§ Order for Second Reading read.3.37 pm
§ The Minister for Local Government and the Regions (Ms Hilary Armstrong)
I beg to move, That the Bill be now read a Second time.
This Bill introduces two important measures. We are introducing the Bill in the belief that it will encourage farm diversification and give help to rural communities. It fulfils commitments made last year in the action plan for farming and in the rural White Paper, which was published in the autumn of last year. It will also provide some long-term help for businesses inevitably affected by foot and mouth disease.
The rural White Paper set out a comprehensive plan of action to improve the quality of life and increase opportunities for rural communities. It is important to ensure that rural economies are able to establish themselves on a sustainable footing. However, I know, perhaps as well as any hon. Member in the Chamber today, that the effects of the foot and mouth outbreak have been, and continue to be, very serious for farmers, the wider rural economy and, of course, the communities that rely on the rural economy.
The first priority is, of course, to eradicate the disease, but the Government are equally committed to helping the farmers and other businesses affected. We have already committed in excess of £500 million in aid to farmers and more than £200 million of other help for the rural economy more broadly. That includes hardship rate relief, deferment of rates payments, temporary reductions in rateable values and the deferral of the rate appeals deadline. We are also deferring tax and national insurance payments for affected businesses and providing help through the Small Business Service, the small firms loan guarantee scheme and the regional development agencies.
The measures contained in the Bill are designed to help farmers and small businesses that provide key services to local communities. They arise from the local government finance Green Paper, the rural White Paper and the action plan for farming. We have taken forward many of the other initiatives and measures in those documents. The changes to the rating system are part of a wider package to support farming and the countryside, so the Bill should not be seen in isolation. Indeed, earlier this month, the hon. Member for Ashford (Mr. Green) and I—along with other hon. Members—formed part of a Committee which considered other rating reliefs.
Clauses 1 and 2 will provide rate relief for small enterprises that are newly established in former agricultural premises. That will include cases where the farmer lets or sells the property to a third party. Of course, farms themselves are already fully exempt from 648 non-domestic rates but, as soon as any part of a farm is used for anything other than agriculture, the business has to pay rates on it.
§ Mr. Michael Jack (Fylde)
In the part of the Bill to which the right hon. Lady refers, will she enlighten me as to why the period of 183 days was specifically chosen rather than any other?
§ Ms Armstrong
I am sorry to say that I do not know that; I shall come back to the right hon. Gentleman on that point later in the debate. I am sure that he will get the chance to speak and I shall be able to intervene then.
When farmers seek to diversify, they face an additional cost through the imposition of rates on a property that was previously rate free. We want to remove that barrier to diversification—[Interruption.] Does the hon. Member for Lichfield (Mr. Fabricant) want to intervene? He was talking, so I assumed that he wanted to intervene, but obviously he does not.
We have consulted on our proposals to remove that barrier, and the proposals in this Bill reflect those consultations. The relief will be on similar terms to that which already applies for village shops. There will be 50 per cent. mandatory relief paid for by the Government, which local authorities will be able to increase to 100 per cent. It will be limited to properties below a certain rateable value. We intend to set it initially at £6,000. That will be reviewed at subsequent national revaluations to ensure that the amount keeps in line with general changes in rateable values. For a property of such size, the mandatory relief will be worth £1,290 in 2001–02; and 100 per cent. relief would be worth £2,580.
§ Mr. David Curry (Skipton and Ripon)
The question of the rateable values at which those reliefs apply is important. The right hon. Lady will know that for the 75 per cent. relief, a rateable value of £12,000 has been applied. I have faded to discover the logic for that amount. The right hon. Lady now mentions £6,000. Has she calculated the number of properties that will be affected? What are the differences for the properties that fall just over that margin? It is sometimes difficult to understand the logic behind emergency rate relief—or indeed where the real differences exist between the properties that fall on either side of the limit.
§ Ms Armstrong
If the right hon. Gentleman has had a look at the Committee debates on exceptional hardship relief in business rates, he will know that we set the limit at £12,000 for two reasons. The first is that the burden of rates on small businesses is much higher proportionately than for larger businesses. In fact, 77 per cent. of small companies come within the £12,000 limit. We made it clear in Committee—the matter is not part of the Bill—that we would keep that level under review, as indeed we are keeping under review the number of authorities that are eligible for that rating.
§ Mr. Curry
I understand what the right hon. Lady is saying, but does she accept that businesses with rateable values of between £12,000 and £20,000, such as larger rural pubs, might be desperately trying to hold on to employees in the current circumstances? They are sometimes harder hit than smaller businesses and cannot meet the wages bill that they face for a significant number 649 of part-time, and perhaps a smaller number of full-time, employees when their cash and customers have ceased to exist.
§ Ms Armstrong
When the Local Government Association raised that matter with us, we asked it to go back to local authorities to determine the weight of the concern. The right hon. Gentleman knows that we have consistently said that we will keep the matter under review, and we are serious about that. However, it is obviously important that we get the balance right. We must consider the fact that there are some companies that might not have survived, even without foot and mouth. We must ensure that public money is used effectively. At the same time, we want to act as sensitively and responsively as possible. That is why we asked the LGA to consult local authorities. We have not had a full response and it is difficult to determine the effect around the country. I am sure that the right hon. Gentleman has talked to his local authority about the problem; I have talked to mine and know what balance is needed there.
It is also true that larger businesses might be eligible for a reduction in their rateable value. The Valuation Office has agreed to review as a matter of urgency the rateable value of companies that think that they should have a reduction because of foot and mouth. In many areas, that is the first step that larger firms take and it might be the most sensible approach. We are clear that arrangements might need to change, and will ensure that we return to them if necessary.
§ Ms Armstrong
I have not finished responding to the right hon. Member for Skipton and Ripon (Mr. Curry), but I shall let the hon. Gentleman intervene.
§ Mr. Evans
I am grateful to the Minister for giving way; I did not appreciate that she was still responding to the previous question.
Page 3 of the Bill sets out exemptions, including catering both on and off the premises. Why is that exempted from the rate reductions? It means that former agricultural premises that want to opens tea rooms will not qualify.
§ Ms Armstrong
The hon. Gentleman will remember that we discussed exemptions from business rates when we debated previous legislation in the House. The issue as it relates to shops was fully covered and the decision was taken to include general stores. Since then, we have extended the relief. In the secondary legislation that was discussed in Committee about three weeks ago pubs and garages were included in the exemption. The relief that we are discussing today requires primary legislation; otherwise we would have taken the opportunity to include it in that secondary legislation. We are now extending the exemption to stores that predominantly provide food. That means that if a small village has a butcher's shop as well as a general store or a baker's shop, both shops will get relief. The hon. Gentleman raises a separate issue, but as the relief has already been extended to pubs, I think that the point is covered.
§ Mrs. Gwyneth Dunwoody (Crewe and Nantwich)
I apologise if my right hon. Friend has already spelt out 650 this point. Some farm shops have logically expanded into catering for people who come on a trip to the countryside. Am I to take it that they will be included in the exemption?
§ Ms Armstrong
My hon. Friend raises another issue, which is whether shops that have already diversified will benefit from the relief. We are unable to backdate provisions sufficiently to deal with such premises, so I am afraid that they will not, unless they were set up within the past six months.
If the hon. Member for Ribble Valley (Mr. Evans) was thinking of tea shops, as opposed to pubs, the answer to his question is difficult because tea shops are not essential. [Interruption.] We had to decide what was essential. Local authorities can decide to give relief to small businesses such as tea shops if there has been significant hardship, but we have been trying to identify services that are regarded as essential by people in rural areas. On that basis, we have extended the rate relief significantly, but not as far as the hon. Gentleman would have liked.
§ Mr. Damian Green (Ashford)
I am slightly more confused than I was before the Minister embarked on that explanation. Where in the Bill or the explanatory notes is there a reference to businesses set up in the previous six months? In response to an intervention by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), the Minister said that they might be eligible for the relief, but it is not at all clear to me that that is the case.
§ Ms Armstrong
As we go through the Bill, the hon. Gentleman will realise that that is because of the number of days in a year in which a business is able to be operative, a point to which the right hon. Member for Fylde (Mr. Jack) referred.
§ Mr. James Paice (South-East Cambridgeshire)
The Minister is now saying that this is retrospective legislation that applies to any business set up in the past 183 days, the past six months. Will she clarify the matter? Will the concessions apply to businesses that exist as of today, or only to businesses that come into existence after the Bill is enacted?
§ Ms Armstrong
We will be able to set the commencement date. If a business was set up in the previous six months and operates within the terms of the Bill, it will be eligible for the relief relating to farm diversification.
Earlier, the right hon. Member for Skipton and Ripon asked how many farms we expected to benefit from the measure. It is difficult to make an estimate, but if about 5 per cent. of farms in England set up a new diversification enterprise that qualifies for relief, more than 7,000 properties could benefit. If 20 per cent, of farms set up a new enterprise, about 30,000 properties would benefit.
§ Mr. Michael Fabricant (Lichfield)
On a point of order, Mr. Speaker. In answer to a previous question, the right hon. Lady said that it was hard to tell the effect of a provision. If a Minister is saying that it is hard to tell the effect of a clause in a Bill that she has introduced, 651 the public will find it even harder. Mr. Speaker, do you believe that this is an opportunity for the Minister to clarify what she meant?
§ Ms Armstrong
If the hon. Member for Lichfield had been listening, he would have heard the explanation. Tea shops are not necessarily seen as essential to the local community, so would not automatically qualify for relief under the Bill. However, if the local authority thought that a certain tea shop qualified for hardship relief, it could get relief under existing rate relief exemptions. If a shop selling food to villagers had a subsidiary business serving coffee at two or three tables on the premises, it would obviously qualify, as the food shop was the main business. I hope that the hon. Gentleman is content with that answer.
§ Ms Armstrong
Before giving way, I want answer the question asked by the right hon. Member for Skipton and Ripon, as I have not yet been able to do so. He asked how many businesses would benefit and I gave the number of farms and food shops that will benefit. Precise figures are not available, but we estimate that there are about 3,000 food shops in rural parishes with populations below 3,000.
§ Mr. Curry
I am grateful for the right hon. Lady's tolerance; we are seeking to clarify matters in this debate, not necessarily to dispute them. She talked about contributions to the local community and their importance. Is a facility important because it offers a service to local people or because its economic impact is achieved by attracting and servicing visitors?
§ Ms Armstrong
As a Minister, the right hon. Gentleman introduced the original legislation, and I remember having similar debates with him then. He will therefore know that that is a matter for judgment and has been the subject of serious debate over the years. The number of such facilities has now expanded and I do not want to say that either route is right for a particular village. In some villages, the service provided is important. The intent of the Bill and of the legislation in general is to make sure that communities in rural areas are sustainable in the long term, which is why we must also take account of their tourism potential, their visitors and the service that they get. I therefore talked about other hardship relief for which such businesses may qualify.
As the right hon. Gentleman knows, and as he mentioned earlier, there has been an increase of up to 95 per cent. in the hardship relief that the Government are giving to premises such tea shops. That is why it is difficult to say that such businesses will not be eligible for rate relief; many will be, if not directly under the Bill. That is the point that I was seeking to make earlier.
§ Mr. Geoffrey Clifton-Brown (Cotswold)
I am grateful to the right hon. Lady for giving way, and I draw attention to my declaration in the Register of Members' Interests. The right hon. Lady will be aware that I have 652 written to her right hon. Friend the Minister for the Environment about Stroud district council's rate relief, and the fact that the council cannot recover part of the 75 per cent. rate relief from the non-domestic rate pool. Three weeks ago, that amounted to some £250,000 and many hundreds of applications. Can the right hon. Lady tell us whether the Bill will impose an extra burden on local authorities that cannot reclaim the full amount of rate relief given under the terms of the Bill? If so, it will impose a general burden on all council tax payers in a local authority area.
§ Ms Armstrong
We agreed in Committee—of which the hon. Gentleman was a member—that councils would not have to pay over their non-domestic rate now and claim it back, so the problem to which he alludes should not arise. They will have to do so eventually, but that will be dealt with at the time. We agreed in Committee that it was right for councils to make some contribution to the hardship relief.
§ Mr. Clifton-Brown
The right hon. Lady says that councils should make some contribution to the hardship relief. Is she saying that the same applies under the Bill? If so, can she say what the total amount will be that local authorities cannot reclaim under the Bill?
§ Ms Armstrong
The Bill will enable businesses to claim 50 per cent. rate relief, not 100 per cent. The 100 per cent. relates to hardship relief. The local authority has the discretion to raise the relief to 100 per cent., but the mandatory level of relief that will be funded by the Government is 50 per cent.
§ Mr. John Bercow (Buckingham)
I am grateful to the Minister of State for giving way. Given that clause 4 declares that the power to make further orders under the Local Government Finance Act 1988 is unaffected, can the right hon. Lady tell the House whether any such orders would be subject to the House's negative procedure or its affirmative procedure?
§ Ms Armstrong
The hon. Gentleman should know that we have dealt with orders in the past few weeks: we discussed them in Committee. I am sorry that he was not a member of the Committee.
§ Ms Armstrong
I am trying to be helpful. I assure the hon. Gentleman that orders will be made under the negative procedure. That was agreed when the Government whom he supported passed the original legislation. We discussed such orders upstairs. We made it clear that should evidence emerge that the support was insufficient, we would be happy to return to the matter within the three-month period to which the orders relate.
§ Mr. Fabricant
I am grateful to the right hon. Lady for her generosity in giving way. She may inadvertently have misled the House when she answered the question from my hon. Friend the Member for Buckingham (Mr. Bercow). She said that the previous Administration had decided the provisions to which clause 4 refers. 653 However, as clause 4 deals with the functions of the National Assembly for Wales, and devolution was effected under the present Government, how on earth could that have been possible?
§ Ms Armstrong
I apologise to the hon. Gentleman. The Bill as a whole affects the whole of England and Wales, as does the 1988 Act. Orders made under that Act will also affect England and Wales. The National Assembly is responsible for implementing the provisions that affect Wales, but we in the House are responsible for the Bill overall. I hope that that helps the hon. Gentleman.
§ Mr. David Heath (Somerton and Frome)
Will the Minister help the whole House by spelling out the reason why there is a need for primary legislation in respect of agricultural premises and premises used for the supply of food, but not hot food, while public houses and other shops can be dealt with in secondary legislation? That is crucial to our understanding of why the Bill is being introduced.
§ Ms Armstrong
The hon. Gentleman should return to the Local Government Finance Act 1988. As that Act defines the nature of shops, we must introduce primary legislation to change the definition of eligible shops.
§ Ms Armstrong
On the interpretation of the Bill in Wales, I have already said that Wales is responsible for specific rating issues. It must, however, act within the terms of the overall legislation. In that respect, subsequent orders are up to the Welsh Assembly.
The relief will operate on terms similar to those which already apply for village shops. Mandatory relief of 50 per cent. will be paid by the Government, and local authorities can use their discretion to increase that to 100 per cent. The relief will be limited to properties of below a certain rateable value, which we intend to set initially at £6,000. That will be reviewed at subsequent national revaluations to ensure that it keeps in line with general changes in rateable values. For a property of that size, the mandatory relief will be worth £1,290 in 2001–02, and 100 per cent. relief would be worth £2,580.
The scheme will initially run for five years, but we will keep it under review and extend it if necessary. If it were to be extended, however, businesses would be limited to receiving relief for five years after they diversified, because its purpose is to help farmers, to diversify, rather than to provide a long-term subsidy.
I should make clear how the Bill impacts on some forms of farm diversification that already qualify for rate relief—an issue that was raised by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody). The premises of small-scale bed-and-breakfast businesses and similar businesses are treated as domestic rather than non-domestic properties. Thus, under the current system, they are liable for council tax, which tends to be lower than business rates. That applies to bed-and-breakfast businesses with no more than six beds in a property 654 where the proprietor also lives, and to self-catering accommodation that is available for letting for no more than 140 days a year. The new scheme extends rate relief to agricultural premises that are converted to those uses on a larger scale and therefore do not qualify for the existing rating exemption.
A rating concession is already given to stud farms that are situated on agricultural land. Such farms currently receive a flat-rate reduction in their rateable value of £2,500, which amounts to a reduction of £1,075 from their bills for 2001–02. For the smallest stud farms, the concession amounts to a complete exemption from rates. The scheme is not time limited.
§ Mr. James Gray (North Wiltshire)
Will the Minister explain why that relief is given to stud farms, but not to farmers who diversify into breeding horses on ordinary agricultural farms?
§ Ms Armstrong
That is one of the decisions taken when the legislation on stud farms was introduced. The Bill goes some way towards dealing with that anomaly. I am sure that the hon. Gentleman will say that it does not go far enough, but if he bears with me I shall explain how new stud farms will fare following this Bill.
Because of the existing concession, new stud farms will not receive the mandatory farm diversification relief. However, we shall increase the stud farm concession to a £3,000 reduction in rateable value, worth £1,290 in 2001–02. That is the same as the maximum mandatory relief under the farm diversification scheme. Thus so long as it is on farm premises, either a stud farm or a horse enterprise of the sort that the hon. Gentleman mentioned will be eligible for the same amount of mandatory relief.
Clauses 3 and 4 of the Bill relate to village shops. Local shops provide an essential service for rural communities. In 1998, we implemented the village shop rate relief scheme, which provides 50 per cent. mandatory rate relief to small general stores and post offices where they are the only such outlets in villages with populations below 3,000. In addition, local authorities can give discretionary relief of up to 100 per cent. to those and other small businesses.
In last year's local government finance Green Paper, we consulted on a proposal to extend the mandatory rate relief to other food shops, pubs and petrol stations. Earlier this month, we extended mandatory rate relief to the sole pub or petrol station in small villages, with effect from 5 April 2001.
The Bill will do the same for small food shops in those villages. At the moment, where there is one general store selling food it gets mandatory rate relief, but where there are two, for example a grocer and a butcher, neither is eligible for mandatory relief. We recognise that separate butchers, bakers and grocers provide the same service to a village as a general store that provides a wider range of foods. I am sure that those of us who live in and represent rural areas want to ensure that local butchers, bakers and grocers can survive. The Bill extends mandatory relief to all village shops that mainly sell food for human consumption. Shops that sell other goods or services, secondary to their food sales, will also be eligible for the mandatory relief.
Relief will be given on the same terms as the existing scheme for general stores and post offices. It will be limited to properties with a rateable value of less than 655 £6,000. Local authorities will have the discretion to top up the 50 per cent. mandatory relief to 100 per cent. where they feel that it is needed. They will also retain the discretion to give rate relief to any village business with a rateable value up to £12,000.
Those measures should not be seen in isolation. We are implementing other rural White Paper measures to help village shops. For instance, the new community service fund will mean that the Countryside Agency can offer more support to keep village shops viable. It will also help communities to re-establish a shop where it has closed.
I should make it clear that the Bill amends the main rating legislation, the Local Government Finance Act 1988. It therefore extends to England and Wales. The new order-making powers will be exercisable in Wales by the National Assembly, including setting rateable value thresholds, commencement and possible extension of the farm diversification scheme.
§ Mr. Gray
I am grateful to the Minister for giving way again. Before she winds up her speech, could she focus her mind on the word "hereditaments" in the title of the Bill? Am I right in understanding that that means any property that can be inherited, and therefore any property that is owned, which would exclude, for example, farms that convert a building and rent it out? If that is the case, does the hon. Lady intend the word to mean corporeal hereditaments or incorporeal hereditaments?
§ Ms Armstrong
I can confirm that the Bill will apply to any premises which used to be used for farming and which will now be used for other purposes, whether the premises are rented out; whether the farmer still lives on and runs the farm but rents out a part of it to someone else; whether the farmer himself uses the premises; and whether the farmer is a tenant or an owner. I hope that that answers the hon. Gentleman's question.
I shall deal with the issue of the 183 days. We wanted to ensure that the premises were in agricultural use for at least half the preceding year, but we did not want to exclude premises that were not used for agriculture, seasonally, for a smaller part of the year. That is why the period of 183 days was chosen.
