HL Deb 22 January 1970 vol 307 cc229-38

My Lords, I beg to move that this Bill be now read a second time. The purpose of the Bill is to enable my right honourable friend the Secretary of State for Scotland to give intensive agricultural units the same measure of relief from rates as is given to industry. The background is that court decisions on the interpretation of Section 7 of the Valuation and Rating (Scotland) Act 1956 have established that intensive livestock buildings are liable for rates, unlike other agricultural buildings.

This development caused the National Farmers' Union of Scotland great concern, and they asked the Government to amend the law so as to extend full de-rating to all buildings used for agricultural purposes. These representations were very carefully considered by the Government. We concluded, however, that it would be right to consider the position of agriculture in the general review of local government finance following the Reports of the two Royal Commissions on Local Government, and consequently that it would be wrong and prejudicial to the outcome of the review to follow the line of action advocated by the farming interests. But my right honourable friend the Secretary of State felt that there was considerable force in the argument that intensive agriculture in Scotland tan take advantage neither of 50 per cent. industrial derating nor of full agricultural derating. He therefore accepted that, without prejudice to the outcome of the review, intensive agricultural buildings in Scotland should be derated to the same extent as industry; and on July 24 of last year he announced his intention to introduce legislation enabling him to put that decision into practical effect. That then is the background to this measure. Let me now proceed to the Bill itself.

Clause 1 contains the main provisions of the Bill. Subsection (1) would enable the Secretary of State to make by Statutory Instrument an order reducing the rateable value of lands and heritages entered in the valuation roll and consisting of one or more buildings (as later defined) used solely for the purpose of breeding or keeping livestock. In adopting this method of derating the Bill follows closely the pattern of the analogous provisions for derating industry which are contained in Section 10 of the Local Government (Financial Provisions) (Scotland) Act 1963.

Dwelling-houses are explicitly excluded from the scope of the reduction in rateable value, in case it should be argued that a bothy or cottage occupied along with an intensive unit was used solely for the purpose of livestock keeping and so should be derated. This would run counter to the general provision that dwelling-houses are liable for rates. In addition, subject to important provisions in subsections (4) and (6) which I shall explain a little later, a building must be used only for livestock keeping or breeding and for no other purpose, such as research or trading, if it is to qualify for derating; hence the qualification that it must be used "solely" for the purpose of the keeping or breeding of livestock. Here I might point out an important feature of this clause, on which there may have been some misunderstanding. The clause refers only to lands and heritages which are entered in the valuation roll. These words make it clear that there is no alteration in the position of those livestock units which qualify for full agricultural derating under the present law. Only those which do not qualify for this full derating are affected by the Bill, which creates no new liabilities to rates.

An order made under subsection (1) could be effective from at earliest the year 1970–71, and would remain in force until revoked or superseded by a new order as provided under subsection (3). A new order will not be needed each year. The order-making power will not lapse after first being used, and it would be possible for the Secretary of State to make an order to be effective from any specified year subsequent to 1970–71. Subsection (2) provides that an order made by the Secretary of State in exercise of the power provided by Clause 1(1) is to be subject to Affirmative Resolution procedure in the House of Commons.

Subsection (4) of Clause 1 provides for cases where intensive livestock keeping or breeding is carried on in a part of lands and heritages, the whole of which is considered as a unit for valuation purposes. Again, as in subsection (1) it is made clear that the subsection has effect only in relation to lands and heritages which are already rateable in terms of the present law. The Bill provides that such a part of lands and heritages should be separated out from the rest of the unit of valuation, and treated as if it were itself a separate unit of valuation subject to the Valuation Acts. As such it would be eligible for derating under subsection (1). The remainder of the lands and heritages left over once the livestock production part has been separated off would also be dealt with as if it were a distinct entity for valuation and rating purposes. This means that a building or buildings used for livestock production purposes, and even a part of a building so used, will not lose the benefit of the derating because it is normally valued along with other parts of the building, and other buildings, used for different purposes.

