Orders of the Day — Rating (Former Agricultural Premises and Rural Shops) Bill

Part of the debate – in the House of Commons at 5:50 pm on 30th April 2001.

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Photo of James Gray James Gray Conservative, North Wiltshire 5:50 pm, 30th April 2001

Yes. If the Sunday newspapers are to be believed—perhaps they should not be—I understand that that view is shared in high places in the Government, by people who are talking about abolishing MAFF after the general election and replacing it with a department of rural affairs.

Although the hon. Member for Crewe and Nantwich was quite right sensibly to praise people working in the Ministry, as do I, and particularly to praise veterinarians—who have done a very fine job in very difficult circumstances—I am not sure that senior officials, and more particularly Ministers, have done anything other than a most abominably incompetent job in the crisis. However, assuming that the Minister for the Environment is right and that there will be a public inquiry into the outbreak—although I understand that the Prime Minister believes that there should not be an inquiry—that fact will undoubtedly emerge.

I very much welcome the fact that the delay to the general election that was caused by the foot and mouth crisis has enabled the Government to introduce this Bill, which will be of some help to them. It has been a matter of great regret to the Opposition that the Government have found no time at all for a debate on the foot and mouth crisis, whereas the Opposition have found two or three days to debate it. Although Ministers have found time to introduce the perfectly obnoxious Bill to ban the innocent sport of foxhunting, they have found no time to support farmers in a debate on foot and mouth.

I am therefore glad that Ministers have found time for this modest little Bill, and hope that they will find a way of ensuring its smooth passage through the House. However, as Ministers seem to have thought up the Bill last summer, at the Prime Minister's so-called farming summit, it is perhaps to be regretted that it has taken them until the 11th hour of this Parliament to introduce it—in the reasonably certain knowledge that it is unlikely to become law before the general election, unless cross-party co-operation allows it a very swift passage. There may of course be such co-operation. Opposition Members welcome the Bill, although we think that it has come very late in the day and is very modest and ineffectual.

We should remember that the Bill's proposals are not related at all to foot and mouth disease, but were announced by the Prime Minister at last year's No. 10 Downing street summit, before the crisis broke, with particular reference to the horse industry. The proposals were consulted on last autumn. By November, however, Ministers decided that proposals affecting only the horse industry would be too narrow and should be widened to include farming diversification initiatives. The Bill therefore had nothing whatever to do with the foot and mouth crisis, but was a reaction to the underlying agricultural crisis which long predated the foot and mouth crisis—which in turn merely exacerbated an already disastrous situation.

It is never otiose to remind the House of the precise nature of the crisis in agriculture. Last year, accountants Deloitte & Touche produced an analysis showing that an average-sized farm of 500 acres earning £80,000 in the mid-1990s is now earning only about £8,000. Such farms may also be supporting two or three farm workers. Farm incomes are down by 90 per cent. across the board. In 2000, total income from farming—TIFF, as the MAFF report calls it—had decreased by 27 per cent. There has been a catastrophe in farming that is quite distinct from the problems that have been caused by the foot and mouth crisis.

It is therefore not surprising that farmers across the nation have been very actively considering diversification. A recent Farmers Weekly survey discovered that more than one third of farmers are currently considering diversifying into activities other than farming. It is very useful that Ministers have introduced the Bill, which one third of farmers will undoubtedly welcome. None the less, as I said and as the figures in the Bill's explanatory notes show, it is a very modest measure. Paragraph 23 clearly states that farm diversification relief is likely to cost the Exchequer something between £16 million and £65 million per annum over the five year period. The relief could be as little as £3 million annually, with another £2 million from local authorities.

As I said, compared with the gigantic crisis in all farming sectors, this is a very modest Bill. There have been huge losses in farming, rural businesses, rural villages and—particularly because of foot and mouth—the tourist industry, but the Exchequer will be providing only £2 million or £3 million a year to deal with them. That is a minute sum. I very much hope that, after this debate, we shall not be hearing the Millbank spin doctors saying, "Haven't the Government been marvellous about it? Aren't they a fantastic lot? They are helping out the countryside in crisis by introducing this business rate relief Bill."

The Bill is worth £2 million or £3 million annually, which could amount to only a few thousand pounds to each constituency. The Bill is worth almost nothing in terms of money, although it may be worth a little more in terms of its principle, which can be extended later. However, farming is in a massive crisis, and there must be no suggestion whatsoever that the Bill will do anything about that. It takes only a tiny midge nibble at the edge of the current farming crisis.

It is reasonable to accept that the Bill will bring about some benefit. As a Department of the Environment, Transport and the Regions report states, 33 per cent. of farmers' wives say that they make income from activities other than farming. That is a very important statistic. Many farms can survive only because of their very limited diversified activities. As the hon. Member for Crewe and Nantwich quite correctly said, farmers can no longer survive only on farming, but make money from renting out cottages, selling cheese in a farm shop or renting out a barn to an associated business. Farms have a chance of surviving only because of such limited diversification. However, people can do that only if they own the farms and do not have a mortgage.

