Conservative MP denies second home tax loophole is a problem!

Posted on: 10th January 2022

Response to “Derek Slams…” press release

Debate the facts with me in open forum. Tory MP should apologise to local people

If Mr Thomas is so adamant that second homes have not been handed hundreds of millions of tax benefits and covid aid in Cornwall alone then I’m sure he’ll accept my invitation for the two of us to hold an open public debate so that we can get to the truth of the matter.
Mr Thomas asserts that he has “slammed” me. If he’s “slammed” anything I fear he’s merely slammed his foot into his own mouth.

He falsely claims (in his by-line) that the “GOVERNMENT IS NOT GIVING GRANTS TO SECOND HOME OWNERS”[1]. This demonstrates a Johnsonian degree of respect for honesty and integrity. Perhaps something required of the modern conservative-loyalist?

The Conservatives have of course already granted at least £104 million of Cornwall’s covid aid – that’s up to £18,000 of taxpayers’ money each – to second homers whose primary address is not in Cornwall. This shocking scandal should cause local Tory MPs to apologise, not to attack those who warned them this would happen! Even Cornwall Council Conservative finance portfolio-holder describes this as “just wrong and unfair”[2].

This is on top of the Government granting Cornwall’s second homers well over £10 million a year over the last decade in a business rate tax loophole, not to mention the many other methods used to achieve “tax-efficiency” as a very lucrative property investment vehicle for the wealthy. My Liberal Democrat colleagues supported my opposition to this during the years of the Coalition Government, just as they did my campaign to scrap the notorious “bedroom tax’ which penalises the poorest.

Mr Thomas and the Tories either criticised me or were strangely silent when I warned them in March 2020 that their Covid grant system would result in unacceptable and industrial-scale handing-out of public funds to second homers. I have of course been proven correct. Mr Thomas seems to believe otherwise.

In a particularly surreal passage Mr Thomas’s bluntly contradicts himself! On the one hand claiming that second home owners cannot claim grant aid and on the other is calling on the Government to stop the second homers’ tax loophole which enables them to claim these grants!

Mr Thomas’s delusion that “he has already persuaded the Government to close the loophole” appears to be at the heart of his misunderstanding. Yes, he and his Tory friends have finally been shamed into promising they intend to “close the tax loophole” (which I first pointed out to them nearly 10 years ago) almost as if it’s thanks to them rather than in spite of them and their Party. But nothing has actually happened. As a result of a campaign I led the Government finally relented and grudgingly announced a carefully-worded, purposeful-sounding but ultimately time-wasting “consultation” into the loophole as long ago as 2018 [4]. Since then the Conservatives have made numerous claims and announcements that they intend to close the loophole – including with typically cynical timing just before last year’s local elections (23rd March ’21) [3]. This included consulting again on further “intentions” (in this case for properties to prove they have been let for at least 70 of the 140 days they should be available to be eligible to switch from Council tax to business rates). But nothing has actually happened and the only commitment the Government has made is that it intends to “announce a call for evidence” at some point later this year (ie 2022), “to assist in developing policy options” for yet another subsequent “consultation”.

Mr Thomas should perhaps also be granted an award for “taking the biscuit”. He’s been an ardent supporter and apologist for the growth of second home ownership. In contrast I’ve led campaigns on housing justice for decades – including leading the then successful campaign (1996-2000) to abolish the 50% council tax discount for second homers introduced by the Conservatives in 1991.

Another campaign I’ve consistently promoted since the 1980s has been to introduce new (planning use-class) laws to restrict second homes and to force them to be separately registered from permanently occupied homes, to cap their numbers and so that Councils or Government could ensure they pay their way and accept an appropriate level of taxation. Whilst I had been making some progress with Labour Ministers prior to the 2010 change of Government, the new Tory Housing Minister, Grant Shapps, laughed-off the suggestion when I met him saying “I’m a Conservative. You surely don’t think I’m going to introduce regulations to discourage these property investors? Your communities should be grateful.”

Having been shamed into back-tracking on second homes, Mr Thomas should first of all admit he was wrong and apologise to local people for his Party’s support for the policy conditions which permitted this situation to occur before he starts claiming credit for a policy his Party had dismissed for years. Had the Conservatives accepted the proposal when I presented it to them, none of this would have happened. Not just saving hundreds of millions of tax payers money but generating much needed income which could be used to address the serious housing injustice which local families suffer.

This latest round of Covid grants have yet to be fully administered. So there’s bound to be speculation and uncertainty regarding their impact and who the beneficiaries will be. But let me be clear, I certainly don’t apologise for once again blowing the whistle. It’s noticeable that since I have the Government has added more information to its website and seems to be backtracking. I’ve acknowledged the grants available to leisure businesses were between £2,700 and £6,000 from the moment the Government finally updated the details. That fact can be seen on both my website and on social media from the moment I posted. So, yet again Mr Thomas is incorrect in what he asserts. His attack is merely an attempt to distract attention from the big picture of the massive housing injustice going on in our communities and which is the direct result of policies he supports and should be ashamed of.

