Rating (Agricultural Premises and Rural Shops) Bill

---

[back to previous text]

Mr. Green: We have now reached the debate on hereditaments, to which I am sure Committee members have been looking forward all morning. I shall be brief, as the Minister knows what the issue is. She and her officials have defined the term in a way that I think we would all welcome. Outside organisations that have read the Bill think that the term applies in a more narrow sense. In particular, they think that third parties who rent or lease buildings from farmers would not be entitled to the relief. That would significantly narrow the effect of the reliefs available under the legislation. I hope that during the clause stand part debate the Minister will be able fully to assure the Committee and those observing its deliberations.

Mr. Gray: I rise very briefly indeed because it was an intervention from me on Second Reading that prompted the Minister to say:

``the Bill will apply to any premises which used to be used for farming and which will now be used for other purposes, whether the premises are rented out; whether the farmer still lives on and runs the farm but rents out a part of it to someone else; whether the farmer himself uses the premises; and whether the farmer is a tenant or an owner.''—[Official Report, 30 April 2001; Vol. 367, c. 655.]

That is in stark contrast to the excellent document ``Words and Phrases legally defined'' produced by the House of Commons Library, which states that a hereditament is

``whatever is capable of devolving upon death.''

It must be something that one owns, which one passes on upon death, so it does not apply to something that one rents--leaving aside the technical matter of agricultural tenancies, which are hereditaments on the grounds that the tenant of a farm can pass his tenancy on to his son when he dies.

Wiltshire Tracklements, a company in my constituency, rents a building from Pinkney Park farm to make mustards, but there is no suggestion that the excellent Mr. William Tullberg, the owner of Wiltshire Tracklements, can pass on the tenancy of that building to his son on his death. On his death, the tenancy lapses unless some other agreement has been made in the normal commercial way between Mr. Tullberg and the farm owners. Wiltshire Tracklements' tenancy at Pinkney Park farm is not a hereditament and therefore would not benefit from rate relief under the Bill. The Minister's answer on Second Reading was extremely plain, and I look forward to her explanation of that distinction.

Ms Armstrong: Clause 1 provides for the new mandatory rate relief for former agricultural premises. It achieves that by amending section 43 of the Local Government Finance Act 1988, which sets out ratepayers' liabilities, including provision for other mandatory rate reliefs. The 1988 Act uses the same definition of a hereditament as was used in the General Rate Act 1967. Section 64(1) of the 1988 Act states:

``A hereditament is anything which, by virtue of the definition of hereditament in section 115(1) of the 1967 Act, would have been a hereditament for the purposes of that Act had this Act not been passed.''

Section 115(1) of the General Rate Act 1967 defines a hereditament as

``property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list''.

I hope that that clarifies the issue. My hon. Friend the Member for South Ribble (Mr. Borrow) was a valuation officer in a previous life. He is nodding emphatically; that is precisely how valuation officers have dealt with the matter.

Other definitions relating to hereditaments may well survive, but a leading legal dictionary states that the word is now used only to mean a unit for rating purposes. Statutes from 1836, and probably earlier, may well have used the term differently, but now it is used as I have explained. That is its use in the provisions that we are considering, derived from the definition in the General Rate Act 1967.

12.15 pm

Mr. Gray: I am delighted to hear the Minister's definition, but it might be helpful if she would ask her officials to let the House of Commons Library know about it, so that the excellent document in question can be updated. It is clearly incorrect.

Ms Armstrong: I am sure that the Library keeps a close note of our proceedings and will see how we are working.

Proposed new subsection (6F) defines properties eligible for relief. Paragraph (a) specifies that they must meet the conditions in proposed new subsection (6G). Any property that does so will be eligible for the relief, and there will be no restrictions on who occupies it. Rates are levied on the occupiers of property, not the owners, but they are assessed on the nature of the property. Whoever is the ratepayer—whether a farmer owner-occupier, tenant farmer or third party—will receive the relief if the property qualifies for it.

