Rating (Agricultural Premises and Rural Shops) Bill

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Mr. David Heath: I beg to move amendment No. 2, in page 2, line 17, at end insert

    `, except that subsection (6F) will continue to apply to any hereditament, subject to the condition in subsection (6G) being fulfilled, for a period of five years beginning with the day on which it first applies.'.

The amendment concerns another of the issues on which we received assurances from Ministers on Second Reading. There is a difficulty in the interpretation of the Bill, with respect to the five-year qualifying period after which the measure lapses, subject to review by the Secretary of State. There seems to be a suggestion that a business that qualifies for relief towards the end of the period does so with an expectation of relief only for the unexpired portion of the five years. That poses considerable difficulties for businesses that want to diversify late in the day, towards the end of the period for which the provision is in force. It will be impossible to persuade borrowers, for instance, that a business plan has any respectability if the relief that forms part of it is contingent on a decision, a year ahead, by the Secretary of State.

It seems much more appropriate that the Bill should make it clear that, if a business qualifies under the other relevant clauses for rate relief, that relief will continue for five years for the business or hereditament, irrespective of the continuation of the provision in force beyond that time. I understood, or think that I did, from the Minister's comments on Second Reading, that that was her intention. Otherwise, there would be an unseemly scrabble in the first year for rate relief for as many businesses as possible, after which there would be no point in bothering, because the full benefit would not be obtained. However, I cannot discern that approach in the Bill, and nor can those outside the House who are better qualified than I am to examine it.

The amendment is not the most elegant ever, but I hope that it would ensure that the rate relief would be extended for a full five-year period to any business that qualified for it at any point in the five years during which the provision had effect. At the end of the time, the Minister might want the provision to be reintroduced. If so, any business or hereditament that qualified in that latter period would have the guarantee of a five-year rate relief. That is a sensible way forward and it is in line with what I think the Bill seeks to achieve. It gives those seeking to take the plunge in this area confidence that their business rates position will be consistent during that period. If the Minister is not minded to accept that, I should be grateful if she would explain to me exactly how the measure will work and how it will apply to a hypothetical business that wants to diversify in the fourth year after the Bill comes into force. How on earth will such a business be encouraged to diversify by the promise, as it would appear, of only one year's rate relief?

Mr. Green: It is time to show some reciprocal generosity towards the hon. Member for Somerton and Frome. I was attempting to draft an elegant amendment to achieve the same objective as his. That objective is wholly right. Having read his amendment, I decided that I would not bother drafting my own, and that we would support his instead because it seems to do the job—an important job.

Certainty is vital for future business planning, particularly for businesses that are genuinely unsure about the likely extent of their liability. There is a long history of Governments of all parties offering rate reliefs and grants—all kinds of goodies—to businesses. That history tells us that businesses that are set up specifically to take advantage of some short-term Government scheme are unlikely to be viable in the long run. They are less likely to be viable than if they planned on a consistent basis.

If the Government introduce a scheme such as this to provide outside relief to businesses, it should be a consistent part of the planning of those businesses. The attitude of businesses to its introduction should not be, ``It will be worthwhile if we do this now, regardless of business circumstances, but it would not be worthwhile if we set this business up in a year or two's time, regardless of business circumstances.'' One of the unintended side effects of the legislation will be to drive more businesses to take decisions based purely on the reliefs rather than on the underlying business climate, whereas, if the Government accept this amendment, or introduce something of their own to achieve the same effect during the future stages of the Bill, the bumpiness of the effect of people responding to rate reliefs would be smoothed out.

It seems wholly sensible, and would serve the purposes of the legislation better, for the Government to offer people an advantage spread over time, so that businesses were not seeking to take decisions purely in light of the timing of the pump-priming measure proposed under this part of the Bill. I very much hope that the Minister will accept the spirit, if not the letter, of the amendment and either accept it or introduce something of her own at a later stage.

Ms Armstrong: I have listened with great care to hon. Members and I know that they are concerned about the matter generally. It is my ambition to bring together all the existing reliefs. People are confused by the many different ways in which they can get rate relief, and that confusion frequently results in their being unsure whether they will get any. That is a real problem, which we dealt with in the local government finance Green Paper. My problem is that the White Paper has not yet been published. We are working on it, and I anticipate that it will be out in the not-too-distant future.

