Baroness Hayman of Ullock:

Moved by Baroness Hayman of Ullock

415: Clause 176, page 222, line 14, at end insert— “(2A) Designations under subsections (1) and (2) may only be made following consultation with the local community.”Member’s explanatory statementThis amendment would require designation of a high street or town centre to be consulted upon.

My Lords, before I start, I thank the noble Lord, Lord Fox, for all his work on the REUL Bill, on behalf of my noble friend Lady Chapman.

Welcome back to the levelling-up Bill. We have a large number of amendments in this first group today. They address vacant high street premises and provide us with an opportunity to consider how best we can address our declining high streets and town centres, so I beg your Lordships’ patience: there is quite a lot to say here. Recent data from the British Retail Consortium shows that shopping centre vacancies are running at nearly 19% and high street vacancies at around 14%. These are significant figures, and communities need the tools to improve the situation. There are clearly a number of reasons why this has been happening, and we cannot ignore the impact of online shopping. That was already a significant area of growth before the pandemic, which of course increased the amount of online shopping that people were doing. Vacant shops are also a symptom of a weak economy, and we have had slow economic growth for more than a decade.

That said, there are things we can do to get vacant shops into use and create the conditions for the growth of community enterprises, social enterprises and co-operatives, all of which are good business models and generally more resilient to global events; this certainly proved to be the case during the pandemic. First, I will look at a number of amendments we have tabled that specifically look at how the high street has declined. Amendment 431 probes the impact of business rates and council tax on the number of vacant high street premises. We know that business rates have become extremely problematic for many retailers and other small businesses on the high street, and we believe it is time for the Government to review business rates. I hope the Bill is an opportunity for the Minister to explore that further than we have so far.

Amendment 432 probes the impact of pedestrianisation on the number of vacant high street premises. How people feel about their high streets when they do not have traffic going up and down them is an area of real interest. Evidence shows that it makes it a nicer place to shop. Maybe if we looked at pedestrianisation within the context of vacancies and business rates, we could see how we could make improvements.

Amendment 433 probes the impact of vacant pubs on high streets. Unfortunately, a lot of public houses are closing and I know from public houses on the main street near where I live that business rates are a major problem in that area. Perhaps we can look at business rates around pubs particularly, because they have had specific challenges during the pandemic.

Amendment 434 is about the impact of access to cash and high street banks. Unfortunately, too many banks have been closing high street branches and often we also lose the cashpoint and the ability for small businesses to manage their finances effectively and efficiently. One of the problems is that banks seem to think that bringing a van and parking it in the supermarket car park every now and again is providing a sufficient service. We do not believe that to be the case; we think we need to look at how we can stop the loss of banks on the high street.

Amendment 435 probes the impact of disparity in costs between online and high street retail. We know that online shopping is having a major effect on our high streets which, again, is why we need to look at business rates. Surely the way to resolve that disparity is to see how it can be ensured that retail on the high street is not put at a disadvantage through business rates, and that online retailers are properly taxed and there is a better balance between the two.

Amendment 436 in the name of my noble friend Lady Taylor of Stevenage looks at how increasing dwell time can support regeneration. Dwell time is how long you actually spend there. We have asked for a Minister to publish a report on how leisure, culture, sport and tourism in town centres can increase dwell time for the purpose of regeneration. For example, if retail is not going to fill every shop unit, how can we use leisure, culture, sport and tourism to do so? How will that encourage more people to come into the town centre and shop more?

Looking specifically at some clauses in this part, Clause 176 sets out the arrangements for local authorities to designate where our town centres and high streets are—in other words, the places that will be in scope for premises to be subject to rental auctions, which come later under Clause 188. This is an important first step in the process. Amendment 415 in the name of my noble friend Lady Taylor of Stevenage would require any designations of high streets or town centres to be consulted upon. This is a pretty modest proposal, we believe. It just means that local communities affected by the designation of high streets and town centres would be consulted. We believe that is the right way forward; nobody knows what is or is not a high street or a town centre. Who knows better than the people who use it and live near it?

Amendment 416 in the name of my noble friend Lady Taylor of Stevenage probes the possibility of new incentives to fill empty shops. This develops that previous amendment further by including consultation with local businesses on possible incentives as to how empty shops can be filled. Again, they will know their local community well and may have some interesting ideas as to how the local situation can be improved.

Amendment 417 allows the local community to apply for a street or an area to be designated as a high street or a town centre. This builds on the previous two by adding a protection to ensure that any local community is empowered to seek that a street or an area of their choosing could be designated as a high street or town centre—in other words, giving the community the right to initiate. We believe that communities should have some say as to where their high streets are.

Amendment 437 in my name defines “local community”. To make Amendments 415 to 417 make sense, Amendment 437 defines what is considered “local” in this regard. We have specified people “in the vicinity” to add in protection from potential outside interference. This is an important point. It is about demonstrating that levelling up should not be something done to communities but is something done with them. As part of that, there need to be protections and powers for our communities; our amendments would ensure that these exist.

