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Column 760Spring, Richard
Squire, Robin (Hornchurch)
Stanley, Rt Hon Sir John
Tapsell, Sir Peter
Taylor, Ian (Esher)
Taylor, John M (Solihull)
Taylor, Sir Teddy (Southend, E)
Thompson, Patrick (Norwich N)
Thornton, Sir Malcolm
Townsend, Cyril D (Bexl'yh'th)
Twinn, Dr Ian
Vaughan, Sir Gerard
Waldegrave, Rt Hon William
Walker, Bill (N Tayside)
Wardle, Charles (Bexhill)
Wiggin, Sir Jerry
Winterton, Mrs Ann (Congleton)
Young, Rt Hon Sir George
Tellers for the Noes: Mr. Bowen Wells and Mr. Timothy Wood
Column 760Question accordingly negatived.
`3A. In paragraph 21 of Schedule 2 to the 1994 Act the following shall be inserted after sub-paragraph (b)--"and,
(c) for the purposes of agriculture, horticulture, and forestry.".'.
Government amendments Nos. 42 and 43.
No. 35, in page 172, leave out lines 44 and 45.
No. 36, in page 173, leave out lines 14 to 19.
Mr. Bruce: This is an innocuous little amendment in terms of its place on the amendment paper and its length, but it is very important. It is astonishing that the Government should have thought that it would be possible to put into the Finance Bill the provisions which are enshrined in the lines that we wish to take out without accepting that that would create considerable concern in
Column 761the farming community. The exemption of farm vehicles from vehicle excise duty dates back to the 1920s. No Government have seriously considered changing that. Suddenly, without notice, farmers find that they are faced with having to pay vehicle excise duty on all farm vehicles. At least that was the situation until a couple of days ago, and I will refer to that matter in a minute.
I am sure that hon. Members who have connections with farming or agricultural interests will know of a number of matters which are relevant to farm vehicles and which are the reason for exemptions having been granted for so many years. A significant number of agricultural vehicles are used for only a few weeks of the year. Some combine harvesters might be used for only a few days a year. The Government now propose that farmers must pay the full rate of vehicle excise duty on them, which seems to be unreasonable and unfair. The previous ruling was that the exemption was restricted to vehicles that travelled no more than six miles from their point of registration.
Given the changes in agricultural holdings in recent years, there are fewer farms where there is no reason to take agricultural vehicles on to a public road simply to carry out the basic business of running a farm, because a farm straddles a public road, because fields can be reached only by going along a public road, or, increasingly, because holdings are physically detached and might be a mile or two apart.
In such circumstances, a very modest farmer might be expected to find vehicle excise duty for three, four or five vehicles for which he has never previously had to consider such a payment and for which there has been no warning, no discussion, no consultation and no sign that the Government were considering it. There has been no opportunity for farmers or their representatives in the National Farmers Union to make representations about the implications or to seek exemption or modification. That is reprehensible.
I represent a constituency in Scotland. Of course there are prosperous Scottish farmers. There are farmers for whom paying vehicle excise duty on three, four or five vehicles is a relatively small charge to their businesses, but there are an awful lot more farmers for whom that is a significant burden on top of other matters with which they must cope. In Scotland, 95 per cent. of agricultural land is in less-favoured areas. By definition, therefore, such farms require subsidy. The Government are providing a subsidy with one hand and clawing it back in additional taxes with the other hand. That does not seem to be fair, reasonable or even sensible.
In the past few weeks, Scottish farmers have had a problem with sheep annual premiums that have not been paid, even though they have been paid throughout England and Wales. Scottish farmers were promised them in October-November. Two thousand farmers are due £8 million, but they have received no payment whatever, and they are told that the Scottish Office is unable to tell them when they might be paid, and that it could be some time after Easter.
