Hansard

I am pleased to open today’s debate on the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill. First, I welcome Margaret Burgess as minister designate for welfare and housing and commend Keith Brown on his contribution to the housing portfolio.

The bill will contribute to measures to reduce the number of empty properties—whether they be homes or shops or other commercial properties—so that we can make best use of existing buildings and minimise the number of properties that fall into disrepair and become a blight on our communities.

I thank the Local Government and Regeneration Committee, the Finance Committee and the Subordinate Legislation Committee for their scrutiny of the bill so far.

I was pleased to see in the stage 1 report of the Local Government and Regeneration Committee that there is much common ground between the Scottish Government and the Parliament on the importance of tackling empty properties. I am grateful to the committee for supporting the general principles of the bill.

Keith Brown—then Minister for Housing and Transport—and I have looked carefully at the recommendations that were made in the stage 1 report. I will outline a number of actions that are proposed to respond to the issues that were raised. Of course, I will write to the committee to respond to all its recommendations. Indeed, this debate will further contribute to the on-going engagement that I have committed to within and outwith this chamber.

I have met various organisations to hear their issues and consider how our proposals can be refined and improved. The Scottish Government has carefully listened to the experience of stakeholders, MSPs and councils.

We welcome the Local Government and Regeneration Committee’s support for our commitment to tackling empty homes. We want there to be a reduction in the 25,000 homes that are sitting empty long-term, while around 140,000 families are on waiting lists for a social rented home. We agree that giving councils the flexibility to increase council tax charges for certain long-term empty homes is a useful additional discretionary measure for the toolbox of functions that councils can deploy to help, encourage or, where needed, push owners not to leave their homes lying empty while there is such need.

We also agree that council tax is not the only answer. We have been funding the empty homes partnership to provide support to councils in tackling empty homes. We are also now part-funding three empty homes officers on a pilot basis, shared across seven councils. We are pleased to say that that is now starting to pay off as the number of councils that are actively working to tackle empty homes is increasing each year.

Although advice and support from a council can be enough in many cases, we also recognise that some owners need financial help to bring their homes up to standard. That is why we have doubled the amount that is available through the empty homes loan fund to £4 million. We will help make at least 160 extra empty homes available as affordable housing in addition to the existing £1.75 million of innovative empty homes projects that we are already supporting.

In relation to the increase, we have also taken on board comments about the need for clarity and the avoidance of complexity in relation to the types of empty home owners who deserve special treatment so that they are excluded from any council tax increase. That is why we propose to focus the exceptions on only those who are actively trying to bring their homes back into use, either for sale or for let.

We are consulting on that, and on other aspects of the draft regulations, which flesh out the details of how any council tax increase would operate.

We plan to amend the bill at stage 2 in response to the stage 1 recommendations as they relate to unoccupied homes. We intend to lodge an amendment that will increase from £200 to £500 the maximum level of penalty charge that a council can charge an owner who fails to provide information on whether their home is unoccupied. As the committee suggested, that should help to deter owners from deliberately avoiding providing information or from providing false information. We will also lodge an amendment that will limit in the bill the maximum amount of council tax increase to 100 per cent of the applicable standard rate, rather than just place that restriction in regulations. That is a response to the concerns that the Subordinate Legislation Committee raised about the potential for future regulations to allow for higher increases.

We welcome the committee’s general support for the proposals on business rates that will allow us to introduce regulations to reduce the level of empty property relief for commercial properties that have been empty for more than three months. I continue to talk to stakeholders about the provisions and again state that we will return to the Parliament with the details of the regulations should the bill be passed.

An important point is that the bill makes no change to empty property relief as it stands; rather, the bill creates an enabling power to decrease or, indeed, increase the rates discounts through regulations. That is no different from the ability that the Government already has to change through regulations many rates reliefs, such as the small business bonus scheme or the United Kingdom’s first and only renewable energy relief. I emphasise again that we remain flexible in our considerations. Yes, we must make savings, as a consequence of deep United Kingdom’s Government cuts, but we aim to ensure that the measure acts as an incentive to bring empty properties back into use. The policy will therefore be supported by our efforts on regeneration and our imminent town centre review.

Opposition for its own sake is no substitute for constructive suggestions to make the bill more effective. That is why the stakeholder engagement has been so important. I welcome the encouragement from Mark McDonald MSP to look at the incentivisation scheme in Northern Ireland, which provides relief to ratepayers after they fill empty properties. That could potentially be a further incentivisation as part of the package. I can confirm that we are considering how such a scheme could operate in Scotland and, if it is supported, how it could form a stage 2 amendment.

Our stated intention is to vary, from April 2013, the discount that empty properties receive after the first three months from 50 to 10 per cent. I reiterate that, as a result of our learning from experiences elsewhere, industrial and listed properties will continue to receive 100 per cent discount for the duration for which they are empty. In comparison to the council tax provisions, which could affect about 25,000 home owners and under which, for good reason, rates across the country will be potentially variable, the changes to empty property relief will affect a much smaller number of property owners and will be consistent across Scotland. Therefore, in view of that and of the scale of the savings that are involved, it was decided that it would be disproportionate to conduct a business and regulatory impact assessment. Modest but necessary savings will come from the policy—it will be £18 million a year from 2013-14 compared to a forecast business rates income of nearly £2.5 billion.

The package of rates relief will remain the most generous in the United Kingdom. Indeed, the current cost of empty property rates relief is £757 million over the five-year revaluation period. That is more than the sum involved in the popular and effective small business bonus scheme, which has made such a difference in these difficult times. Overall rates relief per year now exceeds £0.5 billion. To ensure that the relief is properly focused on supporting sustainable economic growth, we will shortly launch a consultation on the rates relief system.

The Finance Committee queried the impact on the public sector. By providing estimates, we have shown that the cost to the public sector is relatively minor. The benefit to local government services is that all non-domestic rates are of course passed back to local government for the funding of local public services.

We welcome the support in the Local Government and Regeneration Committee’s stage 1 report for our plans to abolish the housing support grant. The grant has become an anomaly since the introduction of the prudential borrowing regime, which requires councils to ensure that they borrow funds only if they are confident that they can pay them back. Therefore it must be councils’ responsibility to ensure that they can balance their housing revenue accounts each year. That will allow us to make better use of our housing funding by focusing on only key priorities in an equitable way, rather than simply servicing councils’ interest on historical debts.

Despite that, we recognise that Shetland Islands Council has continuing high levels of housing debt due to having borrowed significant amounts over many years from the council’s harbour fund. Keith Brown, as Minister for Housing and Transport, met the new leader of the council back in July and explained that the £15 million in funding being requested by the council was not a realistic scenario. We expect the council, as recommended, to take a hard look at its housing service to ensure sustainability, just as all other local authorities are required to do.

I too have met Shetland Islands Council, and officials are in discussion about easing the affordable housing situation on the islands. I believe that there is a desire to tackle the challenges that were inherited by the new council administration.

I commit to further engagement. I hope that the Parliament considers our amendments at stage 2 and in essence supports these key measures to bring back into use the empty properties that blight our communities—domestic and non-domestic.

I move,

That the Parliament agrees to the general principles of the Local Government Finance (Unoccupied Properties etc.) (Scotland) Bill.