§ Mr. Evans
The Minister said that it would be up to the National Assembly to bring the order into play in Wales. Will she tell the House what assessment she has made of the cost to the Assembly of implementing the provisions? Will she give the House an assurance that that money will be forthcoming from the Exchequer to support the National Assembly?
§ Ms Armstrong
I have already explained that it is very difficult to estimate those costs. It will be up to the National Assembly to budget the amount that it will allow for this within its overall budget. For example, the Assembly has decided on totally different amounts for the rate relief that we announced some weeks ago, and it has done that within its budget. It is up to the Assembly to do that. That is why it has set an overall limit on the amount that it is prepared to give in hardship relief. My measures for England do not set such an overall limit. That is one reason why we went for a lower rateable value than 656 Wales. It is up to each of the Administrations to set those amounts for themselves within their overall budgets. I am sure that the hon. Gentleman does not want me to go into the intricacies of how the Barnett formula allocates money to Wales as opposed to England and Scotland.
§ Mr. David Heath
I want to return the right hon. Lady to the point that I raised earlier, because I still have not had an answer to my question. When the order was introduced to extend relief to public houses and petrol filling stations, it was done by an amendment, by order, to section 43(6A) and (6B) of the Local Government Finance Act 1988. The right hon. Lady is now saying that she needs to amend subsection (6C), to apply the provision to qualifying food stores. She defines those stores separately despite the fact that qualifying general stores are already covered by the Act. Will she explain the legal necessity for that? It is not apparent to me or, I suspect, to a great number of other people.
§ Ms Armstrong
It was not very apparent to me, either. However, as a Minister, if one does not take the advice of the lawyers and parliamentary counsel at this stage, one can end up in deep trouble. Whatever the means of achieving this, we wanted to make sure that we could do so without being challenged. This was the most effective way of ensuring that we would not be challenged. The legal advice was very clear that the provisions relating to shops had to be achieved through primary legislation and that we could not achieve that in the same way as we did with pubs and garages—so it may be mystifying to us all. Lawyers will always have their day. My main concern is that rural communities can benefit from the measures. By whatever means, therefore, I was prepared to do the additional work to ensure that we could introduce the Bill without concern that the provisions would be challenged.
§ Ms Armstrong
I think that they might have great difficulty in demonstrating that they were undergoing hardship at the moment.
To sum up, the two measures in the Bill will provide welcome financial assistance to rural businesses. The Bill will help to reduce costs for farmers who wish to diversify into non-agricultural activities. It will also provide support to village food shops. It will be helpful as part—I recognise that it will be only part—of the long-term recovery from the problems caused by foot and mouth disease. I commend the Bill to the House.
§ Mr. Damian Green (Ashford)
At the beginning of the Minister's illuminating and helpful speech, she said that the Bill was important. She was right, and it is therefore right to put on record the fact that precisely two Labour Back Benchers were present to listen to the whole speech—less than 0.5 per cent. of the parliamentary Labour party. One of those two hon. Members was elected a Conservative—I welcome the hon. Member for Leominster (Mr. Temple-Morris) to his place. That is a stark illustration of the Government's commitment to the countryside in the middle of the current crisis.
§ Mrs. Dunwoody
The hon. Gentleman might be using an interesting form of arithmetic that I have not 657 discovered, but at least three or four Labour Members were present. Some of us make up for more than one person.
§ Mr. Green
I was going to make the point that although the quantity of Government Back Benchers was lamentable, the quality was extremely high. The hon. Lady makes a significant contribution to the quality. I emphasised that only two Labour Members were present throughout the Minister's opening speech: the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) and the hon. Member for Leominster.
The Minister introduces the Bill at a time when the economic condition of the British countryside is unprecedentedly bleak. We are considering a few small but welcome measures to help farmers and other rural businesses. Although we welcome the Government's gesture, it is vital to put it in perspective. The crisis threatens to engulf not only agriculture but many other sectors of rural life in Britain today.
Hon. Members know from the Minister's speech that the provisions arise from the crisis that hit agriculture before the devastating blow of foot and mouth. A little more than a year ago, the Prime Minister presented an action plan for farming, to which the right hon. Lady referred. He stated in it that he intended to introduce proposals that would helpchart a way out of the current crisis in farming.Thirteen months after that action plan was produced, things are getting worse faster. Conservative Members therefore believe that the Bill will be useful, but only at the margins of the crisis.
§ Mr. Fabricant
Would not it emphasise my hon. Friend's valuable point if he made it clear to hon. Members and the public that farm incomes have fallen by 72 per cent. since their peak in 1995, and that they doubled between 1990 and 1995? Does not that illustrate the difficulties that farmers faced even before the onset of foot and mouth disease?
§ Mr. Green
My hon. Friend is right. The accountants Deloitte & Touche published an analysis of farm incomes last October, before the outbreak of foot and mouth. I shall illustrate my hon. Friend's point with the stark figures. An average-sized farm of 500 acres, which earned £80,000 in the mid 1990s, earned only £8,000 in 2000. Almost no other business sector has suffered so much in the past few years. Deloitte & Touche also estimated that in 2001, such a farm would incur losses of £4,000.
My hon. Friend the Member for Lichfield (Mr. Fabricant) mentioned the five-year figures. In 2000, total income from farming fell by 27 per cent., with the consequences that we have witnessed. That is why the crisis is spreading throughout rural businesses. The National Farmers Union estimates that 47,400 farmers and farm workers left the industry in England and Wales in the past two years. Even before that, the industry shed almost 20,000 jobs between June 1998 and 1999.
Inevitably, the position has worsened since because of foot and mouth. A survey shows that more than a third of the farmers hit by the disease plan to scale down their businesses. Part of the problem is that the crisis is all-embracing in farming: the fall in farmgate prices and incomes is affecting every sector of the industry.
§ Mr. Bercow
Given the visceral hostility of most Labour Members to farmers, and their habitual tendency 658 to depict British farmers as the unwarranted beneficiaries of public funds, would my hon. Friend care to re-emphasise the fact that thousands of pig farmers who might benefit modestly from the Bill—I stress the word "modestly"—receive absolutely nothing from public funds, and that 24,000 have gone out of business over the past three years?
§ Mr. Green
My hon. Friend makes his point eloquently. He is right: although some sectors of agriculture are subsidised, others are barely subsidised at all or, indeed, unsubsidised. The crisis in agriculture is all-embracing, so the unsubsidised as well as the subsidised are being hit.
Even more important, however, is the fact that the current crisis is spreading far beyond agriculture. It is affecting all the essential services that provide the lifeblood of local communities. We welcome the fact that the Bill recognises that by including provisions for village shops. The daily customers of many such shops are precisely those whose family incomes are being hit hard, which will be a severe additional problem for businesses that are already in crisis.
In many areas, village shops normally rely for survival on another great source of income—visiting tourists. Again, the effects of foot and mouth will be targeted on the shops that can least afford them. Whatever overall drop in tourist numbers is taking place—and there can be debate about that—urban destinations will probably be hit less hard than rural destinations. Trips to country areas, whether by British or by overseas tourists, are most likely to be cancelled. The summer uplift on which many village shops rely will be less this year than ever before. The Countryside Agency has estimated that rural tourism losses will rise to £2 billion, and I am happy to accept that figure: it comes from a Government agency. I am sure the Minister will recognise that, whatever percentage of that £2 billion loss falls on village shops, the help that the Bill will give them should be judged in the context of the sheer size of the losses that they face. The House should consider this Bill in the context of a terrible overall crisis.
The Bill gives rise to a number of issues, not least the amount by which diversification can help farmers, and the effects on farms and shops. We shall want to make some proposals of our own. At the outset, however, let me urge the Government to consider whether their actions, including the Bill, are adequate to deal with a crisis of this scale. For many businesses in the countryside, these measures are not enough. To thousands of people who are struggling to hold on to their livelihoods, the Government seem to be offering an umbrella in a hurricane. The rural taskforce is meant to be coming up with wide-ranging solutions, but the Minister for the Environment has produced nothing new since he made what he described as a preliminary announcement fully six weeks ago.
Perhaps the Government would command more respect in the countryside if we were discussing a comprehensive package of measures to help rural businesses; but they have not produced such a package, so instead we must consider the details of what they propose in the Bill.
The first big issue that the Bill raises is the scale of possible diversification and the effect of diversification on preserving the long-term health of British agriculture. I do not think that any hon. Member would deny the 659 importance of diversification for farmers. Nevertheless, I hope that Ministers do not believe even for one moment that, in the long run, if it remains unprofitable, farming will be preserved by greater diversification. Ultimately, the long-term economic health of farms depends on farming, not on non-farming activities. Farmers will have the capital to diversify successfully, and to take advantage of the diversification that the Government are seeking to encourage in the Bill, only if the underlying farming business is producing a profit.
Seizing on new opportunities is, of course, a good idea for businesses, but businesses will seldom be able to do so successfully if they act out of a sense of desperation. Currently, desperation is affecting far too many United Kingdom farmers.
§ Mr. Fabricant
Does my hon. Friend agree that speculation on the very future of the Ministry of Agriculture, Fisheries and Food is causing considerable concern in the farming community? Does he also agree that many farmers believe that their function in life is not to serve as mere stewards of the countryside or as "park rangers", as some farmers have described it? Do not those facts support his point that farmers wish to remain as farmers, and that although diversification can help farming, diversification should not be used simply as a means to an end?
§ Mr. Green
I agree with my hon. Friend that, in shaping the control of farming, and by its very nature, diversification must remain essentially a side issue. As for his point on farmers wanting to be farmers, the key fact is that the English countryside—the environment that many of us love so much—is so attractive precisely because it has been farmed for hundreds of years. Our countryside has not grown up naturally. If farming declined, the countryside would not return to a more desirable state of nature; it would become environmentally worse.
Too often, if diversification is undertaken for the wrong reasons, the wrong type of diversification emerges—that fact has long been known. As long ago as 1987, David Richardson—who is one of the more insightful commentators on agriculture, and currently writes for Farmers Weekly—wrote that farm diversification tends to attract publicity out of proportion to its potential. He said that many ideasenjoy a brief period of intense interest and high profits for their originators before the necessarily limited new markets become oversupplied. All over Britain there is a scattering of failed worm farmers; deserted pick-your-own fields; empty farm house holiday bedrooms; and rabbit farms which seemed like a good idea once but proved unprofitable when the animals failed to breed like rabbits are supposed to do.Quite apart from that salutary warning, the fact is that the amount of help offered in this Bill and in the other measures that the Government have introduced is relatively small compared with the sheer size of the problems facing farming. The Minister acknowledged that when he replied to interventions from my right hon. Friend the Member for Skipton and Ripon (Mr. Curry). Indeed, the Bill's explanatory notes state that farm diversification relief will cost the Exchequer various 660 figures, beginning at £16 million. Although that relief is welcome, it is not sufficient to transform the fortunes of a quickly shrinking industrial sector.
§ Mr. Green
My hon. Friend has caught me out for being generous to the Government. I apologise and assure him that it will not happen again. Even with those caveats, however, there are other important questions. For example, if we accept that farm diversification is desirable, how many diversification projects will be helped by the scheme?
The Countryside Alliance has welcomed the Bill's principles, as do the Opposition, but it has asked some key questions. How many diversification projects will be eligible for the scheme? Is the £6,000 rateable value threshold appropriate? The alliance also rightly says that the rateable value must be realistic if it is to promote diversification, and that, if is not, the Bill will simply be an empty gesture. I am afraid that empty gestures are exactly what the countryside does not need in the current state of crisis.
The Countryside Alliance also made the correct point that the rateable value for similar premises will vary across the country. Indeed, the recent Green Paper on local government finance uses a rateable value of £8,000 to determine a small business. We are entitled to ask, whatever happened to joined-up government if the limit under this Bill is £6,000 and the limit in an extant Green Paper on local government finance for small business is £8,000? As the Minister said, during the foot and mouth crisis relief has been given for premises with a rateable value of up to £12,000.
There appears to be no coherence in the Government's thinking about where the limits should apply. Will the Minister explain the reason for the apparent plethora of limits on rateable value that the Government are scattering around? As we are anxious to ensure that any relief reaches businesses throughout the countryside as fast as possible, we hope that the Government can act quickly to address those concerns.
The Government need to address a number of other worries if this measure is not to be merely an empty gesture. One of the most important, still under the heading of diversification, is that the relief proposed will apply only to farmers and not to third-party occupiers. Many farmers convert or construct buildings to be let to others as light industrial units or storage. If the rate relief were made available to farmers making such conversions and others, it would help not only farmers but the wider economy by providing affordable business premises.
§ Mrs. Dunwoody
The hon. Gentleman is very indulgent and I apologise for interrupting him again, but this is an important point. Somewhere along the line, someone must draw a distinction between support to enable people to diversify from farm incomes to something that will continue to make their business viable, and creating an alternative form of development that could lead to problems in the countryside. I sympathise with his point that farmers on occasion want 661 to rent property, but does he accept that there is a narrow line between farmers diversifying into genuine, agriculturally based and useful businesses and people who seek to create an alternative industrial unit in the middle of the countryside, which could cause considerable problems?
§ Mr. Green
I take the hon. Lady's point about the balance between the environmental need to preserve the beauty of the countryside and to avoid inappropriate development. However, surely that issue can be resolved by planning authorities; it has no necessary relationship with the operation of the business being set up. In theory, a farmer could set up a business that was environmentally inappropriate and someone from outside could set up a business that was entirely appropriate environmentally, providing local employment and other things that the hon. Lady and I regard as desirable.
My point is that there seems to be an arbitrary distinction between which type of business the Government propose to help through the rate relief system. The Bill provides that relief can be allowed only if the business is operated by the farmer. Farmers may be very good at farming but not necessarily at running general businesses, and they may know that someone else could use a building for a better purpose, providing local employment. It seems perverse to deny them that opportunity.
§ Mr. Gray
My hon. Friend makes an extremely important point. His understanding of the Bill is, like mine, that only the farmer may benefit from the rate relief proposed. That is why I intervened on the Minister on the rather technical point about the definition of hereditament and corporeal or incorporeal hereditament. Her answer was that the relief would apply irrespective of whether the person claiming it was the farmer or someone renting a building from the farmer. Therefore, if the Minister's words are to be taken at face value—they can, of course, be used in court when these matters come to court—my understanding of the Bill, and that of my hon. Friend, is incorrect.
§ Mr. Green
My hon. Friend makes a good point. That is my reading of the Bill. There is clearly an issue about definition that can perhaps be dealt with in Committee. However, at the very least, this part of the Bill bears further scrutiny and improvement, and I hope that we can achieve that in the coming days and weeks.
One other specific point about diversification relates to the length of time for which the relief will be available, and I am grateful to the National Farmers Union for drawing it to my attention. As I understand the Bill, although I am open to correction by the Minister, the relief will initially be limited to a maximum of five years, which can be extended by order. The relief appears to be available to premises only for a set five-year period from the commencement of the new law. In other words, if a new business was set up in year four and the scheme was not extended, it would benefit from only one year's relief.
§ Ms Armstrong
I discussed that point in my speech, and I made it clear that at this stage the relief will run for five years, but that we will continue to keep the position under review. I also made it clear that even if we extend the five-year period, any individual business will not 662 receive the relief for more than five years, because it is meant to help businesses get going, not to provide unfair competition for other businesses.
§ Mr. Green
I am making a subtly different point. I appreciate that no business will get the relief for more than five years and that the House could decide to extend the scheme, but the point rightly made by the NFU is that if there is a risk that it will not be extended, for whatever reason, those planning a business enterprise would not be able to build the relief into their calculations. That could encourage a rush of applications in the first part of the period in order to gain the maximum definite relief, and a tailing off later as the value of the relief waned. All the history, in agriculture and all other industrial sectors, suggests that grant-driven or rate relief-driven business decisions are likely to be bad business decisions. The more we can clear up the position at this initial stage, the better it will be for farm diversification in the long run.
I have spotted one other puzzling anomaly in the part of the Bill that is designed to encourage diversification, and I hope that the Minister will be able to clear it up. As she knows, we have welcomed the mandatory element of the relief, but some people believe that the discretionary element adds nothing to the existing power under the Local Government and Rating Act 1997. Not only are the criteria for the discretion exercised under the Bill exactly the same as in the 1997 Act, but the threshold in the 1997 Act is £12,000, which is twice that proposed in the Bill. The Bill would add nothing to the status quo. Indeed, it is clearly unlawful for the same discretion present in two Acts of Parliament to be exercised in different ways. I can assume only that I have misread the situation or that it is a genuine oversight, and I would be grateful for the Minister's clarification. As it stands, once the Bill is on the statute book, we shall have two contradictory Acts. In fact, the 1997 Act is more generous and useful, and that is puzzling.
§ Mr. Evans
Can my hon. Friend confirm that many local authorities would dearly love to help some of their small rural businesses but simply do not have the cash to do so? If they helped all their small rural businesses by the 50 per cent. discretionary rate, council tax rises would be even higher. In some places, the rises are in double digits, which is way above the rate of inflation.
§ Mr. Green
My hon. Friend is right and he anticipates a point that I intend to make later.
The Minister glories in the fact that the proposals on shops might involve subsidising more than one shop per village. Even more damagingly, some shops could be subsidised at the expense of others. Can the Government bend their mind to the problem whereby one shop in a village would fall just under the limit while another would fall just over it? In such an example, the Government would be providing a subsidy to help one business against a similar competitor.
Have the Government conducted any research to ascertain how common such a situation would be? Where one existed, what would they do about it? It would be perverse if the effect of this attempt to do good for rural 663 businesses made life more difficult for certain shops in rural areas. As the measure stands, we cannot rule out that possibility.
§ Ms Candy Atherton (Falmouth and Camborne)
I understand that the hon. Gentleman is in favour of the Bill, but his speech is making me more confused by the minute. Is he in favour or not?
§ Mr. Green
I have already said that I am in favour of any measure that helps small businesses in rural areas during the crisis. Although the Bill is inadequate, it is a step in the right direction and I do not oppose it in principle. However, the hon. Lady has been a Member long enough to understand the process of parliamentary scrutiny, whose purpose is to allow us to welcome the principles of the Bill while referring to a number of genuine practical problems that might make matters worse in a situation such as I am describing, or whose effect could be lessened.
It is the job not only of Parliament and the Opposition but of Government Back Benchers to try to improve Government legislation. I appreciate that that has not been their practice in this Parliament, but I commend to them the Bill, which they will enter the Lobby to support, in order that they will read it.
§ Ms Armstrong
I simply ask the hon. Gentleman whether he is suggesting that the Government should offer rate relief to businesses such as antique shops. If he reads the list of shops that exist in such villages as we are discussing, he should remember that a population of 3,000 is the key figure. The rateable value of food shops is simply not above the level that we are talking about. The only shops that have a rateable value above that level are antique shops and specialist shops, which are not considered to be essential to the life of the village.
§ Mr. Heath
I shall not give such an example, but I am grateful to the hon. Gentleman for giving way, because I agree with the point that he is making. Has he considered the circumstances of two rural settlements, perhaps within a few miles of one another, with populations of 2,999 and 3,001? The food shop of one would be subsidised by the measure and the food shop of the other would not, simply because of the artificial threshold of 3,000 as an absolute figure for a settlement.
§ Mr. Tony Baldry (Banbury)
Is not the main offence of the Bill that it gives the impression that the Government are doing something for the countryside and for rural England following the foot and mouth disaster when practically nothing is being done? The bottom line is all spin and no substance. Will my hon. Friend make sure that he explains to the House what the Conservative Government will do to help rural shops and rural village post offices? [Interruption.] In the coming weeks, it will be extremely helpful for rural England to know exactly what we are offering to it in clear contradistinction to the Government, who are all spin and no substance.
§ Mr. Green
Let me cheer up my hon. Friend and, indeed, the Minister, who was shouting from a sedentary position, by explaining not only our proposals for helping village shops and other businesses under threat from the Government, but where the money would come from. I made the point that these small steps are welcome, but they are inadequate.
The House has spent time dealing with the detailed problems in the Bill, but it is important that we deal with the Bill's sins of omission, namely those provisions that would improve the Bill and that we have urged on the Government. The House will be aware—the Minister certainly is—that a Conservative Government would save money by abolishing the regional development agencies and the regional assemblies that add layers of bureaucracy to political life in this country without providing benefits to rural or urban areas. Some of the money that we would save by doing that would be used for our practical proposals to help businesses in the countryside. We are about substance and not spin, so we would use the money sensibly.