Farming is therefore facing a catastrophe that can be dealt with only by diversification. What have the Government done about it? They could have done many things, such as exempting all farm businesses from business rates, as they have done in relation to agriculture itself. It would have been perfectly sensible and easy for Ministers to say that any business on a farm occupying a previously used agricultural building will be entirely exempt from business rates, and not to limit relief to a five-year period or only to new businesses or to those with a rateable value not exceeding £6,000. Such relief would have been at least a gesture towards assisting agriculture as we know it to survive. Instead, Ministers have presented their very modest proposals which are tied to so many conditions that few of my constituents who are doing their best to diversify will be able to use them.

Earlier, in reply to an intervention from me, the Minister for Local Government and the Regions caused some confusion which the Minister may wish to clarify when he replies to the debate. From my reading of the Bill, it certainly seems true that the provisions will not apply to people other than the farmer himself or to other businesses that use the farmer's old barns, for example. They are, under no circumstances, allowed this rate rebate. That, however, is not what the right hon. Lady said, and I am keen to have it clarified. What she said, which will appear in Hansard, becomes law, so it is important that if she made a mistake she should admit it.

My understanding of what the Minister said in answer to an earlier intervention from me was that all businesses will be eligible for this rate relief. As well as the farmers themselves, that includes tenant farmers and those who rent premises from a farmer. That is a very important concession, and I hope that that is what she meant. In Pinkney Park in my constituency, for example, such a concession would be extremely important to the survival of the 20 or 30 businesses that rent small accommodation from the farm. However, I fear that my detailed reading of the Bill suggests that that was an error on the part of the Minister. She may seek to correct it later in the debate. If it is an error, this is a very modest little Bill.

I want to address the Bill from a particular viewpoint. I declare a non-pecuniary interest, in that I am chairman of an organisation called the horse and pony taxation committee. It was set up some time ago by Sir Adam Butler, the erstwhile Member of Parliament for Bosworth, and then taken on by Lord Cope of Berkeley, the former Member of Parliament for Northavon. The horse and pony taxation committee is an informal committee of this House which seeks to lobby the Government, as the name suggests, on issues of taxes and rates with regard to horses and ponies.

I am also an unpaid consultant to the British Horse Industry Confederation, the overall body that tries to bring together racing, sporting interests and all other horse interests in its representations to Government. Although it is an unpaid post, I think it none the less important that the House should know that I speak on behalf of the horse industry.

The horse industry is involved because one of the primary areas of diversification that may be allowed under the Bill will be from farming into equestrian businesses of one sort of another. That was acknowledged by the Prime Minister during the farming summit at No. 10 Downing street last year; it then became a consultation paper, examining how equestrian businesses' rating could be helped by a rate rebate for diversification into horse businesses. It was discovered last autumn that that was much too narrow, which is why the Government introduced this rather wider Bill which includes other rural businesses besides horse businesses. I should however like to address the horse industry for a moment, and consider what the Bill's consequences for the industry will be.

Equestrian businesses, which are thought by some to be a little elitist, or posh, are worth some £2.5 billion a year to the nation. It is an enormous industry, the second largest in the countryside, and is responsible for 150,000 jobs in Britain. One million people own horses in Britain, and 2.4 million people ride horses every year—an extraordinarily large number of people who are, by no means, nobs and toffs: they are ordinary people of all sorts.

The horse industry is nevertheless in sharp decline. It has been having very real problems over a number of years, for a variety of reasons, and is nearing crisis. Some 272 riding schools have closed since 1999. They are closing at a rate of about 20 per cent. of the total each year. Many have closed during the foot and mouth crisis and are losing an enormous amount of money.

In 1992, there were 3,016 full-time registered riding schools in Britain. By February 1999, that number had declined to 2,371, and it has gone down further since then. Riding schools are facing a very real problem during the foot and mouth crisis. It is estimated that between 65 and 85 per cent. of all the income earned by riding schools has been lost during the crisis.

The Bill would enable a farm to open a riding school or to allow some instruction to go on in DIY livery yards, as they are called, and to benefit from a 50 per cent. rate reduction. However, at the end of the farm drive, an established riding school that may have been there for many years would not benefit from that relief. As a result of the Bill, one business would receive 50 per cent. rate relief while an identical business next door would not.

The consequence, I fear, would be that most existing riding schools would progressively go out of business. They are already in deep trouble and face a whole spectrum of problems, not least those of taxation, the minimum wage, the bureaucracy involved in registering riding schools and a number of other Government measures. The catastrophe of a neighbouring farm being given 50 per cent. business rate relief could mean very severe problems.

When this measure was announced during the Downing street summit this time last year, the riding school industry's initial reaction was to oppose it lock, stock and barrel, but people such as Michael Clayton of the British Horse Society, myself and others persuaded the riding school industry that if new businesses were at least allowed to be set up on farms, that might be a toe in the door—the thin end of the wedge—and it might eventually lead to business rates on existing riding schools being reduced.

If the Government care about riding schools, they will either have to consider that or consider not introducing this measure for farms, which every Member would regret. The Government must pay particular attention to the specialist case of riding schools, which are facing catastrophe. The Bill would only add to their problems. We persuaded the Association of British Riding Schools not to oppose it lock, stock and barrel in the hope, and on the understanding, that sooner or later the business rate for riding schools would also be reduced.