§ 7.31 p.m.
§ THE PARLIAMENTARY UNDER-SECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD)
My Lords, I beg to move that this Bill be read a second time. The main purpose of the Bill, which I now commend to your Lordships' House, can be stated quite simply and briefly. It is to remove certain anomalies in the application of rating law to agricultural buildings in which new methods of animal husbandry are employed. By way of background, it might be of interest if I explained a little more fully to your Lordships the circumstances which have given rise to this measure.
Speaking generally, agriculture has been partially or wholly derated for a very long lime. Agricultural land in England and Wales was completely de-rated by the Local Government Act 1929, and so were agricultural buildings within 887 the definition of that term. For this purpose an agricultural building is one which is occupied together with agricultural land, and is used solely in connection with agricultural operations on the land. This definition has stood ever since, subject to a minor addition to which I shall refer later, and now appears in Section 26 of the General Rate Act 1967. The position in Scotland has been much the same as in England and Wales, but it was not until 1956, in the Valuation and Rating (Scotland) Act of that year, that the Scottish law was brought into line with that South of the Border in regard to the method by which agricultural land and buildings were derated. Hence the corresponding reference to that Act in Part II of the Bill, which deals with Scotland.
Until quite recent times this definition of agricultural buildings was not unreasonable. Buildings used for agriculture were normally used in connection with agricultural land, and occupied by the farmer for the purposes of farming the land. And the buildings were usually solely used for those purposes. In recent years, however, as your Lordships will be well aware, we have had the development of more intensive forms of livestock husbandry. With the advent of these developments animals are kept in buildings, in an environment constructed and controlled to suit their needs. Instead of foraging for their food on agricultural land, the food is brought to them. It has been found that these intensive systems promote increased production in terms of eggs or meat for the food supplied. Current practice is to rear most pigs, poultry and some cattle in this way.
This process has had predictable rating consequences. Agricultural buildings gain exemption because they are used solely in connection with agricultural operation on agricultural land in the same occupation. But with intensive husbandry, there is not this sole connection. For example, some of the food for the animals may come from the farmer's land, but not normally all of it; sometimes perhaps none of it. Consequently, the courts have increasingly been finding that intensive livestock buildings are not exempt under the existing law because they do not comply with the condition of sole use in connection with 888 agricultural land. We thus have the position that a farmer who uses traditional methods of farming enjoys rate exemption in respect of his agricultural buildings, whereas the farmer using newer methods which have now become accepted agricultural practice is rated in respect of his intensive buildings. This is the anomaly to which I referred at the beginning of my speech, and one which the Government were pledged in their Manifesto to remove when they came into office. This Bill implements that promise.
The main provision for this purpose is, for England and Wales, in Clause 2 which, subject to conditions set out in the clause, gives buildings in which livestock are kept or bred rate exemption in their own right, without, that is, their having to be used in connection with operations on agricultural land. Moreover, the clause also exempts, in a manner analogous to the building derated by the existing law, buildings used in connection with operations in the livestock buildings. Thus we have two sets of exempt premises: agricultural land, and its ancillary buildings under the existing law; and livestock buildings and their ancillary buildings under the Bill. And I might usefully add here that the clause provides for cases where a building falls partly under the old dispensation and partly under the new because of a mixture of uses; and also for land occupied and used in conjunction with the livestock buildings.
When the Bill was first introduced into Parliament, in another place, it applied to buildings in which all animals which had become regarded as agricultural animals, are kept and for this purpose the Bill defined livestock (again for England and Wales) in accordance with the definition of that term in the Agricultural Act 1947. This definition coversany creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of land".In the course of the consideration of the Bill in another place, both the Government and the Opposition accepted that exemption could not be justified in respect of animals kept for their skins or fur, and the new definition, in subsection (3) of Clause 1, now refers only to mammals or birds kept for food, wool, or use 889 in the farming of land. A similarly revised definition appears in Clause 4(6) in relation to Scotland.
In mentioning only mammals or birds, there is the obvious omission of two kinds of creatures—fish and insects. On fish, I would merely say that the Bill was never intended to apply to fish, which are not agricultural creatures, and the Amendment prevents any argument that it might have done so. On the second, the only insects which might have been involved were bees, but the provisions of the Bill as it stands do not fit the circumstances in which they are kept, so nothing is lost in excluding them from the definition. But I ought to say at this point that the Government are sympathetic to giving the benefit of the Bill to the ancillary buildings of bee-farmers, and if the House gives the Bill its Second Reading it will be my intention to move Amendments for this purpose at a later stage.