I am able to be so clear about this matter because in our consultation last November we suggested that relief be restricted to farmers, as it is farmers whom we want the rate relief to help. That consultation may have affected what people outside the House believe about our intentions. However, we dropped the restriction because the response to the consultation was clearly against it. Opposition Members have clearly judged matters by their experience. The Government listen and respond to consultations and we recognised that farmers and the wider rural economy would benefit if under-utilised agricultural premises were brought into other uses, where the potential for that exists.

Farmers may establish such enterprises as part of the farm. However, the enterprises may be set up by family members or by a company legally separate from the farm, even if it is in the same ownership or occupation. Farmers will also benefit if they let or sell part of their farm to a third party to operate a separate business. That indirect form of diversification brings the same benefits, and properties used in that way will also qualify for the relief.

I hope that the matter is now clear to Opposition Members. The new rate relief will be available with respect to small-scale properties used for non-agricultural activities, which were previously in agricultural use. The purpose of the relief is to help farmers who want to diversify but who are discouraged from doing so by the additional rate burden. The clause will halve the rate burden, making it easier for farmers to move some of their property into small-scale, non-agricultural activities.

The new rate relief is not intended to subsidise other rural businesses, including those that are already well established, or those that are not on farms. We are taking a range of other measures to support rural businesses, as set out in last year's rural White Paper. The new rate relief is one measure aimed at a problem that concerns farmers at present.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3

Rate relief for rural food shops

Mr. Green: I beg to move amendment No. 14, in page 3, line 7, leave out `mainly' and insert `in part'.

The Chairman: With this it will be convenient to take the following amendments: No. 3, in page 3, line 8, leave out from `consumption' to `is' in line 9.

No. 4, in page 3, line 8, after first `excluding', insert

`a trade or business consisting wholly or mainly of the sale by retail of'.

No. 5, in page 3, line 8, after second `excluding', insert

`a trade or business consisting wholly or mainly of'.

No. 15, in page 3, line 13, leave out from `supplied' to end of line 20.

Mr. Green: I shall confine my remarks to amendments Nos. 14 and 15, which are tabled in my name and that of my hon. Friend the Member for North Wiltshire. The two amendments are another attempt to make the Bill more generous so that it achieves its purposes better and is much less fiddly.

Amendment No. 14 is designed to help shops that have diversified or, those that have been set up such that food does not provide more than 50 per cent. of turnover—which I assume would be the definition of ``mainly'' food shops—which is the current usage and terminology of the clause as drafted. That would provide welcome flexibility. None of us can anticipate fully which way the retailing sector in villages will go in years to come, so applying a rigid rule about the desirable type of food shop that will be entitled to relief under the Bill, and especially to specify that in the Bill, may prove unnecessarily restrictive.

Amendment No. 15 is intended to cope with what will become the great microwave problem. A shop that is essentially or even wholly a food shop but which contains a microwave oven in which people can heat up a meat pie and take it away will lose relief under the Bill. That restriction is pointless—indeed, it is ingenious in the pursuit of pointlessness, like too much legislation. It does not alter the essential character of a shop to offer such a service, and I fail to understand why the Government insist on that petty and impractical restriction, not least because the effect might conceivably be that an existing service is withdrawn and, at the small margins, the quality of life for some people is reduced, or a service that would have been introduced is not. That seems perverse.

The purpose of the two amendments is to make the Bill more generous and less fiddly. I hope that the Government will accept both amendments.

Mr. David Heath: I have tabled three amendments in this group. One would widen the Bill's scope and the other would clarify the position that Ministers outlined in their responses on Second Reading to ensure that there is no ambiguity in the wording of the Bill.

Amendment No. 3 would widen the Bill's scope by removing the words in parentheses in subsection (6CA). It would remove the exclusion of shops that supply confectionery and provide food in the course of catering. It is similar to the amendment tabled by the hon. Member for Ashford and is designed to explore the Government's contention that the scope of the clause should be narrower.

Confectionery is not defined in the Bill. Is it defined in existing statute? We have a definition for the supply of food in the course of catering, but we do not know what constitutes confectionery.

 

---

Prepared 8 May 2001