HC Deb 23 February 1978 vol 944 cc1681-2
7. Mr. Rost

asked the Chancellor of the Exchequer what representations he has received suggesting three-year averaging of tax liability for agricultural business.

Mr. Robert Sheldon

I have received a number of representations on these lines from organisations representing farmers.

Mr. Rost

Is it not time the Treasury acknowledged that there can be wide fluctuations in incomes, particularly for small farmers and market gardeners such as the potato growers in my area of Derbyshire? Should not the Treasury accept that this would be a sensible assistance to farmers and would not necessarily mean any lost revenue?

Mr. Russell Kerr

Well spoken, spud

Mr. Sheldon

There have been a number of representations, and some have included the suggestion of an investment reserve scheme for farmers. This proposal is under examination. In relation to the averaging of incomes generally, or even for groups within the community, there are formidable administrative problems that have been recognised by various commissions. An investment reserve scheme merits closer scrutiny and is now receiving it.

Mr. Watkinson

Has my right hon. Friend received any representations from the Minister of Agriculture? Is there not a great deal of support for this idea within the Government, and would it not assist farmers and be of benefit to agriculture?

Mr. Sheldon

It is one of the proposals under consideration. My hon. Friend will surely appreciate that there are difficulties in moving in this direction. Averaging was turned down by the Radcliffe Committee, which called it an administrative impossibility. Of course, things have changed since then, but there are problems that have to be looked at closely.

Mr. Watt

Does the right hon. Gentleman appreciate that agriculture is one of the few industries in this country with real growth potential? Does he realise that adopting a system of three-year averaging would do more to restore the confidence of farmers than virtually any measure that the Minister of Agriculture could introduce?

Mr. Sheldon

I must remind the House that the possibility of averaging does not apply only to agriculture. There is a whole range of trades and industries that experience violent fluctuations in income and there are great problems in drawing the line over the period in which these accounts have to be looked at. There are practical problems which have to be considered, and they are under examination.

Mr. Peter Rees

Will the right hon. Gentleman avoid being over-oppressed by the technical difficulties and recognise the urgent need for some sort of relief in the next Finance Bill? Will he press on with the examination of investment reserve relief and take the Australian scheme as a useful precedent?

Mr. Sheldon

This is under examination. I can say no more except that at the time of the Budget debates these matters can be examined further and the Government's proposals, or whatever may be brought to the House, can be considered.