There is one other point of some importance which I should mention now before going on briefly to the secondary purposes of the Bill. I refer to the provision in subsection (4) of Clause 2 (and in subsection (5) of Clause 4 for Scotland) which makes it a condition of exemption that the livestock and ancillary buildings should be contiguous to, or surrounded by, not less than five acres of agricultural land, subject to certain disregards. The purpose of the condition is to deny exemption to livestock and ancillary buildings inside built-up areas. The Government take the view that intensive livestock rearing is not a suitable activity in such areas, and they do not consider it appropriate to extend rate exemption to them.
I should now like to mention briefly one or two significant features of the Bill. The first relates to the term "solely" in relation to the use of a building. This, your Lordships will recall, appears in the existing definition, and the courts have interpreted the terms strictly, so that anything more than a de minimis use would disqualify a building from exemption. Where the exemption does not apply, the building becomes rateable on the assumption that it is wholly used for a rateable purpose. The Government accept that a building should be predominantly used for agricultural purposes in order to qualify for exemption, but consider that the present rule operates too harshly; so provided that the non-qualifying use does 890 not amount to a substantial part of the time, Clause 1(2) (and corresponding provisions in Part II of the Bill) ensure that exemption is not lost.
Secondly, I must devote a minute or two to Clauses 3 and 5, which deal with the position of buildings occupied by agricultural co-operatives. This is a complex subject, and I do not want to weary your Lordships with the detail of it. The necessity for special provisions arises from the requirement in the original definition of an agricultural building that it must be occupied with agricultural land. But since the original definition 40 years ago, co-operation between farmers has developed to a considerable degree. And to take the simplest case under the law as it stood in 1929, a single building might be occupied by several farmers for the purposes of the farming activities of each. Such a building would fail the test for exemption, but would still be just as much used for agricultural purposes as if one farmer occupied all the land, and the building. Because of developments of this kind, the Rating and Valuation Act 1961 (and. for Scotland, an Act in 1963) extended the derating of agricultural buildings to cases where the building was occupied by an unincorporated syndicate of farmers, and used in connection with their land which they occupied individually.
It is, in the first place, clearly right for the Bill to deal with this kind of situation in relation to livestock buildings and ancillary buildings; for example, where a syndicate occupies a building used in connection with the livestock buildings occupied by the individual members. In the second place, however, farmers have recognised the benefits of incorporation, and we now have corporate agricultural bodies occupying buildings which serve the agricultural land of their members. The Government consider that exemption should also be extended to these buildings. To achieve this it is necessary, first, to give the benefits of the 1961 and 1963 extension of derating to corporate bodies—for example, to corporate bodies occupying buildings ancillary to the agricultural land of their members—and, secondly, to give similar exemption to buildings occupied by corporate bodies in connection with the livestock buildings of their 891 members. All these purposes are achieved by Clauses 3 and 5 of the Bill.
Finally, I ought to emphasise that the Government do not see this Bill as in any way prejudging the general issue of the rerating, or the continued derating, of agriculture which they must clearly consider in their current review of local government finance. It does no more than take the present agricultural exemption as it finds it, and amends it to bring it into line with newer agricultural methods and techniques. Agricultural re-rating is a separate issue which requires, and will be given, consideration in a wider context. I hope that that has made clear the purposes of this Bill. My Lords, I beg to move.
§ Moved, That the Bill be now read 2a.—(Lord Sandford.)
§ 7.43 p.m
§ LORD GREENWOOD OF ROSSENDALE
My Lords, this is a measure which has come to us after a long and hard-fought battle in another place, where it evoked a great deal of passion, and the noble Lord's skilful presentation to-night does not make it any the more palatable. I want, if I may, to avoid being drawn into discussion about the ethics of factory farming, and I want instead to say, quite briefly, why I think that this Bill is bad simply as a piece of rating legislation.
My first objection is that it is retrospective in its effects; indeed, Clause 1(5) was specifically introduced to make it retrospective. I am quite certain that most noble Lords share my dislike in principle of retrospective legislation, and I think that the Government's arguments in respect of this are particularly thin. Mr. Graham Page, who revels in the minutiae of rating, explained to another place that one only condemns retrospection if it creates a retrospective liability, or confiscation, or a burden, and not if it awards a benefit. But the point is that if some ratepayers pay less, other ratepayers have to pay more and I think it is wrong for the Government to have made this measure retrospective.
