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Mr. Bercow: I rather fear that the anomalous position that my hon. Friend has eloquently described will be greeted with some reservations, not to say sadness, by the Addington equestrian centre in my constituency. Does my hon. Friend believe that the differential, and the apparently capricious treatment of new businesses and existing enterprises, is attributable to Government folly or to knavery--or to a combination of the two?

Mr. Gray: Only my hon. Friend could turn a differential between existing riding schools and those that might be created and benefit from the Bill into a choice between folly and knavery. I, like my hon. Friend, suspect that the Government are guilty of folly and knavery. However, I raise the issue because I hope that they are ready to listen to reason. I hope that they will listen to the horse industry and correct the anomaly, demonstrating that they are guilty neither of folly nor of knavery. If we are holding a similar debate this time next year and we find that the closure of riding schools has accelerated quite considerably, it may be a result of the combination of the two. I hope, however, that the Minister will listen carefully to the arguments of the riding school industry.

The effects of foot and mouth are evident in other areas of the horse industry. The British Equestrian Trade Association, which represents those in the equestrian industry who make saddles, clothes and provide feed, for example, estimated that in March this year its turnover had declined by some £40 million and in April by some £57 million. These industries are not in rural areas but are nearly all in Labour-controlled constituencies in towns. People who make clothing for the riding industry tend to do so in towns, so Labour Members may wish to take an interest in this matter.

Those industries are being damaged not only by the foot and mouth crisis but by the decline in riding schools and in agriculture in general, as I described earlier. Industries such as riding schools will not be helped by the Bill. Items such as riding boots and riding clothes are often made in Germany and elsewhere on the continent. The Bill will not help the factories here that make those items.

The Government might like to consider how to help businesses that are equestrian and rural in nature but are not in country areas and may not be covered by the Bill. Racing, livery and hunting yards all face huge problems and none of them will benefit from--and some will be damaged by--the Bill.

We need to give careful thought to the issues, as the Department of the Environment, Transport and the Regions said in its response, published in November, to the consultation paper that it issued last year:

"All those against the scheme gave consistent reasons for their opposition. They expressed the view that the equine industry is currently suffering a decline, with many parts of the country experiencing an over capacity of equine businesses. They felt that

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those currently in business are finding it hard to survive and operate on very low profit margins. They thought the proposed relief would give newly established farm enterprises an unfair economic edge in this tight market and the industry could not sustain any sudden growth that might be generated without widespread closure of existing establishments. They said this would seriously damage the wider rural economy."

The Department acknowledges that the cut in business rates proposed in the Bill might have serious deleterious effects on existing businesses in the countryside, which will require careful consideration.

I have outlined the problems that the Bill might cause, and I shall now focus on possible solutions. One obvious solution lies in the zero rating of farms and agricultural businesses. Equestrian businesses are rated in full, and many of us have lobbied for years for that situation to be changed. The Bill will give relief only to new businesses with a rateable value of less than £6,000, but some livery yards and riding schools are larger and, of course, are more than six months to a year old, and so would not benefit.

It is a strange anomaly that buildings used for heavy horses for agricultural use and for race horses kept for breeding use receive rate relief, yet buildings housing other kinds of horses used for riding, hunting or any other legitimate purpose receive no rate relief. That was the result of a decision by the House of Lords in, I believe, 1987. It was said at the time that the decision about whether to allow rate relief depended on the nature of the animal. Therefore, a horse bred and kept to be eaten attracts rate relief as an agricultural animal, but a horse designated for riding does not. Curiously, a sheep that is kept not to be eaten but to be shorn does attract rate relief.

The logical approach would be to give 100 per cent. rate relief to farmers for using buildings and land for the spectrum of equestrian purposes, as it is given for any other agricultural business. All horse activities should be reclassified as agricultural, which almost happened in 1987 but was blocked by the House of Lords decision. At this difficult time for farming and the horse business, that would be the sensible approach. That point was made forcefully by Mr. Owen Tebbs, who serves with me on the horse and pony taxation committee and advises the Thoroughbred Breeders Association on tax matters, to the DETR:

"If the government wishes to encourage farmers into new fields of farming activity it should remove completely the obstacles in terms of planning and rates which prevent farmers from breeding horses to the point of sale."

He said that

"there is no justification for penalising farmers from conducting what can only be regarded logically as a normal farming activity--the breeding and rearing of horses to the point of sale."