On average, that sum works out at £4,000 per head. It relates only to partnerships, but a partnership business is often a husband and wife or, possibly, a son or a daughter. Such businesses are being deprived of £12,000 of basic salary. Farm support income has been cut, hill livestock compensation allowances have been cut, and farmers now
Column 762have to pay additional taxes. That is unreasonable and unfair, especially without adequate consultation or consideration. I welcome one matter. It is clear that, after we tabled our amendment, vibrations got through to the Treasury that perhaps there was a potential problem and that there was some resistance and resentment. The National Farmers Union has been busy, no doubt, contacting hon. Members with agricultural interests to point out the implications of the clause and schedule.
When we tabled our amendment, at least two Conservative Members put their names to it, as well as tabling their own amendment. Surprise, surprise, a couple of days later, the Paymaster General, apart from writing notes to several hon. Members, tabled his own amendment, which provides exemptions for all-terrain vehicles--no doubt he will tell us more about his proposals --and light farm vehicles. That is welcome. It is a recognition that the Government have overstretched the point, that they have not considered the matter, and that there is a need to respond. However, welcome as that response is, it means that all the arguments that I have put will still apply to the majority of farm vehicles affecting the majority of farms and farmers.
In those circumstances, our amendment is justified and desirable. That remains the view of the National Farmers Union, which also welcomes the pressure that has been brought to bear by hon. Members and which has generated a response from the Government. I always welcome evidence that action in the House is observed, acknowledged and responded to, and I give due credit to it.
Conservative Members who take the view that the Government amendment is adequate will find that the NFU does not agree, and many of their local farmers will tell them that the amendment neither affects nor benefits them. Farmers are faced with additional charges which have been introduced without warning or consultation at a time when Government support for many farmers is being withdrawn. It is a little mischievous of the Government to cut subsidies while trying to claw back additional taxes from farmers. Why has a measure which has been accepted for 70 years suddenly been brought into the net? It does not seem reasonable or fair. The Government may have acknowledged that their proposal as it stands is unreasonable and needs qualification. It would be helpful if the Minister undertook to take the measure away, to consult farmers and their interests, and to bring it back in a form which takes account of those consultations. I understand that one of the Government's arguments is that the administration of the scheme is somewhat bureaucratic. For 70 years, farmers have been perfectly happy to handle that bureaucracy and I have had no complaints about it from any farmer. It is funny that people in general think that bureaucracy is not a bad thing when they get a tax rebate, and that they are only opposed to it when they face a tax imposition. The serious point is that, if there is a bureaucratic problem, it can be addressed.
The NFU has suggested that a possible solution is a one-off registration with a requirement to notify changes. Nevertheless, the subject of bureaucracy was raised by the Minister after the Finance Bill was published, and no doubt there was justification. The matter has not, I
Column 763understand, been raised by farmers' representatives complaining about the existing system. The NFU has simply responded to the Minister's assertion.
A significant change has been introduced after 70 years of unchallenged and accepted practice, without warning or consultation. The Government could simply say that they still want the measure--if that is their position--but that they accept that it has implications which they had not fully considered. The measure is clearly resented within the farming community, and it is felt to be a burden for which the Government have not made a case to justify the change. The Government should take the measure away, reconsider it and possibly bring it back in a revised form after consultation. I would rather that they did not bring it back at all, but consultation has not taken place and I hope that the Minister accepts that it should now take place. Whether we press the amendment to a vote tonight will depend to a significant extent on the Minister's response, but I hope that he accepts that farmers are extremely unhappy about the way in which the measure is being introduced.
Mr. Heathcoat-Amory: Government amendment No. 42 is, I think, entirely uncontroversial and removes an anomaly which might otherwise mean that a local authority which used tractors simply for the maintenance of roadside verges, hedges and trees would have to license them as haulage vehicles, and thus pay vehicle excise duty. They would also lose their entitlement to rebated diesel. As a result of the amendment, they will continue to enjoy their existing concessions to license them as agricultural tractors, and they will therefore pay £35 tax and use rebated diesel.