What it amounts to is that they have decided to help their factory farming friends at a most inauspicious time; and it is inauspicious because the average rate increase this year is somewhere in the 892 neighbourhood of three old shillings in the pound, or 15p. It is also a year in which the yearly increase in the domestic element of the rate support grant—the method which the last Government devised to protect ordinary householders —has been reduced by half, in spite of all the present Government's complaints at what they regarded as our niggardly treatment of domestic ratepayers in the last Parliament. I think that to introduce this further measure of derating is very unjust to the domestic ratepayers and, at the same time, unfair to the Government's friends in the local government field who have been sacrificed to the factory farming interests, and who have legitimate ground for complaint against their own Government.
My second objection is about the absurdity of the definition. I think it can be summed up by asking: when is a non-railway a railway? The Bill goes out of its way to emphasise that a railway which no longer has any rails is, nevertheless, a railway; and, of all the complicated definitions, Clause 2(4) states:A building is not an agricultural building by virtue of this section unless it is surrounded by or contiguous to an area of agricultural land (as defined in the principal section) which amounts to not less than five acres; but in determining for the purposes of this subsection—That is a really full definition—I think probably too full a definition. It really is quite remarkable that it should have been necessary to provide in the Bill that,
there shall be disregarded any road, railway or watercourse, any agricultural building (as defined in the principal section of this Part of this Act) and, if occupied together with the first-mentioned building, also any other building and any land which is not agricultural land.
- (a) whether a building is contiguous to or surrounded by an area of agricultural land; or
- (b) whether an area contiguous to or surrounding a building is an area of agricultural land and what is the size of such an area;railway' includes the former site of a railway from which railway lines have been removed.It transpired in the course of debate in another place that a watercourse can include a tidal estuary, and it may well be that one can have agricultural land in the Liverpool Docks or in Cardiff, because it is contiguous to a waterway 893 of that kind. I should like to ask the noble Lord whether it is true that, provided a building is used solely for the keeping or breeding of livestock, it need not be situated on agricultural land to qualify for relief; it need only, under Clause 2(4), be contiguous to five acres of agricultural land and it may be separated from that land by a road or railway. Is it not also true—and this is. I think, even more surprising—that there is no requirement that the building and the land to which it is to be contiguous should be in common occupation or common ownership, or that there should be any connection between the agricultural operations carried out on the land and those carried out in the building? I think that the Government have produced a nonsense in trying to spell out this definition in the way that they have done.
My final objection is that this is a further erosion of the rating principle which I think is made, in spite of what the noble Lord said in his concluding remarks, at an absurd moment when the Green Paper is on the way and when we should have it later this year. There is nothing urgent about the need for the Bill which the noble Lord has introduced and it would have been much more sensible, in my view, to have taken it at the same time as the Green Paper on local government finance. In the circumstances, it is not unnatural that the local authority associations—or at least two of them —have reacted very badly to this Bill. The Urban District Councils Association regard it, as I do, as a further erosion of the rating principle and they qualify that by saying this. I quote from a letter which they issued in February:We say yet 'a further erosion' because the Government have it currently in mind to reduce by one-half the part of the rateable value of mineral hereditaments which is attributable to the occupation of land for the purpose of winning and working, grading, washing, grinding and crushing of minerals.The Association of Municipal Corporations has reacted even more strongly against this proposal. After quoting the Conservative Party's Election Manifesto, the Association says that it is opposed to the Bill in principle. I hope that your Lordships will have had an opportunity of studying the A.M.C.'s document Reform of Rating, issued in November last year. It is, I think, an invaluable document in clearing one's mind on the 894 financial requirements of local authorities. I certainly share the view of the A.M.C. and also of the Redcliffe-Maud Commission that rates are almost certain to continue as the main source of locally collected revenue. Everybody dislikes rates but nobody has yet come up with a viable alternative, and I have much sympathy with A.M.C.'s view that all encumbrances which have the effect of eroding the basis of rating should be abolished. Derating in fact—and I think this is the basic argument against this Bill—narrows the local authorities' tax base and I want local authorities to have as much financial independence as possible.