For example, there are just under 10,000 post offices in rural areas. At present, under this Government, they are closing at a rate of nearly two a day. We propose to cut an average of £1,000 from their business rates, with many of the most vulnerable paying no business rates under our proposals. On the specific issue of rural shops, we propose a similar cut of £1,000 in the business rate for a shop serving a particular local community.
The advantage of our proposals—which we will also extend to vulnerable garages and pubs in rural areas—is that the funding will not put any pressure on local authority funding in the way that the Government's proposals do. That point has been made by several Conservative Members, and it is vital because, in many rural areas, small district councils are already under extreme financial pressure. If those councils are to give help to the vulnerable businesses that, I suspect, all Members want to help, they will be under great pressure to cut essential services or increase council tax to unacceptable levels. Our proposals are better for small businesses and for small district councils.
We also have detailed proposals for the equestrian industry, which has so far been very unhappy with the Government's proposals. Several of my hon. Friends speak with passion and great expertise on the subject of the equestrian industry and I am sure that the House will 665 benefit more from hearing their views than mine. Therefore, I shall restrict myself to saying that that we believe that equestrian buildings should be deemed to be agricultural rather than light industry, and that the next Conservative Government will exempt new and existing equestrian businesses from business rates.
To help farm diversification, we have also suggested slashing the bureaucratic obstacles that make diversification so expensive and difficult for farmers. As the Minister has pointed out, we are all aware of the need to balance environmental protection with the business needs of rural areas. That is why we have proposed much greater devolution of planning decisions to local levels where decisions can be made in the full knowledge of local environmental conditions. In the end, decisions will be taken by the people who have to live with the consequences of them rather than by remote Ministers and bureaucrats in Whitehall. Within that general pattern, we believe that genuinely redundant farm buildings of up to 1,500 sq ft can be allowed to be used for commercial purposes, allowing small-scale non-farming operations.
We also think that it is a shame that the Government are missing a huge opportunity with this Bill. We have made proposals for emergency interest-free loans to relieve the cash flow problems of rural businesses affected by the foot and mouth crisis. By contrast, the Government's proposals under the small firms loan guarantee scheme involve a complex and lengthy application procedure and, even more important, charge interest rates of 8.75 per cent. Small rural businesses affected by cash flow problems simply cannot afford to take on new interest-bearing loans, especially when the interest payable on those loans is higher than the interest that they pay on existing loans from their own banks. Our proposals—which, sadly, the Government have neglected to take up in this Bill—would provide businesses with an essential cushion to get them over the problems of the next few months. It is a terrible wasted opportunity that they have not been included in the Bill.
The Minister will be aware that the Bill does little to tackle some of the unfairnesses that are emerging from the crisis in the countryside. There is unfairness between England and Wales about the size of the ceiling for emergency rate relief—the figure is £12,000 in England, but £50,000 in Wales. There is a potential unfairness built into this Bill between businesses set up more than 12 months ago as farmers tried to diversify and businesses that will be set up under the Bills's provisions. There is unfairness in the discretionary element of the rate relief available, simply because some local authorities will be able to afford it better than others and big authorities will have an advantage over smaller ones.
The Bill is better than nothing, but it is less good than it should be. It offers a small degree of palliative care to some extremely fragile businesses. We will do everything we can, within the bounds of proper parliamentary scrutiny, to ensure that the small amount of relief that it proposes is available to businesses as soon as possible. However, we have proposed a set of measures that would make a real difference to hard-pressed farmers and struggling small businesses in rural areas and provide some hope in the current catastrophe facing the British countryside. I welcome these small steps by the Government, but I urge them to adopt some of our more radical proposals before it is too late.
§ Mr. Peter Temple-Morris (Leominster)
It is a pleasure for me to participate in the debate. Although it is not for me to estimate the exact date of a certain event, I suspect that this speech will be something of a swan-song. Although the Bill is not extensive in itself, it is very much to do with wider rural questions and the wider rural package that the Government have proposed, so it is perhaps fitting that the hon. Member for Leominster—whatever side of the House he might sit on at the present time—should speak in a rural debate.
Indeed, I was flattered that the hon. Member for Ashford (Mr. Green), who speaks for the Opposition, should remark on my conscientious presence in the Chamber throughout the Minister's speech. I was here not necessarily as a Labour Member of Parliament, although I am very proud to be such; I was here for my constituency. I have always sought—as, I think, the hon. Gentleman knows—to represent my constituency from this side of the House in exactly the same, I hope, conscientious way as I did from the other.
I shall talk a little about my constituency because it more than qualifies me to make the comments that I shall make. The most encouraging thing that the hon. Gentleman did was not to approach the matter in a party political knockabout way, and I compliment him on that. It is utterly proper that the Opposition should make proposals, although I do not know how they would pay for them in the context of their overall commitments, but I shall not be distracted on to that matter. The important thing is that he has done what, in essence, he had to do—welcome the principle of the Bill. He said that it is a step in the right direction. I would add that, as my right hon. Friend the Minister made very clear, the Bill is part of a package, virtually every element of which is subject to review.
Another point to consider before we reach any closing debate on such issues is that we are dealing with very wide matters involving agriculture, foot and mouth disease, the environmental aspects of rural areas and the benefits, or otherwise, to those who live in them. In this regrettable and tragic outbreak, there is a need to reach a conclusion so that we can understand and, to an extent, quantify the damage before taking any final decision on what help is given and, incidentally, what help goes where. We should have a vigorous debate on the balance of rural and environmental support, defining each in the context of the other, and so on.
I hope that the hon. Gentleman would agree that a thorough review must take place when we are over the immediate tragedy, and I dare say that it will have to go well beyond FMD, although FMD nationally and internationally will form an integral part of it. However, we must undoubtedly review the support in that context. I welcome the Bill because people will increasingly go out of small farming—perhaps regrettably, but necessarily—and into rural business. That aspect of the Bill is commendable.
§ Mr. Evans
Does the hon. Gentleman accept that the Bill represents nothing more than a sticking plaster for a patient who has had a heart attack? Does he accept that it would be far better if the smaller businesses that are in trouble because of foot and mouth and the lack of tourism were given access to interest-free loans, given that many 667 small businesses owe money to other small businesses, as that would pump-prime the whole industry and put it back on its feet again?
§ Mr. Temple-Morris
I do not accept that. We have to consider the whole context. The matter is up for review, but the Opposition's proposal is not the Government's policy, as the hon. Gentleman knows perfectly well. Incidentally, the way that he introduced his remarks with the example of heart attacks and sticking plasters was colourful—talk about spin! However, given the whole context, the Bill is of value and has been welcomed as such by the hon. Gentleman's party; it is part of a continuing process.
As I said earlier, we shall need to take a thorough look at agriculture and benefits to get over the situation in rural areas. In that connection, the hon. Member for Ashford made a point—with which I very much agree—that the long-term economic health of farmers depends on farmers and farming. I am sure that he well realises that although reform and change are expected in the agricultural community, the constant doubt, because people do not know—in the context of the common agricultural policy and elsewhere—what their eventual fate will be, causes many of the difficulties. Most farmers in my constituency accept that there has to be change—that the terms of subsidy will be different—but they need to know where they stand. The Bill is a step in that direction.
I said that this speech would be a swan-song. I also said that I have a rural constituency. I am pleased to be speaking on a rural matter, and I take this opportunity to thank my constituents for putting up with so many speeches over the years on matters other than agriculture and the rural areas—especially on foreign and European affairs and Ireland. My constituents tolerated that; indeed, occasionally they encouraged it. However, in this debate I speak on behalf of a constituency of 700 sq m. I am happy to say that I have a lovely memory of the fact that when I was first elected to this place in February 1974–27 years ago—there was not one traffic light in that 700 sq m. Regrettably, I have to announce that there are about two and a half at the latest count; one of them—dare I say it?—covers the entrance to a supermarket.
There are five market towns in the constituency. Two have benefited from the wider programme of which the Bill forms part—the Government's regeneration programme—and no doubt others will benefit, too. Much public money is going into areas such as mine, and there certainly is no area more rural than mine. We have countless villages. Fourteen foot and mouth outbreaks have occurred and there are more just over the border in Wales, which means that exclusion areas spill over into my constituency. There are 68 outbreaks in the whole county of Hereford and Worcester.
There has been much hardship for animals and farmers alike, for rural areas generally and, indeed, for the rural businesses dealt with under the measure. No one is happy. We can always criticise financial support by saying, "We want more". Indeed, we have already heard that call from the Opposition today; it does not surprise me. However, my constituents are grateful for that financial support. They welcome the gradual relaxation of restrictions and the opening of markets. Goodness knows, no one is happy, but those measures have been welcomed.
668 Almost every day—like other hon. Members representing rural constituencies—I hold conversations with individual farmers; I shall be doing so later today. I take my hat off to those farmers. Despite their dire circumstances, they appreciate the sheer scale and extent of the outbreaks, which dwarf anything we or others have seen.
My home is about four miles outside my constituency in the Welsh border area, just inside Wales, and has been in an infected area since the beginning of the outbreak. It has the shop, the pub—all the characteristics that we are talking about—and bed and breakfasts galore. In fact, bed-and-breakfast businesses and smaller hotels and accommodation are the main losers at present. However, to put that in context, all was not complete gloom over Easter. Many rural attractions did remarkably well—indeed business was up on last year. The statistic that tourism is 70 per cent. down overwhelmingly relates to accommodation. I am happy to say that the village pub was crowded during my last Sunday visit, and will remain so.
I think that a personal anecdote helps. Some comments, especially by the Opposition, imply that everyone is seething with discontent against the Government. That is not the case in my area. Indeed, the farmer who farms immediately around my village, who is an embarrassingly enthusiastic member of my former party and farms in a Conservative area, told me last weekend that, all things considered, the Government have done as well as any could. That is a true anecdote and we should acknowledge such opinions.
There is not much to say about the Bill's contents and I admire the extent to which the Opposition have examined its minutiae. They mounted a veritable barrage of questions to my right hon. Friend the Minister, for which I commend them. My study might appear to be limited in comparison, although as a lawyer I have some understanding of hereditaments.
Measures in the overall rural package need to be mentioned and gratitude should be expressed to my party and Government. We must not forget that the cost of the total effort is much greater than the rural aid to farmers, and my right hon. Friend the Prime Minister has not put a limit on that. Direct agricultural support as a result of foot and mouth is climbing above £500 million and the support to the rural economy is nudging above £200 million. The Government have announced immediate measures, such as hardship rate relief, deferment of rates payments and temporary reductions in rateable values. In addition, an effective appeal has been made to the banks, which has not been mentioned. Their initial reaction was a little bank-like. However, the Government made a public appeal for them to go easy, which they have done. I have been in contact with constituents and banks, and approaches to them have had to go no further, which is a good sign.
The village shop rates relief scheme, which was introduced in 1998, has been mentioned. The 50 per cent. mandatory relief applies to my village where the shop is doing the same business during the outbreak as it has always done. It is certainly a small business. The pub is down on accommodation bookings, but its general business, including serving food, is relatively normal.
§ Mr. Gray
I have tried my best to be patient, but I have two questions for the hon. Gentleman before he gets carried away with praising his new friends in the Labour party for what they have done for rural businesses. First, will he acknowledge that the mandatory relief on village shops is a result of an initiative introduced by my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) when he was Secretary of State for the Environment? It was merely brought into operation by Labour. Secondly, will he also acknowledge that according to the notes produced by the House of Commons Library, the Bill's provisions may amount to as little as £3 million a year help for businesses throughout England? That is a drop in the ocean compared with the hundreds of millions that are being lost by rural businesses. Perhaps he could include that in his speech.
§ Mr. Temple-Morris
Overall support is climbing above £200 million, and it will continue to increase. Much as I appreciate the Library's devotion, and although I have not seen the paper, it appears we are taking a step in the right direction. The hon. Gentleman said "may amount to"—"may" being the operative word. I have a suspicion that when Governments offer such support, it absorbs more money than they initially promise. I am pretty sure that this measure will do the same. Incidentally, the relief is greatly welcomed by my constituents. I do not see why I cannot praise my present political party. This is one of the best Governments we have had for years. Compared with the time that I had under the previous Government, I have had a very peaceful Parliament.
Regardless of who introduced what, the issues that affect rural areas have been around for years, as all hon. Members know. They include access, the motor car, people retiring to rural areas and the decline of agriculture. When I was an eager young Conservative Member in 1974, newly elected and anxious to assuage the concerns of a shopkeeper in a small village who had just had to close his shop, I told him that I was pleased to see the support that he had received from the village in a petition. I had better leave out his expletives, but the broad gist of his reply was that although he was pleased about the petition, if the villagers who had been so eager to sign it had shopped in his establishment a little more often, it might still be open. Many people in rural areas, particularly those who wave the banners the most, are the first in the Saturday morning queue in the supermarket. That is true of the relatively new supermarket outside the market town of Leominster.
This month, rate relief for village food shops, pubs and petrol stations has taken effect. That applies to my village and many others in my constituency. About 8,000 pubs will benefit, so the measure will absorb quite a lot of public money.
The Bill caters for the future. It goes beyond the question whether we should change the bottom line for rate relief and spend more; it tackles the fundamental issues. We will hear more and more about those because, regrettably, the debate is far from over. I am sure that the Government, after the election—I say that deliberately—will have much to do about the shift from farming to small 670 business which is represented by the Bill. Unfortunately, many farmers will go out of business, but they are already excused domestic rates and it will now be easier for them to diversify into bed and breakfast. The rateable values ceiling, which has already been mentioned several times and in this case is £6,000, is subject to review.
I have said a little about village shops and given a personal example, but I want to deal with rural areas more generally. It is an unfortunate fact of life that when so many areas are in a state of change, that change leads to fear where there is uncertainty. It is the Government's duty to recognise, as I am sure they do, the extent of the change, particularly as it concerns the elderly, the need for increased services and the undoubted decline of agriculture. As we know, the latter affects not only those who are in farming, but the vast number of families and ancillary industries that are connected to or dependent on agriculture. The Bill forms a small part of an overall programme for the future, and I trust that that programme will include a full review not only of foot and mouth disease, but of the whole question of agricultural subsidies.
§ Mr. Temple-Morris
The hon. Gentleman may not have realised, but I am just perorating. However, I cannot resist his plea.
§ Mr. Bercow
The hon. Gentleman really ought to make up his mind. I say to him beyond peradventure that his attitude makes Dr. Pangloss look a pessimist. How does he justify the Government's refusal to introduce honesty in food-labelling legislation, whereby consumers can know both the country of origin and the method of production of all the main ingredients so that they can make a free and informed choice of what to buy?
§ Mr. Temple-Morris
I seem to remember being asked that question as a Conservative Member when the Conservatives were in power. As for labelling in shops and supermarkets, it is infinitely better than it has ever been. Indeed, I am always clear about the origins of what I am buying. The Minister concerned has been tightening up regulations on labelling.
I know that the hon. Member for Buckingham (Mr. Bercow) is well practised, but I could not resist giving way to him. I am sorry that I hesitated to do so at first, but perhaps I was overcome by my own oratorical efforts and was anxious to complete my speech—[Interruption.] Well, he has made his point now and I have dealt with it. I wish him many more happy interventions; I am sure that he will be making them in opposition for a long time. Finally, I thank the House for occasionally listening to me over the years and my constituents for putting up with me.
§ Mr. David Heath (Somerton and Frome)
It is a pleasure to follow the hon. Member for Leominster (Mr. Temple-Morris) who, if I may say so, brought urbanity to his rural subject. Having listened to him carefully, I have the impression that the picture in Leominster is different from what we are experiencing daily in Somerset. The hon. Gentleman would be 671 hard-pushed to find people in my constituency who were quite as optimistic about their future or as complimentary to the Government as his constituents are, although that may be a regional difference. The hon. Member for Ashford (Mr. Green) gave a good analysis of this brief Bill and covered many areas that I intended to cover. I therefore make no apology if some of my comments are along the same lines as his.
The Bill was not introduced in response to the present crisis. If it had been, it would be even more inadequate. It was introduced in response to an old anomaly in the effects of the uniform business rate, to the closure of shops in small communities—which has been going on for a long time—and to the difficulties that many in the agricultural industry are experiencing in diversifying. Whatever the response to the present crisis, it is extraordinary that everybody is gripped by the urgent need to do something for our rural areas, apart from the Treasury and the business managers of the House.
It is extraordinary that the Bill has been introduced at such a late stage. As the Minister said in her introductory remarks, the Bill had its genesis partly in the action plan for farming that was drawn up a year ago. We then waited for the rural White Paper, which eventually appeared in November. However, after that, nothing was done to put any proposals into effect. The Government finally got round to publishing the Bill on 16 March and it was introduced in the House, but we have had to wait until now for it to see the light of day. I suspect that we might not be discussing it now had I not asked the Minister for the Environment the other day when it would be debated on the Floor of the House. The right hon. Gentleman realised that it was rather embarrassing for the Government that a Bill that they had introduced purporting to give support to rural areas had not even been debated in this place.
I shall not labour the point about whether we need primary legislation. I was not convinced by the Minister's reply, which was based on something that we have heard before from this Government—an assertion that the lawyers know best. Our role in this place is to question what Government lawyers say about legislation; we need to be told the reasons for any course of action and consider whether it is right. No doubt, we shall return to that in Committee.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Robert Ainsworth)
Does the hon. Gentleman not appreciate that if a piece of primary legislation states specifically that relief is for a sole business in a community, it is not possible to undo that without primary legislation?
§ Mr. Heath
I understand that perfectly well. I did not want to extend the argument as we will have to return to it in Committee, but I question the distinction that is still made between a food store and a general store. The qualification on sole business is on the general store, not the food store. Why does the Minister's point not apply to the public house or the petrol station? The distinction is not a matter for a long debate on Second Reading. [Interruption.] The Minister says from a sedentary position that I am wrong. He will have to establish that to the satisfaction of members of the Committee. Let us have that debate at the appropriate time.
672 The Bill does not address the basic inequities of the uniform business rate. Some of us have argued ever since its introduction that it was based on an erroneous premise and was unfair in its application. It is biased against the interests of small businesses, particularly small high street businesses in villages and market towns in areas such as the one I represent, and it benefits large retailers—supermarkets and hypermarkets—which are laughing all the way to the bank because the overhead that the uniform business rate represents reduces the opportunities for competition.
I would have liked to see a Bill to reform the uniform business rate and make it fairer than the present system. If that is not possible in one leap—and why it should not be, I cannot imagine—perhaps we might at least have had some form of tax allowance for a certain turnover or income in order to take smaller businesses out of the uniform business rate net entirely or to reduce its impact on them. That would have been a fair approach. Instead, the Bill tinkers at the edges to make exceptions piecemeal and on an interim basis. It is unfortunate that we cannot address the basic problem.
§ Mr. Heath
The hon. Gentleman knows that it is still our policy that local income tax would replace council tax. We are discussing the uniform business rate, which militates against rural areas and small businesses. It was introduced by the Government whom he supported and its reform is long overdue.
§ Mr. Heath
When I have made some progress, the hon. Gentleman will have his opportunity.
The problems with the Bill have been outlined by the hon. Member for Ashford. I shall deal first with the aspects relating to agricultural premises. I am greatly in favour of means of support for rural businesses deriving from agriculture. The re-use of agricultural premises in the form of diversification is consistent with what my colleagues and I have been arguing for many years in the context of common agricultural policy reform. We are in favour of support for rural economies and rural societies, rather than simple commodity support. It is important for us to make that move, although the Bill is a very limited part of that process.
The Bill contains no definition of agricultural premises or of agriculture. It does not purport to address that, as the matter is covered by other legislation, but it is time that we grasped the nettle and stated what agriculture is. Some of the businesses that are currently excluded from the definition of agricultural businesses should be included, because times have moved on.
I am pleased that the hon. Member for Ashford raised the topic of third-party use, but I am less pleased with the fact that we had no clear answer on the point. I do not read the measure as applying to third-party users. The Minister indicated that it applied to tenant farmers. We knew that. 673 The question is whether someone unrelated to agriculture can use the premises and benefit from the relief afforded by the Bill. I am not clear that that is the case.
