Minister calls for empty property rate relief

Nov 20 2008 by William Green, The Journal

NORTH East Minister Nick Brown has joined growing calls for a Government rethink on a crippling tax on the region’s recession-hit companies.

The Treasury should re-examine the levy on empty commercial properties in old industrial areas like the North East, says Mr Brown who attends cabinet meetings as government chief whip.

His intervention comes after business chiefs last month warned firms face cutting investment or jobs or going bust because of tens of thousands of pounds being added to their tax bills.

Dozens of MPs – including nine from the North East – have also signed Commons motions calling on ministers to reintroduce empty property rate relief to help hard-hit small firms, regeneration schemes and the supply of affordable commercial properties.

But Mr Brown’s intervention has sparked anger from the British Property Federation (BPF) who said it would be “highly cynical” to offer relief just in areas “where the government might lose seats”.

It said firms received full business rate relief on empty factories and warehouses and half relief on empty shops and offices before April, but now paid full rates after a “woefully inadequate grace period” – leading to many demolitions and companies facing bankruptcy.

Speaking to The Journal, Mr Brown said: “The issue has been raised with me as Regional Minister. I support the Government’s position but believe it would be right to consider how the tax could be ameliorated in older industrial areas as are found on Tyne and Wear and Teesside.

“The effects of the tax are fairly different in parts of London compared to the North East. It is a regional case I have made as the Regional Minister.”

He added he was not the only regional minister to be raising the issue and warned against attempts to turn the situation into a “political party fight” as it would not help the region’s case.

Ross Smith, head of policy at the North East Chamber of Commerce, welcomed Mr Brown’s involvement. “I hope that the Treasury listens to the representations that he makes and takes swift action because this is having a damaging impact on the economy now and will only slow down the recovery in the North East when it starts,” he said.

BPF chief executive Liz Peace said: “How can the Government ignore the views of so many MPs, experts and real people?

“No one with a basic understanding of business supports this and it would be highly cynical to offer relief just to areas where the government may lose seats. That would ultimately cost them votes right across the country.”

Helping one part of the country could be highly damaging to other regions, and the logic of restoring relief across the board is becoming overwhelming as the recession deepens, said the BPF, which is running an online petition against the tax.

It added that demand for commercial property has fallen dramatically in recent months and expects a massive increase in vacant property, with 40 small firms going bankrupt daily and one in five retailers going to the wall over the next couple of years.

Click here to read William Green's blog on life at Westminster.