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Mr. Michael Jack (Fylde): In the part of the Bill to which the right hon. Lady refers, will she enlighten me as to why the period of 183 days was specifically chosen rather than any other?
Ms Armstrong: I am sorry to say that I do not know that; I shall come back to the right hon. Gentleman on that point later in the debate. I am sure that he will get the chance to speak and I shall be able to intervene then.
When farmers seek to diversify, they face an additional cost through the imposition of rates on a property that was previously rate free. We want to remove that barrier to diversification--[Interruption.] Does the hon. Member for Lichfield (Mr. Fabricant) want to intervene? He was talking, so I assumed that he wanted to intervene, but obviously he does not.
We have consulted on our proposals to remove that barrier, and the proposals in this Bill reflect those consultations. The relief will be on similar terms to that which already applies for village shops. There will be 50 per cent. mandatory relief paid for by the Government, which local authorities will be able to increase to 100 per cent. It will be limited to properties below a certain rateable value. We intend to set it initially at £6,000. That will be reviewed at subsequent national revaluations to ensure that the amount keeps in line with general changes in rateable values. For a property of such size, the mandatory relief will be worth £1,290 in 2001-02; and 100 per cent. relief would be worth £2,580.
Mr. David Curry (Skipton and Ripon): The question of the rateable values at which those reliefs apply is important. The right hon. Lady will know that for the 75 per cent. relief, a rateable value of £12,000 has been applied. I have failed to discover the logic for that amount. The right hon. Lady now mentions £6,000. Has she calculated the number of properties that will be affected? What are the differences for the properties that fall just over that margin? It is sometimes difficult to understand the logic behind emergency rate relief--or indeed where the real differences exist between the properties that fall on either side of the limit.
Ms Armstrong: If the right hon. Gentleman has had a look at the Committee debates on exceptional hardship relief in business rates, he will know that we set the limit at £12,000 for two reasons. The first is that the burden of rates on small businesses is much higher proportionately than for larger businesses. In fact, 77 per cent. of small companies come within the £12,000 limit. We made it clear in Committee--the matter is not part of the Bill--that we would keep that level under review, as indeed we are keeping under review the number of authorities that are eligible for that rating.
Mr. Curry: I understand what the right hon. Lady is saying, but does she accept that businesses with rateable values of between £12,000 and £20,000, such as larger rural pubs, might be desperately trying to hold on to employees in the current circumstances? They are sometimes harder hit than smaller businesses and cannot meet the wages bill that they face for a significant number
of part-time, and perhaps a smaller number of full-time, employees when their cash and customers have ceased to exist.
Ms Armstrong: When the Local Government Association raised that matter with us, we asked it to go back to local authorities to determine the weight of the concern. The right hon. Gentleman knows that we have consistently said that we will keep the matter under review, and we are serious about that. However, it is obviously important that we get the balance right. We must consider the fact that there are some companies that might not have survived, even without foot and mouth. We must ensure that public money is used effectively. At the same time, we want to act as sensitively and responsively as possible. That is why we asked the LGA to consult local authorities. We have not had a full response and it is difficult to determine the effect around the country. I am sure that the right hon. Gentleman has talked to his local authority about the problem; I have talked to mine and know what balance is needed there.
It is also true that larger businesses might be eligible for a reduction in their rateable value. The Valuation Office has agreed to review as a matter of urgency the rateable value of companies that think that they should have a reduction because of foot and mouth. In many areas, that is the first step that larger firms take and it might be the most sensible approach. We are clear that arrangements might need to change, and will ensure that we return to them if necessary.
Mr. Nigel Evans (Ribble Valley): Will the right hon. Lady give way?
Ms Armstrong: I have not finished responding to the right hon. Member for Skipton and Ripon (Mr. Curry), but I shall let the hon. Gentleman intervene.
Mr. Evans: I am grateful to the Minister for giving way; I did not appreciate that she was still responding to the previous question.
Page 3 of the Bill sets out exemptions, including catering both on and off the premises. Why is that exempted from the rate reductions? It means that former agricultural premises that want to open tea rooms will not qualify.
Ms Armstrong: The hon. Gentleman will remember that we discussed exemptions from business rates when we debated previous legislation in the House. The issue as it relates to shops was fully covered and the decision was taken to include general stores. Since then, we have extended the relief. In the secondary legislation that was discussed in Committee about three weeks ago pubs and garages were included in the exemption. The relief that we are discussing today requires primary legislation; otherwise we would have taken the opportunity to include it in that secondary legislation. We are now extending the exemption to stores that predominantly provide food. That means that if a small village has a butcher's shop as well as a general store or a baker's shop, both shops will get relief. The hon. Gentleman raises a separate issue, but as the relief has already been extended to pubs, I think that the point is covered.
Mrs. Gwyneth Dunwoody (Crewe and Nantwich): I apologise if my right hon. Friend has already spelt out
this point. Some farm shops have logically expanded into catering for people who come on a trip to the countryside. Am I to take it that they will be included in the exemption?
Ms Armstrong: My hon. Friend raises another issue, which is whether shops that have already diversified will benefit from the relief. We are unable to backdate provisions sufficiently to deal with such premises, so I am afraid that they will not, unless they were set up within the past six months.
If the hon. Member for Ribble Valley (Mr. Evans) was thinking of tea shops, as opposed to pubs, the answer to his question is difficult because tea shops are not essential. [Interruption.] We had to decide what was essential. Local authorities can decide to give relief to small businesses such as tea shops if there has been significant hardship, but we have been trying to identify services that are regarded as essential by people in rural areas. On that basis, we have extended the rate relief significantly, but not as far as the hon. Gentleman would have liked.
Mr. Damian Green (Ashford): I am slightly more confused than I was before the Minister embarked on that explanation. Where in the Bill or the explanatory notes is there a reference to businesses set up in the previous six months? In response to an intervention by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), the Minister said that they might be eligible for the relief, but it is not at all clear to me that that is the case.
Ms Armstrong: As we go through the Bill, the hon. Gentleman will realise that that is because of the number of days in a year in which a business is able to be operative, a point to which the right hon. Member for Fylde (Mr. Jack) referred.
Mr. James Paice (South-East Cambridgeshire): The Minister is now saying that this is retrospective legislation that applies to any business set up in the past 183 days, the past six months. Will she clarify the matter? Will the concessions apply to businesses that exist as of today, or only to businesses that come into existence after the Bill is enacted?
Ms Armstrong: We will be able to set the commencement date. If a business was set up in the previous six months and operates within the terms of the Bill, it will be eligible for the relief relating to farm diversification.
Earlier, the right hon. Member for Skipton and Ripon asked how many farms we expected to benefit from the measure. It is difficult to make an estimate, but if about 5 per cent. of farms in England set up a new diversification enterprise that qualifies for relief, more than 7,000 properties could benefit. If 20 per cent. of farms set up a new enterprise, about 30,000 properties would benefit.
Mr. Michael Fabricant (Lichfield): On a point of order, Mr. Speaker. In answer to a previous question, the right hon. Lady said that it was hard to tell the effect of a provision. If a Minister is saying that it is hard to tell the effect of a clause in a Bill that she has introduced,
the public will find it even harder. Mr. Speaker, do you believe that this is an opportunity for the Minister to clarify what she meant?
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