§ Mr. Gray
It is worth repeating that, when I intervened on the Minister or Local Government and the Regions to ask her about the matter, she made it absolutely clear—tomorrow's Hansard will confirm this point—that the relief applied not only to farmers who own their land and to tenant farmers, but to any other business that rents the premises. Thus, a farm could convert a barn into a small office and rent it to an outside interest in industry that would benefit from the reduction in rate relief. I agree that that is not what the Bill says, but I point out that the Minister said that it would have that effect.
§ Mr. Heath
I wish that I could rely to the same extent on the Minister's words, but I do not interpret the Bill in the same way. We will have to explore the matter further in Committee to make certain that the Bill achieves the intention that she described.
Concern was expressed about the five-year expiry period, but the Minister appeared to misunderstand the point that was made. Surely, the question is not whether businesses can benefit from rate relief for longer than five years, but whether a business that wishes to take advantage of rate relief in, say, the fourth year after enactment of the Bill will be subject to a five-year or one-year period of relief. Clearly, the period can be extended by the Government, but that will not impress a bank manager who is presented in the fourth year with a business plan that can extend to only one year. We need clarification and we must press the Government for it. I suspect that they have good intentions, but that they have not written them into the Bill.
The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) spoke about the business of whether diversification is always good or bad and about the wrong uses to which it can be put. I feel strongly that rate relief is an economic and fiscal measure, and not a means of policing environmental and planning considerations. The planning regime must be sufficiently flexible, but also sufficiently robust, to deal with those issues, which should not be the subject of measures such as the Bill.
I should like to deal briefly with the provisions on food shops. I welcome the principle of extending rate relief to such shops.
§ Mrs. Dunwoody
The point that I sought to make—obviously, I did not do so with sufficient clarity to get it across to my colleagues—is that, although there comes a moment at which planning laws mean saying yes or no to particular developments, the Bill is meant to support businesses. At some stage, the House will have to decide on the ranges of business that are suitable and unsuitable for rural areas. As we are currently anxious to develop any sort of employment, people are not prepared to confront that question, but it will be a significant problem at some future time.
§ Mr. Heath
I understand the hon. Lady's concerns, but I believe that the matter must be determined by local authorities, which must fulfil their planning function in respect of what is appropriate to their local areas. The House cannot determine such matters, but we can set out 674 the support that we can offer when a business is determined by the planning authority to be appropriate to an area. Perhaps that is where the hon. Lady and I have a difference of opinion, but it is only slight, as we are dealing with essentially the same point.
On food shops, we must consider the key issue of the rateable value threshold. I do not think that the £6,000 threshold is appropriate. The matter was the subject of substantial argument in the statutory instrument Committees that have dealt with related issues concerning pubs and petrol stations. It is a matter that has caused some concern in terms of hardship relief, in respect of which there is a great disparity between what is being offered in England and what is being offered in Wales. I think that the Welsh are right to ask for an increased deal.
On food shops, some basic issues need to be addressed and the Government need to clarify their thinking. We were told that the matter could be reviewed whenever there were revaluations. We have had revaluations since 1977 but have seen no change, despite the fact that the revaluations have mostly been upwards and have often been challenged by businesses that are subject to the business rate. I have no confidence that the threshold will ever move; it will simply stay at a grossly inadequate level.
Evidence from the shops themselves shows that the level is grossly inadequate. I have a letter from the Association of Convenience Stores, which might be said to know the nature of the business of its members. It argues that, although there are exceptions to the rule, in general, a convenience store needs about £4,000 a week minimum turnover in order to be viable. That is a very different figure from the £6,000 rateable value mentioned in the Bill, which suggests a turnover of less than £1,346 a week. Thus there is a huge disparity between what the Association of Convenience Stores says is a viable level and what the Government say is the maximum allowable. We must get to the bottom of that.
It is argued that pubs and filling stations are being given an enhanced level of £9,000 because many of them share large premises, but so do many food stores in rural areas.
§ Mr. Bercow
I do not dispute what the hon. Gentleman says about sharing premises with larger outlets. However, as he has just referred to the Association of Convenience Stores, does he accept that in the overwhelming majority of cases, those stores occupy a space of under 3,000 sq ft and, almost invariably, occupy a space of about 2,000 sq ft or less? Will he also factor into the equation in support of his general argument the fact that those stores operate on substantially smaller margins than their big business counterparts?
§ Mr. Heath
The latter point is self-evidently the case, and I am happy to accept the hon. Gentleman's figures on the first point. Although I have no evidence that his figures are correct, I feel intuitively that he is right, so I am grateful for his general support for my proposition.
Those businesses must cross not only the rateable value threshold, but two other thresholds. First, there is the Government's definition of a rural area. As we know, some rural areas are defined by order of the Secretary of State, while others which happen to be on the periphery of conurbations and which are clearly rural areas, are not defined as such. We have had this debate in terms of the 675 hardship funding. It is difficult to stand on the banks of the lower estuary of the Severn, in an entirely rural setting with not a vehicle or house to be seen, and explain to someone—as my hon. Friend the Member for Northavon (Mr. Webb) has had to do—that they are not in a rural area because the Secretary of State says so, and simply because of the definitions being used. That anomaly must be dealt with.
The third threshold is the limit of the population of a settlement to 3,000. I accept that a limit must be set and that 3,000 is towards the upper end of a village size, but in my part of the world we have many small settlements of around that size. Broadly speaking, it is a very rural county, but our population pattern happens to be in settlements of about 3,000 every three or four miles.
It is a townie's conception of rural life to think that only shops in small villages serve rural populations and are suffering from a downturn in the present crisis. It is principally the shops in the market towns that serve the rural population. That is where those people go to shop, and those are the shops that are feeling the squeeze at the moment.
§ Mr. Lembit Öpik (Montgomeryshire)
This is the key issue for me in the Bill. Is my hon. Friend aware that the "big smoke" in Montgomeryshire—indeed, in midWales—is Newtown, whose population is 11,000? The Bill will be extremely helpful for the shopkeepers there, yet they might in part be excluded because of the limitation that my hon. Friend has described.
§ Mr. Heath
I am grateful to my hon. Friend. That it exactly the kind of illustration of which we should take careful note.
Surely it is possible for there to be either an assessment based on local circumstances or a taper of some sort? The hon. Member for Ashford (Mr. Green) mentioned the original £8,000 level suggested in the Green Paper. The Government's response to that has, as I understand it, been that 50 per cent, of all small businesses fell into that £8,000 rateable value category. That is not true: it was 50 per cent, of all hereditaments, including telephone boxes and the like. Those were not all genuine small businesses. However, there should be some sort of tapering arrangement to enable a sensible assessment to be made.
In relation to hot food, I cannot believe that the Government intend to disqualify all the little food shops that happen to have a pasty counter in the corner from benefiting from this relief. However, that is clearly there in black and white in the Bill at the moment. The qualification is not that the business consistswholly or mainly of the sale by retail of food for human consumption".Instead, there is a specific exclusion ofthe supply of food in the course of catering".That needs to be clarified. Could a shop with a microwave in the corner that sold a cold sausage roll to a customer, who then put it into the microwave, be disqualified from rate relief? I do not think that that is the Government's intention, but that is what has been written into the Bill, and it needs to be looked at.
A large element of discretion still forms part of the arrangements. There will still be patchiness across the country. We have already seen that, wherever 676 discretionary rate relief applies, some local authorities are able and willing to do a lot to support smaller businesses; some are willing but not able to do so; and some are neither. I am not arguing against local discretion. The Bill will help to provide a bedrock of mandatory relief, but anomalies will still exist between different areas, sometimes over quite a narrow grid. I hope that they will eventually be ironed out, because the people who have the courage to carry on small businesses in rural areas at the moment need all the help that they can get.
This is an inadequate Bill. It moves in the right direction, but it is not part of the larger package that I would like to see and that we have discussed on many occasions, which would include the interest-free loans that the hon. Member for Ribble Valley (Mr. Evans) mentioned. Incidentally, I think that the banks should play a part in providing those loans, perhaps by being responsible for the interest element. I see no need to use Treasury money for that.
These issues need to be treated with an urgency that the Government have so far failed to display. This is not an urgent measure of the kind that we need, but it is welcome none the less. I hope that it will have a swift passage through the House, but I also hope that it will be followed by something much more substantial that will give real support to the businesses that are failing at the moment and will continue to do so over the next few months.
§ Mrs. Gwyneth Dunwoody (Crewe and Nantwich)
Napoleon was supposed to have said, "Let me have lucky generals" when he was asked to appoint a particular man to be in charge of his army. In agriculture, perhaps the one question that should be asked is, "Is this farmer lucky?" In my constituency a number of farms have been put through enormous hell—there is no other way of describing it—and have sought to alleviate their condition by moving into some form of diversification. Some of them seem to have suffered simply because they got their timing wrong.
I welcome the Bill because, perhaps for the first time in my career, British agriculture faces barriers that are genuinely so great and soul destroying that those affected are under tremendous pressure. For most of my working life, I have listened to the moans of farmers on greater and lesser incomes. The common factor, usually in direct proportion to their affluence, is their ability to complain bitterly about the amounts of money that they receive from various sources. I have therefore not always been as sympathetic as I might have been.
After many years of subsidised farming, however—there have been two different forms of subsidy, but farming has clearly been supported by taxpayers' money—we are paying an enormous price for the growth of agribusiness and damaging methods of farming. It is therefore important to seek any possible means to help farming communities and rural areas to maintain their services and the facilities that we are discussing today.
The Bill is useful Of course it is possible to argue, as several hon. Members have done, that if one draws a line, someone will be to the right of it and others to the left, and that that creates anomalies. However, anyone who runs a farm shop successfully, for example, in my constituency, competes with my rural butcher in the middle of Nantwich or Crewe. We are therefore not 677 immune from the charge that, by helping one rural community, we are damaging people in the same line of business elsewhere.
The Bill tries to subsidise particular businesses that are under enormous pressure because they provide an essential service. We should be clear about that. The House has not suddenly decided that the whole of agriculture should be reformed, but we realise that village communities cannot exist without shops and schools. Without village communities, there is a rash of gorgeous but empty villages, which incredibly but continually turn into dormitory areas for people who work elsewhere. That is sterile and cannot be supported.
Many farm shops will experience some difficulties. I have in mind two farm shops in my constituency. I shall do my advertising bit, and say that I hope that anyone in Cheshire will support Snugberry ice cream, which is home made and of excellent quality, and Mrs. Miranda Shufflebottom's best sausages, which I buy on every possible occasion. Those products are of high quality and the shops provide good service. However, the amount of relief for which the Bill provides, although necessary and welcome, is small.
We must acknowledge that the sort of support that we can give any business is finite, can continue for only a specific amount of time and can provide only temporary aid. We cannot support rural shops without affecting rural towns; we might otherwise distort competition. Vast distortion already exists because many rural shops pay more for their goods wholesale than supermarkets pay retail. If we are to consider methods of supporting rural industries, we should also examine supermarkets' impact on agriculture, buying patterns and subsidies for business. Those considerations are essential because of their effect on the people whom we are discussing.
Farm diversification is interesting because I suspect farming communities, especially families who have initiative and do not want to be left in an intolerable position, try to diversify. Many diversify into related businesses such as food. I hope that the comments of the hon. Member for Somerton and Frome (Mr. Heath) about hot food are wrong, because many farm shops will not only sell some heated food, but will try to expand that provision.
I am thinking in particular of a business that grew out of the destruction of an entire pig herd. It diversified first into butchery, and then into the provision of teas and light refreshment. Presumably, it might not be able to claim relief. That would be unkind and unfair, and would cause the business great difficulties.
§ Mr. Gray
The hon. Lady makes a good point. The tragedy for that business, and for the excellent Mrs. Shufflebottom's business, is that they will not benefit: only businesses that are fortunate enough to have been established in the last six months will receive the relief. Mrs. Shufflebottom's business, and the other shops that the hon. Lady has described, will therefore be faced with unfair competition.
§ Mrs. Dunwoody
I think that Miranda Shufflebottom—whose excellent sausages, pies and hams I hope everyone will buy—will sidle in, because I believe that the diversification took place within the specified period.
I hope that Opposition Members will speed the Bill's progress, and that it will reach the statute book in time for everyone to benefit from the relief. Farm diversification, 678 however, can only ever be a subsidiary to agriculture. It is an extension, and a sensible option for most farming units that are thinking about their economics; but it will never be an alternative to agricultural employment or proper control of the countryside.
There are those who will eternally carp about the Bill, saying that it is not enough, that it does not encompass everyone, and that it makes difficulties for people in villages that could have been dealt with differently. I hope that when that happens my hon. Friends and I will remind the House that the last Government took no action of this kind, and certainly did not give rural communities the support that they should have given.
§ Mr. Green
Uncharacteristically, the hon. Lady has overstepped the mark. As has already been said today, the whole concept of rate relief was introduced by the last Government. It is uncharacteristically unfair of the hon. Lady to say that the last Government did nothing. In fact, this Bill is based on legislation passed by them.
§ Mrs. Dunwoody
I am delighted to learn that the Conservative Government did something right. I pay tribute to them: I cannot think of anything else that they did in almost 20 years on which I could even vaguely congratulate them. I am happy to withdraw my remarks, and to say that the carping tone of the hon. Gentleman's welcome for the Bill clearly does not demonstrate that he does not approve of rate support, but—presumably—demonstrates that he does not think we are providing enough money, in enough ways, at the right time.
There has been a constant leaching of both population and jobs from agriculture, first into small towns and then into cities, throughout my lifetime. Measures such as this, welcome as they are, constitute only a small step, and only a small part of the process of reversing the damage that has been done to the British countryside over not one generation, but several.
If the House of Commons is serious, it will begin to address the problems in the next Parliament. One thing that it will have to do is face up to the enormous erosion of power represented by the common agricultural policy. It will also have to explain seriously to members of the farming community that if they go out alone into the cold, hard world of total competition, things will be difficult for them unless they receive some form of support—support which will, I hope, be targeted in a new and completely different way.
In the meantime, I welcome the Bill. It is a small measure, but a good measure. It is going in the right direction. I am glad that we are doing something for villages and shops; I only hope the inevitable arguments that will arise in my constituency, where people will say, "I am on the wrong side of the line by five yards", will be met with sympathy.
I have been very impressed by the work of the Ministry of Agriculture, Fisheries and Food during the current crisis. I have been very impressed by the hard work of Ministry veterinarians and civil servants, many of whom have given up their free time and worked extremely hard. They are not infallible, but they have done a fantastically good job and I thank them for all that they have done.
I also believe that the type of change that we are proposing is simply an acknowledgement of the fact that the House has to think clearly about where we want United Kingdom agriculture to be in the next 10 years.
§ Mr. James Gray (North Wiltshire)
It is a great honour and pleasure to follow the hon. Member for Crewe and Nantwich (Mrs. Dunwoody). I agreed with almost every word that she said, at least until the last moment, when she offered strange praise to the Ministry of Agriculture, Fisheries and Food. Many Ministry staff have of course worked very hard and done their best in very difficult circumstances. However, I think that most people in the countryside and on farms would agree that the foot and mouth crisis has been characterised by astonishing incompetence, a general shambles—
§ Mr. Gray
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 680 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 thatfarm 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 681 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 682 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 683 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.
§ Mr. Bercow
I rather fear that the anomalous position that my hon. Friend has eloquently described will be greeted with some reservations, not to say sadness, by the Addington equestrian centre in my constituency. Does my hon. Friend believe that the differential, and the apparently capricious treatment of new businesses and existing enterprises, is attributable to Government folly or to knavery—or to a combination of the two?
§ Mr. Gray
Only my hon. Friend could turn a differential between existing riding schools and those that might be created and benefit from the Bill into a choice between folly and knavery. I, like my hon. Friend, suspect that the Government are guilty of folly and knavery. However, I raise the issue because I hope that they are ready to listen to reason. I hope that they will listen to the horse industry and correct the anomaly, demonstrating that they are guilty neither of folly nor of knavery. If we are holding a similar debate this time next year and we find that the closure of riding schools has accelerated quite considerably, it may be a result of the combination of the two. I hope, however, that the Minister will listen carefully to the arguments of the riding school industry.
The effects of foot and mouth are evident in other areas of the horse industry. The British Equestrian Trade Association, which represents those in the equestrian industry who make saddles, clothes and provide feed, for example, estimated that in March this year its turnover had declined by some £40 million and in April by some £57 million. These industries are not in rural areas but are nearly all in Labour-controlled constituencies in towns. People who make clothing for the riding industry tend to do so in towns, so Labour Members may wish to take an interest in this matter.
Those industries are being damaged not only by the foot and mouth crisis but by the decline in riding schools and in agriculture in general, as I described earlier. Industries such as riding schools will not be helped by the Bill. Items such as riding boots and riding clothes are often made in Germany and elsewhere on the continent. The Bill will not help the factories here that make those items.
The Government might like to consider how to help businesses that are equestrian and rural in nature but are not in country areas and may not be covered by the Bill. Racing, livery and hunting yards all face huge problems and none of them will benefit from—and some will be damaged by—the Bill.
We need to give careful thought to the issues, as the Department of the Environment, Transport and the Regions said in its response, published in November, to the consultation paper that it issued last year:All those against the scheme gave consistent reasons for their opposition. They expressed the view that the equine industry is currently suffering a decline, with many parts of the country experiencing an over capacity of equine businesses. They felt that 684 those currently in business are finding it hard to survive and operate on very low profit margins. They thought the proposed relief would give newly established farm enterprises an unfair economic edge in this tight market and the industry could not sustain any sudden growth that might be generated without widespread closure of existing establishments. They said this would seriously damage the wider rural economy.The Department acknowledges that the cut in business rates proposed in the Bill might have serious deleterious effects on existing businesses in the countryside, which will require careful consideration.
I have outlined the problems that the Bill might cause, and I shall now focus on possible solutions. One obvious solution lies in the zero rating of farms and agricultural businesses. Equestrian businesses are rated in full, and many of us have lobbied for years for that situation to be changed. The Bill will give relief only to new businesses with a rateable value of less than £6,000, but some livery yards and riding schools are larger and, of course, are more than six months to a year old, and so would not benefit.
It is a strange anomaly that buildings used for heavy horses for agricultural use and for race horses kept for breeding use receive rate relief, yet buildings housing other kinds of horses used for riding, hunting or any other legitimate purpose receive no rate relief. That was the result of a decision by the House of Lords in, I believe, 1987. It was said at the time that the decision about whether to allow rate relief depended on the nature of the animal. Therefore, a horse bred and kept to be eaten attracts rate relief as an agricultural animal, but a horse designated for riding does not. Curiously, a sheep that is kept not to be eaten but to be shorn does attract rate relief.
The logical approach would be to give 100 per cent. rate relief to farmers for using buildings and land for the spectrum of equestrian purposes, as it is given for any other agricultural business. All horse activities should be reclassified as agricultural, which almost happened in 1987 but was blocked by the House of Lords decision. At this difficult time for farming and the horse business, that would be the sensible approach. That point was made forcefully by Mr. Owen Tebbs, who serves with me on the horse and pony taxation committee and advises the Thoroughbred Breeders Association on tax matters, to the DETR:If the government wishes to encourage farmers into new fields of farming activity it should remove completely the obstacles in terms of planning and rates which prevent farmers from breeding horses to the point of sale.He said thatthere is no justification for penalising farmers from conducting what can only be regarded logically as a normal farming activity—the breeding and rearing of horses to the point of sale.If the Government, who seem very pleased with their little Bill, wish to correct the anomaly that I have described, the easy way to do so would be to designate all horse businesses as agricultural activity and thereby exempt them from business rates altogether. The cost would be small, compared with the losses experienced in the countryside today, but the benefit to farmers would be huge. In North Wiltshire, for example, most farms are small family businesses of 200 or so acres, with perhaps 120 to 150 milking cows and beautiful Cotswold stone farmhouses. Such farmers would benefit greatly from the 685 ability to convert their farms into horse businesses, if only they had zero business rates, and there would be huge demand for their services if they did so.