I will now turn to what constitutes “vacancy”. My Amendment 419 removes the Henry VIII powers for the Secretary of State to alter the circumstances of vacancy. Amendment 424 removes the Henry VIII power that allows the Secretary of State to add or remove grounds of appeal. In general, though, we think the Government have got this right. According to the Bill, vacant premises must have been vacant for a year or for 366 days in the previous two years. We think this is a sensible balance between detriment to the local community and commercial pressures. Our issue is with subsections (5) and (6). Subsection (5) reads:

“Regulations may amend this section so as to alter the circumstances in which the ‘vacancy condition’ is satisfied in relation to premises”.

Subsection (6) says:

“Those circumstances must relate to the time during which premises are or have been unoccupied”.

So, essentially, Clause 178 legislates for what “vacancy” is, but the Government want to reserve the power to change it later. The arguments for and against Henry VIII powers are well known and I am not going to repeat them again today, but I will say why this part of the Bill is inconsistent with what we think levelling up needs to be.

As we have discussed previously in Committee, levelling up should be about the devolution of resources and power. It should not be about Ministers and officials in Whitehall holding all the cards and making decisions about which town centre or high street will benefit from government investment or involvement. Amendments 419 and 424 seek to remove those Henry VIII powers and give us protection in the future.

My Amendment 421 reduces the period after which an initial letting notice would expire to 28 days. Clause 180 is the first clause in this part of the Bill which provides the detail about how the process is likely to work. It is important that the state does not act in an overbearing way and that there is a balance between private and public interests. Currently, this tilts entirely towards landlords, which can lead to long-running vacant and derelict premises blighting our communities and high streets.

Clause 180 sets out that an initial letting notice will be in force for 10 weeks and that a final letting notice can be served only while the initial notice is in force. Our view is that 10 weeks is too long. If we add on the 14 weeks of the final notice period, that makes it a 24-week process, and if the premises has already been vacant for at least a year, or 366 days in the preceding two years, that is a long period of time for it to be empty. We want the Bill to deliver swift action to bring about the change that people want in their communities, so we do not want to see such a long process. Our amendment seeks to rectify that by specifying a shorter notice period of 28 days. We think that four weeks is enough time for landlords to understand the implications of the notice, to act promptly, and to find new tenants as a last opportunity before that process then kicks into being.

In a similar vein, Amendment 423 would reduce the period before a final letting notice can be issued to two weeks. Clause 183 establishes the final notices. As I have said, these are used when a premises has laid vacant for a year or 366 days over two years and has been served its initial notice but no action has taken place and it is still lying vacant. Obviously, that has a huge impact on the local community. On the face of the Bill, final notice has to take place after eight weeks have elapsed from the serving of the initial notice, but not before the notice itself expires after 10 weeks. As I have just said, we feel that this period is too long. Amendment 423 would allow for the final letting notice to be served after two weeks have passed following the serving of the initial letting notice.

My Amendment 422 would prevent the landlord from transferring the premises between related entities while the initial letting notice is in force. Clause 181(1) prohibits landlords from entering into contracts for the building, other than for the sale of the site, without the consent of the local authority. However, the local authority, as covered in Clause 182, must grant approval, provided that the landlord has agreed a lengthy tenancy that meets the conditions. We welcome that the restrictions aim to prevent landlords from trying to escape their obligations; for example, by entering into a bogus tenancy that includes an immediate break clause. In this case, the new tenant—possibly a friend or family member—might be a tenant for a day, and they could then execute a break clause and vacate the premises, and the clock can restart. It is right that the Government are looking to close these kinds of loopholes. However, the purpose of this amendment is to probe whether the clause still leaves a gap where a landlord might seek to pass ownership of a premises to a friend or family member, or perhaps a related company, in order to establish new ownership and restart the clock, when in reality nothing has changed. The amendment may not be the best way to close such a loophole, but I tabled it for the Minister to consider the matter and see whether a better way could be created.

My Amendment 427 requires the Secretary of State to lay any regulations under this clause before Parliament within 90 days. It reflects our belief that it is important to get as much of the Bill as possible on to the statute book in good time. We support rental auctions so that landlords can use their properties, or other groups can seek to, and we want the powers to have teeth so that they are not easily circumvented and are usable.

My Amendment 429 would exempt from compensation damage that is caused when the authority or its agent needs to force access to a site following the failure to allow such access by the landlord. If Clause 201 is used proactively by local authorities and communities, it will of course mean that it is disruptive: it is meant to be. I have no doubt that there will be cases where some landlords think that the best course of action is to ignore the process entirely, especially if they are based a long way away from the communities where the premises are situated. There have to be powers for the local authority to enter premises, and we fully support that.

Clause 201 provides that where this power has been used and damage has been caused, the landlord has a right to compensation. That is fair, but in certain circumstances, a landlord should be able to seek redress and compensation. Amendment 429 would cover that, and brings two protections: first, that the damage happens reasonably—for example, cutting off a lock or knocking through a wall might not be proportionate—but, secondly, that it follows the refusal of a landlord who has not given the local authority the opportunity to enter, so reasonable action has had to take place. Again, we think this is a fair balance between protecting property and complying within the law. I should be very interested to hear the Minister’s thoughts on this.

