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Lord Whitty: My Lords, as my noble friend the Chief Whip is sitting beside me, I am afraid that I cannot give the noble Baroness much comfort that we shall be considering these matters and coming forward with any amendments that address her concerns in time for the Committee stage, to which I believe we shall shortly be moving. Indeed, as regards the questions that the noble Baroness has just asked, I am not sure that we can resolve them in relation to changes to the Bill.

I believe that the noble Baroness's main concern related to the question posed by my noble friend Lord Brennan on the burden of rates on rural areas. I should point out that that is not a change that is brought about by the Bill: discretionary relief already receives 75 per cent central funding, but that means that 25 per cent must be found by the local authority. The Bill does not change the situation. In passing, whatever the noble Baroness's concerns may be about the relative position of rural counties in the SSA process, I should stress that they have received very substantially more money in absolute terms than they did during the latter years of the previous administration. However, we are not supposed to be political at this stage in our proceedings.

The noble Baroness's points about administrative convenience and square footage as against rateable value relate to the same issue. In immediate terms, it is easier for local authorities to check the rateable value and, therefore, to get the process into operation rapidly. It would not serve the interests of those who are seeking such relief in order to set up new enterprises, or to maintain their enterprises, if we were to require the local authority to check the square footage and work it out on that basis. I agree that there might be a slightly different impact in various parts of the country; but, nevertheless, we propose to use that

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system in order to get the scheme under way rapidly. That ought to be of benefit to rural areas rather than having another loop of bureaucratic administration.

In relation to the five-year lag, we shall return to those aspects shortly in Committee. As for the question of hand-over from one company to another, it would be odd if, in the case of neighbouring farms, we were to give five years to one property that had diversified and yet award seven years, or whatever, to another property next door simply because the property had changed hands in the middle of that period. Of course, we may extend or subsume the scheme in an effort to show more widespread support for local businesses, and rural businesses in particular, at a later stage. We must maintain a degree of equity between the business that runs for the full five years and a property that changes hands within that period. Anything else would be illogical and inequitable.

With those final words for this Second Reading debate, I hope that we can proceed to further stages of the Bill. I commend the Bill to the House.

On Question, Bill read a second time.

Then, Standing Order 46 having been suspended (pursuant to Resolution of 9th May), House resolved into Committee.

[THE DEPUTY CHAIRMAN OF COMMITTEES (Lord Ampthill) in the Chair.]

3.8 p.m.

Clause 1 [Mandatory rate relief on former agricultural premises]:

The Earl of Caithness moved the amendment:

    Page 2, line 18, 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 noble Earl said: This is a subject on which we have already had rather more discussion than I thought would be the case. However, it is worth probing the Government's thoughts a little further.

The amendment highlights the rather short-term thinking of the Government. At Second Reading the noble Lord, Lord Whitty, made clear that the scheme was to run for a five year period. As I am sure the Committee will agree, substantial difficulties arise in that connection. My noble friend Lady Byford gave the example of a business that started off with good intentions but after two or three years ran into difficulties and folded. What would be the situation with regard to an incoming business?

I am also concerned about farmers who would like to diversify but who, for a variety of reasons, are not yet in a position to do so. They might need MAFF grants which will take time to be approved. Some planning permissions will also take time to be approved. That is why I referred to town and country planning on Second Reading. The noble Lord, Lord Whitty, did not want to be drawn too deeply into that quicksand. I hope that my noble friend Lord Dixon-Smith with his experience might be able to help the Committee on that matter.

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If a local authority is reluctant to allow a change of use, a farmer may have to wait a substantial length of time to obtain the planning permission he seeks. However, the clock is already ticking. The farmer has to seek MAFF's approval for a restructuring scheme and then has to obtain planning permission. By that stage two or three years could have passed and the farmer has only a further two years of rate relief unless he is able to obtain further discretionary relief. That situation will encourage farmers to submit ill thought out proposals. There will be a rush to get on to the bandwagon to try to obtain the maximum benefit from the proposals. As I say, that will encourage farmers to submit ill thought out proposals.

The foot and mouth tragedy adds irony to the situation. Farmers in areas where there is foot and mouth disease who have diversified receive very little help from the Government and have been particularly heavily penalised. Farmers in such areas will be wary of undertaking further diversification unless long-term commitments are made to them. My amendment seeks to limit the scheme to a period of five years from the commencement of the diversification. If a farmer wants to diversify in, for example, 2003, the scheme would run to 2008. If he wants to diversify now, the scheme would run to 2006. I realise that that would be tough on the business that went bankrupt that my noble friend Lady Byford mentioned and even tougher on a business for which a two-year period applied. I do not seek to make the provision open-ended. I seek to make certain that the help that the Government are now offering is a pump-priming measure for five years from the commencement of diversification. I beg to move.

