response to the increasing spate of demolitions as private and public sector landlords raze buildings across the country rather than pay up, empty rates are costing owners of vacant shops, offices and warehouses hundreds of thousands of pounds.

The news comes days after one of Gordon Brown’s chief regeneration advisers revealed that the then chancellor ignored the advice of the country’s 19 urban regeneration companies (URCs) – the public-private bodies charged with rebuilding Britain. (See notes).

Despite the economic downturn, the government has pressed ahead with cutting business rate relief on commercial space since the start of April. Before April, retail and office space received 50 per cent relief from rates, while industrial space got full relief.

While landlords have been hit, thousands of occupiers tied into leases on properties they no longer need because of the downturn now also face a bleak future. Larger retailers are also now hitting out at what has been described as ‘a short-sighted tax grab’ on the part of the chancellor.

Jonathan Refoy, head of property communications & planning at Asda, said:

"ASDA is dedicated to helping our customers through this difficult economic period and our retail development programme is continuing to invest in local communities and regenerate towns and cities across the UK. But just as things have become more difficult economically, the government has imposed an ill-timed tax on empty properties which has had a number of unintended consequences and can only hinder retailers’ ability to regenerate brownfield sites. Anything that the government can do to alleviate this added burden, and help us work with local communities to get through this difficult time, would be welcome."

Stephen Robertson, director general of the British Retail Consortium said:

“At a time when retailers are facing very difficult trading conditions, the Government’s decision to tax empty properties is inexplicable. It’s led to an increase in property costs for large and small retailers at time when they can least afford it.

“We’re working with the British Property Federation to highlight to politicians the negative impact that removing empty property rate relief is having and hope the government will re-introduce the relief as soon as possible.”

Peter Cosmetatos, director for investment at the BPF has said that the federation’s campaign will continue to focus on collecting evidence of the effects of empty rates. The BPF set up a hotline – info@emptyrates.com – for firms and individuals to get in touch with their own stories.

“Occupiers are feeling the hit just as much as landlords,” said Cosmetatos. “Any short term gain for the Exchequer will be wiped out by regeneration projects being shelved, firms driven out of business and usable buildings being demolished. If we are to avoid further and lasting damage to the economy, the government must make use of the statutory power it reserved that allows it immediately to re-apply empty rate relief.”

The government has come under increasing pressure from backbench MPs who represent deprived areas of the country seeing new developments being killed off.

Chris Mullin, MP for Sunderland South, known for his involvement in freeing the Birmingham Six, was one of the first to speak out again empty rates.

“I hope the government moves swiftly otherwise we shall have a disaster on our hands,” Mr Mullin said today. “I am aware of several companies in Sunderland who may be forced out of business unless common sense prevails. It will also deal a blow to regeneration efforts in the North East since no one is going to develop new business premises on a speculative basis if they have to pay the full business rate regardless of whether or not they can find a tenant.”

The Conservatives have also criticised the tax grab, which is now expected to raise around £1.3bn this year.

Eric Pickles MP, shadow communities secretary, said:

“The changes are nothing less than a £1 billion rise in stealth taxes for local firms. At a time when the property market is so fragile, these tax rises threaten to discourage development and regeneration.”

The Treasury has defended the reforms, saying they had “followed the independent recommendations of experts Kate Barker and Sir Michael Lyons to encourage owners to bring empty properties back into productive use and discourage deliberate dereliction”.

Both reviews were carried out several years ago during the economic boom.

The Treasury’s statement said: "Reforms to empty property relief are aimed at ensuring there is a fairer balance between incentives to re-let property and giving property managers a period of relief while they manage vacancies."

For more information, background or case studies contact Andrew Teacher at the BPF

020 7802 0113
07968 124545
ateacher@bpf.org.uk