Trade groups have reacted with fury after business secretary Lord Mandelson said a hugely unpopular tax on empty properties was “good news for tenants”.
Lord Mandelson said the “bombsite Britain” tax – which resulted in a national campaign yesterday backed by Birmingham City Council – would bring down rental prices.
But the business community erupted in fury at the comments, with one post office owner saying the business secretary was “detached from reality”.
Mandelson said: “I don’t think now is the time to bring back the business rate relief on empty properties, as I believe this can benefit small businesses. Landlords are more likely to bring down rental prices if they are looking to find new tenants quickly, which is good news for tenants.”
But the British Property Federation, which is leading the campaign to scrap the taxes on owning an empty property, said the decision showed the Government had no idea about how business worked.
BPF chief executive Liz Peace said: “This is the equivalent of the property poll tax. It’s worrying that people running the country have such fundamental misunderstandings of how business works.
“You can’t tax something earning no money and expect that to conjure up tenants when demand is falling through the floor.”
The BPF campaign was recently backed by Birmingham City Council, which has to pay more than £817,000 a year itself on empty properties. The rates cost Birmingham businesses as a whole £23 million annually.
Council leader Mike Whitby put his name to an open letter written by the BPF asking for the rates to be scrapped.
The Forum of Private Business said it was backing the campaign, with chief executive Phil Orford saying: “No landlord, large or small, wants a property to remain empty. Mr Mandelson’s comments that it is helping small businesses is simply wrong.
“The Government should be doing all it can to help small firms, especially at a time when they are struggling to survive.”
And John Wright, national chairman of the Federation of Small Businesses, said: “There is currently no way out for those tied to a lease or who own a building they cannot let.
“It is unfair that, at a time when they need the most help, businesses are being hit a with a tax on properties that earn no income.”
The cut in empty business rate relief for offices, shops and warehouses was made by Gordon Brown last year and came in from April to raise £1.3 billion. Since April, landlords have been flattening buildings to avoid ruin, leading to it being dubbed the ‘bombsite Britain tax’.
Some businesses have had to lay off people or saddle themselves with more debt to pay the tax, the BPF claimed.
John Beswick, a village post office owner in rural Lincolnshire, said: “Mandelson is detached from reality. If businesses fail, the last thing they need is to have a rates problem too.
“Where there’s no demand, there’s simply no demand and even reducing rents as he suggests won’t change that.”