§ Mr. Bercow
Once again, my hon. Friend is on to an extremely pertinent point. Does he agree that in addition to the advantage that the universality of relief that he commends would provide, a simple and universal system would save time and expense because businesses would no longer need to study the issue in detail and employ external professional advisers to determine whether they were eligible for relief? That would be a material advantage to such businesses, the overwhelming majority of which are small.
§ Mr. Gray
My hon. Friend makes an astute point. Such businesses are already over-burdened by bureaucracy, and puzzled and confused by regulations. From the Government's point of view, it would also remove the need to create so many regulations and fool around with Bills such as the one before us. It would be clear and straightforward to say that horse businesses are exempt from business rates, and the only downside that I can imagine would be a cost to the Exchequer. If that is the Government's argument against the change, they should produce figures to demonstrate the exact cost. I suspect that the cost would be small, because at present no business rate is charged on a farm. If it converted to a horse business, no business rate would still be charged. It would involve a marginal differential between business rates. The cost would be zero but the advantage to farmers would be huge.
I hope that the Minister will also address one small anomaly concerning private stables. If a private stable is attached to its owner's house, it is exempt from business rates. If it is apart from the house by even a very small distance, business rates are payable. There is no logic in that, because it is a private yard and no business is involved at all. The mere fact that the loose box is situated a short distance across a yard attracts business rates. The Minister may wish to consider correcting that anomaly.
Those concerns were brought to the Government's attention by the horse and pony taxation committee, which I chair, in its Budget submissions for this year, for last year and for the previous year. The Minister for the Environment held a meeting to discuss the matters fully—as we hoped—with Michael Clayon, the chairman of the British Horse Society and of the British Horse Industry Confederation, and Anthony Wakeham, the director-general of the British Equestrian Trade Association. The purpose was to discuss the consequences of the foot and mouth crisis on the horse industry, as well as the general malaise in the industry even before the crisis.
The horse industry was extremely disappointed by the outcome of the meeting. The BHS's press statement, issued on 24 April, read:Keen disappointment has been expressed by the British Horse Society and the British Equestrian Trade Association that the Minister for the Environment, Mr Michel Meacher, made no mention of the plight of the horse industry in his latest report to Parliament on the work of the Rural Task Force on the Foot and Mouth crisis.Some 2.4 million people ride horses, and the horse industry is an essential part of rural life, but the Minister made no mention of it. He did not refer to specific measures to help the horse industry or to his meeting with the BHS and the British Horse Industry Confederation.
686 In that context, we are particularly disappointed that the Minister for the Environment failed to mention bridleways, which are not opening, although footways in the countryside are. Once again, the horse industry, which is hugely important to the countryside in general, has been ignored.
It is a shame that the Government pay so little attention to the horse industry, which can easily be dismissed as somehow rich or somehow self-sufficient. Across the nation—not only in the country, but often in suburban areas—the reality is that horse businesses are experiencing huge difficulty, and the terms and content of the Bill run a significant risk of making that difficulty a great deal worse. It is too little, too late and may be rather damaging.
In contrast, my hon. Friend the Member for Ashford (Mr. Green), from the Front Bench, referred to what the incoming Conservative Government will do with effect from 8 June. I welcome the fact that, unlike the Minister for the Environment, who so notably failed to listen to the horse industry, my hon. Friend has done so with some care, announcing thatriding has long been part of rural life.Indeed, it is an essential part of the countryside. He continued:The next Conservative Government will exempt new and existing equestrian businesses from business rates.There was no talk of new businesses, no talk of small ones, no talk of exceptions—we will simply exempt equestrian businesses from business rates.
We will also relax planning restrictions that prevent farm buildings from being converted to equestrian premises. Such conversions represent a huge problem and planning restrictions are such that they are difficult to achieve. Anyhow, there is no incentive to convert, because of the lack of business rate relief.
§ Mrs. Dunwoody
Are we being told that, no matter what the size of a building, no matter what its facilities and no matter where it was sited, planning permission would be given for conversion to a riding school?
§ Mr. Gray
No, that is not what I said. I am grateful to the hon. Lady for making that point, because I am happy to clarify my remarks. Of course, consideration would have to be given to the size of the riding school, where it was sited and in what circumstances restrictions would be relaxed. Planning restrictions represent an enormous hurdle to overcome and my hon. Friend the Member for Ashford has proposed that they should be very much relaxed.
I would happily have given time to discussing many other measures, but hon. Members have referred to the question of village shops and rate relief for businesses in areas such as Lacock in my constituency. I welcome those provisions, which will make it a great deal easier for such businesses to survive the crisis through which they are going, but my particular interest is the horse industry. I hope that the House will forgive me for having concentrated my efforts largely on that.
The Government have consistently ignored the industry, although there has been talk of having a Minister for the horse. We think that there should be one. It is 687 unclear which Department is responsible for the horse and there are a significant number of anomalies in the way in which horse businesses are rated.
§ Mr. David Heath
The hon. Gentleman has touched on an important point, because it is not clear which Ministry is responsible for recreational horse riding. There is a clear need for the Government to develop a strategy encompassing not only the points that he has made about the status of businesses, but the provision of an adequate bridleway network to enable people to ride horses safely in the countryside. That would achieve a bonus not only in recreational terms, but in tourism terms.
§ Mr. Gray
The hon. Gentleman makes a good point. When we come to power, I hope to persuade my right hon. Friends to establish within a Department a clear responsibility for the horse. I suspect that that Department will be the Department of the Environment, Transport and the Regions, if it still exists, although I hear on the grapevine that it is about to be broken into pieces. The Ministry of Agriculture, Fisheries and Food or a department of rural affairs might take charge and a Minister would have clear responsibility for the horse.
The hon. Gentleman's point about bridleways is extremely good. The recent Countryside and Rights of Way Act 2000 did not address bridleways at all satisfactorily and it is important that we have a go at producing a sensible network across the nation.
The horse industry has been ignored by the Government and, to a degree, by previous Governments, but the Conservative party has committed itself to addressing it sensibly and effectively when it comes to power. A central part of our consideration must be the way in which it pays business rates. Once again, I congratulate my hon. Friends on the Front Bench on committing the party to giving 100 per cent. rate relief to new and existing equestrian businesses. I call on the Government to match that.
§ Ms Candy Atherton (Falmouth and Camborne)
I am grateful for the chance to take part in the debate. Last week, I hoped to participate in the rural economy debate, which should have been the parliamentary equivalent of the Radio 4 programme "Just a Minute", with no repetition, deviation or hesitation. Many Members wanted to take part, so that is how I thought the debate would go. Sadly, far too many Members did not follow the rules of the game and spoke for far too long, so I was unable to take part. [HON. MEMBERS: "Ah!"] I know.
I am pleased to take part in tonight's debate and speak in favour of the Bill, which is relevant to the broader discussion and to my constituency in Cornwall, which represents part of the rural economy. I am one of the Labour Members with a constituency that encompasses coastal towns, former industrial areas and rural areas. There is an interesting symbiosis between them, and I am honoured and privileged to represent such a diverse range of communities.
We all accept that the unforeseen outbreak of foot and mouth has put great strain on rural areas, farmers and tourism in my area in particular. Worryingly, there are 688 specialist businesses whose plight has been worsened, given their lack of a voice or group to represent them. Throughout the crisis, I have been in contact with a local shop selling equestrian equipment—this might interest the hon. Member for North Wiltshire (Mr. Gray)—whose owner has built up the business over some 20 years only to see it hit with the body blow of foot and mouth. All the local horse shows were cancelled just after she had purchased the prizes and the equipment for this season.
I know that my hon. Friend the Minister recognises that identifying businesses that need assistance is not easy, but a case must be made for such businesses, which, by their very nature, are hit so hard—they do not have the might of the National Farmers Union to put their case for them. Of course, that is the job of their local MP, so I ask my hon. Friend please to bear in mind the fact that isolated shops and businesses have been affected by the disease. Their concerns and the real threat to their existence have hardly been heard in the Chamber.
I am also concerned for recently diversified farms, which are suffering the most in my area. In particular, those farmers who have taken the plunge, converted their barns and considered different land usage such as camping—often, they are the younger ones—are having difficulties. I hope that the Bill will assist some of them.
Perhaps the Government will go further and look to those farmers who have not sat on their hands and said, "We won't do anything to help ourselves. We'll just keep getting the subsidies." Some have established tourism businesses, particularly in my part of the world, but they find themselves unable to open them because they have been hit by foot and mouth. They cannot allow tourists on to their farms, let alone invite them to come.
The county of Cornwall is, thank God, only mildly affected by foot and mouth—mostly in the east, adjacent to Devon. We all hope that it will stay that way. Of course, as any Cornish man or woman would say, Cornwall's biggest problem has always been that it is next to Devon. Given the plight of our dearest neighbour, many in Cornwall are justifiably worried about the knock-on effect on the south-west economy at large, particularly our all-important tourism industry.
It was a relief, particularly for me, to read in last Monday's Western Morning News—the newspaper has regularly featured in debates in the Chamber in recent weeks—that the Falmouth Beach hotel has announced record winter bookings. The hotel was a magnificent 77 per cent. full between November and March. Although foot and mouth had an initial effect on bookings, the situation still looks good and that bodes well. That was a great boost for the town and the county. Over the Easter period, our tourist attractions were well attended and the queues in my patch stretched for miles. There are several reasons for that. One is that it is a sign that the efforts of many—from Ministers to film stars—in spreading the word have borne fruit. They are to be thanked for that.
In the past month I have welcomed my right hon. Friend the Leader of the House and my hon. Friend the Minister for Tourism, Film and Broadcasting to Cornwall. Like many others, they have joined me in putting out the message that Cornwall remains the country's No. 1 tourist attraction and destination. We have a lot to shout about. For example, those hon. Members who have not been to the fantastic Eden project have not lived. Get down there, 689 enjoy it and keep going back. It will be an emerging and growing attraction. The maritime museum will also be great for attracting visitors.
In Cornwall, finding new ways to attract tourists is the way forward, and support from my hon. Friend the Minister's Department and from the regional development agencies is critical to that. We all know that this country has enjoyed a period of sustained growth in recent years, which benefits every region—whether urban or rural—and every sector of the economy. That is why unemployment has gone down dramatically in my constituency since 1997.
There are deep-rooted problems and reasons for other concerns. The future of post offices and other shops is an obvious example. Villages have had varying fortunes as people change their work patterns and shop in supermarkets. That puts more pressure on village shops. We all know the dangers of that. A visit to some areas of France highlights the risks of a rural economy caught in decline. They include depopulation, empty buildings and the predominance of second homes and British number plates in the Dordogne. I do not want that for Cornwall, and it can be avoided.
The Government's rural White Paper gave a valuable indication of the way forward for villages and towns alike. The Bill is another step in the implementation of that blueprint for the future. However, we must not stop there. Structural economic change can be both positive and negative, and we would all agree that there are rarely quick and easy solutions. We must look to innovation within the rural economy and to local branding, information technology and—in Cornwall's case—renewable energy. Just because Cornwall currently lags behind other parts of the country, we must ensure that it does not remain so as other areas move forward.
Difficulties in the rural economy are often most acute in the most rural areas. Equally, the effect of foot and mouth on businesses may follow that pattern. The smallest most vulnerable businesses may suffer the most. However, it is important to realise that they are also the businesses most vital to the preservation of village and rural life.
Soon after the outbreak began, I conducted a snap survey of local businesses. Some reported, as borne out by the Employment Service, that there had been little effect on employment so far. However, it was no surprise to learn that the effect had been most noticeable in the businesses that organise walking tours, supply bikes for hire or use the coastal footpaths and the open country. They will be helped by the news that the county council will open another 50 miles of the coastal footpath on Wednesday and that the Government have made extra funds available for signing, fencing and the extra staff needed to enable the county council to open the path. No other measure will help the rural economy in Cornwall to overcome the effects of foot and mouth more than the opening of footpaths. Every member of the tourism industry whom I have met in the past two weeks has said the same thing over and over again: "Please open our coast paths."
I have also argued to Ministers that there is a strong case for a job or wage subsidy in the tourism industry. If a hotel or pub recognises that it has problems in the short term and threatens to lay off staff and to close down, the money for unemployment benefit or the jobseeker's 690 allowance could be used to keep people in employment—perhaps with an element of training—while keeping the business open. I believe that Ministers are warming to such a proposal, and I have stressed to them that it is one way of keeping the rural economy and the tourism industry going. It will also help to keep people in work while offering them proper training.
A number of meetings have been held in villages across my constituency to discuss the rural White Paper. Overall, it has been well received by people, no matter from which political party they come. At last, the Government have looked right across the board at the issues affecting rural areas. Villages are evolving and they are very different from the image that some who live in the M25 corridor might have of them. Many people now work from home, using new technologies, and others commute into local towns and cities. As people shop weekly in supermarkets rather than daily in the village store, that affects local shops. Fewer and fewer people work on the land, and the Government and communities need to wake up to that fact. This Bill reflects the evolving and changing countryside.
Last week, my mother used our local post office in St. Day in my constituency as a bank, paying in money and changing coins. She did not travel into a local town and that saved her money. More of us need to follow that example and support our village stores and post offices. I am often struck by the fact that calls to save post offices are often made by those who—as my hon. Friend the Member for Leominster (Mr. Temple-Morris) said, in what I was sad to hear may be his last speech in the House—are least likely to have set foot in a post office for many years.
I have given a cursory outline of several issues relevant to the debate and of the broader issues that affect farmers in the Camborne area and Cornwall. However, those issues form part of a much wider debate and, like many, I believe that if there is one silver lining to the awful foot and mouth disease, it may be that we shall finally have a proper and comprehensive debate on the future of rural areas and of farming in particular. I strongly urge Ministers to ensure that, after the election, we have time on the Floor of the House for such a comprehensive debate.
Members of the farming community in my area have appreciated the work of my right hon. Friend the Minister of Agriculture, Fisheries and Food and of his Department and they have asked me to relay their thanks to everyone involved. They tell me that they want the Government to send a clear message about what they want from the fanning community, and that is not too much to ask. If the Government do not want farmers to use subsidies, the farmers say, "Fine." However, they want to hear from the Government and do want to have to second guess their intentions. After BSE, foot and mouth and the other problems facing rural areas, people who live in the towns and who buy from the supermarkets and from farmers' markets are now saying, "Times have got to change. What are the Government going to do?" As other hon. Members have said, the Bill is a step in the right direction. Although we have a long way to go, I am pleased to support it because it makes a start.
§ Mr. Michael Jack (Fylde)
The hon. Member for Falmouth and Camborne (Ms Atherton) mentioned the radio programme "Just a Minute". I fear that my remarks 691 may take a little longer than that, but her comment triggered in my mind questions as to what the cast of "The Archers" would think of this Bill. With the thought that all sorts of rural developments could be encouraged by rating relief, I imagine that Linda Snell would be organising a protest group against them. Whether Brian, on his big farm, would have enough money to diversify given the loss of Borchester Mills is a burning question in the minds of "The Archers" scriptwriters. Would the Bill induce Pat and Tony to open a second organic food shop on Bridge farm? Undoubtedly, the Government's spin doctors will be considering those questions very carefully in trying to influence the scriptwriters of "The Archers" in promulgating the new-found message of hope that the Government want to come from what is palpably a very modest measure indeed.
This debate, not unnaturally, has included matters connected with foot and mouth disease, but other hon. Members have rightly reminded the House that the Bill is built on proposals made by the previous Conservative Government in recognising the need to pay attention to the viability of businesses in rural Britain and to reduce their rates. To that extent, I am glad that the Government have followed the lead set by the previous Conservative Government, as they have done in so many other ways. The fact that we are debating the Bill is useful, and I certainly would not disagree with it, but let us have a little look at some of the measures because there are some specific points to tease out as well as some more general points to be made.
I wonder how much new diversification is available in the farming community, because especially in those areas affected by foot and mouth disease, and whatever moneys might be available, the problem is one not of diversification but of survival and it involves restocking the farms and dealing with the consequential losses of having no farm income for the next six, nine or even 12 months.
I listened carefully to the remarks on the potential for further diversification. My hon. Friend the Member for North Wiltshire (Mr. Gray) mentioned that possibly a third of farmers were considering diversification, but when I look around in my constituency—Fylde in Lancashire—hardly an original barn is left to be diversified; they have already been turned into houses or some form of rural enterprise. I wonder about the physical opportunities to develop diversified businesses.
An aspect that has not been mentioned is the fact that diversification is a great deal easier for those who own the freehold of their farms than it is for tenants. In considering businesses and new ventures, those tenants who do not have a farm business tenancy would, in the first instance, have to seek the agreement of their landlords—the principal landowners—and that may involve some very great difficulties. As we consider farming generally and those areas affected by foot and mouth specifically, I suspect that the tenants will suffer the most, and that, sadly, they will benefit the least from these proposals.
From where will the money for diversification come? Sadly, the Bill does not give much hope that the Government are trying to encourage new sources of capital to enter agriculture to take up the opportunity of diversification. In my speech on Second Reading of the Finance Bill, I suggested, for example, some changes to 692 the qualifying terms of the enterprise investment scheme and the venture capital trust scheme that would enable new money, with the limited tax advantage already conferred on urban investment, to be visited on rural investment. Sadly the Government have not yet responded, but I pay tribute to the Paymaster General, who very kindly said that she would consider those proposals. If the Government are truly interested in diversification, they will have to consider such issues.
We must focus on an important detail in the notes on clauses that accompany the Bill, and I make no apology for returning to an issue that my hon. Friends have mentioned. Paragraph 7 states:Therefore, farmers face a new rate liability when moving any of their property from agricultural to non-agricultural uses. This is perceived as a barrier to diversification into non-agricultural activity.Those very words raise the question of who is the beneficiary of the proposal. The assumption in the Government's own words is that farmers will benefit, yet the hon. Member for Falmouth and Camborne (Ms Atherton) talked about the use of new technology in the rural environment. She was right to do so because those businesses that, for example, can deal with information technology—data processing, or whatever—may find farm environments very attractive given the lack of rates under the Bill, but will they necessarily be able to take up the advantage, as clause 1 does not make it clear who will be the beneficiary?
As other hon. Members have said, the Minister suggested that third parties may be able to help, but I hope that, in winding up the debate, the Under-Secretary will make it absolutely clear who will be the beneficiaries of the proposals. Certainly, new forms of agricultural business partnership may well represent the way forward, and farm business tenancies, which I had the pleasure to bring into law, may well find a further boost. They have been popular, they have been taken up, and they provide certain opportunities for tenanted farms to diversify. The people who have adopted such leases will be anxious to ensure that new forms of partnership in the rural areas can be developed.
The term "rural settlement" has been used in relation to clause 1, and I want to consider the important issue of what is rural. Coincidentally, in my mail today was a letter from my local authority, Fylde borough council. The letter, which was written in the context of the foot and mouth disease outbreak, is headed "Designation of 'Rural' Areas". Fylde borough council has written to the head of the rural development division, Mr. Henry Cleary—who may be known to the Under-Secretary—to debate what is rural. The letter was written by the acting chief executive. In fact, he is now the deputy chief executive; I had forgotten that Fylde has appointed a new chief executive.
Mr. Bramhall wrote to Mr. Cleary stating:Fylde Borough has an area 16501 hectares, and a population of 75000. Nearly 60 per cent. of the population are concentrated in the narrow coastal strip at Lytham St Annes, while another 15 per cent. inhabit the small adjacent towns of Kirkham and Wesham.He points out that 10 per cent. of the population effectively live in what are defined as the urban areas. The land use of the borough of Fylde effectively shows that it is a rural area, but we do not qualify under the designation used for the foot and mouth rate reliefs because we have been judged not to be rural. Colleagues 693 have talked about rural settlements of 3,000—plus or minus one person—on cliff edges being included in the measure, but I am not certain whether parts of Fylde that would consider themselves to be entirely rural would benefit from the proposals. I shall send the Under-Secretary a copy of the Fylde borough letter, and perhaps he will be kind enough to acknowledge that he will consider those concerns, which are important to Fylde borough council.
