New Clause 2 - Exemption of equestrian enterprises from non-domestic rating

Rating (Agricultural Premises and Rural Shops) Bill – in a Public Bill Committee at 12:45 pm on 8th May 2001.

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`.—In paragraph 5(1) of Schedule 5 to the Local Government Finance Act 1988, after sub-paragraph (a) there is inserted—

``(aa) it is used for the keeping or breeding of horses as part or all of a business.''.'.—[Mr. Gray.]

Brought up, and read the First time.

Photo of James Gray James Gray Conservative, North Wiltshire

I beg to move, That the clause be read a Second time.

I shall speak more briefly than I normally would in such circumstances in the hope of currying favour with the other members of the Committee. I shall explain new clause 2 less thoroughly than I might otherwise do, despite the insult of being described as the duller end of the rainbow. My name may be duller, but I am sure that my hon. Friend the Member for Ashford would not wish to make any intellectual comparison. Certainly, if there were to be an intellectual comparison across the Floor—I will not go down that track.

The new clause was tabled for a sound reason. I should declare a non-pecuniary interest, which is that I am chairman of the Horse and Pony Taxation Committee and an unpaid consultant to the British Horse Industry Confederation. I therefore speak on behalf of horse businesses.

We support the Bill. It is important that farmers should be allowed to diversify in the way that is proposed, so we do not oppose the Bill. However, given that many farmers will diversify into horse businesses, the Bill will have an unfortunate effect on existing horse businesses. That particularly applies in the case of riding schools, which are already in severe decline. Since the Government came to power, riding schools have closed at the rate of 200 per annum. It looks as if that rate of decline is increasing rather than decreasing, and it has certainly been made worse by the foot and mouth disease crisis.

The purpose of the new clause is to correct an anomaly that was last addressed by the House in 1987, when the other place decided not to proceed with the matter. It is a peculiar anomaly that premises used for housing horses used for agricultural purposes—heavy horses in particular—and stud farms, are given business rate relief. However, if one uses precisely the same barn as was used last week for housing a heavy horse to house a horse that one intends to rent out for pony trekking, or which will be used in a riding school business, one does not receive rate relief. That is a curiosity that ought to be corrected. This may not be the right Bill in which to do that, but it could become the right Bill when one considers that, if it is enacted, a farm that diversifies into a riding school business will receive 50 per cent. rate relief, whereas an existing riding school will receive no rate relief at all. That introduces a peculiar form of competition between new and existing businesses.

The new clause corrects both of those anomalies at a stroke by simply describing all horse businesses as agricultural, and from that point of view it is more effective than another amendments that was not selected for discussion today. That would mean that a horse business, whether a pony trekking business, a DIY livery yard or a riding school, would be described as agricultural and would benefit from the zero rate that other farming industries enjoy. That would be the cleanest possible way both of avoiding the unfortunate competition issue and of clearing up the existing anomalies in the agricultural exemptions.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

I understand the issues that the hon. Gentleman has raised. However, as he has in a sense acknowledged, the new clause is not directly relevant to any of the other clauses of the Bill, in that it does not relate to the new rate relief for farm diversification enterprises or to the extension of mandatory rate relief to all small village food shops. It amends the definition of agricultural buildings, which are exempt from rates, so that those used for the keeping or rearing of horses as part of a business would be included. It would exempt all such buildings from rates, so it would cover not only buildings on farms but any commercial stable, riding school or stud farm, wherever its location and whatever its size. However, it would not cover private stables that were not part of a business, which would remain liable to non-domestic rates.

Photo of James Gray James Gray Conservative, North Wiltshire

I think that I am right to say that private stables attached to a building are not subject to rates. However, private stables a short distance from buildings are.

Photo of Hilary Armstrong Hilary Armstrong Minister of State (Local Government and Housing), Department of the Environment, Transport and the Regions, Minister of State (Department for Environment, Transport and the Regions) (Local Government)

I am sure that the hon. Gentleman is right. He seeks not to help farmers diversify or maintain essential services in isolated rural communities, although he does want to deal with another serious problem that he and other hon. Members have sought to tackle. I appreciate his ingenuity and his commitment.

The issue of whether horse enterprises should be regarded as agricultural is being considered. I have discussed the issue with colleagues in the Ministry of Agriculture, Fisheries and Food, and their and our officials are reviewing the definition. The law is complex and straddles a range of legislation, and there must be a careful assessment of the implications. The hon. Gentleman will know that the subject requires detailed work.

I do not feel able to accept the new clause. However, I assure the hon. Gentleman that I understand the issues that he raises, and do not want to dismiss them out of hand. He talked about competition between an existing horse enterprise and a new one set up under the diversification proposals in the Bill. That is why I was cautious earlier about the purpose of the Bill, and was clear that we did not seek to provide a level of support that meant that already established businesses felt undermined by similar new businesses.

My Department and MAFF are discussing the issues that the hon. Gentleman raised to work out the most effective way forward. I assure him that those discussions will continue, although other events may take precedence. We want to see what we can do, as we know that several horse enterprises are in serious trouble, and we want to establish a regime that enables them to prosper. That is at the forefront of the minds of MAFF Ministers, and I have had extensive discussions with them recently. However, I cannot give the hon. Gentleman what he wants. I can assure him that the matter is under consideration in terms of general principles, but we do not think that we can fit it into the Bill.

Photo of James Gray James Gray Conservative, North Wiltshire

I take some comfort from the Minister's words, but I am disappointed that she will not accept the new clause, as it would kill two birds with one stone.

My pager informs me that the Prime Minister is in his car on the way to Buckingham palace to seek Her Majesty's leave to dissolve Parliament. Perhaps we should therefore round off the Committee by quoting from a Conservative party press release on the subject that we are debating, which states that the next Conservative Government—there will be one a month from now—

``will exempt new and existing equestrian businesses from business rates.''

Photo of Joe Benton Joe Benton Labour, Bootle

Order. The hon. Gentleman should return to the new clause.

Photo of James Gray James Gray Conservative, North Wiltshire

That exemption is the purpose of the new clause. We hope that, on 8 June, we shall be in a position to introduce such a measure ourselves. I take some comfort from the Minister's remarks in the short term, and in the light of that, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Bill to be reported, without amendment.

Committee rose at five minutes to One o'clock.