Rating (Agricultural Premises and Rural Shops) Bill

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Mr. David Heath: I beg to move amendment No. 6, in page 1, line 19, leave out `one year' and insert `two years'.

The amendment is not simply an attempt to outbid, for no good purpose, anything that the Government have put into the Bill. There are sound reasons why the one-year period set out under proposed new subsection (6G)(a)—in particular its application to (6G)(b), which is the most crucial part of the measure—should be extended. We had a rather pointless or fruitless exchange about the meaning of the phrase ``183 days'', and I think that we ascertained that it is roughly equivalent to six months. The period of six months during the previous 12 months is arbitrary, but I accept that the Government have to set some limit. I also accept that the measure cannot be retrospective to an unlimited degree. Every building in the country could probably be described as having once been in agricultural use and would therefore qualify under the measure.

I recognise that we have had a crisis of staggering proportions in our agriculture industry over the past few years and that farm incomes are at the lowest level that anybody can remember. The requirement for farmers to diversify has never been stronger than over the past few years. As a result, many people who previously used their premises and land for agricultural purposes have sought to extend their business arrangements into new areas in order to cross-subsidise their agricultural activity.

The crisis in farming is one thing, but the additional difficulties caused by foot and mouth disease mean that those businesses that took the plunge during the past year or so have met with probably the most adverse trading conditions possible for setting up a new business. That means that many people who set up a non-agricultural business on farm land or premises in the 12 months prior to the past year are probably struggling to make ends meet much more than their business plans suggested they would be.

The Minister is partly right in her interpretation that the measure will deal with third-party businesses operated from farm premises—I accept your ruling, Mr. Benton, that we shall deal with this matter in due course. A period of time is required to make a building ready for occupation by another business, during which it is being converted but is probably still owned and operated by the farmer, and after which it is let to the other business. Foot and mouth disease will have had a critical effect, in terms of finding tenants, on those farmers who have chosen to create workshops or retail premises on their farms. Now would be the worst time for anyone to start up a new business on farm premises or in a rural situation.

For all those reasons, the six months within the previous 12 months provision, although relatively generous in that it is to some degree retrospective, will in practice eliminate many of the businesses that the Minister and I want to support in terms of diversification. Many businesses that have been set up in the past 12 months may not qualify under the provisions and may be stillborn because of circumstances beyond their control. That is the result of the crisis.

That is why I ask the Minister to allow for agricultural operations for six out of the past 24 months, rather than the past 12. That would not extend the net substantially, because we are dealing with a relatively small number of businesses and with a small degree of relief. However, it would ensure that new businesses, which will be set up in the worst trading conditions of this century or the last, have a chance of surviving. Such a provision is not outwith the Government's intentions and has not been plucked out of the air to outdo them, because that is not the way to deal with legislation. It is a sensible extension of the Government's proposals for dealing with the present circumstances, and I ask them to consider it.

Ms Armstrong: As I assumed, the amendment is intended to extend the period of retrospection so that the relief is available to diversification businesses established up to 18 months, rather than six months, before the provisions come into force. Businesses that have been without rate relief for that long are precisely those that will be able to survive; those that have been established in the past year and have not had rate relief are the least likely to.

The amendment would also extend from one year to two the period during which properties must be in agricultural use to qualify for rate relief. Once they move into non-agricultural use, they become rateable. The amendment does not increase the 183 days qualifying period. The purpose of a qualifying period of 183 days during one year is to ensure that relief is available to premises that are in agricultural use for more than half the time. That will allow relief to properties whose use changes seasonally, but which are, for the most part, agricultural and which are in non-agricultural use for the smaller part of the year.

The amendment would set a qualifying period of 183 days during a two-year period, so properties would have to be in agricultural use for only a quarter of the time. That would allow relief for properties that were primarily non-agricultural, but which had a secondary agricultural use. That would include sheds used for winter storage of farm equipment for three months in each of the two years, or for a total of 183 days, which were regularly used for other rateable purposes for nine months in each year. Those cannot be considered as new diversification enterprises.

The hon. Member for Somerton and Frome wants to support farms that have had real problems during the foot and mouth crisis, and I understand why he wants to do that. However, the problem that he faces is that the amendment would extend relief for farm diversification to buildings that have not essentially been used for farming. He wants to use the Bill to help in another way those who have had problems with foot and mouth disease, but the amendment will have a different effect from what he expects, and I am not convinced that that is the most effective way to help farms that are part of the current crisis.

I have sympathy with the hon. Gentleman's aim, but the consequences of pursuing it in the Bill would be greater than he realises and would not necessarily further help the farms that diversified 18 months ago. His main aim was to help someone who had, perhaps, diversified 16 or 17 months ago, and so had not had long to establish the business. I understand that. None the less, the amendment would have a much wider effect. In many senses, it would go beyond what we are trying to limit relief to--new businesses set up in buildings that have essentially been farm buildings, which are exempt from rates.

11.45 am

We all want to assist farmers suffering the results of foot and mouth disease. My constituency has had a significant number of outbreaks, and I can say that there has been extensive relief for many farmers, whereas many of the other businesses that receive no relief at all have suffered greatly. One therefore has to approach relief for farms bearing in mind the problems of other businesses.

The amendment would not make the most helpful change at this stage. I am unable to accept it, as it undermines the core purpose of this part of the Bill. I hope that the hon. Gentleman will withdraw it.

Mr. Heath: I listened to the Minister's comments with great care, and am grateful at least for her sympathy with my intentions. She had two objections to my amendment. One was a result of interpreting the amendment in a way in which I had not. Were my amendment agreed to, the problem could be dealt with by consequent amendment, simply by requiring the 183 days stipulated in proposed new section 43(6G)(a) of the Local Government Finance Act 1988 to be a continuous 183 days. That would get round the difficulty of the two three-month periods.

I never set a limit on the ingenuity of lawyers and accountants, so I am sure that someone in the country would contrive to use a building for agricultural purposes three months in each year and so claim rate relief. However, the Government's intention is to allow for diversification and to define a building in agricultural use. Relief is primarily intended not for buildings in use part time, but for ones that have ceased to be used for agricultural purposes in the past year, which will now be used for an alternative business purpose. That was the spirit in which I proposed my amendment, which is why a six-month period within two years was perfectly reasonable. For the provision to be watertight against clever accountants, I accept that a subsequent amendment would be needed.

I do not accept the Minister's second point to the same degree. If our purpose is to support diversification, I maintain that we want to do so not only for those contemplating diversification, but for those who have taken the plunge. I accept that retrospection can go only so far, or one would be dealing with established businesses. Someone who had attempted to start a new business a year or so ago would have had to weather the worst trading conditions imaginable. The Minister may be right to say that only the strongest will survive them. My purpose is to ensure that as many diversified businesses as possible weather that storm. The amendment would be one way in which the Government could assist that process.

My problem with foot and mouth disease is that, even if we take a sanguine view—given the events of the past week, we are by no means convinced in Somerset that the epidemic is near its end—there will undoubtedly be an epidemic of business failures across rural areas of the country in the next few months. If we close our eyes to that, we shall be failing to represent people properly. I agree with what the Minister said on Second Reading about the Bill not being a response to the foot and mouth crisis. However, it could have furnished a mechanism by which to help a little. The time limits will mean the failure of business that might have been helped.

I am disappointed that the Minister cannot accept the amendment. We shall find other ways to pursue the same objective, but for the moment I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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