Local Government Finance (England) Special Grant Report No. 80 and Draft Non-Domestic Rating (Public Houses and Petrol Filling Stations) (England) Order 2001

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Mr. Geoffrey Clifton-Brown (Cotswold): I reiterate that it is a pleasure to serve under your chairmanship, Mrs. Michie. I hope that it will not be the last time because I hope that the general election will be called at a time that will allow us to consider further measures of this type. It is clear nationally that the foot and mouth crisis is getting appreciably worse by the day. As of yesterday morning, we had 19 cases in Gloucestershire and it looks as though the situation is worsening. As I said in the debate on foot and mouth in Westminster Hall on Monday, I sadly think that when it is time for the cattle to be turned out of the cattle sheds, the whole pandemic has the capability of spreading from the sheep flock into the cattle flock.

We are dealing with a national disaster. I lived through the outbreak in 1967, when my mother was a dairy farmer. There was an outbreak next door and we adopted a siege mentality. I draw attention to my entry in the Register of Members' Interests. I no longer have any connection with any stock farm, and my mother no longer has that dairy herd. However, I understand the trauma and psychological stress that farmers are experiencing, both those whose flocks have been slaughtered and those who are sitting on a ticking time bomb, wondering whether their flocks will be next. I have great sympathy for them—the Government should be totally sympathetic—and I welcome the measures.

As the then Minister's Parliamentary Private Secretary during the BSE crisis, I dealt with special measures and Europe. Has the present Minister ensured that the European Union will allow the reliefs to be paid and not counted as state aid? We ran up against that problem time and again during the BSE crisis. We must not raise hopes that reliefs will be available, only to dash them because of European Union modifications. I hope that the Minister can reassure the Committee on that aspect.

Another important question was raised at a meeting with my district council last Friday. We did not have the details that the orders provide today. I am not totally familiar with the technicalities, but I understand that district councils will have to apply to the non-domestic rate pool for the rebates and that they will have to justify all applications. Councils are anxious that there should be no restriction—that all the businesses that qualify will be fully reimbursed. They are also worried that if there is a huge call on the pool, the criteria—which are still relatively loose and undefined—that are set out in the order might suddenly be tightened and cases at the margins might not be reimbursed. That could result in a costly exercise for those councils in whose area there are many foot and mouth cases. Therefore, it is wholly reasonable that any council that applies the criteria should be fully reimbursed and should not find that their applications are filtered out at the end.

I echo the points that have been made about the three-month time limit, from 31 March to 30 June, for applying for the reliefs. I represent a constituency that is heavily involved in the tourism industry. The cancellation of the Cheltenham festival alone cost Gloucestershire some £40 million. The Badminton horse trials have been cancelled, and I imagine that that will cost the Gloucestershire tourism industry another tranche of many millions of pounds. I have had a number of harrowing constituency inquiries from a range of tourism industries—the Cotswold wildlife park, bed and breakfast establishments, horse training institutions, a range of businesses—that have been devastatingly affected by the outbreak. Sadly, Cotswold district council will have many such cases.

Business people take whatever steps they can to try to ameliorate problems. During this most worrying time—it should be their busiest time—they will be taking every form of advice: from accountants, and from wherever they can find it. I wonder whether the three-month time limit is reasonable and, in a genuine spirit of inquiry, I ask the Minister whether there is any scope for extending it.

We are in the middle of a situation that is getting worse. Every day we are getting more cases of foot and mouth in Gloucestershire, and every day the situation for the tourism industry is deteriorating. Many businesses will not know whether they should apply for relief; I would tell them to apply, on the basis that they might get it. However, that is not the point. The idea should be targeted, because district councils will have to give out to businesses information on whether they should apply. Therefore, I plead with the Minister to reconsider whether the three-month time limit is reasonable.

I return to the £12,000 limit and market towns. I represent almost 1,000 square miles of Gloucestershire, which includes a huge number of villages and 10 market towns, and many businesses that operate in between them. It is a net in which all businesses depend on one another; if one starts to suffer, the whole net will suffer. Some larger businesses in the market towns—my hon. Friend the Member for Ashford mentioned hotels, but there are others—will be just above the £12,000 limit. I know that, with any order, it is possible to claim that a limit should be just above the figure given—just above £12,000, £15,000 or £20,000. I understand the enlargement argument only too well, but businesses in rural areas and market towns are relatively isolated from bigger towns and will suffer particularly badly. They already have a high cost structure. For example, my hon. Friend mentioned hotels in the Cotswolds, and their rents are a significant part of their business costs. They may be able to lay off their labour and offset their business rates, but if they are still paying rent and other unavoidable costs, such as bank interest, they will be in great difficulties when their cash flow dries up.

