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Fair Rating

Volume 79: debated on Tuesday 21 May 1985

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4.29 pm

I beg to move,

That leave be given to bring in a Bill to provide for the elimination of agricultural derating over a five year period.

My Bill would ensure that the agriculture industry pays rates on its buildings like any other industry in the United Kingdom. Because the sum involved is substantial, I propose that reform should be spread over five years.

The fact that agriculture makes no contribution to the costs of local government is an unjustified and grotesque anomaly, which is an insult to many other industries which, in some cases, are struggling to survive under a heavy rates burden that could be reduced if agriculture paid its fair share. If the Treasury adjusted rate support grant to take account of the extra valuations, about £300 million a year would be available for reductions in general taxation.

Agricultural derating was introduced in 1929 as a modest endeavour to alleviate agricultural distress during the great slump when no other means of support was available to the industry. Circumstances have changed dramatically, as I am sure my right hon. Friend the Minister for Agriculture, Fisheries and Food will confirm. Rates, which were then a modest burden, have become a major business cost. Farm buildings were modest and unsophisticated in 1929, but the agricultural revolution has resulted in an explosion of expenditure on costly buildings and facilities. Far from reducing or abolishing the concession, however, Parliament extended it in 1971 so that it now applies to what are loosely referred to as factory farming operations such as chicken battery systems and commercial buildings used by farm syndicates and co-operatives. Soon afterwards, case law extended the exemption to fish farming.

I find the continuation of agricultural derating puzzling because every committee set up by the Government to examine the rating system has declared that the exemption is intolerable and unjustified and should be ended. The Layfield commission, which was set up in 1976, expressed the unanimous view that there was no good reason for the concession to continue.

Why has nothing been done about this rating anomaly, which means that all other ratepayers and taxpayers have to bear an unfair burden? Has nothing been done because of administrative problems? That cannot be the answer because our efficient Inland Revenue would have no difficulty making the necessary valuations, because it constantly has to value all types of new buildings between general revaluations.

Has nothing been done because agriculture is especially depressed and vulnerable?

My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) must be aware of the principle of rating which is that rates must be paid irrespective of whether businesses are profitable or depressed. I could give him the names of many firms that have great difficulty paying rates. Even if profitability were a factor, the evidence shows that agriculture receives more protection than any other industry.

Industry faces foreign competition with a tariff protection of 10 per cent., yet the protection of some commodities exceeds 200 per cent. through import levies. While industry struggles to secure customers, farming in general receives a guarantee that all of its produce will be purchased at a price well above that in the market—

We spend more than £100 million every week in the Common Market destroying food, dumping it or storing surplus produce that cannot be sold. There is no special case, but even if there were the principle of business rating is that rates are paid irrespective of profitability, as many firms in my constituency and others, including agricultural ones, know to their cost.

Has nothing been done because rating reform is round the corner? Far from being a reason for inaction, the prospect of reform should make us even more determined to set down a marker that the concession should not be written into any new system.

Are we refusing to act because food prices would rise?

Even if that were true, there would be commensurate reductions in the price of other goods as the burden was taken off other industries. Even those who argue the case of agriculture know that farming prices do not reflect costs or the operation of the market because of the Socialist and interventionist price-fixing arrangements of the common agricultural policy.

I believe that there has been no action to remove an anomaly which we all know is a grotesque nonsense and an insult to ratepayers because it would involve putting an additional burden on an industry which has a great deal of friends and political clout and has much sympathy from all of us. That is especially true because the chemical industry is now integrated with agriculture and many City institutions and pension funds have sizeable holdings in the land.

There is a basic theme to the Government's policies — the removal of all unjustified privileges and protections and the eradication of unfair subsidies. Whether it be the mining industry, the car industry or engineering, we must remove unfair privilege and subsidy. My right hon. Friend the Prime Minister has rightly said that, when considering the future of rates, we should try to ensure that a wider section of the community which benefits from local authority services should contribute to the costs of local government. Agricultural derating is an illogical and unjustified privilege. It runs contrary to natural justice and is terribly unfair to other ratepayers. I hope that the House will cast aside any special interests and ensure that this wholly unjustified privilege is removed.