Subsection (5) provides for the definition of the term "livestock production part" as it is used in the provisions of the previous subsection. Taken together, these two subsections allow for apportionment between rateable and non-rateable uses where a building can be physically divided into parts. Within the scope of the definition in subsection (5) would be a part of a building, a single building, a number of buildings, parts of several buildings, or a combination of some of these. But in order to qualify the part referred to must be used solely for the keeping or breeding of livestock. The sixth subsection of Clause 1 expands the sense in which a building, or part of a building, is to be considered as being used solely for livestock production purposes. The subsection provides that if a building used for breeding or keeping livestock is also used to some extent, or from time to time, for purposes which would qualify it for full agricultural derating under the 1956 Act were it used wholly for these purposes, then it will still be eligible for partial derating under the Bill. As is indicated by the opening words of the subsection, this provision in no way undermines the instruction given in Clause 1(4) to cover cases where the building can be physically split into rateable and non-rateable parts.

To simplify this still further, it will obviously be in the interests of the farmer, where he can, to divide the building physically, because one part will be completely derated and the other part will be derated to the extent of 50 per cent. But there will be cases where physical separation is neither possible nor desirable, and if the building is used for part of the year for intensive breeding purposes it will receive partial derating over the whole period of the year. The Bill deals with those cases where either the whole building is used for intensive livestock or other agricultural purposes but cannot be physically divided according to the uses, or the whole building is used sometimes for intensive livestock and sometimes for other agricultural activities.

The seventh and last subsection of the clause provides that lands and heritages derated under subsection (1) are to be identified on the valuation roll by some means such as a distinguishing mark.

Clause 2 defines some key terms used in the Bill. Subsection (1) deals with the meanings of some technical terms commonly used in the valuation code, and it follows closely the precedents of past legislation in defining the Valuation Acts, the valuation roll, and the year for valuation purposes. The rest of the clause contains the principal definitions which mark out the scope of the Bill and ensure that it is read in an agricultural context. Subsection (2) defines the keeping and breeding of livestock through reference to the definition of "agriculture" in Section 86(3) of the Agriculture (Scotland) Act 1948. In that section "livestock" is defined as including any creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of land. The definition of "agriculture" in the 1948 Act is the one used for general purposes of agricultural administration in Scotland. It has worn extremely well during all these years; it has given rise to few difficulties of interpretation. I am assured that it will admit for derating all premises used in the pursuit of agricultural activities but nevertheless entered in the roll, while excluding premises—like fish farms or dog kennels—used for operations which are outwith agriculture.

My Lords, I said earlier that Clause 1(1) of the Bill provides that the lands and heritages which are to be derated shall consist of one or more buildings. Clause 2(3) provides that a reference to a building is to be taken as including a reference to "any pertinent" of it. Practical examples of pertinents in the context of livestock production are such pieces of fixed plant as grain silos, gas cylinders, generators and the like. In the fourth and last subsection of Clause 2 provision is made to take within the ambit of the Bill buildings and land which are occupied together with, and used solely in connection with, buildings used solely for the purpose of the keeping or breeding of livestock. This provision ensures that ancillary buildings, such as the granary holding the grain fed to intensively reared pigs, will be derated by the order made under the Bill.

It may be helpful if I now set out for your Lordships briefly, in plainer language, just what classes of buildings will be derated by the Bill. They fall into three broad groups; buildings and parts of buildings used solely for housing livestock; buildings and parts of buildings used solely in connection with the use of the buildings which house livestock—for example, grain stores, tool sheds and so on; and, lastly, buildings and parts of buildings which are used, whether concurrently or successively, for the purpose of livestock production and for other forms of agricultural activity.