Baroness Byford: I support my noble friend's amendment, although I suspect that the Minister will be unable to do so. This is an important issue. As we are well aware, many farmers have had a dreadful time. They may have good reasons for not wishing to take advantage of the measure straight away. My noble friend mentioned some of those reasons. It is not clear whether the Government will consider the issue. I do not find it referred to in the business of another place. I may have missed the reference; I do not think so.

In a year's time a farmer may feel able to diversify. As my noble friend suggested, the farmer would be eligible to a period of only four years. If he waited two years, the period would be only three years. I return to my earlier point which the Minister was unable to take on board: it is much less attractive for another person to take on the business if the timescale is shortened. We sought to make clear that point at Second Reading. I support my noble friend.

Lord Dixon-Smith: I, too, support the amendment of my noble friend Lord Caithness. The principle he enunciates seems to me unexceptionable. I accept the procedural difficulties that we all face. However, even words of sympathy from the Minister at this stage would demonstrate some understanding of the situation. Perhaps something could be undertaken subsequently regarding the principle.

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The noble Earl raised the problem of planning difficulties which are a well-known quicksand into which changes of use in rural areas tumble rapidly. It is an area for which no applicant can be wholly responsible. The situation is even more vexed and difficult if he happens to be within the area of a national park where the planning situation, quite properly in many respects, is more restrictive. However, attitudes across the length and breadth of the country differ on these matters.

The crucial issue is that the relief should be available for the five-year period from the start of the diversification. The diversification cannot start until all the requisite permissions are granted. That of itself might take three or four years. If that were so, it would be nice to think that the relief would be available for that period. It is only occasionally the fault of the applicant that these matters run into the sand.

3.15 p.m.

Lord Whitty: The remarks of the noble Lord, Lord Dixon-Smith, allow me to indicate that were we not at this stage of Parliament, I might be sympathetic to the amendment. I understand the underlying problem to which noble Lords have referred. However, even were we to have more time at our disposal, we would be unlikely to accept the amendment. The noble Earl referred to the issue as short term. In a sense it is short to medium term. We are dealing with a situation which arises now. The measure is there to provide immediate help to those farmers who wish to diversify now into non-agricultural activities. The noble Earl rightly referred to other measures of support available from MAFF and others. But rate relief is an immediate and medium-term attractive support to farmers wishing to diversify their business; or to allow others to diversify their business on the properties. In one sense, therefore, it is short term and needs to be put into effect immediately. It meets a specific need which is clear at the moment.

The situation may change in five years' time. It is also true that if we had a huge take-up the scope for agricultural diversification would be limited by the existence of current buildings and so forth. So we are providing a scheme for a fixed period which will be known to potential ratepayers and the owners of that property. We have provided, if the situation is maintained and if the scheme works, for the extension of that period beyond those five years if the need is there.

I referred to the other change at the earlier stage. It is to be hoped that by that time a more general scheme for rate relief--it has been referred to in the local government finance Green Paper--may provide monetary relief to all small businesses which would be covered by the diversification scheme under the Bill, and many other schemes. If that is so, clearly one would have to adapt the scheme even if one wished to give further differential support to diversification at that stage.

With regard to businesses changing hands within the five-year period--perhaps I repeat myself--it is important to recognise that this measure relates to a

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property and not a business. Any new person taking over a diversified business, or a property already containing a previously diversified business, is not replacing agricultural activity. Therefore, it is not diversification in that sense. The offer of relief over five years is intended to provide an incentive to move from agricultural to other use, not to move between different forms of agricultural use.

I believe that one must see the scheme for what it is. It is a five-year definitive offer to try to help farmers who seek diversification or to attract businesses to occupy farming premises for diversification in the context of the crisis and problems which currently affect the rural community. The context in which we are addressing that type of problem may well change within five years. Therefore, although obviously we wish to keep open the option for the scheme and may well trigger the option before the end of the five years, for the moment five years appears to us to be an adequate incentive and signal to farmers and others that the Government would support financially the diversification of such properties.

With regard to non-farming businesses, contrary to what was said, significant help is being provided to those who suffer from the knock-on effects of the foot and mouth outbreak. However, we should separate that help from assistance provided within the Bill. We started this process before the foot and mouth disease broke out. As the noble Baroness, Lady Byford, said, a serious problem already existed in relation to economic activity within the countryside, and that problem is addressed. The foot and mouth disease is a serious aggravation of the problem but it is being dealt with separately. Therefore, we should not mix up the two.

In view of the manner in which the Government are approaching the issue, I do not believe that the noble Earl's amendment would be appropriate. Therefore, I hope that he will not press it and that the Committee will resist it.

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