I am aware from the shouts that, when it comes to voting, I shall be on a rather sticky wicket, but surely justice will prevail in Parliament. I am comforted, amid the scandalous shouts and abuses of procedure, by the knowledge that my cause is just and that, in the last century, it took 15 years of determination in Parliament to repeal the Corn Laws. This is a similar injustice. We should stand up for every ratepayer in Great Britain and treat everyone the same way. We should tell them that Parliament believes in justice and equity.

4.37 pm

Does the hon. Gentleman wish to oppose the motion?

Yes. I declare my interest as I am involved with the agriculture industry.

I oppose the motion on several grounds. First, rather than produce justice and fair play as the hon. Member for Southend, East (Mr. Taylor) claims, the Bill would merely add to the complexities inherent in the present rating system. We all know that there are many anomalies and unjustices in that system and that we must eventually find a just solution, but why should we add to the confusion by introducing yet another category of rateable property?

The hon. Member has already condemned the whole rating system. I was interested to read an article that he wrote only last March on this very subject.

On a point of order, Mr. Deputy Speaker. Is the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) speaking on behalf of the Liberal party? If he is, it should be made clear that the Liberal party supports agricultural rating.

Having analysed and dismissed several choices for rating reform, the hon. Gentleman presented his own solution thus:

"we should sweep away all rates—for householders, industry and commerce—and provide funds for local councils from the Treasury."
In this way, he says:
"we would get rid of all the injustices of rates entirely."
Today, however, with this measure the hon. Gentleman is turning his own argument on its head.

The second reason for strong opposition to the measure is that its application would place an unjust burden on the sections of the farming industry that are least able to bear it. What the hon. Gentleman perhaps does not understand is that there is tremendous variety in the agriculture industry, and that some sectors of the industry need to use outbuildings more than other sectors. Therefore, it is not the cereal grower, reputedly at the top end of the financial scale, who is likely to be penalised by additional rates, but the livestock farmer and especially the dairy farmer, who have suffered enough in the last year or so, and who will have to pay heavy bills for essential buildings.

It should also be remembered that the value of the output of agricultural buildings is very low in relation to the capital value of the buildings. This fact would present even more anomalies when comparisons are made with other industries.

I am entirely sympathetic to the concern of the hon. Gentleman for small businesses in particular. Their burden in terms of rates should be given urgent consideration. There is a need to change the system. It is patently in need of reform. However, the answer does not lie in extending the burden to other categories of small business, which include the farmer.

I should like to stress also that the rating of agricultural holdings could well be seen as the thin edge of a dangerous wedge. Many people fear that agricultural land itself would be in danger. I put on record that the Liberal party is against the rating of agricultural land because we do not think that it is right to add to the already high cost of producing food, and our concern, therefore, is just as much for the consumer as it is for the producer. Food is necessary to life, and its production cannot be compared to the production of other commodities and taxed in the same way.

The measure in my view is a retrograde step which merely tinkers with solutions and adds nothing to the serious debate on rating that needs to be considered urgently. Another way must be found of producing a system that is fair and just for all sections of society.

Question put, pursuant to Standing Order,No. 15 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business):The House divided: Ayes 99, Noes 184.