If the Government, who seem very pleased with their little Bill, wish to correct the anomaly that I have described, the easy way to do so would be to designate all horse businesses as agricultural activity and thereby exempt them from business rates altogether. The cost would be small, compared with the losses experienced in the countryside today, but the benefit to farmers would be huge. In North Wiltshire, for example, most farms are small family businesses of 200 or so acres, with perhaps 120 to 150 milking cows and beautiful Cotswold stone farmhouses. Such farmers would benefit greatly from the

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ability to convert their farms into horse businesses, if only they had zero business rates, and there would be huge demand for their services if they did so.

Mr. Bercow: Once again, my hon. Friend is on to an extremely pertinent point. Does he agree that in addition to the advantage that the universality of relief that he commends would provide, a simple and universal system would save time and expense because businesses would no longer need to study the issue in detail and employ external professional advisers to determine whether they were eligible for relief? That would be a material advantage to such businesses, the overwhelming majority of which are small.

Mr. Gray: My hon. Friend makes an astute point. Such businesses are already over-burdened by bureaucracy, and puzzled and confused by regulations. From the Government's point of view, it would also remove the need to create so many regulations and fool around with Bills such as the one before us. It would be clear and straightforward to say that horse businesses are exempt from business rates, and the only downside that I can imagine would be a cost to the Exchequer. If that is the Government's argument against the change, they should produce figures to demonstrate the exact cost. I suspect that the cost would be small, because at present no business rate is charged on a farm. If it converted to a horse business, no business rate would still be charged. It would involve a marginal differential between business rates. The cost would be zero but the advantage to farmers would be huge.

I hope that the Minister will also address one small anomaly concerning private stables. If a private stable is attached to its owner's house, it is exempt from business rates. If it is apart from the house by even a very small distance, business rates are payable. There is no logic in that, because it is a private yard and no business is involved at all. The mere fact that the loose box is situated a short distance across a yard attracts business rates. The Minister may wish to consider correcting that anomaly.

Those concerns were brought to the Government's attention by the horse and pony taxation committee, which I chair, in its Budget submissions for this year, for last year and for the previous year. The Minister for the Environment held a meeting to discuss the matters fully--as we hoped--with Michael Clayton, the chairman of the British Horse Society and of the British Horse Industry Confederation, and Anthony Wakeham, the director- general of the British Equestrian Trade Association. The purpose was to discuss the consequences of the foot and mouth crisis on the horse industry, as well as the general malaise in the industry even before the crisis.

The horse industry was extremely disappointed by the outcome of the meeting. The BHS's press statement, issued on 24 April, read:

"Keen disappointment has been expressed by the British Horse Society and the British Equestrian Trade Association that the Minister for the Environment, Mr Michael Meacher, made no mention of the plight of the horse industry in his latest report to Parliament on the work of the Rural Task Force on the Foot and Mouth crisis."

Some 2.4 million people ride horses, and the horse industry is an essential part of rural life, but the Minister made no mention of it. He did not refer to specific measures to help the horse industry or to his meeting with the BHS and the British Horse Industry Confederation.

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In that context, we are particularly disappointed that the Minister for the Environment failed to mention bridleways, which are not opening, although footways in the countryside are. Once again, the horse industry, which is hugely important to the countryside in general, has been ignored.

It is a shame that the Government pay so little attention to the horse industry, which can easily be dismissed as somehow rich or somehow self-sufficient. Across the nation--not only in the country, but often in suburban areas--the reality is that horse businesses are experiencing huge difficulty, and the terms and content of the Bill run a significant risk of making that difficulty a great deal worse. It is too little, too late and may be rather damaging.

In contrast, my hon. Friend the Member for Ashford (Mr. Green), from the Front Bench, referred to what the incoming Conservative Government will do with effect from 8 June. I welcome the fact that, unlike the Minister for the Environment, who so notably failed to listen to the horse industry, my hon. Friend has done so with some care, announcing that

"riding has long been part of rural life."

Indeed, it is an essential part of the countryside. He continued:

"The next Conservative Government will exempt new and existing equestrian businesses from business rates."

There was no talk of new businesses, no talk of small ones, no talk of exceptions--we will simply exempt equestrian businesses from business rates.

We will also relax planning restrictions that prevent farm buildings from being converted to equestrian premises. Such conversions represent a huge problem and planning restrictions are such that they are difficult to achieve. Anyhow, there is no incentive to convert, because of the lack of business rate relief.

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