Government amendment No. 43 concerns the all-terrain vehicles which are familiar to any hon. Member with an agricultural constituency. The vehicles have increased in use, and are now a common sight on hills where sheep are rounded up or hay is delivered. This is a clear example of where the old concessionary classes have simply not anticipated the development of such vehicles. If the legislation were being laid down today, those vehicles would undoubtedly be considered a form of small lightweight tractor. Under the amendment, we propose to recognise that farmers do use ATVs like tractors and, accordingly, we define them as light agricultural vehicles. That means that they will be taxed in the £35 a year class and, although most of them are petrol-powered, a number which are diesel-powered will be able to use rebated fuel because of the amendment.
The other issue touched on by the hon. Member for Gordon (Mr. Bruce) concerns the low-mileage vehicles which are often used by farmers between fields on a single farm. The legislation as drafted required farmers to pay vehicle excise duty for the first time. Most of the vehicles, of course, are tractors and therefore the duty was only £35. I must make it clear to the Committee that the proposals are not in this case driven by the need for extra revenue, but to end anomalies and to find a system which is administratively workable. I must make clear at the outset that the current system for the vehicles--whereby exemption is based supposedly on the vehicles doing fewer than six miles a week on public roads--cannot continue. It is self-evidently
Column 764impossible to police the scheme. It may be possible for a police officer to stop a vehicle and check its distance, but it is certainly impossible when the criteria for evasion is not just distance, but time and how many miles have been covered by that vehicle during the week. It will not surprise the Committee to know that prosecutions are unknown.
The scheme is bureaucratic in the extreme. I have with me one of the forms which must be filled out each year by people claiming the concession. Of course, they do not complain about it. As the hon. Member for Gordon fairly said, who would complain about filling in a form if it means that one does not have to pay tax? However, it cannot be good taxation if every year, a person claiming the concession must fill in a detailed description of the route to be travelled, and any divergence or detour from that route-- because of a temporarily blocked road, for example--must be sent in writing to the authority before that concession can continue.
Hon. Members with agricultural constituencies will know what I mean when I say that, in private, farmers often concede that there is a certain amount of abuse of that concession. It is difficult for the authorities and bureaucratic for the users.
I am not wedded to the concept of taxing genuine cases, however, when vehicles necessarily have to cross main roads in the course of business. If trade organisations--the National Farmers Union, Country Landowners Association and other trade groups--or hon. Members can come up with a system that involves none of the form filling, is workable and administratively simple and prevents evasion, I will willingly consider it in time to table an amendment on Report.
Sir David Mitchell (Hampshire, North-West): First, I warmly welcome what the Minister said about all-terrain vehicles, as those were causing some anxiety in the farming community and his words will be widely welcomed.
On exemptions from normal vehicle excise duty for certain agricultural vehicles, I have much sympathy with the Chancellor's wish to tighten the rules and to lessen abuse of former concessions that allowed six miles per week and were misused, especially as regards livestock. One could say that farmers have brought the problems on themselves because of the widespread abuse of the system, but the change means that the majority of law-abiding farmers are being penalised because of an unscrupulous minority.
I must draw two genuine problems to the Minister's attention. The first concerns the substantial vehicle excise duty and the second, the subsequent need to MOT a vehicle to motorway standards, when it will be used merely for crossing a farm road or up a narrow lane to get to another part of the farm. Technically, the first change in vehicle excise duty would result in a further change in the MOT requirements. Those should not apply to harvest vehicles and others of that type.
Column 765I have here a letter from a farmer in my constituency, who says that I should be aware that
"many farm harvest lorries have been un-MOT'd within the exempt ruling law, but will in future have to pay licence duty but also be liable to MOT to motorway standards. There must be many farmers with harvest grain transport trucks who will not MOT their vehicles to MOT motorway standard. We run two lorries for harvest work--that is all. Should the law change we would have to purchase two 14 ton trailers and hire two tractors--a considerable cost"
to their farming enterprise.