I acknowledge that that is difficult for Committee members, as I am talking about other changes that I hope will bring more coherence to the rate relief regime, and we are referring to something that is intended as a short-term measure to provide immediate help to farmers who want to diversify into non-agricultural activities. We have presented the Bill quickly to provide that relief as soon as possible.

12 noon

Mr. Gray: Will the Minister give way?

Ms Armstrong: I do not think that we want to debate that matter further now. The hon. Gentleman knows that it takes time to consult on and draw up legislation, while ensuring that the resources of the Parliamentary Counsel are used effectively. We sought to get the Bill through the House quickly so that there can be immediate relief.

The amendment would extend the period of relief to five years from the date when a hereditament first received relief, even if that extended beyond the five-year life of the scheme. However, the Bill seeks to meet a specific need--one that is clear now but may not always be. The scope for diversification is finite. We are providing a scheme that applies for a fixed five-year period that will be known to all ratepayers and so will be clear.

Hon. Members know that it is not only in local government finance that further proposals are being made. Everyone knows that we shall have to consider the future organisation of farming. To introduce a measure such as the amendment would, in many senses, suggest that everything would continue for some time. The impetus to recognise a new and different system would be curtailed if we accepted the amendment.

We have provided a power to extend the scheme if it is still needed in five years' time. That would need to be considered with our proposal for a rate relief scheme for all small businesses in England, which was in the local government finance Green Paper. If implemented, it would provide mandatory rate relief to all small businesses covered by the farm diversification scheme in the Bill, as well as those not covered by it.

The Government must look at the issue carefully. It is important that we rationalise the number of relief schemes, how people apply for relief and what they know is available. Confusion about what people might be eligible for is a problem. I have been to several authorities and talked to farmers and others involved in, for example, the tourism industry, including those offering bed and breakfast. Many of them are confused as to what they are entitled to receive, so the case for rationalisation is fairly strong.

I understand the arguments made by the hon. Member for Somerton and Frome, but he will understand that if I agree to the amendment, I would seal in law for more than five years something that would make that rationalisation even more difficult. The Government may have to extend the relief because agreement may not be reached elsewhere. However, to do so today would make it much more difficult in the medium term to sort such matters out in a rational way and see the conclusion of the scheme, because it would be overtaken by a more comprehensive scheme that would enable rate payers to be much clearer about what was available. I realise that that is not what Opposition Members want, but it is the right way to proceed. I invite the hon. Member for Somerton and Frome to withdraw the amendment.

Mr. Heath: I listened carefully to the right hon. Lady. I applaud her intention to consolidate and reform legislation on this matter. However, we both know that the road to local government finance reform is extremely long and arduous, with many twists along the way. The experience of those who want simplification, codification and reform has not been entirely happy.

I do not understand the argument that, because the provision for relief on former agricultural premises extends beyond five years, it will somehow stymie all Government attempts to reform local government finance. That is an extraordinary position. It is a time-limited relief; the other reliefs are not time limited. Do they stymie local government finance reform? I suspect not. We are talking about a simple inequity. A business that qualifies on the first day on which the Bill comes into effect will qualify for five years of rate relief; but a business that qualifies four years and 364 days after that date will qualify for only one day of rate relief—unless the Secretary of State decides to introduce an extension to the requirement.

If the Government intend to extend and encourage diversification throughout the period, that intention should be as strong on the first day as on the last. There is no internal logic to the argument that different considerations should apply. The Minister is right to say that diversification might be the done thing in five years' time. I doubt it, but it is possible that, by then, things will have changed so much that the provision will no longer be needed. However, that does not alter the fact that any hereditament that qualifies up till then should benefit from the scheme in full, not in an attenuated form.

Sadly, the right hon. Lady's argument does not make sense. It is not in line with what the Government said that they intended. I therefore seek the opinion of the Committee.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 9.

Division No. 2]

Cotter, Mr. Brian
Fraser, Mr. Christopher
Gray, Mr. James
Green, Mr. Damian
Heath, Mr. David
McIntosh, Miss Anne

Ainsworth, Mr. Robert
Armstrong, Ms Hilary
Borrow, Mr. David
Cawsey, Mr. Ian
Edwards, Mr. Huw
Hughes, Mr. Kevin
Keeble, Ms Sally
Organ, Mrs. Diana
Temple-Morris, Mr. Peter

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

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