Finally, my Amendment 430 provides that:

“Within the period of 90 days beginning with the day on which this Act is passed the Secretary of State must publish a report detailing the new resources made available by His Majesty’s Government to local authorities in order to exercise Part 11 powers”.

Noble Lords will be aware that we regularly raise concerns about the finances and resources available to local authorities, and this is just another occasion. It is all very well to bring in new legislation, but local authorities, in particular, must have the resources to be able to deliver it.

I am aware that the noble Earl, Lord Lytton, and the noble and learned Lord, Lord Etherton, have amendments in this group, and I am very interested to hear what they have to say. I think I have probably spoken for long enough, so I beg to move.

My Lords, I draw attention to my amendment, co-signed by the noble Lord, Lord Thurlow—and I am very grateful to him for doing so. The amendment is to Clause 178(4).

Clause 178 is dealing with the vacancy condition, which is one of the conditions for permitting letting or rental auctions by local authorities. My question is probing, to do with certainty. Clause 178 (4) mentions

“Occupation by … a trespasser, or … a person living in premises that are not designed or adapted for residential use”, but goes on to say that

“this is not to count for the purposes of this section”.

Since the section deals with both what is occupied and what is not to count as occupation, it is unclear what that means. I ask the Minister to make it clear.

I think the intention must be that where a trespasser is in occupation or there is

“a person living in premises that are not designed or adapted for residential use”, the premises are not to be treated as unoccupied for the purposes of Clause 178(1). That is my understanding. If that is incorrect and it is intended that they should be treated as unoccupied, the amendment provides that if a landlord has taken possession proceedings, they are not to be treated as unoccupied. It is really a question of clarity as to what Clause 178(4) is meant to do here. If the Minister can give a clear explanation from the Dispatch Box, that would help me and may be the end of the matter.

My Lords, I am grateful to the noble and learned Lord, Lord Etherton, for identifying what I believe to be an unintended consequence in connection with the proposed forced auctions of high street property. I am pleased to add my name in support of Amendment 418.

Following many years of practice as a chartered surveyor, specifically in the commercial property market, I am well aware that one of the most difficult challenges that landlords of vacant property can face is that of the unauthorised or illegal occupation of their premises. Securing legal and legitimate possession from an occupier who refuses to leave is expensive and time-consuming and can easily—and unfairly—add to the long list of bad landlord stories.

If that unauthorised occupation involves residential property, the problems of cost and delay can increase significantly. I appreciate that the clause we are referring to does not refer to residential occupation, but commercial shops are frequently let to sole traders who use an upper floor storage space informally as residential accommodation. It is outside the terms of the lease, but it may remain a fact, so it is worth pointing out that residential occupation comes into this amendment.

Amendment 418 is designed to protect a landlord from enforcement by the local authority of the auction process when they are already doing their very best to secure vacant possession. They are trying to get rid of an unauthorised occupier. Without this possession, it becomes impossible to let the property. Who would conceive of signing a lease for a shop as a tenant with an illegal trader already in place? Surely it is wrong to penalise the landlord who is keen to let their property but is unable to do so. While legal action is under way, that landlord receives no rent and is probably paying interest on a commercial mortgage. They are likely in breach of their rental income covenants with the bank, so may be verging on defaulting on that loan, and are likely employing costly solicitors to pursue legal action for recovery of their property. Yet, by this Bill, they could be accused of keeping a property vacant.

The clock should not start on the period defined as “lying vacant” until the property is vacant and is in the landlord’s gift to be let to a tenant. I do not believe that it is the Government’s intention to auction off commercial premises that are the subject of legal action to recover possession, so I ask the Minister to ensure that, while legal proceedings are under way to secure possession, the landlord does not inadvertently fall into the trap of effective confiscation by the authorities.

This amendment is not a matter of policy or principle. It does not dispute the intention of Clause 178. It is simply a practical matter that, unamended, will lead to confusion and conflict between vested interests, which, I am sure, is unintended.

My Lords, I rise to speak to Amendment 426 in my name. I start by declaring an erstwhile interest as a former property manager of retail premises. It had a high street address, but the main shopping area had ceased to be in the high street some 30 years prior so, when we talk about high streets, it requires a little care in what one is actually referring to.

I pay tribute to the British Property Federation, which the noble Baroness, Lady Hayman of Ullock, mentioned in her excellent and substantial introduction to this group of amendments, but I must stress that these views are mine and not those of the BPF.

I observe that 27 clauses and a schedule is a lot of stuff to have in a Bill of this sort for something that I am advised is a really quite narrow application. However, I am looking in the direction of the noble Baroness, Lady Thornhill, because I suspect that she may have other views on this matter that she will doubtless enlighten us on.

The Government seek to attract overseas inward investment at scale, and UK real estate is one of those attractive asset classes across the world which has a great deal of further potential. I am told by the chief executive of Savills that commercial property investment in the UK runs at about £60 billion annually, about £30 billion of which comes from overseas, so this is a matter of considerable moment. However, we risk serial policy interventions, with a potential adding of burdens, increasing uncertainty and raised investor risk, which threaten to undermine this success story. Commercial rent collection moratoriums were one such thing. While I recognise that they were essential in the circumstances, they did not help.