I should like to press the Minister further on other measures that could be introduced. She might be aware that, in a Westminster Hall debate, I focused on cash flow. I know from my businesses in the Cotswolds that cash flow is becoming a problem. The solution is not just the cancellation or postponement of a business rate; it is enabling businesses to garner in cash flow, particularly when they have Government Departments knocking on their doors and demanding money. I am referring to income tax and VAT—and council tax for businesses that have to pay it in addition to non-domestic rates. It would be wholly reasonable for businesses to have a holiday from such payments when their cash flow has hugely reduced or dried up entirely. That suggestion may not be strictly within the scope of today's Committee, but the Minister might say something about that. If she cannot, she should plead the case strongly to the Minister for the Environment, who is in charge of the rural taskforce. It will be no good waiting for another month, when the general election might be upon us; businesses need that help now.

On Saturday, I was talking to a postmistress in my constituency, who said that her business would not survive. She does not pay any business rates and already gets full relief. She asked what the Government were doing for her, because they are already taking away a large part of her business and people do not want to visit the Cotswolds. The chances of extending her business are slim. Indeed, she went to a conference on how small post offices could survive, and she was told that she would not survive unless she joined one of the larger chains. That seems extraordinary advice for a Post Office conference to give to a postmistress. She has worked hard all her life and is now having a large part of her income taken away by the Government; on top of that, she is being hit by the fact that, as a result of the foot and mouth crisis, no one is visiting her village. Her business, which does not pay any business rates anyway, will not survive.

I welcome the order relating to garages. However, can the Minister speak about a specific issue relating to rural garages? If she cannot, will she ask her hon. Friends in the Department of Trade and Industry to investigate that issue? Many rural garages are supplied by independent petrol companies—not the big four companies, the Shells, Essos and BPs—which rely on buying their petrol on the spot market. During the fuel crisis, for example, the big four, who had already bought all their fuel forward, tended to act as a quasi-monopoly by keeping their prices artificially lower than those charged by rural independent garages who had to buy their fuel on the spot market. I do not know whether the garage owner in my constituency to whom I was talking will survive but I know, from driving around my rural constituency, that many garages have closed in the past few months. I suspect that those closures may be due to the anti-competitive methods of the big four, which are obviously bad news for rural retailers, rather than the rating problem—although that problem exacerbates the situation.

I think that the Government understand the consequences of closure of the rural school, the rural garage, the rural post office and the rural pub. Many rural villages suffer from a lack of policemen and closure of police stations. Many have very few services left. The disappearance of local services is altering the structure of our society because our youngsters are leaving villages and moving to towns—a process that will cause villages to die even faster. I will not go further down that route, Mrs. Michie, lest you call me out of order; I simply say that we have a real problem on our hands.

I welcome the measures as far as they go but I hope that the Government will rapidly propose further ones, particularly those that I have been suggesting: a holiday from VAT, income tax and council tax.

10.41 am

Ms Armstrong: We have had an interesting debate. All members of the Committee recognise, and are committed to solving, the problems of areas affected by foot and mouth disease and, extending beyond those areas, the problems experienced by other industries. The dilemma that we face is that we are closing this and closing that, and imposing restrictions on the countryside in order to deal effectively with farmers, but that damages other industries and businesses. I remember only too well being in opposition for many years. It is easy to be simplistic about the situation, but that just creates greater problems for a greater number of people. That is the dilemma faced by the Government and the Prime Minister—the Leader of the Opposition is not prepared to face it because he is giving the world the irresponsible message that the country is closed.

My constituency is largely rural. It has nothing like 10 market towns: the largest town has a population of 20,000; the next largest has 10,000 or 11,000 people and the rest are all villages. Foot and mouth cases number in the mid-30s—the first case in my constituency occurred within the first two days of the outbreak and there have been new cases every day since—so I know the real problems faced not only by our rural communities but by other businesses, which are desperate because they do not know which way to turn.

There is a clear way forward for farmers. The loss of stock is painful, but farmers know that they will receive compensation for it. Compensation will not cover everything, but farmers recognise that it is far more generous now than during the BSE period. The Government fully recognise the problems and, despite what Opposition Members say, many Labour Members' constituencies are significantly affected by the foot and mouth crisis and have to deal with it—day in, day out.

I recognise from my own constituency—rather than from my ministerial work—the real impact of foot and mouth not just on the farming community, but on the whole rural economy. That is why we set up the rural taskforce, which is working well. It is not just a small group of Ministers. It includes representatives of key organisations in the rural economy and we are working together to support businesses effectively. The Government cannot bail out every single business and compensate for all the money that might have been made. No Government could do that, but we want to make every reasonable effort to ensure that businesses survive during this incredibly difficult period. We shall provide support to help people build up their businesses again.

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