I now come to an important point. Your Lordships will no doubt have noticed that the Bill does not contain a specific figure indicating the percentage of derating which is to be granted. As Clause 1(1) makes clear, this percentage is to be specified in the order made by the Secretary of State under the Bill. I can assure your Lordships that my right honourable friend intends to introduce an order specifying 50 per cent. derating as soon as this Bill is enacted. This order would be effective from the local authority financial year 1970–71. The practical effect of the introduction of this order will be that intensive livestock farmers throughout Scotland will have their next rate demand reduced by an aggregate sum of around £125,000; and, of course, the benefit will continue in succeeding years so long as the order is in force. While a sum of £125,000 may not seem considerable against the background of a total Scottish annual rating bill of £164 million, the savings to individual farmers will be substantial. In some cases it may mean the vigorous continuation of an intensive enterprise which might otherwise have gone into decline. For this reason the Bill has been welcomed by the farmers—though they would not have been farmers had they not preferred 100 per cent. derating. They are, however, accepting it on the basis of the old maxim that "Half a loaf is better than no bread ". My Lords, I beg to move.

Moved, That the Bill be now read 2a. —(Lord Hughes.)

3.39 p.m.


My Lords, I should like to thank the noble Lord, Lord Hughes, for his commendably clear and short explanation of the Bill. He referred to the Act of 1956, out of which the trouble has arisen; but as we all know, in Scotland, and in England, agriculture has been derated since 1928. Under the 1928 Act it was thought a good plan, and one which would save an enormous amount of trouble, that a fixed proportion of farm rentals should be deemed to be the value of the dwelling-houses upon that farm. It was thought that, on the whole, the average proportion of farm rentals which might fairly be allocated to the dwelling-houses was one-eighth; and that basis was adopted for 28 years in Scotland. It saved a vast amount of trouble—of that there is no doubt. If the rent of the farm was £200 then, automatically, the rateable value for the dwelling-house was £25.

In 1956, this basis was changed. It was considered right that the recommendations of the Sorn Committee, appointed to consider the whole question of rating —and a very good Report they made, too!—should be adopted in regard to agriculture. They proposed that agricultural land and buildings should be wholly derated and that all dwellings upon farms should be valued and rated individually and separately.

Some of your Lordships may regret that the simplicity of the 1928 Act was superseded by the relative complexity of the 1956 Act. It now appears that the 1956 Act was not only complicated in the procedure which it required but also not as clear as it ought to have been in its expression. I do not think that anyone who read the Sorn Report, or who took part in Parliament in passing the 1956 Act, ever dreamed for a moment that Parliament did not intend all agricultural buildings on a farm to be wholly derated. That was the intention of Parliament, and nobody suspected that it could be otherwise, until towards the end of 1963, when, in the case of Peddle v. The Rox-burgh Assessor, it was ruled by the court that some agricultural buildings, particularly those which house livestock, were liable for rates.

That decision, and decisions which have followed, have caused not only a certain amount of unforeseen liability but a certain amount of lack of confidence in the agricultural industry in Scotland. In some cases, I think that farmers have been discouraged from adopting the most modern and up-to-date methods, because they are afraid that if they have a new kind of cattle house, which may be regarded as too like a factory, it may be liable for enormous rates, which they can save by going on with the old building. I think that that rating decision has also discouraged amalgamation between small unviable holdings and that in some cases very small farmers who have been advised by the Department of Agriculture to adopt intensive methods for some special market garden market in their area may perhaps have found that by doing so they would unexpectedly incur liability for rates. No doubt many of your Lordships have read of the recent questionnaire which has been sent out to farmers in Moray and Nairn asking for an account of all their buildings used for housing cattle. It has created a certain amount of uncertainty and fear about the future.

In the discussions on the Agriculture (Miscellaneous Provisions) Bill, of the year before last, 1968, some Members of both Houses, including my noble friend Lord Balerno, put down Amendments designed to rectify this position, but these were not persisted with because we were told that the Government were reviewing the whole question of agricultural rating and that this point should not be considered separately. That may have been the right thing to do, but farmers were naturally a little disappointed when they found that the Government, instead of rectifying this misinterpretation of the intentions of Parliament, were simply producing a Bill which removed their rateable liability to the same extent as the rates imposed on industry in Scotland.

I am a bad Parliamentary draftsman and the noble Lord, Lord Beswick, has just told me that I am too fond of looking back into the past. But I think that by looking back into the past one often learns lessons which are very useful when one looks forward to the future. I should have thought that if it is generally agreed that the intentions of Parliament have not been carried out—it may be owing to the bad wording of the Act or simply to the unavoidable impression of human language—we ought to do something to try to put the matter right. We all know how easy it is to commit this kind of mistake and how difficult it often is to rectify it, and that the time which is required to commit an error is not, as a rule, nearly so long as the time required to put it right.