High streets and retail properties are particularly challenged by the burdens from business rates referred to by the noble Baroness, Lady Hayman, and from floor space oversupply, loss of important anchor tenants, major shifts in shopping habits and general changes in work/life balance. Many properties in regions with the highest vacancies suffer from historic business rates levels, with instances of rates liability being in excess of 100% of the rent. That makes tenancies as unattractive as private sector investment and must be addressed.

Any measure that threatens investment should be looked at critically. As far as the retail investment sector is aware, according to the information that I have from the BPF, there is little pressure across the country to introduce these auctions, and the Government admit that they will be relevant in only a minority of cases to deal with empty properties. I appreciate that if a property is creating a particular problem, it must be dealt with, but given what we are being asked to put into this Bill, I wonder whether we are not using a very large sledgehammer to crack a small nut. The BPF tells me that the likely costs of each high street rental auction to a local authority alone would exceed £6,000. At a time when strained local authority finance is prevalent, this is unlikely to make them a priority. That figure, if correct, is just the local authority’s cost—never mind the other costs for the other parties.

The Bill proposes a scheme which I find complex, with exacting compliance criteria and where decisions of local authorities in their own cause appear to be incontestable, such as a refusal of consent under Clause 184(1). Appeals under Clause 187 would be to the county court, which has its own problems of delay and cost, and may not stop there. Therefore, a potential liability to pay compensation assessed by the First-tier Tribunal on top of that makes this look like quite a chancy operation. None the less, if Ministers wish to press ahead with this measure, the Bill should better distinguish between those property owners seeking a tenant but who have been unable to find one, having used all reasonable endeavours, and those who are just being plain unco-operative, where I can see that there is a perfectly good explanation. I pay tribute to the points made by the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Thurlow, in that respect.

Schedule 16, which sets out the grounds on which landlords might have to appeal against a local authority’s final letting notice, should therefore be amended to include a new Clause 8, as set out in my amendment. It provides a facility for the landlord to demonstrate reasonable attempts to market the property at or below what might be described as a reasonable market rent for at least a nine-month period. That is to provide a safeguard against any capricious approach to the matter. We know that there are difficulties on the high street, and in dealing with certain types of shop premises—their shape, their configuration, their position in the high street, and other things that are going on at any given time, possibly to do with planning policy.

Government should not require property owners to undertake any action that places them in breach of their contractual arrangements—for example, if a tenancy required them to undertake works that conflicted with an agreed future use or required expenditure that necessitated borrowing in excess of agreed limits. That is the sort of thing that would apply here. Furthermore, if actions are being taken against tenants who are being dragged through the courts, it would be unreasonable for a landlord to be subject to these provisions in circumstances where that legal process was being pursued. Indeed, it might be seen to be prejudicial to the whole process.

I do not believe that property owners keep shops empty without reason. They lose rental income, face higher insurance premiums, run an increased risk of vandalism to the property and, needless to say, are liable for empty property rates. Many property investors have fiduciary duties to their shareholders that mean they must use all reasonable endeavours to let the property.

Forcing a rental auction is not a harmless exercise; it could result in what is termed, in the cant of the trade, a fire sale outcome, with sharply marked down rental figures. This has implications, such as the precedent that sets in the rest of the locality, and for certain types of shop. That would not be at all helpful.

Store vacancy rates correlate with wider economic health, as the noble Baroness, Lady Hayman, said. North-east England has the highest vacancy rates—18.8% in the first quarter of 2022—and the highest regional unemployment at 5%. The north-west and West Midlands also have relatively high levels of vacancies, correlating with higher unemployment. There are wider market factors at play here. Owners of real estate, and retail premises in particular, should not be made to bear the burden, uniquely, of the outcomes of government regional policies, or simply larger shifts in economic activity that are clearly outside their ability to control.

Empty shops are much more frequently a symptom than a cause of the problem. It may be high street decay but turning around the root causes of high street or town centre decline requires a framework to stimulate investment and activity. The British Property Federation tells me it has a model for this, called town centre accelerators. I suggest that His Majesty’s Government work with the British Property Federation to develop these across the country, especially where there is strong local leadership to deliver them.

My Lords, I apologise that I have not been in Committee in recent sessions; I had amendments on housing. I have discovered that, as a non-affiliated Peer, it is difficult to organise the division of labour when there are so many hefty Bills going through the House.

I have a particular interest in a couple of groups of amendments being discussed today. High streets and businesses are a core levelling-up issue for so many people outside of London. The decline of the high street can illustrate viscerally the feeling of being neglected and left behind. Boarded-up shops and closing community resources such as banks and pubs can be demoralising, making it feel like the heart of a community is being ripped out. Amendments 433 and 434 from the noble Baroness, Lady Hayman, are important in this regard; she summed up in a compelling way why this is an important group.

A number of the amendments refer to consultations, which are very important. I was interested in the comments of the noble Lord, Lord Thurlow, the noble and learned Lord, Lord Etherton, and the noble Earl, Lord Lytton, regarding incentives. They show that we cannot simply declare a commitment to reviving the high street; it is a bit more complicated than that, to say the least.