Paragraph 10 of the notes on clauses refer toa rural settlement of no more than 3,000.The Under-Secretary will, no doubt, tell us that that phrase comes from some well-defined source, but I am not clear about what will happen during the proposal's five years. Will there be any creep? Will people consider the figure of 3,000 as of now, or will such an area not qualify if another baby is born there? I am sure that that is not the case, but there is a lack of clarity about how the proposal will work and it is time that that was sorted out.
As has been said in referring to the definitions of the rate relief, the mandatory relief will be limited to £6,000, whereas the discretionary relief will reach a rateable value limit of £12,000. Again, I am intrigued about how such numbers and limits are set, but, like other contributors to the debate, I am worried that councils such as the hard-pressed borough of Fylde—if it was to be included—would not necessarily have enough money in their budgets to enable them to take advantage of the discretionary relief. What work has the Under-Secretary done to assess whether rural local authorities are actually able to take up the opportunities proposed in the Bill? The proposals will be hollow indeed if local authorities find it difficult to take advantage of the flexibility of the measure.
I was also intrigued by clause 3. It gave rise to an interesting debate in which the Government say, in effect, that in order to ensure that all the key retail outlets in a rural village are able to benefit from the proposals, a business will qualify if it is "wholly or mainly" forthe sale by retail of food for human consumption".Questions about the nature of petrol retailing go through my mind. Nowadays, many petrol stations contain a shop, a bakery or a newsagent—one can buy numerous other things there. Such businesses already attract some rate relief because of their importance to the rural community, but there seems to be substantial doubt as to whether a diversified food business will quality.
If the spirit and purpose of the Bill is to safeguard, develop and sustain the villages of rural Britain—or certainly of England and Wales—why are we nit-picking in that way? Why do we not recognise premises that are central and important to the well-being of a village community? If necessary, we should turn to local authorities and ask them which businesses are important. Why do we not ask parish councils? They know their area; they know which businesses are important. It would have been nice if there had been a little local consultation to deal with these nit-picking points in the Bill.
The clause contains the phraseexcluding confectionery and excluding the supply of food in the course of catering".The Minister for Local Government and the Regions suggested that if the premises had a few seats for people to have a cup of coffee and a bun, that business would be 694 included. However, I have visited places in the Lake district where three old cottages were knocked together—one bit is the post office, one bit is the cafe and one bit is mainly for food sales—
§ Mr. Evans
Does my right hon. Friend agree that, due to that confusion in the Bill, enormous discretion will be given to the people who will decide whether businesses qualify when the measure is enacted? There could be arguments—businesses could be allowed to benefit in one area, while in another area identical businesses might be excluded. That will lead to even more confusion.
§ Mr. Jack
I am grateful to my hon. Friend—my near neighbour in Ribble Valley—for that observation. He understands, from the many small villages in his constituency, what such questions could mean. If we are wrong, I shall be the first to thank the Minister for clarifying the matter. Perhaps the time is right to produce a simple, easy-to-read booklet of guidance on the whole subject. That might save the Minister's correspondence unit time, energy and effort—if nothing else—in replying to all our letters about who will be included and who will be out. I should certainly be grateful if some thought could be given to pulling together the various definitions of what is rural; sometimes, I struggle to find out whether parts of my constituency are included under various schemes.
I come to the wider context of the Bill. The National Farmers Union, in its representation to Members, rightly drew our attention to the anomaly that the Bill favours new, not existing, diversified businesses. If we are trying to safeguard the rural economy, that issue must be addressed. I support those hon. Members who have raised the five-year period and I am glad that the Government will review that carefully.
Much has been said about diversification of the rural economy and the fact that the activity of agriculture is suffering in that regard. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) is no longer in her place, but I want to qualify some of her remarks. The moaning has not come from the whole agricultural sector, nor is the whole sector subsidised. The poultry, pig and horticulture industries receive no direct subsidy, but they, too, are as interested in the measures as the subsidised sector.
The Library document rightly reminds us, under the heading "Factors limiting diversification", that:Finance is almost always important in diversification, since investment is almost inevitable".One of the issues that we shall have to address—although perhaps not directly through the Bill—is from where new investment in agriculture will come. As hon. Members point out when they comment on the lack or decline of farm incomes during the past few years, the amount of new investment capital in agriculture is significantly limited.
695 Table 6 of the English rural development plan—a weighty document—lays out some of the help that the Government purport to be able to give over the next seven years to enable rural Britain to take advantage of some of the provisions in the Bill. According to the table, investment in agricultural holdings in 2002 will, in effect, be only £1.5 million; in the following year, it will be £2.3 million. Those amounts are for the whole of British agriculture.
In 2002, there will be £6.3 million for the improved processing and marketing of agricultural products—the type of diversified activity that might receive assistance under clause 1; in 2003, the amount will be £8 million. In 2002, £1.8 million will be allocated for the encouragement of tourism; there will be £3.6 million in 2003.
When we hear talk of £1.6 billion over seven years, the English rural development plan sounds wonderful, but break it down into its constituent parts and we find a pretty thin diet—a limited amount of jam is being spread thinly through the rural economy to enable diversification to take place.
I conclude my remarks with an observation on another key barrier on which much work is needed. The rural White Paper produced by the previous Conservative Government addressed planning in the countryside. In fairness, the Labour Government have also done so. However, there is great feeling, especially among people who moved to rural Britain because they seek an idyllic life style, and opposition to substantial development. Development on farms will excite a large number of people.
It is clear that although planning guidance has been changed, we have not yet dealt with all the barriers to developments on farms. If genuinely new enterprises are to develop, there may be a lack of fit between the rural idyll and the needs of the farm. For example, access is one such issue. If an IT-based industry is developed within the curtilage of a farm, using redundant buildings, and 20 or 30 people use cars to go to those premises, one can imagine the concerns that will be expressed in villages.
I could continue, but such practical issues may act as a constraint on the type of diversification that the measure is supposed to address. I very much hope that when the election is out of the way, we shall return to a full, frank and public debate on and discussion of all these matters. It is important that we maximise the potential of the rural parts of the United Kingdom, just as we try to do in the urban context through inner-city regeneration. This is the equivalent challenge to inner-city regeneration; it just happens to be taking place in the countryside. The same difficult issues present themselves there as in urban Britain. Although I welcome the measure, it is but a small drop in what will be a big ocean when it comes to reviving the rural economy in this country.
§ 7 pm
§ Mr. David Drew (Stroud)
I am grateful to have the opportunity to contribute to the debate and apologise for not having being present for as much of it as I should have liked. Unfortunately, it clashed with an interesting scientific exposé of bovine tuberculosis which is ever 696 present in my constituency, and the next problem after foot and mouth. There is nothing new in our having to face up to animal diseases.
In our discussion on how businesses can be helped, we must get right the context within which they operate. The Bill is not an isolated measure; it is part of a raft of Government initiatives. Given that the Government are sometimes criticised for not knowing what is going on in rural Britain, or for not representing it, the hard and fast way in which they have introduced many different policies deserves close examination and hearty congratulations. The rural White Paper is an important document in its own right, and several initiatives have sprung from it. The Bill is not necessarily one of them, but we must start from the perspective that it is integral to it. The action plan for farming is central to the debate. Although we are not dealing with the immediate crisis, we are concerned about the way in which we can help farms and alternative businesses in rural Britain.
Some issues that I want to raise have already been mentioned; others remain to be highlighted. We must get the Bill right because businesses will need to understand it and call on the help that it offers. I welcome the Government's clarification of diversification as it relates to farming and other businesses in the rural economy. We need to build on that; we cannot wait for the market to make it happen. Intervention is necessary, and some of us want to see more of it. That policy can be delivered by direct Government support or by using the tax or rating system to encourage new businesses to set up, which hopefully will help existing businesses to flourish.
What I like so much about the Government's approach in the White Paper is that, rather than just talking about the need to help rural industry, they are providing it with resources. That was lacking in the previous Government's attempts. The Government are a decentralising Administration. They are giving resources to the first level of government—parishes and towns. Various schemes are under way, including the parish initiative for transport and the more effective use of resources to bring businesses into operation locally. In addition, we are starting to believe that we can lay down a minimum service provision. That links up with the Government's policy on retention and protection of rural sub-post offices. As I have said before, we need to bring that together and recognise how crucial transport is to rural Britain. We must provide genuine alternatives to the car so that people can get about if they cannot or do not want to drive.
I welcome the recognition of the important role played by tenant farmers in the rural economy and the difficulties that they face. We must give them particular help. Clearly, that has to relate to the nature of their tenancies. We also have to consider how we can encourage them and give them the wherewithal to diversify so that they can run other businesses alongside their farming activities. I hope that, as it develops, the Small Business Service will play a major part in that by giving advice and financial help. The countryside group, which was set up by the Gloucestershire development agency, is beginning to have an important intermediary role. It is helping to use the rural development regulations to find money that can be invested in different ways. Not only does that work at a county level, but it could be successful as part of a more decentralised structure. I believe that the organisation will take on other roles.
697 My only criticism of the Government is in relation to their approach to early retirement. That nettle will have to grasped, as I have said openly before. I welcome the gradual movement towards that. I understand the concern of my right hon. Friend the Minister of Agriculture, Fisheries and Food about pumping money into supporting dead weight—I do not use that term pejoratively, but in an economic sense. I realise that it would be better to front-end the money and ensure that it is provided effectively. However, an industry with an average age of 58 does not have the best future ahead of it. We must do something about that.
The Bill is part of a cohesive policy. We should not separate different aspects of that. As the official Opposition said, there is a danger of setting business against business if we do not handle the problem sensitively and sensibly. I hope that the Bill will help us to consider how we can keep shops in operation. They need to be able to source locally and get supplies from local abattoirs. Perhaps greater economies of scale will allow them to keep the sub-post office going. That could be achieved as part of the ratings system. Those are the very costs that businesses want to reduce and I am sure that we can help them to do that.
We are working through the problems created by the difficulties of the foot and mouth crisis. However, we must move beyond the specific help that is being offered and consider a cohesive way in which we can rebuild the food chain and offer services that do not rely purely on subsidy. Those businesses need to function in their communities in the long term so that people are willing and able to buy into them. It is important that they have a future, not only for the local communities, but, of course, for the people who run them.
I am always depressed by the fact that when the official Opposition have to find money for rural regeneration—whether it be additional help for rate relief or grants—their answer is to get it by the emasculation of the regional development agencies. I say categorically that if they want a complete vote loser in my constituency, that is it. The regional development agency is pumping in £90 million to overcome the decline of one key industry in Dursley in my constituency. [Interruption.] Conservative Members may laugh, but they should bear that fact in mind when the official Conservative candidate tries to defend their policy. They must understand that the local rural economy is dependent on the regeneration of that site and it will be greatly damaged if we get rid of the RDA without giving it a second thought. There is a total misunderstanding of the relationship between small communities in isolated rural areas and the market towns on which they depend. The whole point of RDAs is that they provide seedcorn investment to market towns, which creates employment for people in surrounding villages. Getting rid of the RDAs would be vandalism. They are supported not only by Labour Members but by businesses and communities who see the investment that they make. I hope that the official Opposition will reconsider, even at this late stage, their decision to find the money that they need by abolishing the RDAs.
I have become increasingly aware of how foot and mouth disease directly affects local authorities, which have a key role to play, because, as many hon. Members have said, they know the problems experienced by businesses and communities in their area. Even if we provide help from the centre, largely through mandatory 698 rate relief, local authorities have to be allowed a certain amount of discretion. That is the right approach, but we must not leave it to local authorities to find all the funds because that will cause them difficulty.
On Friday, I will meet the officers of my local authority to talk about the implications of its funding relief for businesses suffering in the foot and mouth crisis. I am sure that central Government will be able to find methods of making additional finance available, but unless we put together a comprehensive package for the rural economy, and not only for the foot and mouth crisis, local authorities will be in a difficult position. It has been said many times that that can only result in higher council tax charges and, potentially, a conflict between methods of raising money and of spending it. We must work with local authorities in rural areas to put in place a funding stream that works properly.
We must also consider how we value property and lock in place rate support. I know that the notes accompanying the Bill are merely explanatory, but they say that there is not expected to be much call for rate revaluation tribunals. A clear way to provide substantive help would be to reduce rateable values when businesses—particularly, but not exclusively, in rural areas—get into trouble. My experience is that it may be a long time before a tribunal hears an appeal, and if a business was in difficulty, a reduction in the rateable value could make a substantial difference. This is a question not only of resources but of people, and we need to involve them so that tribunals can be held as soon as possible.
I welcome the Bill, which shows that the Government are in tune with the help that is needed by our rural economy. Individual businesses are crucial to that economy. We need to keep shops and small firms operating, and the Bill will help us to do so. Clearly, it will be subject to further improvement. When the Government are re-elected, they should build on community regeneration, which is also crucial. With that in mind, I am sure that we will send the Bill on its way, having improved it, and put in place the rural support that is needed.
§ Mr. Owen Paterson (North Shropshire)
This is the first debate on the countryside that the Government have held since the foot and mouth crisis began. We have had three such debates in Opposition time and we have had statements from the Government, but we have not had a full day's debate, and that is appalling. The problem concerns not only farming but the whole rural economy.
I had a meeting with my county council chief in the early days of the crisis, when I also met the chief executive. In Shropshire, 12 per cent. of the population is engaged, directly or indirectly, in farming activities and 15 per cent. is engaged in tourism and related industries. I went to a crisis conference in Telford. My hon. Friend the Member for Ludlow (Mr. Gill) and I were the only MPs present, but 200 people came along at short notice to stress the immediate crisis that they are facing.
The Government set up the taskforce, but before that the Secretary of State for Culture, Media and Sport came to the Chamber to make a statement. I had already had letters and phone calls from people who were desperate because their business had simply stopped. I asked the Secretary of State whether he had talked to banks about loans or to the 699 Chancellor about rates and what he had done about promoting tourism. I was accused of being partisan and of ranting, which I hope you think is an uncharacteristic feature of my performance in the Chamber, Mr. Deputy Speaker.
§ Mr. Paterson
I am touched by that endorsement from my hon. Friend.
Three weeks later, the Minister for the Environment, came to the Agriculture Committee. He talked about the very same interest-free loans, rate relief and promotion and marketing, but he was only talking. The Government are "considering" and saying that they are "sympathetic", and the taskforce is "meeting", but where is the action? We have had an announcement on rate relief for businesses affected by foot and mouth. Businesses in my area went to Oswestry borough council about that, but the council had not been informed. Months after the crisis began, we have this puny little measure. It would be churlish to deny that it will help, and it will provide some small help to some businesses, particularly those which will have to diversify away from basic farming. However, it is too little, too late.
I would be grateful if the Minister paid attention while I give a few examples of local people who are absolutely desperate. I can see that she is in deep conversation with the Whip.
§ Mr. Deputy Speaker (Mr. Michael Lord)
Order. We must not have interventions from a sedentary position.
§ Mr. Paterson
Thank you, Mr. Deputy Speaker. I was just trying to get the Minister's attention. I want to be brief because I know that other hon. Members want to speak. I want to talk about the second largest industry in the rural sector, which is the equestrian business. It has a turnover of £2.5 billion, 2.4 million riders, 900,000 horses and 20,000 businesses employing 40,000 people, and that is excluding racing. In April, the industry lost about 50 per cent. of its turnover. In May, it is likely to lose 60 per cent. The revenue lost in April was £57 million, and the industry reckons to be losing about £29 million a week. Those losses are simply unsustainable by small country businesses, and the decelerator effect in the countryside will be massive. Farriers, horseshoe manufacturers, tack shops, saddlers, retailers, equestrian magazine publishers, specialist equipment suppliers, feed merchants and competition organisers will all be affected. They are short of cash.
The other day I went to a large, successful riding school whose name might make the Minister's ears prick up. It is called the Prescott equestrian centre, having the same name as the great Jaguar owner. The school is based in Baschurch near Shrewsbury. It was involved in classic diversification; large barns, originally set up for agriculture, were converted by Mrs. June Haydon. In the past 14 or so years, the school has created a successful business; it owns about 70 horses and employs 20 full and 700 part-time staff. When I went there the other Friday, it was quite dead, which is shocking. When one drives past, one can see that there are not many cars around; but to go to such a large establishment, with a huge indoor school, an outside showjumping arena and a dressage arena, and find no activity on a beautiful sunny morning in the run-up to Easter is shocking and brings home how devastating the crisis is.
The business has weekly overheads of about £3,000, but is nowhere near getting that back. Such businesses will not carry on without an immediate injection of cash to help cash flow, as we have suggested in our interest-free loan proposal, which is considerably better than the Government demanding 8.75 per cent. interest and collateral. As one farrier, whose business is down from 150 horses to just eight per week, told me, that is just a shovel to dig a bigger hole for one's grave.
Without being churlish, what is offered on rates on new businesses is welcome. However, Mrs. Haydon cannot touch it, as her business has been going for 14 years. Surely, it is iniquitous to create a division in the equestrian business. It cannot be fair that established businesses cannot take advantage of that fairly puny measure. The cost of business rates can make or break diversified business.
Another constituent of mine, Mr. Richard Matson from Twemlows Hall, had a substantial dairy and pig business, and has diversified. He set up an equine therapy pool for exercising injured race horses; a highly enterprising idea which required considerable investment. However, because of the racing season, it was open for only six to eight months a year and it simply could not bear the cost of business rates. In future, that sort of business would perhaps benefit from this fairly stingy measure. Sadly, however, it is too late for Mr. Matson, who had to close his business because he could not afford the business rates. He is bitter about the fact that the measure will apply only to new equine developments.
Mr. Matson also made the point that agricultural colleges pay no rates on riding stables, arenas or indoor schools, although they can use them for all sorts of purposes to do with horses. That seems to be another pernicious effect of a two-tier system of rating. It is not fair that established businesses should have to compete, first, with educational establishments that do not have pay rates and, secondly, with a new tranche of people coming in. There has to be a level playing field; if there is going to be a rebate, it must be available to all.
§ Mr. Gray
Does my hon. Friend not agree that, when the Government say that giving zero rating to equestrian establishments such as those that he has described will cost them £3 million, £5 million or £10 million, they are being slightly misleading? The moment that they get no business rates from a building because it is being used as a farm, which is zero-rated anyhow, all that they will be doing is giving up a potentially much larger figure. The cost to the Government would be nothing at all if they were to give such businesses a zero rate as well.
§ Mr. Paterson
I am grateful to my hon. Friend for his prescient comment. I was just about to go on to a similar point made by my constituent, Mr. Matson. My hon. 701 Friend gave an excellent speech and went into great detail about the impact of the measure on the horse industry; what he said is endorsed by Mr. Matson, who said:The most damning point of the document is the reference to cost. Other than administration costs this will cost the Government nothing. If it attracts new equine enterprises the Government/local authority will be in receipt of more business rates—albeit at 50 per cent.—than it would have been without the scheme.So my constituent endorses the exact point made by hon. Friend.
There is therefore not much risk to the Government. The measure demonstrates that they do not take the rural economy seriously. After three or four months of the crisis, this is the first Government debate that even touches on the rural economy; Members now have a chance to come to the House and debate the issue. It is interesting that only two Labour Back Benchers are present; throughout our debate, only one Liberal Democrat has turned up to make a brief intervention for a press release, and he has now bailed out. By contrast, numerous Conservative Members have participated, intervened and made valuable comments such as those made by my hon. Friend the Member for North Wiltshire (Mr. Gray).
§ Mr. Paterson
He may be a Whip, but there are great merits in being a Conservative Whip with a country background.
I shall conclude as I know that other Members wish to contribute. I welcome the idea behind the measure, which is that there has to be some diversification—which must, however, be uniform. Clearly, the equestrian sector is the largest area of activity in the countryside which will benefit from rate relief, but that relief must be uniform across the entire sector.
§ Mr. Tony Baldry (Banbury)
There was an outbreak of foot and mouth in my north Oxfordshire constituency which had a devastating impact not just on the farming community but on the tourism industry in north Oxfordshire.
Many people were confused about just who in Government had responsibility for responding to wider concerns about foot and mouth. For a long time, there has been a Cabinet Sub-Committee, chaired by the Minister for the Cabinet Office, but at no point in the disaster has she appeared on the scene. The Minister of Agriculture, Fisheries and Food then sought to answer questions on a wider brief, but he was overtaken by the Secretary of State for Culture, Media and Sport, who came to the House on a couple of occasions to make statements. Latterly, responsibility was given to the Minister for the Environment, and we were told that the Government had set up a rural taskforce.