It is interesting to look back to the fact that as long ago as 1929, when the Government issued a White Paper on the Local Government Act passed that year, the White Paper said:The most important effect of the derating proposals on the position of the individual local authority is clearly the narrowing of the basis of taxation available to that authority, which necessarily involves a greater or less impairment of the capacity to meet considerable fluctuation in certain classes of expenditure inevitable from time to time. This is a matter of less significance in the case of larger authorities or of those whose resources are drawn from a wide area but is of the greatest importance in the case of smaller and financially weaker authorities.I think that one must accept the situation against the background of agricultural Berating, derating which began, I think I am right in saying, in the Public Health Act of 1875, was continued in the Agricultural Rates Act 1896 and again in 1923, and again in the case of the Local Government Act 1929, to which I am happy to say that my father led the opposition in another place. In the face of this long history, it would obviously be extremely difficult to rerate all agricultural land, but I am sure that the A.M.C. are right in saying that they have no doubt that industrialised farming should be rated and should not be derated.
For those reasons, my Lords, I think that this is a silly Bill. I think it is introduced for an unacceptable purpose. So far as its retrospective effect is concerned it has been pushed through with unjustifiable haste, and I believe that it may well cause damage to the structure of local government. Interpreting the quaint fact that in this country, if a 895 Party persuades three out of ten electors to vote for it it has a mandate, it may be argued that the Government has a mandate for this Bill. With that, my Lords, I leave it.
§ 7.55 p.m.
§ LORD BALERNO
My Lords, the rates burden on Scottish livestock farmers is proportionately much more severe than it is South of the Border. One-fifth of the total rates payable on these buildings in Great Britain as a whole is paid in Scotland, despite the fact that Scotland enjoys the 50 per cent. derating on these buildings which was introduced a year ago; and I remember the arguments and persuasion we had with the noble Lord, Lord Hughes, on this subject. Perhaps that is the reason why Part II of this Bill, dealing with Scotland, is half as long again as Part I which deals with England.
Steadily increasing pressures for greater efficiency in the production of livestock have caused major changes in the methods of husbandry. The factor with which I have been most concerned for about fifty years is the efficiency of live weight gain, which one can also call the economy of feed consumption. It was my colleague, Dr. Alan Greenwood, of the Poultry Research Department in Edinburgh, virtually its founder, who first demonstrated the importance of the controlled environment in the economic production of livestock. The valuation authorities called the consequent developments factories, and put them on the valuation roll despite the fact that they were situated in the heart of the country and in not a few cases were run jointly by a group of farmers. That is why I welcome the statement by my noble friend Lord Sandford regarding the sections concerning the provision for the co-operation of farmers in this matter. It is with units such as these that the farmer, or group of farmers, can most easily meet changes in the pattern of consumer demand that is of fundamental importance in the future feeding of the human population.
Because they have seen enterprising fellow farmers having to close down intensive operations owing to the high incidence of rates, other farmers have decided against the use of progressive methods over a considerable range of 896 livestock production activities. Derating is available on buildings only if they are used in a manner which was appropriate, effective and sensible up to twenty years ago, but which are now obsolescent. Factory farming, my Lords, is an emotive phrase, and I question whether the noble Lord, Lord Greenwood, appreciates that any abuse of or cruelty to animals is taken care of by other legislation, and that in any case no true farmer will ever make a profit if he keeps his animals under cruel conditions. So far as that is concerned, intensive farming need not necessarily be factory farming. One hopes that factory farming, where this emotive phrase is used, is on its way out—it hardly had come in.
I therefore welcome this Bill because it will give a real stimulus to production and do away with all the petty anomalies, some of them extremely local, which have borne unevenly on farmers in different parts of the country. I see that in another place there has been a discussion of the word "livestock". I congratulate the Government on accepting a clear-cut definition of the two great zoological classes of mammalia and aves—mammals and birds—and, with respect to the noble Lord, Lord Beswick, opposite, I want to say how very glad I am that they have not used the word "creatures". The traditions of animal legislation in this country are to use the word "animals", and not to use the word "creatures". This is a matter in which I am glad the new Government have made this substantial scientific advance.
My Lords, this is a tremendous improvement in animal legislation, because, as I say, the definitions were becoming quite illogical. There are, however, three examples of animals outside these two great classes which I would submit for consideration to my noble friend. First, there are the bees—and he made mention of these. Naturally, bees are livestock and are free to roam where they wish; but there are the hives, and there may be ancillary buildings in connection with them. I understand that consideration is being given to the question of bees, and I hope that there will be an Amendment put down on the Committee stage.