I want to raise the dilemma that arises when government policies with different priorities, in completely different areas from this Bill, inadvertently make matters worse for high streets. I will reflect on and support Amendment 432, from the noble Baroness, Lady Taylor of Stevenage, on assessing the impact of pedestrianisation.

Pedestrianisation can intuitively seem like a good idea for high streets—a positive contributor to a community atmosphere, with increased footfall and increased likelihood of people popping into premises and so on. But stop and consider Naz Choudhury who, for many years, ran the successful Temple Bar, a halal Lebanese grill and Indian food restaurant in Oxford, which permanently closed recently. Why did it close? Mr Choudhury blames a certain form of enforced pedestrianisation in the council-imposed low-traffic neighbourhoods, specifically car restrictions in the Cowley Road area of east Oxford. Mr Choudhury says:

“The council’s decision to put these bollards up along Cowley Road was the main reason people don’t want to travel here anymore”.

Obviously, that is a subjective view, but there are a lot of controversies surrounding the Government’s active travel policies, which emphasise cycling and walking over driving. Businesses are saying that policies such as LTNs are having a negative impact on them. In Haringey, where I live, many shop owners say that LTNs are causing them to lose business.

The controversy around LTNs in Cowley Road in Oxford even hit the national newspaper headlines, largely because of opposition by Clinton Pugh, who is the father of the brilliant “Little Women” actress Florence Pugh. Clinton Pugh said:

“The council have literally strangled the life out of the Cowley Road and it is having a very negative effect on businesses.”

Mr Pugh, who is the owner of two or three cafés and restaurants on the road, even put up a banner accusing Oxford of censorship, quoting Orwell’s Nineteen Eighty-Four. Rather than talking to or listening to him, the council’s response was to threaten to fine him for not getting planning consent for the banner.

Beyond the celebrity stories, a serious point for this group of amendments on the high street is to note that policies such as LTNs, which I am sure are very well intentioned, can create a type of pedestrianisation that is bad for business. Too often, councils just will not listen to the complaints or look at the evidence. Cowley Road traders became so exasperated that they produced their own business impact survey of the effects of traffic-reducing measures. It revealed that at least eight shops had closed where LTNs are located; that 153 shops had been directly or indirectly affected through a loss of customers and logistical problems with deliveries to businesses and customers; and that business owners reported a decrease in turnover of 30% in some instances, with some claiming 50%. A letting agent said that the tradespeople they use had increased their call-out fee from £45 to £65 due to the time it takes to get around in a van, the extra fuel used and so on. Hospitality businesses are particularly affected. A staff member at a specialist supermarket, which people travel a long way to get to, noted:

“We don’t sell many large bags of rice now because they’re too heavy to take on the bus”.

Something that looks like “Let’s get everyone walking or on the bus, and it will all be lovely and pedestrianised” is actually destroying businesses and having a bad effect on consumers, who cannot get what they want to buy. We can see parallels between pedestrianisation and the removal of free—or any—parking spaces in town. This is a double blow to both shoppers and SMEs alike, again in the name of anti-car, active travel policies.

Oxford traders say:

“We’ve been asking for an independent business impact assessment to be carried out but the council have ignored us, so we had to do our own”.

If we are to have a levelling-up discussion, Amendment 432 would be a sensible way to sort out the pros and cons of pedestrianisation in local areas. In other words, you cannot have top-down policies that undo any possibility of local residents or businesses having a proper say. LTNs illustrate that.

My Lords, I apologise to the Committee: I should have disclosed before I spoke that I have an interest as the owner of high street retail premises.

My Lords, there is so much that can be said regarding high streets that is very well evidenced, and in fact there is consensus about what does and does not work. Our concern on these Benches is that the various measures in the Bill, even when combined—it is important to see that—probably do not go far enough or are bold enough to really level up or regenerate. However, this is not Second Reading. I am pleased to speak positively to this part of the Bill and to this group of improving and strengthening amendments, which have been well described in appropriate detail by their proposers, particularly the noble Baroness, Lady Hayman of Ullock, as has already been mentioned.

I have to confess to becoming mildly excited about the prospect of local government being able to oblige landlords to rent out persistently vacant high street premises through the rental auctions process. As the elected Mayor of Watford, I inherited a high street shamefully branded in a tabloid headline as “Ibiza on acid”, and where the national crime survey showed one of our town centre side streets as one of the worst crime hotspots in the country several years running. Yes, more bad headlines, but more importantly it was backed up by local people’s opinions, experiences and—never to be forgotten—their perceptions. There was much work to be done, and it took years.

Thus I have bitter experiences of first, and most importantly, trying to track down the landlords of vacant premises—in other words, those who have real legal responsibilities and can actually do something and not just pass the buck. It was rarely straightforward, and any improvement that the Government can make to ease that part of the process would be very welcome and undoubtedly strengthen this policy.

For us, the formation of a business improvement district was critical to eventual success, and one hopes that they continue to be supported. In fact, it was the BID team which was able to do much of the footwork that is going to be needed of continuously monitoring vacant units and all the other premises on the high street. Given the skills and capacity issues in local councils that have been mentioned, this is definitely going to further stretch resources, particularly in district councils. Will the Minister reassure us that the Government have plans to target these issues?

