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Property chiefs call on Cable, Pickles and Spelman to keep pledges to scrap “damaging” hardship tax on empty property

Property chiefs are calling on business secretary Vince Cable to reverse a tax on empty property which both he and current communities secretary Eric Pickles declared was “damaging” while in opposition.

The so-called ‘bombsite Britain’ tax which levies full business rates on unoccupied offices, shops and warehouses, has famously led to millions of square feet of property being demolished since it came in two years ago.

Described as a ‘tax on hardship’ by business leaders, it was derided for making a bad situation worse by hitting the cash flows of under-pressure business looking to save money by downsizing property, often forcing them to cut jobs instead.

Although a concession was made by Labour 18 months ago, only the very smallest properties were spared from paying the tax.

Ahead of the emergency Budget, business leaders are calling on the new government to keep their promises by reminding them of all the things they said in opposition to the tax. (See notes.)

In a recorded interview on the campaign website emptyrates.com set up to battle the tax, Dr Cable called the tax “counterproductive” adding that it was “economically very damaging”.

Liz Peace, chief executive of the British Property Federation, said:

“It’s one thing to sit in opposition and criticise bad decisions but the real test comes in having the bottle to undo them and put things right. Of course we are in a climate where tax cuts are not viable, but the simple fact is that taxing empty properties at a time where high streets are falling apart is making a bad situation worse. This tax was opposed by hundreds of MPs, including the current secretaries of state for Business, Communities and Environment. If they do not un-do this damaging tax next Tuesday, questions will no doubt be asked.”

Francis Salway, chief executive of Land Securities, said:

“Whatever difficult decisions the new chancellor takes on Tuesday, it is absolutely vital that growth and enterprise are not hampered by spending cuts and tax rises. Empty rates has been a tax on hardship at the worst possible time and it is absolutely essential that the budget revokes it fully to support business occupiers and ensure the future provision of commercial space.”

For more information, interviews or quotes call Andrew Teacher at the BPF on 07968 124545 /  ateacher@bpf.org.uk

Notes for editors

See www.emptyrates.com for regional case studies, quotes, background information, media clips and more.

Below is a selection of quotes from senior politicians

Eric Pickles, then Shadow Secretary of State for Communities and Local government, Mail on Sunday, 16/11/08

"The fact Labour’s own Chief Whip is leading this tax revolt shows just how damaging this levy is."

Caroline Spelman, Shadow Secretary of State for Communities and Local Government, House of Commons, 20/01/2009

"...One of the saddest features of this recession is the increase in the number of empty premises on the high street. Will she therefore confirm that, even with the tiny relief in the pre-Budget report, the new empty property business rates are still set to raise £700 million this year? Does she accept that that additional tax could well make the difference between a business getting by and a business going to the wall?" (Hansard)

Vince Cable, Liberal Democrat Shadow Chancellor [filmed for www.emptyrates.com]

“What will now happen is that when property falls vacant it will be penalised for being empty in a recession which is a ludicrous situation, completely counterproductive and economically very damaging. [The Government] hasn’t thought through the economics of commercial property. They introduced in effect a tax on development a lot of which in its nature is speculative and built ahead of demand. [Empty rates are] damaging to the industry even in a good time and now that we are in a recession it is lethal. [The Government] rushed a change through to raise more money without consulting people and talking about it properly. I think what the Government needs to come back with a revised proposal on empty property rates, which reflects the current economic reality.”

Alan Duncan, then Shadow Minister for Business, Enterprise and Regulatory Reform, House of Commons, 07/10/08

"Perhaps most immoral of all, taxing something that generates no revenue does enormous damage. Removing the tax relief for empty property rates is bringing to a grinding halt any kind of activity for preparing business premises or developing wrecked premises for future use. It is taking money from people who have not got it to the point where they have to take the roof off or demolish what they have just built."