Division No. 214]

[4.45 pm


Archer, Rt Hon PeterJones, Barry (Alyn & Deeside)
Atkinson, N. (Tottenham)Lamond, James
Beaumont-Dark, AnthonyLewis, Terence (Worsley)
Beckett, Mrs MargaretLitherland, Robert
Bell, StuartLloyd, Tony (Stretford)
Benn, TonyLofthouse, Geoffrey
Bennett, A. (Dent'n & Red'sh)Loyden, Edward
Bermingham, GeraldMcCartney, Hugh
Boothroyd, Miss BettyMcDonald, Dr Oonagh
Boyes, RolandMcKelvey, William
Brown, Gordon (D'f'mline E)McWilliam, John
Brown, Ron (E'burgh, Leith)Marek, Dr John
Caborn, RichardMarshall, David (Shettleston)
Callaghan, Jim (Heyw'd & M)Mason, Rt Hon Roy
Canavan, DennisMaxton, John
Carter-Jones, LewisMaynard, Miss Joan
Clark, Dr David (S Shields)Michie, William
Clay, RobertMikardo, Ian
Clwyd, Mrs AnnMorris, Rt Hon A. (W'shawe)
Corbett, RobinOakes, Rt Hon Gordon
Cowans, HarryO'Brien, William
Craigen, J. M.O'Neill, Martin
Crowther, StanOrme, Rt Hon Stanley
Cunningham, Dr JohnOttaway, Richard
Davis, Terry (B'ham, H'ge H'I)Park, George
Dixon, DonaldPatchett, Terry
Dobson, FrankPike, Peter
Dubs, AlfredRandall, Stuart
Duffy, A. E. P.Roberts, Ernest (Hackney N)
Eastham, KenRobertson, George
Edwards, Bob (W'h'ampt'n SE)Robinson, G. (Coventry NW)
Evans, John (St. Helens N)Sedgemore, Brian
Faulds, AndrewSheerman, Barry
Fields, T. (L'pool Broad Gn)Sheldon, Rt Hon R.
Fisher, MarkShort, Mrs R.(W'hampt'n NE)
Flannery, MartinSkinner, Dennis
Forrester, JohnSmith, C.(lsl'ton S & F'bury)
Fraser, J. (Norwood)Snape, Peter
Garrett, W. E.Soley, Clive
George, BruceSpearing, Nigel
Gilbert, Rt Hon Dr JohnStraw, Jack
Godman, Dr NormanTaylor, Teddy (S'end E)
Griffiths, Peter (Portsm'th N)Thorne, Stan (Preston)
Hamilton, W. W. (Central Fife)Tinn, James
Harrison, Rt Hon WalterWareing, Robert
Haynes, FrankWeetch, Ken
Heffer, Eric S.Winnick, David
Home Robertson, John
Hughes, Dr. Mark (Durham)Tellers for the Ayes:
Hughes, Robert (Aberdeen N)Mr. Richard Shepherd and
Hughes, Roy (Newport East)Mr. Jonathan Aitken.
Hughes, Sean (Knowsley S)


Alexander, RichardFox, Marcus
Alison, Rt Hon MichaelFranks, Cecil
Amess, DavidFreud, Clement
Ancram, MichaelGale, Roger
Arnold, TomGardner, Sir Edward (Fylde)
Ashdown, PaddyGarel-Jones, Tristan
Atkins, Robert (South Ribble)Glyn, Dr Alan
Beggs, RoyGoodhart, Sir Philip
Benyon, WilliamGorst, John
Biffen, Rt Hon JohnGower, Sir Raymond
Biggs-Davison, Sir JohnGreenway, Harry
Blackburn, JohnGrist, Ian
Bonsor, Sir NicholasGrylls, Michael
Boscawen, Hon RobertGummer, John Selwyn
Bottomley, Mrs VirginiaHamilton, Hon A. (Epsom)
Boyson, Dr RhodesHancock, Mr. Michael
Braine, Rt Hon Sir BernardHargreaves, Kenneth
Brandon-Bravo, MartinHarris, David
Brinton, TimHaselhurst, Alan
Bruce, MalcolmHawksley, Warren
Bryan, Sir PaulHayhoe, Barney
Buchanan-Smith, Rt Hon A.Hayward, Robert
Buck, Sir AntonyHenderson, Barry
Burt, AlistairHind, Kenneth
Butcher, JohnHolland, Sir Philip (Gedling)
Carlisle, John (N Luton)Holt, Richard
Carlisle, Rt Hon M. (W'ton S)Hordern, Peter
Cartwright, JohnHowarth, Gerald (Cannock)
Cash, WilliamHowell, Ralph (N Norfolk)
Chapman, SydneyHowells, Geraint
Churchill, W. S.Hughes, Simon (Southwark)
Clark, Hon A. (Plym'th S'n)Hunt, David (Wirral)
Clark, Sir W. (Croydon S)Irving, Charles
Clarke, Rt Hon K. (Rushcliffe)Jackson, Robert
Clegg, Sir WalterJohnson Smith, Sir Geoffrey
Coombs, SimonJopling, Rt Hon Michael
Cope, JohnKellett-Bowman, Mrs Elaine
Crouch, DavidKennedy, Charles
Currie, Mrs EdwinaKershaw, Sir Anthony
Dicks, TerryKey, Robert
Dunn, RobertKing, Rt Hon Tom
Durant, TonyKirkwood, Archy
Dykes, HughKnight, Gregory (Derby N)
Edwards, Rt Hon N. (P'broke)Lang, Ian
Eyre, Sir ReginaldLatham, Michael
Fenner, Mrs PeggyLawler, Geoffrey
Fookes, Miss JanetLeigh, Edward (Gainsbor'gh)
Forsyth, Michael (Stirling)Lennox-Boyd, Hon Mark