On further investigation, we found that there was often a wide range of reasons why properties were empty, many of them legitimate and often complex and challenging. Amendment 426 in the name of the noble Earl, Lord Lytton, essentially speaks to that dilemma. He may be surprised to learn that I can empathise. I say to him that any good council would and should seek to work with a landlord in the circumstances outlined in his amendment and help and support the landlord in getting the premises re-let. But I recognise that this is not always the case and despair when I hear case studies such as that from the noble Baroness, Lady Fox, of when things have clearly gone awry and councils have not listened. I do not believe in being prescriptive about it because I could stand here and tell noble Lords how pedestrianisation revitalised our high street. My instincts are always to say, “Let councils decide what suits their circumstances”, but in the full knowledge that sometimes they mess it up.

What was key was the partnership approach—agents, landlords, businesses, the council and the community working collaboratively to get things to a point where a compulsory rental auction would not be necessary. That would be a measure of its success. But all too often we found that the landlord was not the kind of one described by the noble Earl but a pension group or similar investor with a wide range of holdings and for which a couple of shops in Watford High Street were small beer. For a wide range of commercial reasons it did not “suit their circumstances at the moment” to re-let. I sincerely hope that these are the landlords that this legislation will drive to the table.

The word “community” in my list of partners is important. Amendments 417 and 437 emphasise the involvement of the community, which is the heart of any place, as we know—the hub for getting together to enjoy a wide range of activities and events. In short, it is hard to imagine that a local plan would be found sound if it did not involve a policy for the high street and significantly involve the local community in its formation. Can the Minister confirm this?

Some landlords can be challenging to deal with and, as our experiences in compulsory purchase cases show, if there is a way around a new perceived impediment, it will be found. Indeed, businesses are hatched to help landlords do just this. Try Googling, “How to get out of paying your business rates” or, in the case of this policy, “What to do to ensure your premises aren’t vacant for a year and a day”. Therefore, the second stage after the notice has been served is important. Used positively, it enables partners to get together to sort things out, but conversely it allows landlords time to employ various ruses to try to convince the council that they are sorting it out, so that the council will call off bailiffs. Thus we strongly support Amendments 421, 422, 423 and 424 in the name of the noble Baroness, Lady Hayman of Ullock, for all the detailed reasons that she has so helpfully given. They would speed up and tighten up the process and give ultimate powers to the council as opposed to the Secretary of State.

Amendment 418 in the name of the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Thurlow, seeks to support landlords caught in that intermediate position and offers a solution which seems entirely reasonable—that they must be actively seeking possession. That is all the more important, as one possible unintended consequence is that landlords heading towards the one-year vacant point might opt to avoid the auction by reverting temporarily to low-quality residential accommodation, a process made easier and quicker by recent changes to permitted development rights. Noble Lords will have noted the increased use of property guardians. Both actions, while providing some sort of home, can be business-rate loopholes, will not contribute to enhancing or improving the high street, and may even be contrary to what the council is seeking to achieve on behalf of its community. Can the Minister reassure us that the current technical consultation, which finishes in June, and the other one finishing after the Bill on the operational matters of this policy will weed out these and other unintended consequences?

We support Amendment 429 in the name of the noble Baroness, Lady Hayman. Given that the council has been driven to a forced entry, it would seem a reasonable presumption that, as long as it can demonstrate that all efforts had been made to effect entry legitimately, costs should fall on the recalcitrant landlord.

The various probing amendments in the name of the noble Baroness, Lady Taylor of Stevenage, highlight all the possible issues a town centre might have which would affect its viability, and there is much evidence to show that they do. We certainly endorse Amendment 435. The disparity between warehousing and high street business rates must be evaluated.

Even if a high street has been fortunate enough to gain some of the money from the various bidding rounds in the several pots to spruce it up, the sad fact is that the key factor for a high street to be viable is that its residents have enough money in their pockets to go out and spend. Sadly, this is not the case for many towns where levelling up is needed, wanted and has been promised. As for vacant shops, full reform of business rates would be a bigger contributor to reducing empty properties than targeting landlords. I, for one, would be up for a little target practice, and I broadly welcome this part of the Bill.

My Lords, I start by addressing Amendments 415, 416 and 417 in the name of the noble Baroness, Lady Taylor of Stevenage. Clause 176 sets out the criteria and conditions that must be met before high street or town centre designation can be made. Local authorities are uniquely placed to make this designation based on their deep knowledge of their area and we must empower them to do so. The needs of both local people and local businesses may have also been considered by local authorities in the development of their local plans and regeneration programmes. These amendments add complexity and burdens for local authorities, so the Government are not able to support them, or Amendment 437, which is consequential on 415 and 417.

