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Mr. Tony McWalter (Hemel Hempstead): Does the hon. Gentleman agree that the Government are responding, in part, to representations made by the Council for the Protection of Rural England that to give such relief to substantial businesses could have deleterious consequences for the environment that we are trying to protect?

Mr. Green: I do not think that is quite what the CPRE said, but I take the hon. Gentleman's point. If he is saying that businesses with a rateable value of £8,000 are big fat cats who do not deserve help, I suspect that he and I would be as one in thinking that view was wrong. Indeed, even if he and I disagreed on that point, he may agree with his colleagues in the DTI who appear to accept it as a definition of a small business. I am happy to take the Government's definition of what constitutes a small business. In Committee, I tabled an amendment that would have substituted £8,000 for £6,000, but it was rejected by Ministers. I was merely trying to make the Government's position more coherent.

Mr. Gray: Does my hon. Friend agree that the hon. Member for Hemel Hempstead (Mr. McWalter) is missing the point? The potentially damaging effects on the environment of bigger businesses in the countryside would be covered by the stringent and rigorous planning regime. Even if one wanted to set up an environmentally

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deleterious business in a converted farm building, one could not do so. The size of the rateable value is thus irrelevant in environmental terms.

Mr. Green: My hon. Friend is right; environmental considerations should always be at the forefront of our mind when considering business development in rural areas. However, Bills dealing with rate relief, such as this one, should not be the lever for ensuring that appropriate environmental protection is imposed. Such protection is extremely important, but that is why there are planning regulations.

I hope that the Government will take on board the strictures of the National Farmers Union. It made a small number of sensible suggestions for improvements to the Bill--none of which the Government have chosen to take up or even to address. I cannot believe that the Under-Secretary of State for the Environment, Transport and the Regions did not receive the same NFU briefing, so he will be aware that the union is worried about the discretionary element which could lead to "competitive distortion" between local authorities. That is not because one local authority is more generous than another, but because some local authorities have more money available. The problem is genuine and although the means to address it are not necessarily obvious, the Government may well need to do so.

Another problem outlined by the NFU and for which it offered the Minister a solution is the fact that rate relief will be restricted to a maximum of five years, but will start only from the fixed date. Thus, someone who wanted to diversify a farm business three or four years after the commencement order under the Bill will not gain the full rate relief. Such a person might take business decisions based on the amount of rate relief that might theoretically be available, rather than on sensible business criteria. There was widespread agreement that that part of the Bill should be improved as it is likely to lead to problems.

We have held extensive discussions as to whether third parties who rent diversified agricultural land and buildings would benefit--another of the points raised by various of the bodies that have carefully considered the Bill. The Minister for Local Government and the Regions told us firmly that the definition of hereditaments that my hon. Friend the Member for North Wiltshire (Mr. Gray) had obtained from the Library was out of date, and that there was an extant, agreed legal definition--such that third parties who rented out buildings would be eligible for rate relief. We are, of course, happy to accept the Minister's assurance--we are sure that she is extremely well briefed. I only hope that she is right, not least for the sake of the Government's legal bills in years to come.

Also serious is the potential unfairness to existing riding schools. If things go wrong, the Bill might have a genuinely perverse impact on this country's equestrian sector. The Minister for Local Government and the Regions assured my hon. Friend the Member for North Wiltshire that she took on board many of his points about the inadequacy of the Bill as drafted in terms of its effect on the equestrian sector. My fear is that it might damage businesses that are already under pressure. I am sure that everyone on both sides of the House hopes that that will not happen, but it is regrettable that in our proceedings on the Bill we have not improved it so that it can cope with that problem.

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The final specific point about the Bill as it stands from which problems might arise is the starting date. The Under-Secretary accepts that the problem of the delays that are inevitable in obtaining planning permission for diversification of farm buildings means that an early commencement date will result in the value of the early months of the rate relief being nugatory for most, if not all businesses, because no one will be able to enjoy the benefits when the delays in planning permission have prevented the businesses from getting started.

The Bill ought to be a lot better than it is, but its contents are better than nothing--extremely lukewarm praise. In terms of effectiveness, the Bill is probably in the top 20 per cent. of Bills introduced by the outgoing Government in that it is, at least, not wholly destructive. On that, I congratulate the Minister. I assure him and the House that when we get the chance, we will introduce our own comprehensive and radical measures that will give better, genuine and more widespread help to farms and other rural businesses.