I should have thought it not beyond human ingenuity to amend Section 7 of the 1956 Act in such a way as to allow complete 100 per cent. derating of all agricultural buildings which are part of a farm. What the Government have done is to bring in a Bill—a good Bill so far as it goes—which provides that if farmers are caught, owing to some decision of the courts, and find themselves subjected to rating of their buildings, at least they shall not pay more rates than are paid by other industrial undertakings in Scotland. That is an unexceptionably right and just proposal, which we gladly accept. I do not think that it would be possible through this Bill to cause any subject to be rated which would not otherwise be rated, or to cause any subject to be derated which would not otherwise be derated. I think that the whole nature of the Bill is to provide that when an agricultural building is, unfortunately, as some of us think, mistakenly rated it should be rated on the same basis as other undertakings in Scotland. This is the least that can be done. I am sure that the agricultural community will accept it as a small mercy.

3.47 p.m.


My Lords, it is always a happy event when a Minister of any Government is able to implement in some small measure a promise he has given. When the Agriculture (Miscellaneous Provisions) Bill was introduced, we on these Benches raised the question of some inequities in rating which had arisen from certain decisions of the valuers, who had found support on appeal. Resulting from these actions, several substantial livestock production units in Scotland have been put out of business and a continuation of that process would certainly force many more to go out of business.

This little Bill before your Lordships' House to-day is an excellent illustration of the virtue arising from necessity, even though it is only partial virtue from a big necessity. Of course, virtue is all the more virtuous when it is put over with such disarming charm as the noble Lord, Lord Hughes, exerts over this House; but we must recognise that it is only by the equal exercise of this charm in another direction, that is, upon his right honourable friends the Secretary of State for Scotland and the Chancellor of the Exchequer, that even what we have to-day has been made possible and that in part redress is being made of what is acknowledged on all sides in Scotland to be an injustice.

I would support my noble friend Lord Dundee in suggesting that this could have been better done by amending the 1956 Act. I would add that, if we must have it in this way, surely it could have been better done without all the circumlocution that envelops the Bill. I wonder how many of your Lordships who have been able to study the Bill have understood what it is all about. It is a most confusing little Bill, and possibly the more confusing because it is a little one. Could not the fame end have been achieved simply by omitting the word "solely" in subsection (1) of Clause 1 of the Bill? This would have made the Bill much easier to interpret.

We farmers are by no means ungrateful to the Government, on the basis as the noble Lord, Lord Hughes, has said, of half a loaf being better than no bread— and his right honourable friend is promising 50 per cent. We on these Benches have taken note of the fact that there are powers in the Bill which enable his right honourable friend to make it a 90 per cent. loaf. Therefore, I would ask the noble Lord, Lord Hughes, once again to exercise his charm upon his right hon- ourable friend to try to persuade him to increase the 50 per cent.

3.52 p.m.


My Lords, I should like to say a word or two before the noble Lord, Lord Hughes, replies. I do not think that anybody who heard the noble Lord explain this Bill in the charming language that he used would realise that he was referring to a Bill which most of us find it almost impossible to understand. The Government are trying to do something quite simple. Is it not possible to put this Bill into language which can be moderately understood?

The Lord Advocate is in his place. I wonder whether he is absolutely sure how the courts are going to interpret what my noble friend Lord Balerno has called "circumlocution", and which I note in the other place the Government referred to as "gobbledegook". None of us is certain how this will be interpreted. One mistake has already been made. Have we any assurance that another mistake will not be made? Even so, however it is interpreted, the Bill by itself achieves absolutely nothing until the Secretary of State intervenes and decides what the percentage will be. Would it not have been much simpler to have derated farming as such? The simplicity of this makes a great appeal to me, and, as the noble Lord, Lord Hughes, explained, the amounts concerned are not enormous. I feel that the statutory law is becoming so complex that it is a real danger.