Amendment 418 in the name of the noble and learned Lord, Lord Etherton, seeks to clarify what is meant by “occupied” for the purpose of assessing the vacancy condition. Clause 178(4) is aimed at excluding occupation by trespassers or property guardians for the purpose of this assessment. Amendment 418 would refine that position so that this type of occupation can count where the landlord is taking steps to remove such occupiers through possession proceedings. The Government see these exclusions as necessary to ensure the policy aims of filling commercial premises for high street uses. We also consider it reasonable to expect landlords to keep their premises secure to prevent squatters, or to take court action where necessary. The Government recognise that there may be more complicated cases of trespassers, but we also consider that many local authorities are unlikely to conduct a high street rental auction on a property that has such complications. While the Government do not feel able to support this amendment at this time, I would add that we do recognise that there may be many challenges caused to landlords by trespassers. We trust local authorities to use these permissive powers sensibly where there are complications caused by certain types of trespassers. I have listened to the noble and learned Lord, and I will give his amendments further consideration.

Amendments 419 and 424, in the name of the noble Baroness, Lady Hayman of Ullock, seek to remove the Henry VIII powers for the Secretary of State to alter the circumstances of vacancy, and the flexibility within grounds of appeal, which are set out in Schedule 16. This power may be needed in future in the light of experience in operation: for example, to alter the vacancy period to ensure that it is targeting the right premises and can respond to changing market conditions; or, in the case of grounds of appeal, where there may be a need to increase the safeguards available to landlords, or to revise these grounds where they are found to undermine effectiveness. We appreciate the importance of parliamentary scrutiny regarding the grounds of appeal, and any amendment will be subject to the affirmative procedure. In the light of that, the Government are not able to support this amendment.

Amendment 420 amends the local benefit condition in Clause 179 so that a property can be let only if it supports regeneration. Currently, the local benefit condition will be satisfied if the local authority considers that occupation of the premises for a suitable high street use would be beneficial to the local economy, society or environment. The local benefit condition is framed by reference to aims that are usually associated with regeneration. Another statutory example demonstrating the use of similar language is Section 226 of the Town and Country Planning Act 1990. We wish to avoid introducing further considerations for local authorities, inadvertently narrowing the scope; so the Government cannot support this amendment.

Amendments 421 and 423 reduce the period after which an initial letting notice would expire and the period of time after which a final letting notice can be issued. We consider that making the process too quick will place an unreasonable strain on local authorities that are looking to exercise these powers. We also do not consider that these reduced timescales will provide the landlord with a reasonable amount of time to let the premises themselves and, in appropriate cases, to work with the local authority, increasing the risk that high street properties go through the auction process unnecessarily.

Amendment 422 would prevent landlords from transferring premises between related entities while an initial letting notice was in force. An initial letting notice is not affected by any change in landlord, as made clear by Clause 199(7). We do not want high street rental auctions to prevent landlords from selling their interest in the property, provided that the initial letting notice continues to bind.

Amendment 426, in the name of the noble Earl, Lord Lytton, would add a further ground for appeal against the use of a high street rental auction. Schedule 16 sets out the grounds on which a landlord can appeal against a final letting notice. The amendment would require local authorities to consider whether a landlord had taken reasonable steps to rent the property before undertaking a high street rental auction, preventing them from taking place where a landlord has done so. The amendment would introduce a complex test which could place significant burdens on a local authority and would likely discourage use and lead to it becoming ineffective. There is already a wide range of grounds for appeal, which ensures fairness for landlords. The amendment also raises matters that should feed into a ground of appeal, such as planning. These matters are already being given careful consideration by the Government. In the case of planning, the Government are currently consulting on extending permitted development rights.

Amendment 427 would require that regulations relating to the rental auction process were laid within 90 days of Royal Assent. Clause 188 sets out the principles of the rental auction process. Significant detail in relation to the process will need to be provided, which will be more appropriately dealt with through regulations. While we will make regulations as soon as possible, it is not possible to commit to a timeline of 90 days because the regulations will be informed by extensive engagement with the sector, which will then need to be reflected in the drafting of those regulations. The Government are therefore not able to support this amendment.

On Amendment 429, we consider it more appropriate to provide landlords with a general entitlement to seek compensation for damage where local authorities have exercised their power of entry and to let the Upper Tribunal decide whether there are any circumstances affecting the landlord’s entitlement to compensation, rather than providing specific exemptions. That is the approach adopted in other legislation, such as the compensation provisions in Section 176 of the Housing and Planning Act 2016, which relate to the power to enter and survey land. The Government do not feel able to support this amendment.

On Amendment 430, I assure noble Lords that high street rental auctions are being designed to minimise costs incurred by local authorities by streamlining the process and through distributing the costs across landlords and tenants. We agree with the intention of the amendment, which is why the high street rental auction consultation contains questions relating to the distribution of the associated costs and details of a standardised lease, and it would be inappropriate to pre-empt the result of the consultation. We are also making up to £2 million of funding available for support with the costs of rental auctions, and full details of this will be announced in due course. The Government are therefore not able to support this amendment.

On Amendments 431, 432, 433, 434, 435 and 436, the measures in the Bill seek to support lively high streets with activity that attracts people and businesses and avoids long-term vacancies, complementing existing government support that directly addresses the concerns raised in these amendments. There is support available to regenerate high streets, including £3.6 billion-worth of investment in the towns fund, a £4.8 billion investment in the levelling-up fund and a £2.6 billion investment in the shared prosperity fund. That is together with the £13.6 billion support package, announced in the Budget this year, to protect ratepayers facing bill increases over the next five years.