Above all this is a matter which deserves urgent and serious attention. There’s a housing emergency. Thousands of local families face severe housing insecurity and extortionate cost while second home and AirBNB property investors are receiving massive grants from the Conservatives in an almost entirely tax free investment environment. This situation deserves action from legislators. Not bizarre statements which expose how confused and misguided our local MPs are.

– Ends –


1. D. Thomas Press release: DEREK SLAMS LIB DEM “FAKE NEWS”

Derek Thomas MP has reacted to claims by a Lib Dem local councillor that the Government is giving grants to second-home owners. These claims are completely untrue, but the councillor is still repeating them on social media.

Derek has been calling on the government to take action to reduce the number of second homes and holiday lets in Cornwall, leading a debate in Parliament a month ago on affordable housing. He has already persuaded the government to close the loophole under which second homes can avoid paying council tax by registering for business rates (which the last MP was unable to achieve), and is pushing for more policies to encourage houses to be used for local people, including a licence scheme for holiday lets and planning restrictions on second homes.

Derek was shocked to read the suggestion that second home owners were being given a grant of £6,000, which has been widely spread on social media and in the local press. When he investigated, however, he found that this “fake news” was completely untrue.

The government has announced that it is introducing “a new grant scheme to support businesses that are experiencing difficulties because of the Omicron variant, and the dual impact of staff absences and lower consumer demand. Recipients must be solvent businesses, and ratepayers in the hospitality and leisure sector. For example, a pub; hotel; restaurant; bar; cinema; or amusement park.”

Businesses that are eligible – such as pubs and restaurants who saw Christmas events and gatherings cancelled at late notice – can claim sums based on their rateable value, in three bands £0-15k (who will receive £2.7K); £15-51k (who will receive £4K); and over £51k (who will receive £6K).

Rather than welcome these grants as a lifeline for Cornish businesses that have been struggling during the pandemic, the local councillor, Cllr Andrew George, has been claiming that £6,000 grants will be going to second home owners. There is no truth in this whatsoever.

For one thing, the award of £6K will only apply to businesses with a rateable value of £51K or more – in other words, a large pub or hotel, not a second home.

For another thing, second homes which are registered as businesses are breaking the law – the government’s guidance is that “Any business caught falsifying their records to gain additional grant money will face prosecution and any funding issued will be recovered, as may any grants paid in error. Local Authorities are responsible and accountable for the lawful use of funds and must be satisfied that all eligibility conditions have been fully complied with.”

Derek has written to Cornwall Council and has ensured that they are carrying out Fraud Risk Assessments before these grants are given.

Derek says:

“It’s very sad when people use this horrible pandemic to spread lies about their political opponents.

“I would have thought it was good news that the government is supporting businesses that are suffering because of the new Omicron variant – but some people are so desperate to attack the government that they will make up problems that do not exist.

“I’m puzzled by Cllr George’s use of social media. He decided not to publicise National Highways’ survey of people living near trunk roads, when I asked him, which would have helped our case for upgrading the A30 and improving safety in villages like Ludgvan and Crowlas. But he seems happy to pump out populist nonsense for his followers.”

2. Contrary to the MP’s assertion, the Conservative finance chief at Cornwall Council admitted that at least £104 millions of Cornwall’s Covid aid, at £18,000 for each second home was granted to “holiday homes” whose address was outside Cornwall (Sept 28th 2021) He rightly described the loophole as “just wrong and unfair”.

3. “The Government will close a loophole which enables second home and holiday let owners avoid paying council tax and business rates.” (quoted from news released by Conservative Govt 23rd March 2021)
“It is wrong that second home owners pay no business rates and are exempt from council tax through a loophole, so I am delighted to support the Government in getting this issue resolved” Scott Mann 23.3.21
“I am delighted to see the Government listen to my campaign to close the loophole which allowed some second home-owners to register their properties as businesses and qualify for business rates relief and avoid making any contribution to local services, without actually being legitimate businesses.” Steve double (ibid)
Cherilyn Mackrory, MP for Truro and Falmouth also welcomed the news saying the loophole has allowed some “unscrupulous” second home-owners to claim business rates relief to avoid paying any rates at all.
And you
“I’m arguing that the Government should close this loophole… the relief was never intended to create a route to enable a home-owner to avoid paying council tax or business rates when the property is used as a business.”
Yet he now denies this happens!
4. Conservatives are keen on making purposeful-sounding announcements about this loophole than in actually doing anything about it. It announced that it would hold a ‘consultation’ on the existence of the loophole and what to do about it a long ago as 2018 It has since made numerous announcements that it has or intends to close the loophole – most notably just before last year’s local elections (23rd March ’21) when housing justice was a big issue – and again promoted in November last year. But nothing has actually happened and the best we can say is that the Government intends to “announce a call for evidence” at some point later this year, “to assist in developing policy options” for yet another subsequent “consultation”!