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Mrs. Dunwoody: The hon. Gentleman is very indulgent and I apologise for interrupting him again, but this is an important point. Somewhere along the line, someone must draw a distinction between support to enable people to diversify from farm incomes to something that will continue to make their business viable, and creating an alternative form of development that could lead to problems in the countryside. I sympathise with his point that farmers on occasion want
to rent property, but does he accept that there is a narrow line between farmers diversifying into genuine, agriculturally based and useful businesses and people who seek to create an alternative industrial unit in the middle of the countryside, which could cause considerable problems?
Mr. Green: I take the hon. Lady's point about the balance between the environmental need to preserve the beauty of the countryside and to avoid inappropriate development. However, surely that issue can be resolved by planning authorities; it has no necessary relationship with the operation of the business being set up. In theory, a farmer could set up a business that was environmentally inappropriate and someone from outside could set up a business that was entirely appropriate environmentally, providing local employment and other things that the hon. Lady and I regard as desirable.
My point is that there seems to be an arbitrary distinction between which type of business the Government propose to help through the rate relief system. The Bill provides that relief can be allowed only if the business is operated by the farmer. Farmers may be very good at farming but not necessarily at running general businesses, and they may know that someone else could use a building for a better purpose, providing local employment. It seems perverse to deny them that opportunity.
Mr. Gray: My hon. Friend makes an extremely important point. His understanding of the Bill is, like mine, that only the farmer may benefit from the rate relief proposed. That is why I intervened on the Minister on the rather technical point about the definition of hereditament and corporeal or incorporeal hereditament. Her answer was that the relief would apply irrespective of whether the person claiming it was the farmer or someone renting a building from the farmer. Therefore, if the Minister's words are to be taken at face value--they can, of course, be used in court when these matters come to court--my understanding of the Bill, and that of my hon. Friend, is incorrect.
Mr. Green: My hon. Friend makes a good point. That is my reading of the Bill. There is clearly an issue about definition that can perhaps be dealt with in Committee. However, at the very least, this part of the Bill bears further scrutiny and improvement, and I hope that we can achieve that in the coming days and weeks.
One other specific point about diversification relates to the length of time for which the relief will be available, and I am grateful to the National Farmers Union for drawing it to my attention. As I understand the Bill, although I am open to correction by the Minister, the relief will initially be limited to a maximum of five years, which can be extended by order. The relief appears to be available to premises only for a set five-year period from the commencement of the new law. In other words, if a new business was set up in year four and the scheme was not extended, it would benefit from only one year's relief.
Ms Armstrong: I discussed that point in my speech, and I made it clear that at this stage the relief will run for five years, but that we will continue to keep the position under review. I also made it clear that even if we extend the five-year period, any individual business will not
receive the relief for more than five years, because it is meant to help businesses get going, not to provide unfair competition for other businesses.
Mr. Green: I am making a subtly different point. I appreciate that no business will get the relief for more than five years and that the House could decide to extend the scheme, but the point rightly made by the NFU is that if there is a risk that it will not be extended, for whatever reason, those planning a business enterprise would not be able to build the relief into their calculations. That could encourage a rush of applications in the first part of the period in order to gain the maximum definite relief, and a tailing off later as the value of the relief waned. All the history, in agriculture and all other industrial sectors, suggests that grant-driven or rate relief-driven business decisions are likely to be bad business decisions. The more we can clear up the position at this initial stage, the better it will be for farm diversification in the long run.
I have spotted one other puzzling anomaly in the part of the Bill that is designed to encourage diversification, and I hope that the Minister will be able to clear it up. As she knows, we have welcomed the mandatory element of the relief, but some people believe that the discretionary element adds nothing to the existing power under the Local Government and Rating Act 1997. Not only are the criteria for the discretion exercised under the Bill exactly the same as in the 1997 Act, but the threshold in the 1997 Act is £12,000, which is twice that proposed in the Bill. The Bill would add nothing to the status quo. Indeed, it is clearly unlawful for the same discretion present in two Acts of Parliament to be exercised in different ways. I can assume only that I have misread the situation or that it is a genuine oversight, and I would be grateful for the Minister's clarification. As it stands, once the Bill is on the statute book, we shall have two contradictory Acts. In fact, the 1997 Act is more generous and useful, and that is puzzling.
Mr. Evans: Can my hon. Friend confirm that many local authorities would dearly love to help some of their small rural businesses but simply do not have the cash to do so? If they helped all their small rural businesses by the 50 per cent. discretionary rate, council tax rises would be even higher. In some places, the rises are in double digits, which is way above the rate of inflation.
Mr. Green: My hon. Friend is right and he anticipates a point that I intend to make later.
The Minister glories in the fact that the proposals on shops might involve subsidising more than one shop per village. Even more damagingly, some shops could be subsidised at the expense of others. Can the Government bend their mind to the problem whereby one shop in a village would fall just under the limit while another would fall just over it? In such an example, the Government would be providing a subsidy to help one business against a similar competitor.
Have the Government conducted any research to ascertain how common such a situation would be? Where one existed, what would they do about it? It would be perverse if the effect of this attempt to do good for rural
businesses made life more difficult for certain shops in rural areas. As the measure stands, we cannot rule out that possibility.
Ms Candy Atherton (Falmouth and Camborne): I understand that the hon. Gentleman is in favour of the Bill, but his speech is making me more confused by the minute. Is he in favour or not?
Mr. Green: I have already said that I am in favour of any measure that helps small businesses in rural areas during the crisis. Although the Bill is inadequate, it is a step in the right direction and I do not oppose it in principle. However, the hon. Lady has been a Member long enough to understand the process of parliamentary scrutiny, whose purpose is to allow us to welcome the principles of the Bill while referring to a number of genuine practical problems that might make matters worse in a situation such as I am describing, or whose effect could be lessened.
It is the job not only of Parliament and the Opposition but of Government Back Benchers to try to improve Government legislation. I appreciate that that has not been their practice in this Parliament, but I commend to them the Bill, which they will enter the Lobby to support, in order that they will read it.
Mr. Green: Ah! The right hon. Lady has an answer.
Ms Armstrong: I simply ask the hon. Gentleman whether he is suggesting that the Government should offer rate relief to businesses such as antique shops. If he reads the list of shops that exist in such villages as we are discussing, he should remember that a population of 3,000 is the key figure. The rateable value of food shops is simply not above the level that we are talking about. The only shops that have a rateable value above that level are antique shops and specialist shops, which are not considered to be essential to the life of the village.
Mr. Green: For the Minister's sake, I hope that she is right that there are not a number of shops--largely food shops--that are just above the rateable level. She has put what she believes on the record, but if she is wrong I suspect that her postbag will be extremely large in the months ahead.
Mr. Green: I may be about to be given a counter example.
Mr. Heath: I shall not give such an example, but I am grateful to the hon. Gentleman for giving way, because I agree with the point that he is making. Has he considered the circumstances of two rural settlements, perhaps within a few miles of one another, with populations of 2,999 and 3,001? The food shop of one would be subsidised by the measure and the food shop of the other would not, simply because of the artificial threshold of 3,000 as an absolute figure for a settlement.
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