The High Streets Task Force continues to provide essential support to local leaders, with 123 local authorities having received expert advice in topics such as place-making and planning. I recognise that these amendments highlight key issues faced by many of our high streets, but I hope I have provided enough reassurance that these concerns are, or will be, addressed through current government actions.

Finally, in response to the noble Baroness, Lady Fox—

I apologise to the Minister for interrupting, but before she sits down, can she address this point? One of the key arguments made—in that group of amendments to which the noble Baroness referred—by the noble Baroness, Lady Hayman of Ullock, and by myself and my noble friends Lord Shipley and Lady Thornhill, was about the huge disparity in business rates between online retailers and high street town centre retailers. I will repeat a comparator that I have mentioned previously. A well-known online retailer—not many miles distant from me—pays £45 per square metre in business rates on its premises, whereas a small town high street shop near me pays £240 per square metre. It is that vast difference that is penalising our town centre shops. This is the heart of the problem that this clause is trying to address, and we are supportive of that—but unless we deal with this big difference, nothing much will change. I would be glad to hear from the Minister what the Government intend to do about business rates.

We are simplifying the issue of the high street. I have listened a number of times to what has been said about business rates, and I have explained how much the Government are putting in to supporting properties in the high street through the revaluation process, et cetera. The Government provide rate relief to help property owners all the time, but the issue of empty properties in the high street is much more complex than that, so there are a number of things we want to address, and one of them is what we are doing in this Bill.

I was saying that I will write to the noble Baroness, Lady Fox, because I would like some further information from the Department for Transport.

My Lords, I thank all noble Lords who have taken part in this debate, which covered an important part of the levelling-up agenda. I am just thinking about the Minister’s comments. A number of times she said that it was not appropriate to accept the amendment at the moment because it pre-empted the findings of the consultation that was going on. I have said this before, but I think it would be helpful if legislation were brought forward after consultation, rather than during or before it, because that consultation could then inform the legislation. It just seems a bit backwards, as if it is around the wrong way.

Also, there are the levelling-up funds, the towns fund and various other funding pots, but they do not necessarily always go to the most needy or provide the long-term support that is needed. It is how we provide that long-term change that is important. Too often there are sticking plasters with bits of pots of money.

Workington is obviously a town near me; I used to be the Member of Parliament for Workington in the other place. An industry report by planning consultancy Marrons showed that Workington was near the bottom of the 360 provincial towns that it looked at. It has had some funding recently, for example from the levelling-up fund, and we are of course grateful for that, but the money is going to be spent on improving key routes, bringing in new cycling routes and building a new café. Well, that is lovely, but it will not solve the fact that Debenhams and Laura Ashley have gone. If people find they do not need to come into the town centre because those key shops have now closed, they are more likely to go somewhere else to shop. We really need to look at this in a much broader way. Again, that is why business rates are so very important and they are one of the main sticking points.

Again, on the issues around corporate landlords and pension funds, I absolutely agree with everything the noble Baroness, Lady Thornhill, said on those. We are pleased that the Government are looking to do something about empty shop units. As an example from where I used to live, two shops next door to each other are owned by the same landlady and have been empty for over 20 years, purely and simply because when her shops failed she did not want to let them out to anybody else. So the fact that the Government are trying to do something about this is important, but it has to be done with the support of local authorities and the local community and it has to be done in a way that genuinely makes a difference. It is also important, as other noble Lords have said, that we do not end up with exploitable loopholes or unintended consequences but do have proper oversight. Having said that, I beg leave to withdraw my amendment.

Amendment 415 withdrawn.

Amendments 416 and 417 not moved.

Clause 176 agreed.

Clause 177 agreed.

Clause 178: Vacancy condition

Amendments 418 and 419 not moved.

Clause 178 agreed.

Clause 179: Local benefit condition

Amendment 420 not moved.

Clause 179 agreed.

Clause 180: Initial notice

Amendment 421 not moved.

Clause 180 agreed.

Clause 181: Restriction on letting while initial notice in force

Amendment 422 not moved.

Clause 181 agreed.

Clause 182 agreed.

Clause 183: Final notice

Amendment 423 not moved.

Clause 183 agreed.

Clauses 184 and 185 agreed.

Clause 186: Counter-notice

Amendment 424 not moved.

Clause 186 agreed.

Schedule 16: Grounds of appeal against final letting notice

Amendment 425 had been withdrawn from the Marshalled List.

Amendment 426 not moved.

Schedule 16 agreed.

Clause 187 agreed.

Clause 188: Rental auctions

Amendment 427 not moved.

Clause 188 agreed.

Clauses 189 to 191 agreed.

Schedule 17 agreed.

Clauses 192 to 198 agreed.

Amendment 428 not moved.

Clauses 199 to 200 agreed.

Clause 201: Compensation

Amendment 429 not moved.

Clause 201 agreed.

Clause 202 agreed.

Amendments 430 to 436 not moved.

Clause 203: Interpretation of Part 10

Amendment 437 not moved.

Clause 203 agreed.

Amendment 438 not moved.