I also want to draw the Minister's attention to the views of the Country Landowners Association on "agricultural off-road vehicles", which is how it wants them to be described. I was glad to hear my hon. Friend say that he was open to suggestions. It suggests: "The licence will only be valid within, say, x miles of the owner's place of business (the exact amount of miles to be determined by the distance from the postal address of the business to the furthest outlying field in the farm". The licence disc should be a special colour and include the address of the place of business so that if the vehicle is stopped on the public highway it should be immediately obvious to any policeman whether or not the licence is valid."
The inclusion of the business address would avoid the policing difficulties that have been encountered and which the Minister mentioned.
I should have thought that that change from X miles per week to a specific distance from a farmhouse or tractor store to the boundaries of the farm plus two miles would eliminate the major problem to which my hon. Friend the Minister drew our attention. Will he consider that suggestion and consult the NFU, the CLA and other interests, as he said he would? I hope that he will be able to table an amendment at a later stage as a result of his consultations.
Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury): I must place it on record that I am grateful to my hon. Friend the Minister for the courteous way in which he received me last week to make representations on vehicle excise duty exemption for agricultural vehicles.
I am also grateful for his announcement that he will consider further representations from the Country Landowners Association, the National Farmers Union and colleagues. Perhaps I should declare an interest, as I am a member of the NFU and the CLA.
I endorse some of the arguments by my hon. Friend the Member for Hampshire, North-West (Sir D. Mitchell). The Bill removes schedule 2, paragraph 21 of the Vehicle and Excise Registration Act 1994. It is worth dwelling for a minute or two on what we are doing and what we are abolishing. As the hon. Member for Gordon (Mr. Bruce) said, the provisions have been in place for 70 years. Paragraph 21 of schedule 2 to the 1994 Act states:
"Where an applicant for a vehicle licence for a vehicle satisfies the Secretary of State that the vehicle is intended to be used on public roads- -
(a) only in passing from land in his occupation to other land in his occupation, and
(b) for distances not exceeding an aggregate of six miles in any calendar week,
the Secretary of State may, with the consent of the Treasury, declare that the vehicle is an exempt vehicle when it is being used on public roads as mentioned in paragraphs (a) and (b)."
So we are abolishing a concise and precise exemption, which has been in operation for 70 years for a good reason. The reason is that the agricultural business
Column 766involves travelling from one piece of land to another. It therefore seems onerous that farmers should suddenly be brought into the licensing net.
I understand the Minister's explanation that, by abolishing the exemption, he is making the law easier to enforce and police. It is generally acknowledged that the current concessions are widely abused, so we must come up with a better system, but I hope that he will listen carefully to suggestions made by the agricultural industry because, in some cases, the abolition of the concession will cause hardship.
The schedule shows that proposals with respect to some restricted HGV lorries, which may be used only on odd occasions in a year, such as during the harvest period or to transport a few sheep from one piece of land to another, could mean that a farmer who currently pays nothing may pay up to several thousand pounds under the new system. I accept that most tractors and agricultural vehicles, such as combines, will, under the concessions granted in the Bill, pay only £35. Under those circumstances, the obligation for farmers is not too onerous, but small farmers who must pay substantially more than £35 for HGVs which are used only on the odd occasion each year and which may only cross a road, may suffer hardship.
My hon. Friend the Minister already mentioned some of the ways in which the exemption could be kept. The Bill provides a new definition for "tractors" and makes it clear that we are dealing with vehicles that can travel at only up to 25 miles an hour, except the concession for ATVs, which I warmly welcome. As it is therefore unlikely that anyone in his right mind will drive those tractors or combine harvesters far on a public road, it must be possible to come up with a system whereby farmers apply for a normal licence but answer a question on the licence form about why they should be entitled to the exemption.
The exemption would specify the address from which the vehicle operated, and it would be reasonable to have a different colour licence that specified up to what range the vehicle could go. I urge my hon. Friend the Minister to give that idea serious consideration. If a vehicle crosses a road only once or twice a year, it is unnecessary to go through the rigmarole of paying a considerable extra amount.