My concern about the Bill, and my reason for wishing to speak this evening, involves the fact that, with the rural taskforce and the Bill, the Government are seeking to give the impression that they are doing an enormous amount for the rural community, rural tourism, village shops, and garages and pubs, when in fact they are doing precious little. The Bill is the sort of measure that will be spun by parliamentary candidates at public meetings in rural 702 constituencies in the next few weeks as an indication of what the Government are doing for the rural economy, when in fact they are doing nothing whatever.
I have constituents whose livelihood and business have been all but destroyed by foot and mouth. The Oxford canal, a beautiful and attractive canal, runs through my constituency, and goes from Oxford up to the Grand Union canal. Oxfordshire Narrowboats at Lower Heyford hires out narrowboats to people on holiday. However, at the outset of the crisis in early March, the board of British Waterways, rightly and understandably, closed all the towpaths. Effectively, no narrow boats could go up and down the Oxford canal or, indeed, any other canal, which of course meant that, almost overnight, Oxfordshire Narrowboats closed down, since it had no customers. Easter is its busiest time for bookings, but it received practically none until Easter week. I am glad to say that, from that week on, things started to improve slightly as the towpaths began to open. However, the closure of those paths was pretty devastating.
I wrote to Ministers asking whether the Government could explain what the rural taskforce would do for businesses such as Oxfordshire Narrowboats. The Under-Secretary of State for the Environment, Transport and the Regions, Lord Whitty, who, as junior Minister, wrote on behalf of the Minister for the Environment, telling me about things that the Government were doing that could assist my constituents—including providingin depth consultancy support via the Small Business Service helpline.Well, that is great and fantastic; it really cheered up my constituents, who were glad that there was a helpline for them to telephone.
I was also told that my constituents would receivea sympathetic approach to deferred and rearranged payments to Inland Revenue and Customs and Excise.That was really helpful, and it might marginally help my constituents with their cash flow. However, they have still got to pay the money; no one is going to say that there is going to be any rebate or remission on Customs and Excise duties or tax.
Then there was the suggestion that there would beextra cash support to enable rural local authorities to provide hardship rate relief—up to £1,290 for three months for a business with a £12,000 rateable value.That was the only positive help in the entire package for a business such as Oxfordshire Narrowboats. If it met the £12,000 rateable value criterion and if the local authority chose to provide rate relief, it could benefit from up to £1,290 off its business rates. Such businesses, which have been devastated by foot and mouth, would consider that pretty small beer.
The Bill does not do much more. It extends the 50 per cent. mandatory rate relief to all food shops in rural settlements of fewer than 3,000 people. I do not know about my colleagues' constituencies, but most of the villages in north Oxfordshire have more than 3,000 people; or the shops, pubs and filling stations that are left tend, by definition, to be in the larger villages and to serve several smaller villages. So I expect that the proposal will benefit practically no shops, no pubs and no fillings stations in north Oxfordshire.
Practically all the village shops, village post offices and filling stations in my constituency are in villages of more than 3,000 people, because that is the only way those 703 businesses have managed to remain viable at all. It will be interesting to see how many shops, post offices and pubs across the country are helped by the Bill—precious few, I suspect.
Why 3,000? If the Government really want to help village post offices, village shops and filling stations in rural areas, why not extend or give local authorities far greater discretion to extend rate relief to them? After all, local authorities know and should be able to decide locally which village post offices, which village shops and which village filling stations are worth supporting. The Bill gives local authorities scant discretion and will give—[Interruption.] If, instead of chuntering, the Minister of State would like to intervene, she is welcome to. I realise that we may be detaining her from her dinner, but there are many of my constituents whose businesses are in dire straits.
§ Ms Armstrong
I was simply saying that post office relief does not come within the terms of the Bill. It is covered by other legislation which is already in operation. It is also possible for businesses such as those that the hon. Gentleman describes in larger areas—not very small villages—to apply to their local authority for hardship relief. Their local authority has full discretion to award hardship relief, of which the Government fund 75 per cent.
§ Mr. Baldry
I am grateful to the right hon. Lady. Of course, she is right in her clarification about post offices. However, hardship relief is available only in the immediate circumstances of foot and mouth. The Bill, as I understand it, is intended to carry on for ever. It is not just for this particular period.
The right hon. Lady may wish to clarify the position, but if a post office or store in a larger village was having difficulties, it could not apply on that basis to the local authority for rate relief. The business would have to get over the hurdle of the case law relating to hardship. There is no statutory definition of "hardship"; it is entirely contained in case law. I hope that at some stage the Government will consider providing a statutory definition of hardship, to help local authorities to decide whether to give relief.
The Bill will give scant help to a very few rural businesses. I have a wildfowl sanctuary in my constituency. Mabel Warner, who runs it, told me that her busiest two months were February and March. At Easter, the big attractions open, so the sanctuary takes much of its money during February and March. As a consequence of closing because of the foot and mouth disaster, the business has been seriously affected. It is true that Mabel Warner can go through the rather cumbersome process of applying to the valuation office for a reappraisal of her business rates, but with the exception of a modest reduction in their business rates, if the overall rateable value of the business in question is less than £12,000, businesses such as the Wiggington wildfowl sanctuary will get no help at all from the Government.
As my hon. Friend the Member for Ashford (Mr. Green) said from the Front Bench, the Bill is unobjectionable. But I do object to the way in which it will be spun as being of substantial help to rural businesses and to those who have 704 suffered from the foot and mouth crisis. It will do nothing of the sort. I suspect that very few, if any, businesses in a constituency such as mine will be helped by the Bill.
Those on the Government Front Bench demonstrated some surprise when my hon. Friend the Member for Ashford said that the Conservatives could do and, I am sure, would do considerably better. One of the ways we would do better would be to save money by abolishing the regional development agencies. The right hon. Lady and any other Government Minister will always be welcome in north Oxfordshire—we have had precious few visits from Ministers in the past four years. Statistics seem to demonstrate that Ministers only visit target seats, but they are always welcome in north Oxfordshire.
If a Minister went down Banbury high street or Sheep street in Bicester and asked people the name of the local regional development agency, or even asked members of the chamber of commerce to name the regional development agency, I would be extremely surprised if, even at the chamber of commerce, more than 5 per cent. had ever heard of SEEDA—the South East England Development Agency. If SEEDA were abolished, it would be unmourned. No one from north Oxfordshire would waste money sending a wreath to the funeral of SEEDA. It is a total waste of money, so far as Oxfordshire is concerned.
We have no strategic interest in what is happening in the southernmost reaches of Kent or Surrey. Ours is a strategic area between the Thames valley and the west midlands, and the South East England Development Agency has been a waste of funds. Far better that such development agencies be abolished and the money given to provide real help to rural businesses.
At the general election, which I expect is not too far away, I very much look forward to going round the village shops, village pubs, village stores and filling stations in my constituency, explaining the genuine help that a Conservative Government can and will give them. That will not be spin; it will be solid substance. What we and the countryside require at this time are not gimmicks or a taskforce which does nothing but direct people to helplines. We want real assistance and solid support.
§ Mr. Nigel Evans (Ribble Valley)
I am grateful for the opportunity to contribute to this very important stage of the Bill's passage. As my hon. Friend the Member for Banbury (Mr. Baldry) pointed out, this is our first opportunity since the foot and mouth outbreak began to discuss in Government time anything that relates even remotely to the crisis. We have so far used Opposition days for all such debates. Indeed, the Liberal Democrats used part of one of their days for the same purpose. It is a great shame that the Government have not allocated a whole day for us to discuss the problems that all hon. Members who represent rural constituencies face with the appalling onslaught of foot and mouth.
My right hon. Friend the Member for Fylde (Mr. Jack) asked what the Archers would be thinking. Let me strain the comparison and say that Emmerdale farm would have closed down a long time ago. That would be nothing to do with foot and mouth, but part of the general rural crisis. No doubt a supermarket would be situated there by now.
The countryside is in deep crisis, but that crisis has not occurred only because of foot and mouth. It has been happening for several years, during which farm incomes 705 have declined so much that some farmers must dream about earning even the minimum wage. I have received a letter from Anthony Goldstone, who is chairman of the North West tourist board. He writes about the importance of tourism in the north-west, which provides about £1.5 billion a year and supports 7 per cent. of the work force. That is how important it is. His letter states:The current Foot and Mouth outbreak is putting at risk up to £8 million of tourism revenue and 200 jobs per week in the rural economy.
§ Mr. Paterson
Before my hon. Friend moves on from farm incomes, may I remind him that, under the Government whom he so nobly supported, total farming income doubled between 1990 and 1995? It has fallen by 72 per cent. since it reached those heights.
§ Mr. Evans
As my hon. Friend knows from his rural constituency, some farmers now earn less than £100 a week. The foot and mouth crisis means that some of them have been earning absolutely nothing. We should pay tribute to the agricultural charities. Without them, one of my constituents would have nothing. Fortunately, two charities stepped forward and gave her some cash, but, because of the sort of farming in which she works, she has been unable to move or sell any of her animals. No income whatever has been coming in, so her situation has been desperate. I pay tribute to all the agricultural charities, especially those that deal with daily calls from farmers who are stressed out and at their wits' end.
Let me return to Mr. Goldstone, whose letter states:The leadership and personal support of the Prime Minister and other Ministers in reassuring the tourism industry and encouraging the consumer, has been big on words, but short on practical substance.The Bill sums that up. As has been pointed out, hardly anybody will benefit from the amounts of money that are being provided, which are small in comparison with the deep problem that exists. I said that the help was a sticking plaster for a heart attack, and that is exactly what it is. The hon. Member for Leominster (Mr. Temple-Morris) said that I was exaggerating, but I am not. There are businesses in deep pain that need direct and immediate assistance from the Government.
Interest-free loans are at the top of Anthony Goldstone's list of suggestions. Why cannot we have such loans? The Opposition have been suggesting for several weeks that they should be introduced. They should be provided now. It is not as if businesses can wait much longer. No doubt many have already closed and laid people off. They need the money now. Many small businesses owe money to other small businesses that are equally affected by the outbreak of foot and mouth. If they could only get access to an interest-free loan, they could start to pay off their debts to other smaller businesses. The money would then start to fuel the economy. The Chancellor of the Exchequer should like that idea, as it would not cost him anything in the long term. Once businesses start to earn a profit again, they will begin to pay the money back, so the Exchequer will not lose out. If businesses stay in business, they will pay taxes in future, but if they go out of business, they will pay no taxes whatever. I ask the Government yet again to consider the proposal.
Earlier today, I asked the Secretary of State for Culture, Media and Sport whether he had made representations to the Chancellor on that exact point. He did not answer my 706 question. Of course, that was no surprise, as he did not answer any of the questions that he was asked today, but as he did not respond to my specific point, I can believe only that he has made representations to the Chancellor about the matter. We are told that the Chancellor is awash with money, including the £22 billion gained on licences for third-generation mobile phones, but he must have said no. For some strange reason, he does not want to help out the affected businesses.
Anthony Goldstone ends his letter by stating:Importantly, we are not currently talking about recovery, but survival. This is a passionate, fighting industry, usually a good news industry. It will not survive without significant support. The situation is critical and urgent assistance is long overdue.The tourism industry needs your help now more than ever before.I ask the Minister to consider carefully what Mr. Goldstone says on behalf of the North West tourist board. I suspect that he speaks on behalf of tourist boards throughout the country, which all feel exactly the same: they need assistance now.
It is a great shame that the Minister for the Environment, who has responsibility for the rural taskforce, is not using this debate to propose a more substantial package of measures than the Bill. We have said that we will take anything that the Government are prepared to offer, but we must be realistic. The Bill will be spun out of all recognition and presented as the great saviour for rural businesses throughout the country, but it is nothing of the kind. A lot of the farming and tourism businesses in my constituency will not benefit from the Bill at all. The Government keep saying "Diversify away from farming, please", but from where will businesses get the money to make the capital investments that they need to diversify in the first place?
I remember when the Prime Minister visited a farm in the south-west that had diversified. I think that the visit occurred about two years ago, and that the farm in question was running a form of restaurant. However, not every farm can turn itself into a restaurant, and the Bill does not allow such farms to benefit from the skimpy offering that is being made anyway. We must be realistic about what activities farms can diversify into.
§ Ms Atherton
I was present when my right hon. Friend the Prime Minister visited the diversified restaurant to which the hon. Gentleman refers. Farmers from a range of industries were also present; one was a cheese maker who had received £500,000 of Government support to enable him to create his Cornish cheese company. The hon. Gentleman is slightly off target.
§ Mr. Evans
I am never knowingly off target; the crisis in farming means that diversification is a problem. Those who want to diversify should be given every encouragement, but we must remember that many farmers want to get on with farming. There are posters throughout the countryside that say, "Keep Britain farming." That is exactly what we should be about, but what can we do to help farmers to keep on farming? By all means, we should support those who want to diversify and who have good ideas about that, but we must also recognise that if all farms turned into restaurants, it would do them no good 707 whatever. In three years, we would be talking about introducing a recovery package for every restaurant in the country.
§ Mr. Gray
The Prime Minister is no great expert in these matters. Does my hon. Friend remember the remarks that the right hon. Gentleman made about foot and mouth about a month ago in Prime Minister's Question Time? He said that one thing that he would do to help farming would be to remove business rates from farms. Of course, he did not realise that farms do not pay business rates in the first place.
§ Mr. Paterson
Does my hon. Friend agree that although the hon. Member for Falmouth and Camborne (Ms Atherton) described a meritorious enterprise in her intervention—which might have been described as valedictory—it would have taken time to develop the cheese business to which she referred? At the conference that I attended in Telford, it was clear that we had an immediate crisis. These people need cash now, for cash flow reasons. There is no time for investment or marketing; they need cash, and the only answer is an immediate, interest-free loan such as that which we propose.
§ Mr. Evans
An interest loan is little use to businesses with no money coming in and debts piling up. The chief executive of my local council spoke to me about the relief that the council could give on business rates and council taxes. He said that the council had to be realistic because those were the bills that farmers would shelve immediately. People with no money and no access to further loans would put their council tax bill and business rate bill at the bottom of the pile. If they had any money left, they would use it to pay their suppliers or as a means of keeping the business going.
So let us be realistic about the support that exists now and about the help for which businesses are crying out. Three weeks ago, I met 30 business men in the Parker's Arms in Newton. They were crying out for help and the situation has got no better for them. Unfortunately, Easter was not the great gold rush to the countryside that we all hoped that it would be. Those business men thought that if they could get access to cash now, it would greatly assist them and boost their businesses. It would be a lifeline. By all means, let us look at a recovery package afterwards, but let us have a survival package now.
I know of no patient who has died and gone on to recover. When a business dies, that is it. The only thing that remains is to bury or burn it. We do not want businesses to collapse when there is a sensible, cost-effective means of giving them a lifeline, which, in this case, is the loan that we are asking for.
The Prime Minister is pretty good, during a general election build-up, at announcing measures that he thinks will be popular, irrespective of whether they cost him 708 nothing, such as the baby bonds that were announced the other day. They will cost the Government nothing for 18 years and will no doubt all be grabbed back in the form of higher education tuition fees by the time people turn 18. He still has a few days to come forward with an interest-free loan for rural businesses. If he announces it now, he will have the full support of Conservative Members. We shall not say that he is electioneering; we shall simply welcome the fact that that money is coming through. I ask Labour Members to pass that message to the Prime Minister, who does not come here very often. Let us give those businesses the support that they desperately need now.
What has shocked us all about foot and mouth is the inter-dependence of many businesses on the countryside generally. It struck me as surprising because I had not given it much thought. The crisis has affected feed merchants, those who sell cars and machinery to farmers, and other businesses involved in tourism. A window cleaner even came to see me, saying that much of his business had disappeared because of foot and mouth, not just because people could no longer afford to pay to clean their windows when money was tight, but because he could not gain access to many houses.
As was mentioned by a Labour Member following last week's statement by the Minister of Agriculture, Fisheries and Food, the problem also affects trout farms. Nobody is fishing much because people cannot cross farms, and the trout farm in my constituency has a real problem in terms of the welfare of the fish. As they grow, they become vicious in a confined space. The owner told me that unless he can start to get rid of some of his stock, he will have to start killing them. The months of February to May are crucial for trout farmers, as that is when they have to get their stocks out. After that, they have had it. We must therefore look at all sorts of ways in which we can help such businesses.
I also had a phone call from someone who runs some tea rooms—that is why I mentioned tea rooms earlier—in a village in my constituency and who had to get rid of their staff and close, hopefully temporarily.
Sadly, the people whom rural businesses employ are often the wives or husbands of farmers, who work in other businesses to help out with their income. They do not have just one job, although given the hours that they work, one would think that they could do no more. Helping out in the tourism trade gives those people another source of income. We should help those people, which is why I could not understand the exemptions in the Bill—which does not go very far anyway—for catering and confectionary businesses.
I hasten to add that I have no interest to declare. The only business that I possess is in a very urban area and I am delighted on this occasion not to declare an interest for having a business in a rural area.
I do not understand the exemptions. As my right hon. Friend the Member for Fylde said, the confusion and stress caused by the discretion in the Bill will lead to many arguments because people will not know whether they qualify. The Minister was nodding when it was suggested that some guidelines should be published explaining to people exactly who is eligible. People should be clear about who is eligible once and for all. I suspect that the Government will spend more on the 709 booklet and on advertising the scheme—we know that they spend a lot on advertising these days—than they will ever spend on the scheme itself.
When the Minister replies, will he say something about the National Assembly for Wales and how it will run the scheme? I gather that it might decide not to introduce it at all. I understood from the Minister that no extra money would come in from the scheme, so it would have to be paid for from existing budgets. That would mean that other expenditure would have to be cut. I suspect that nothing much will be cut and that more will be spent on bureaucracy than on the scheme.
Will the Minister also say something about assistance to local authorities? I understand the 50 per cent. mandatory grant, but not the discretionary aspect. My local authority tells me that it is already strapped for cash. Many rural businesses are tightly balanced. Many are already applying to their local authority for help with their business rates. Once they start applying for this scheme as well, many local authorities simply will not have enough money. They will have to start putting up council taxes by an enormous percentage. The Government need to look at that again.
On diversification, the Government need to get their strategy together and decide what they want farming in this country to do. The Prime Minister says that he wants a fundamental review of farming once the crisis is over, but we need to know the Government's strategy for farming. Do we want to ensure that our farmers, who love their industry and are committed to it, and who work all the hours that are sent in their industry, to continue farming? I hope that the answer is yes.
Farmers' tending of the countryside is value added. They do it for nothing; it is simply a by-product of farming. We now know how important that is because of the number of tourists who have stayed away from the countryside. People go to the countryside because it is beautiful and we should ensure that farming is in such a state that it can continue to produce the goods and at the same time make a profit. Farmers at my surgery say, "Nigel, all I want to do is make a living." The treaty of Rome contains a paragraph saying that that is exactly what farmers should be allowed to do. If that requires a fundamental review of the common agricultural policy, let us have it. However, let us not have the same old CAP reviews that always cost more money. We spend billions on such reviews, while our farmers do not get the money through.
It would have been far better if the Government had used this opportunity to present a package of measures such as the £10,000 loan, which would help kick-start many businesses that are on their uppers. Over the past four years, the Government have piled billions of pounds of extra taxation on rural businesses. Today, they are giving back crumbs and we are supposed to get on our knees, say thank you and praise St. Tony. It simply will not happen.
We need honesty in food labelling so that people who want to buy British products can do so in the sound knowledge that the products are British and do not come from somewhere else. British products must not be those that are put on a British farm for a day or products that have simply been processed here. We also need equality in the treatment of goods that enter this country. I am proud that we have high standards and I applaud the 710 Government for imposing them, but the Government should go one step further and ensure that all the countries with which we trade match our standards.