11.22 pm

Mr. Cotter: It has been said that the Bill is not sufficiently extensive either in its scope or in terms of the rateable value that it covers. My hon. Friend the Member for Somerton and Frome (Mr. Heath) said, rightly, that the measures it proposes are modest. I am quite sure that he will be in his place in the next Parliament.

As the Minister pointed out, in 18 years the Conservatives did little to support small businesses. Nowadays, they speak at length about small businesses, claim that they are the friends of small businesses and outline all the things that they will do for small businesses given the chance. None the less, the fact remains that although they had 18 years to work for small businesses, they failed to do so. We witnessed numerous bankruptcies and the problems that businesses experienced during the various recessions that they had to endure.

Mr. Green: The Bill amends an Act that was passed in 1988. Who does the hon. Gentleman think was in power when that Act, which introduced rate relief for businesses, was passed?

Mr. Cotter: The hon. Gentleman goes on about how much more should be done, but the Tories had a long time in which they could have done far better.

The Liberal Democrats have a clear scheme: relief for all businesses of less than £25,000 rateable value; and for the first £1,500 of rateable value, small businesses would be entirely let off, which would assist them greatly.

I am worried about the rateable values. The Association of Convenience Stores is clear that the £6,000 threshold is not enough. It believes that the threshold will help only a small number of shops because just a few will be eligible. Although the £9,000 rate for pubs is little higher, it has to take into account the fact that they often have living accommodation. Therefore, the same consideration applies. The organisation representing pub owners has made it clear that a business of that rateable value is almost unviable. There are concerns about the detail.

A little work through the House of Commons Library exposed the fact that the Bill's provisions amount to a modest relief of only £3 million. If the Minister disagrees with that figure, I shall be glad to hear his comments.

Mr. Gray: The hon. Gentleman is right: the Library estimates that £3 million a year and £16 million in total

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will be spent. How much would the scheme cost if it applied to the rateable value of £25,000, as proposed by the Liberal Democrats?

Mr. Cotter: The total amount spent would greatly relieve small businesses, which is the main consideration. The bill would be met in a neat fashion by adjusting the rates that the bigger concerns pay, which are out of kilter with what the smaller firms pay. Our proposal would cost the Exchequer nothing because we would play one off against the other.

In the spirit of tonight's end-of-term atmosphere, we are, at least, making a step in the right direction, and I hope that more will be taken. The Government said in Committee that, if they have a chance, they will suggest other proposals. We were especially concerned about the five-year limit that has been placed on providing assistance to business, which is a short time. We have to accept--or at least hope--that the Government will address the problem more broadly to cover rateable values for all businesses. I look forward to hearing the Minister's comments.

11.28 pm

Mr. Gray: I want to reiterate a point that has been made, and shall be brief. Although we welcome the ability of farmers to diversify and the provision of help to some village stores, one sector might be badly damaged. We have been losing about 200 to 250 riding schools a year because of the business rates that bear down heavily on them. The Bill allows a farm to diversify. It could decide to run a livery yard, a pony trekking business or a riding stables. That would put the existing riding school at the end of the drive into an unfortunate competitive position. According to the British Horse Society and the Association of British Riding Schools, that could spell disaster for riding schools.

Instead of the 50 per cent. rating outlined in the Bill, all equestrian businesses should be zero rated. Any new or existing horse business should be exempted from business rates. The easiest way to do that is to redefine the horse as an agricultural animal. If a farmer uses a shed for heavy horses, those animals count as agricultural animals and he pays no business rates on the property, but if he uses that shed for breeding any other horse, including a racehorse, he pays business rates. That is absurd.

The Government might also consider exempting new and existing horse businesses from business rates. Only by doing so can they possibly have a hope of saving these businesses. In the United Kingdom, 2.4 million people enjoy riding horses, so it is a very important industry. If the Bill goes through as it stands, it poses the real risk of wrecking those businesses. At the very last moment, on behalf of the horse industry and the people who enjoy riding, I appeal to the Minister to think again about what can be done to correct the Bill so that the industry can be saved.

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