HL Deb 29 July 1985 vol 467 cc1-4
Lord Newall

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they will consider their decision to take no action yet in the controversial rating of stud farms while they are regarded by the Treasury as agricultural farms for the purposes of income tax and corporation tax.

The Minister of State, Department of the Environment (Lord Elton)

My Lords, decisions on the treatment of a class of property under taxation law do not provide precedents for its treatment under rating law. As to this particular case, we do not think we should decide whether or not to change the law until the courts have made clear what in fact the law is.

Lord Newall

My Lords, I thank my noble friend for his Answer. May I ask him whether he is aware that there are two precedents for the Government intervening—one in 1980 for fish farming and one in 1971 for broiler houses—and that action is needed urgently? May I ask him also whether he is aware that if he does not take action immediately, many small breeders will be put out of business and so damage the horse industry?

Lord Elton

My Lords, if my noble friend is asking me whether I am aware of a precedent for taking a decision before the conclusion of a case, I can say that the Government accepted an amendment to the Local Government Planning and Land (No. 2) Bill—I think this relates to the case of Creswell v. BOC Ltd., to which he referred—but they did so after the Court of Appeal decision was known.

Lord Molloy

My Lords, can the noble Lord the Minister give the House an assurance that when the Government examine this proposition they will not confuse horse de cheval with horse breeding, as the one could very well be industrial and the other overwhelmingly agricultural, as has been recognised by the Treasury?

Lord Elton

My Lords, as I was trying to make clear in my substantive Answer, what the Treasury thinks does not necessarily bear upon what the ratings valuations officer may think.

Lord Gainford

My Lords, is my noble friend aware that horse breeding is not necessarily a rich man's ploy and that under the present rules many urban dwellers and local council tenants could be hit?

Lord Elton

My Lords, I was not aware that many council tenants indulged in bloodstock breeding, but if they do it is important that they should be treated as fairly as everybody else.

Baroness Birk

My Lords, does the Minister consider that it would be more sensible not to consider stud farming apart from the agricultural industry, with which it has much in common? Is not this something which should be being considered by his right honourable friend in his study on local government finance?

Lord Elton

My Lords, it is indeed the case that the basis of local government finance is the subject of a review, on which, as I recently told your Lordships, we hope to publish a consultation document by the end of the year. That is another reason for not prejudging the answer to my noble friend's Question.

Viscount St. Davids

My Lords, will the noble Lord agree that there are some reasons why he should understand my misgivings, when here I am, a member of the public, a member of no political party, but sitting next door to one of the major givers of our laws and hearing that the Government, for all their endeavours, still do not know what the law is?

Lord Elton

My Lords, if the Government knew what the law was in every case, there would be a great deal less business for the major giver of the nation's laws, to whom the noble Lord refers.

Viscount Brookeborough

My Lords, I thank my noble friend for his replies. Can he tell me whether there is any indication that his noble friends or his right honourable friends know how many horses there are in the country? Is he aware that the leisure industry is under tremendous verbal support from his colleagues? In this particular case the riding fraternity is one of the fastest growing parts of the leisure industry, but the Government are not doing very much to support it.

Lord Elton

My Lords, I think my noble friend will agree that riding stables, livery stables and all other kinds of stables have always been rated. The Question relates to stud farms and the Question is whether stud farming is an agricultural activity, and, if so, whether bloodstock animals are agricultural animals and the buildings in which they are kept are agricultural buildings. That is what the court is considering.

Lord Peyton of Yeovil

My Lords, may I ask my noble friend whether he would agree that it would be' something of a pity if, as a result of some of our more ridiculous laws, people were encouraged to go elsewhere to pursue perfectly legitimate occupations?

Lord Elton

My Lords, it would indeed, but I do not think that what my noble friend has described is necessarily the situation that exists in this country. My noble friend who sat down immediately before my last noble friend suggested, I think, that all equestrian pursuits were subject to the possibility of a new imposition of rates. I was seeking to explain to him that that was nothing new. The only question at issue is whether bloodstock breeding should be subject to rates. I do not think there is a prospect of much business being driven away from this country while the court is considering that question.

Viscount Brookeborough

My Lords, will my noble friend not agree that before they get to the riding schools, which are rated, they have to be bred?

The Lord Chancellor (Lord Hailsham of St. Marylebone)

So have we in the House of Lords, my Lords!

Lord Elton

My Lords, since most of your Lordships will have heard the interjection of my noble and learned friend on the Woolsack, which anticipated what I was about to say, I shall not answer that question.

Lord Newall

My Lords, is my noble friend aware that the Ministry of Agriculture is advising farmers who have had milk quota difficulties in regard to their cows to go into horse breeding? Is it not a dreadful anomaly that now they should be overrated?

Lord Elton

My Lords, my noble friend puts a proposition to which I find it difficult to respond. What we are considering is the status of certain buildings for the purposes of rating, by means of which rating they provide funds to the local authority for contributing to local government. I believe I am right in saying that, if these buildings were rated, the difference to the overall income nationally would be about £1 million pounds.

Lord Trevethin and Oaksey

My Lords, in view of the general impression that bloodstock breeding is enormously prosperous, is my noble friend aware that the astronomically priced thoroughbred yearlings to which we racing hacks give such publicity represent only 8 per cent. of the total crop? Is he aware that the vast majority of the remaining 92 per cent. do not make at auction the £8,000 or £9,000 that they cost to produce and put in the ring? Is he aware that this is the reason the thoroughbred breeding industry is unable to bear the unexpected rate burden that has been laid upon it?

Lord Elton

My Lords, I am well aware of the sympathy that my noble friend's remarks generate. I would be the last to describe him as a racing hack. The present position is that the courts are deciding whether the law says that buildings that contain bloodstock, and only bloodstock, should be rated. My noble friend is referring to the small man who has a small establishment. That will of course attract a much smaller rate. However, I do not want to prejudice the Government's position prior to the decision of the court.

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