The second class comprises fish, both fresh water and salt water fish. I question whether the present Government 897 really appreciate the tremendous developments that there may be in fish farming—growing fish primarily for food in this, country. Already overseas—and I would say most particularly in Scandinavia—fish farms are of major importance, and not merely provide a contribution to the human food of their own country but are also an important export to other countries. If you are going in for fish farming, you can only do it from a secure base, and some tanks for the breeding of fish are as much buildings as are swimming pools. Therefore, these should be distinguished, and in my submission should be de-rated. Almost invariably the land on which they are located is agricultural land, even if it supports only a few black-faced sheep. I would certainly take issue with my noble friend Lord Sandford that fish cannot be agriculture. They may indeed be a form of culture.
§ LORD BESWICK
My Lords, am I right in understanding, therefore, that if this suggestion were accepted and fish were included, the noble Lord himself would move an Amendment to delete the word "animal" and substitute the word "creature"?
§ LORD BALERNO
No, my Lords. What I was considering one might do was to revert to the old Animals Act of more than 100 years ago, and come down to vertebrates, because the farming of frogs as well (provided they were for food, of course) would come within the terms of the Bill. Thirdly, as the noble Lord, Lord Beswick, may well anticipate, there are crustacea, more particularly the lobster. Here again, very substantial developments are taking place in the deliberate culture of the lobster. I would suggest that these three cases can all be dealt with by amendment of the Act of 1956, as you will find in Clause 7 of the Bill, which relates to Scotland, where the fact that ponies are on the land does not necessarily mean that it ceases to be agricultural land.
My Lords, I welcome the Bill. I look forward to some possible improvements to it. It is a Bill which is designed to keep up to date with farming developments. The suggested improvements that I would make to it are anticipatory of further developments in the not-too-distant future.
§ 8.6 p.m.
My Lords, first of all I should like to say that I think this Bill has been wrongly named. It is not a rating Bill: it should be a de-rating Bill. Speaking as a farmer, I welcome the Bill, but as a ratepayer in the rural district of Tenterden, Kent, I do not like it. Our total rateable value in Tenterden rural district is £227,000: the population is 8.000: the number of rateable properties is 3,500; and the rates from agricultural buildings amount to £5,000. The council will be the loser by between £2,500 and £3,000 if this Bill is passed in its present form. The rates will therefore have to go up by somewhere between 75p and 100p per rateable property, or about 1 per cent.
Another part of the Bill that I do not like concerns the definition of five acres in Part I, Clause 2(4). For a company to be de-rated seems wrong. This lets in large commercial undertakings, without their paying any rates. They may be producing food, but are in no way connected with the feed produced for livestock from adjacent land. They may be only a packing station. My suggestion, after having consulted with the Rural District Councils Association, is that the de-rating should apply only to farmers with general agricultural use of the buildings, and that if in doubt the rating officer should apply to the local Ministry of Agriculture office for advice. I will endeavour to introduce an Amendment to this effect on Committee stage. I should like to thank the noble Lord, Lord Balerno, for including fish, and also frogs. I live on the Royal Military Canal; we have a lot of frogs down there and they are eatable.
§ 8.9 p.m.
§ LORD SANDFORD
My Lords, I am grateful to the noble Lord, Lord Greenwood of Rossendale, for acknowledging that we have a mandate, which we are now fulfilling, for the introduction of this legislation. I am also grateful for his observation that this is not the moment at which to engage in a discussion on the ethics of intensive livestock farming —and I am grateful to other noble Lords who have spoken for following that advice. I must confess that if I had been in the noble Lord's position of having to oppose rather than to move the Second Reading of this Bill I, like he, 899 could not have resisted the temptation to have some fun with the definitions. I think that perhaps I might well have, gone a little further than he did. But we can certainly return to them at a later stage if any noble Lord wishes.
As to the loss of rate income, this is really not a very large figure. It is only £1 million, spread over the whole of the country; and, as the noble Lord, Lord Nunburnholme, said, in his own district, which I must confess is the kind of district most affected, it is £3,000 out of £227,000. However, that is a factor not to be disregarded. I think that the noble Lord, Lord Greenwood, made rather much of the retrospective aspect. It will be a matter of only a few weeks. The intentions of the Government have been quite clear and, as he knows, it is normal practice for a change in rating made during a rating year to be retrospective to the beginning of that year. This case is no exception.
I am grateful for the general welcome from the noble Lord, Lord Balerno, for the help this Bill will give to co-operatives and farmers generally using modern techniques. I am glad that he is happy with the definitions. I repeat my reassurance about the bees. I, and all noble Lords, shall be intrigued to see what the Beswick-Balerno co-operative produces in the way of changes to deal with fish, frogs, lobsters and other crustacea at the next stage. But, having said that, I should like to end by thanking all noble Lords for their general welcome of this Bill.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.