Lester, JimRenton, Tim
Lewis, Sir Kenneth (Stamf'd)Ridley, Rt Hon Nicholas
Lightbown, DavidRowe, Andrew
Lloyd, Peter, (Fareham)Rumbold, Mrs Angela
Lord, MichaelSainsbury, Hon Timothy
Luce, RichardShaw, Giles (Pudsey)
McCurley, Mrs AnnaShaw, Sir Michael (Scarb')
MacGregor, JohnShepherd, Colin (Hereford)
MacKay, John (Argyll & Bute)Silvester, Fred
Maclean, David JohnSims, Roger
Maclennan, RobertSkeet, T. H. H.
Major, JohnSmith, Cyril (Rochdale)
Malins, HumfreySmith, Tim (Beaconsfield)
Malone, GeraldSoames, Hon Nicholas
Marland, PaulSpicer, Michael (S Worcs)
Mather, CarolStern, Michael
Maude, Hon FrancisStewart, Andrew (Sherwood)
Mawhinney, Dr BrianStewart, Ian (N Hertf'dshire)
Maxwell-Hyslop, RobinStradling Thomas, J.
Meadowcroft, MichaelThatcher, Rt Hon Mrs M.
Mellor, DavidThomas, Rt Hon Peter
Merchant, PiersThompson, Donald (Calder V)
Meyer, Sir AnthonyThornton, Malcolm
Mills, Sir Peter (West Devon)Tracey, Richard
Mitchell, David (NW Hants)van Straubenzee, Sir W.
Monro, Sir HectorVaughan, Sir Gerard
Moore, JohnWaddington, David
Morrison, Hon C. (Devizes)Wakeham, Rt Hon John
Morrison, Hon P. (Chester)Waldegrave, Hon William
Moynihan, Hon C.Walden, George
Neale, GerrardWall, Sir Patrick
Nelson, AnthonyWallace, James
Neubert, MichaelWalters, Dennis
Onslow, CranleyWatson, John
Osborn, Sir JohnWatts, John
Owen, Rt Hon Dr DavidWells, Bowen (Hertford)
Page, Richard (Herts SW)Wheeler, John
Patten, J. (Oxf W & Abdgn)Wiggin, Jerry
Pawsey, JamesWigley, Dafydd
Pollock, AlexanderWinterton, Mrs Ann
Porter, BarryWrigglesworth, Ian
Prentice, Rt Hon RegYoung, Sir George (Acton)
Price, Sir David
Proctor, K. HarveyTellers for the Noes:
Raff an, KeithMr. A. J. Beith and
Rathbone, TimMr. David Penhaligon.

Question accordingly negatived.