I hope that the Minister will be able to answer some of the questions that we have raised today. I also hope that the Minister for the Environment, who is responsible for the rural taskforce and who waltzed into the Chamber briefly during the debate, will come to the House—before the Prime Minister goes to Buckingham Palace to ask for a Dissolution—to introduce a real package of measures. Such a package would not need spinning, because the farmers and people involved in tourism would say themselves that it was good news.
I hope that the Government are not going to spin this little measure today as the great saviour of our farms and our tourism industry, which are on their knees and need the Government to listen to them. They need the Government to act, and the Government have failed to do that to date.
§ 8 pm
§ Mr. James Paice (South-East Cambridgeshire)
I start by declaring my interest as shown in the Register of Members' Interests. I see that the Minister for Local Government and the Regions, the right hon. Member for North-West Durham (Ms Armstrong), wants to have a look at the register. I have a smallholding and an agricultural building and, therefore, on some basis, I might gain from the measures. The right hon. Lady, with her inquisitive mind, no longer needs to bother to look it up; I have told her.
What really matters is the issue raised by my hon. Friends the Members for North Shropshire (Mr. Paterson) and for Ribble Valley (Mr. Evans): that, despite the fact that foot and mouth has been ravaging the countryside for two and a bit months now, and that we have not had a single debate in Government time on that dreadful issue or on the way in which it has been handled, the Government can find a whole day for a Bill with just three substantive clauses, for which the Government ran out of speakers by 7 o'clock. They can find time for that, but not for a debate on the much bigger issue that faces the countryside.
When we consider that it is now six weeks since the First Reading of the Bill, we can understand that the Government are not using the utmost haste to help farmers, even in the way that the Bill proposes. We have heard a number of speeches, including several swan-songs from the Labour Benches: one voluntary one and some involuntary ones. I am impressed by the hon. Member for Stroud (Mr. Drew), who seems to believe that the population of Stroud think, sleep and talk of nothing but the regional development agency. That demonstrates why, in five or six weeks' time, the hon. Gentleman will be looking for a new career.
The background to this debate is the state of agriculture today, after four years of Labour government. My hon. Friends have given various statistics, including the fact that income from farming is down 27 per cent. on a year ago; of course, that is 27 per cent. down on what was already a record low. If we consider agriculture sector by sector, we find that for pigs and poultry, net farm incomes showed a loss of £8,000 a farm last year, compared to a profit of £15,000 two years ago. In the dairy industry, lower support prices—a major factor in the drop in milk prices—have meant that net farm incomes have dropped by 41 per cent. to £8,000 a farm in the past two years.
711 In the cattle and sheep sector, the incomes of lowland producers fell to £1,500 last year, and the incomes of hill farmers fell by 50 per cent. to £2,500. Even the arable sector has not escaped. The net income of cereal farms has dropped by 80 per cent. to £8,500 a farm. Not one of those sectors has earned the equivalent of the minimum wage in the past 12 months. The state of agriculture today is such that the net worth of farmers is 25 per cent. less than it was four years ago. That equity has gone out of the agriculture industry. Agriculture's contribution to the national economy is now down to just 0.8 per cent.: it was 1.6 per cent. just five years earlier. Its contribution has halved thanks to many of the Government's policies.
This debate is not just about foot and mouth disease. Indeed, it is not about the foot and mouth crisis at all, although my right hon. Friend the Member for Fylde (Mr. Jack) and my hon. Friends the Members for Banbury (Mr. Baldry), for North Shropshire and for Ribble Valley all quite rightly made the point that this measure has to be seen against the background of the crisis, which has come on top of all those years of decline.
It is always pleasant to stand at the Dispatch Box and welcome the conversion of the Government to a policy that was introduced by the Conservative party. On 21 May 1998, I stood here in an agriculture debate and called for rate relief to be extended to non-farming businesses on farm premises. That is recorded at column 1172 of Hansard. The response of the right hon. Member for Birmingham, Perry Barr (Mr. Rooker), who was then Minister of State responsible for these matters, at column 1173, was that he was not sure that he could agree with me on the subject of rates. I always welcome a sinner who repenteth.
I realise that the Conservative party understands more fully the situation in the countryside and the needs of agriculture. It is absurd that business rates are not paid if a stable or loose box contains pigs or calves, but are paid if it contains a horse. But, as my hon. Friend the Member for North Wiltshire (Mr. Gray) said, the situation is not even as clear as that. If a heavy horse is kept in a stable, rates are not paid, but if a light horse is kept in it, they are. That is plainly nonsense. Simply to extend the idea of 50 per cent. rate relief, as the Bill does, does not overcome that completely anomalous situation.
We must also consider extending the definition of agriculture to provide the agricultural exemption for land-based industries that are closely allied to mainstream agriculture. I mentioned the horse world, but another important sector is the game farming industry, in which we can see comparisons with what goes on elsewhere in Europe. Anyone who studies the sporting magazines in the spring will find a legion of advertisements for French-sourced game birds and eggs. This country is currently receiving, week after week, tens of thousands of French game eggs. In a few weeks' time, it will be receiving day-old—and older—chicks. The French Government value the role of game farming in the national agricultural and rural economy: this Government do not. It is essential that game farmers should be considered part of mainstream agriculture—as they will be under a Conservative Government—and receive full agricultural exemption.
712 We have heard a great deal about the role of diversification. Hon. Members on both sides of the House have made the point that it is not necessarily the panacea for all farming. Indeed, most agricultural advisers to whom I have spoken over the years have said, "Do not even contemplate diversification or think about a different sector of enterprise until you have got your farming business as efficient and modern as possible." For most people, diversification is merely an adjunct to their farming business, not a wholesale replacement for it, although there are examples of diversification taking over. As my right hon. Friend the Member for Fylde said, after the catalogue of disaster in the agriculture industry that I have recited, the question that arises is, who has the resources to invest in such diversification enterprises in the first place?
We cannot talk about the future of farming without considering its role in the countryside. Many hon. Members have referred to the tourist industry. My hon. Friend the Member for Ribble Valley referred at some length to the importance of that industry, and to why it is suffering. We have to understand that the features that encourage tourists to come to the British countryside are there because of farming, not in spite of it. Tourism is the root of so many farm-based visits. Visits to open farms, pony trekking and all sorts of other activities stem from people wanting to enjoy our countryside.
Listening to the Government, one sometimes might believe that the landscape existed in spite of farming, not because of it. No one planned the landscape and then considered how to farm it; it is the result of millenniums of farming. Farmers have created it for farming needs. To claim, as Ministers often do, that farming no longer matters and that we must concentrate on the landscape and the environment, turns thousands of years of agricultural development on their head. Only a party that did not fully understand the countryside could make such a claim.
The debate has raised several issues. First, there is the problem of the five-year period. It appears that, for the first five years of the Bill's existence, people who fulfil the criteria will receive the mandatory relief, but that those who take up the option in four years' time will receive only one year's relief. It is common sense to provide the relief only as a start-up aid, but granting it solely for five years, starting today, is not. The Minister suggested that she did not understand that the Bill would provide for that. The measure should grant any business five years' relief as long as the legislation remains in place. Businesses would thus know that they had five years in which to ease into paying full business rates on their diversification.
Secondly, let us consider third-party occupiers. Again, the Minister implied that her interpretation was different from that of Opposition Members, including the hon. Member for Somerton and Frome (Mr. Heath). The purpose of diversification is to generate further income, and most business advisers would tell farmers to get their farming right before starting to adopt skills that they did not have. Many farmers would prefer not to move into new ventures, but to allow others to use their buildings for such purposes. Various proposals for third-party occupancy of a stable include garden machinery, metalwork, woodwork and even do-it-yourself livery. It is therefore essential for discretionary rate relief to apply when the farmer leases part of his premises to someone 713 else. It is part of diversification and an attempt to generate income from agricultural assets, albeit by using them—perhaps temporarily—for some other purpose.
Thirdly, we should consider several activities that are closely allied to agriculture. It is absurd that neither mushroom farms nor on-farm processing are deemed to be agriculture. For years, farmers carried out some processing in the dairy sector, but that is no longer considered to be agriculture. Machinery rings constitute an effort by farmers throughout the country to share the enormous overheads on farm equipment. They are not deemed to be straightforwardly agricultural, and are therefore not entitled to the exemption.
Fourthly, we should examine planning. My hon. Friend the Member for North Wiltshire made several comments that excited the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who has apologised for her absence during the winding-up speeches. My hon. Friend's point was crucial. If farmers are to generate extra income, a relaxed attitude to planning is essential. The Conservative party will therefore provide deemed planning consent for all farmers for use of up to 1,500 sq ft of their agricultural property for non-farming activities.
Several hon. Members have referred to equestrianism, and my hon. Friend the Member for North Wiltshire brought his considerable expertise and knowledge to bear on the subject, including the dreadful decline in riding schools of some 21 per cent. in the past 12 years. Indeed, 272 such schools closed in the past 12 months. As my hon. Friend said, the Association of British Riding Schools and the British Horse Society have expressed anxiety that the aid for which the Bill provides could disadvantage existing equestrian establishments compared with new schools. He also reminded us that the horse industry is the second largest in the rural economy, accounting for some £2.5 billion.
The Government claim that providing five years' relief for start-up businesses was the right way in which to avoid the long-term disadvantages to which my hon. Friend the Member for North Wiltshire referred. I do not believe that that is the case. There is a problem of striking the right balance between helping new businesses without disadvantaging existing businesses. That principle extends beyond equestrianism, but the only way to tackle the problem for equestrianism is to adopt the suggestions of my hon. Friends the Members for North Wiltshire and for Ashford (Mr. Green) and provide the full agricultural exemption for all new and existing equestrian businesses.
The Bill also refers to village shops and we have had much debate about tea shops and what can be classified as a food shop. In my constituency, post offices are under threat in many villages—for example, in Fordham and Cottenham. Neither the Bill nor the Postal Services Act 2000 will help them because Government policies have put the future of our sub-post office network at risk. That problem cannot be resolved by a small amount of rating relief.
Clearly, it would be absurd to oppose a step in the right direction, especially as Conservative Members called for it three years ago. As my hon. Friends said, it will not make much difference on its own and, as I have shown, the foot and mouth crisis follows many years of declining incomes.
Some people view the crisis as an opportunity for restructuring. Indeed, the Minister of Agriculture, Fisheries and Food described that opportunity only 714 yesterday as the silver lining to the foot and mouth cloud. Many farmers will find that comment offensive. It is offensive that anyone could find a good story in so much tragedy. Reform of agriculture policy is essential and overdue, but doing it on the back of a national disaster is bound to lead to a distortion of long-term policy.
Farming is and must remain the centre of the rural economy; it is not simply an add-on. Many other rural businesses depend for their livelihoods on trade with farmers. Until we develop policies that allow farming to continue, measures such as the Bill will ultimately fail. We must restore agriculture to the position of strength that it enjoyed only five years ago.
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Robert Ainsworth)
I am pleased to respond to the debate. Over the weekend, I contracted some sort of germ and I sound like a tractor that needs its tappets adjusting. I apologise for that, but I hope that I can make myself understood.
It has been acknowledged during the debate, albeit grudgingly by some Opposition Members, that the new rate reliefs for which the Bill provides will help farmers and village communities. The measure fulfils commitments that we made in the action plan for farming, the local government finance Green Paper and the rural White Paper. Farmers who wish to diversify will pay less to set up new, non-agricultural businesses, and more help will be given to village businesses to provide essential services to the community.
The National Farmers Union and other rural bodies have welcomed our proposals for farm diversification, and a wide range of respondents to the local government finance Green Paper welcomed our proposals for extending village shop rate relief. The Country Land and Business Association has welcomed the Bill; it has written to my right hon. Friend the Minister to urge its implementation as quickly as possible.
Many hon. Members have contributed to the debate. I apologise in advance in case I do not pick up all hon. Members' points. If I miss any and hon. Members raise them with me later, I shall ensure that they receive a response. I shall do my best to respond to as many points as possible now.
In what he described as his swan-song, my hon. Friend the Member for Leominster (Mr. Temple-Morris) spoke knowledgeably about his constituency and also about wider issues of policy. He said what a good time he and his constituents had had under the present Government. I hope that when he considers what a good time he has had under the present Government, he will not forget what a wonderful regional Whip he had for most of that time.
My hon. Friend the Member for Falmouth and Camborne (Ms Atherton) welcomed the Bill, but asked—as did my hon. Friend the Member for Stroud (Mr. Drew)—for it to be part of a more comprehensive review. Indeed, both recognised that the Bill constituted only a small element of a more comprehensive programme.
A procession of Opposition Members suggested that the Bill did not do this, that or the other. In fact, the Bill introduces two measures, in response not to foot and mouth but to the rural White Paper. In an intervention, 715 the hon. Member for Banbury (Mr. Baldry) suggested that our proposals had been plucked off the shelf and presented at the last minute. If he had read the White Paper—as we would expect him to, as a Member representing a rural community—he would have seen the proposals on pages 25, 89, 96 and 97. I commend the document to him and hope that, even at this late stage, he will read it.
My hon. Friend the Member for Falmouth and Camborne and several others asked about the definition relating to food stores. They asked whether, if hot food—not surprisingly, my hon. Friend mentioned pasties—was served as a secondary operation, relief would be ruled out. The store's main business must be the provision of food: if hot food is provided as a side activity, it will not be ruled out.
The hon. Member for North Wiltshire (Mr. Gray) got into a bit of a tangle in regard to hereditaments. In terms of rating law, a hereditament is any unit of property that is subject to business rates. References to hereditaments in the Bill mean that all farm premises that are currently exempt from business rates which would immediately become liable under present legislation in the event of diversification will receive relief under the Bill. The issues raised by the hon. Gentleman about inheritance have nothing to do with the Bill, and he need not worry on that score.
§ Mr. Gray
The Minister makes an interesting point. He might like to have a word with the House of Commons Library, which has given me a four-page extract that is all about hereditaments. I still cannot pronounce that word as well as the Minister, despite his flu. Every single definition suggests that a hereditament must be capable of being inherited if its holder dies. At no stage does the extract say what the Minister has just said.
If the hon. Gentleman will not be reassured by me, we may have to engage in lengthy correspondence, which will bore both him and me.
Along with others, the right hon. Member for Fylde (Mr. Jack) raised the issue of definitions of a rural area. Discretionary relief is available to all businesses, but the special grant is being made available to local authorities that are looking after completely rural areas. Given that the problems experienced by the rural community have a specific and greater impact on totally rural areas, 151 local authorities have been defined as needing additional assistance. There is nothing to stop local authorities that straddle rural and urban or rural and suburban areas giving rate relief to businesses in difficulty; central Government pick up most of that in any case. It was felt, however, that additional help was needed for local authorities representing remote and totally rural areas because of the disproportionate impact on them. That is the only reason and, as I have said, it does not prevent other businesses from being eligible.
The right hon. Gentleman asked about the population limit of 3,000, and wanted to know how it would work over time. A limit must be drawn somewhere, and the measures we propose are designed to maintain the viability of small rural areas. It is for local authorities to keep registers detailing which settlements in their areas contain more or fewer than 3,000, and which will or will not be eligible for relief on that basis.
716 The hon. Member for North Wiltshire mentioned stud farms and other horse interests. He will know that stud farms already benefit from reduced rates: they all receive a reduction of £2,500 in their rateable values, currently worth a maximum of £1,075 off their rate bills. We propose to increase 1he reduction to £3,000 to bring it into line with the maximum mandatory relief for new farm enterprises, which is worth £1,290 off the rate bills of all stud farms. The Bill will extend the discretionary top-up relief for the farm diversification scheme to new stud farms on the terms that apply to other farm businesses.
Several Opposition Members, including Front Benchers, mentioned the apparent rate relief anomalies arising from the exemption of agricultural land from business rates. I should point out that those anomalies have existed for a long time; indeed, they existed throughout the 18 years for which the Conservatives were in power. Opposition is a wonderful way of becoming enlightened, and Opposition Members seem now to have discovered the existence of those anomalies, which they have described as disgraceful. I simply remind them that they did nothing about them when they were in government, and that they did nothing because the anomalies are greatly complicated and difficult to remove. Any attempt to redefine agriculture to remove those anomalies would have to be very carefully thought out, or even greater anomalies could be created.
The hon. Member for Somerton and Frome (Mr. Heath) said that those who are not in designated areas could be excluded from the relief scheme. However, I think that I have already addressed that issue. He also said that he believes that there should be fundamental reform of the rate system. In last year's local government Green Paper, we consulted on that issue and proposed a rate relief scheme for all small businesses. Although there will have to be continuing discussion on the issue, any attempt to address it will, as I said, give rise to various anomalies.
The hon. Member for Somerton and Frome also asked about the need for primary legislation to provide relief for shops—whereas such legislation was not necessary to provide relief for garages and pubs—but he seemed unable to understand the answer I gave him. I tried to answer the question as clearly as I could, and it is very difficult if he cannot or will not understand what I say. However, the issue is very simple. The original legislation refers specifically to sole general food businesses, and that provision cannot be modified without further primary legislation. Such a situation did not pertain in the legislation on garages and public houses.
Opposition Members have said that the Bill does not tackle the problems and issues facing rural Britain. However, we have consulted on our proposals and said that we would introduce them at the earliest possible opportunity. We are doing so. Consultation ended on the same day that the Bill was presented to Parliament, and—with the co-operation of the Opposition—we now have a parliamentary opportunity to implement those proposals. We should take that opportunity.
No one is trying to suggest that our proposals are the answer to every question. Nevertheless, Opposition Members should recognise that, since 1997, the Government have taken various action to provide financial assistance to farmers. The fact is that £1.35 billion has been injected into the sector, including about £785 million in agrimonetary compensation and annual supplements of about £3 billion in direct common 717 agricultural policy payments to United Kingdom farmers. Several initiatives introduced in early 1998 were worth more than £150 million, including £85 million of agrimonetary compensation. In November 1998, a further £120 million aid package was introduced.
All of those actions were taken before our current efforts to deal with the current difficulties caused by foot and mouth. Opposition Members who say that the Bill is a response only to the current difficulties are deliberately ignoring our long record on providing assistance to the sector.
§ Mr. Jack
The Minister was very generously dealing with the points that hon. Members have raised today, many of which concerned clause 1 and the question of whether third parties who invested on a farm would be eligible for help. Clarification of the point is needed, and I should he grateful if he would provide it.
Small businesses that fall within the definitions and scales provided in the Bill—in relation to exempt agricultural businesses and non-exempt agricultural land, for example—will be eligible. The businesses do not have to be run by farmers themselves. Farmers may well have someone else to run the businesses on those premises, thereby constituting diversification. That is not necessarily a problem, but we may need to spell things out in Committee and make people understand exactly what we are proposing.
Conservative Members said that they would do a lot more were they to get back into power. They went on to say that the main way in which they would pay for that would be to abolish regional development agencies, by which they would save more than £100 million. However, the administration costs of RDAs was only £62 million last year—8 per cent. of their total spund—most of which was spent on the wages of those employed on regulatory programmes.
718 If the Conservatives are to transfer the powers and funds of RDAs they will have to keep the staff in employment, and because they will lose the economies of scale, they may employ far more and at a far higher cost than is the case at present. Even that ignores the fact that the Conservatives are effectively double counting savings that do not exist, because the shadow Chancellor has already spent the money from the abolition of RDAs. It is already part of the £16 billion worth of cuts that will pay for the tax cuts that the Conservatives are promising.
Are Conservative Front-Bench Members telling us that they will not follow that programme and would not make those tax cuts because the money that the shadow Chancellor has already spent on them will be redirected to additional assistance for the farming industry? They must say one thing or another—they cannot simply double count money that is probably not there in the first place.
In conclusion, the Bill takes forward important measures that provide rate relief for rural businesses. It will help farmers to diversify into non-agricultural activities by reducing the costs of doing so, and it will ensure that all food shops in small villages benefit from mandatory rate relief in addition to the sole general store. These measures are not the answer to the recent problems facing the countryside, but they are part of a continuing programme introducing measures to assist diversification, the strengthening of the rural economy and the viability of life in small villages. The Bill is part of the proposals contained in the rural White Paper last year. Our countryside needs effective measures to eradicate the current foot and mouth problem as well as on-going assistance, and that is what it will get from the Government.
§ Question put and agreed to.
§ Bill accordingly read a Second time.