Considered in Committee
Dame Rosie Winterton in the Chair
Exemption for buildings used as nursery grounds
Question proposed, That the clause stand part of the Bill.
It is a pleasure to serve under your chairmanship today, Dame Rosie. I should like to start by reiterating this Government’s commitment to supporting the sustainable growth of farming and horticultural businesses. We firmly believe that the agricultural exemption from business rates plays an important role in supporting this aim and boosting agricultural productivity. This measure will therefore help to drive our ambitions for a more dynamic and self-reliant agricultural industry. Until a Court of Appeal ruling in 2015, the long-standing practice of the Valuation Office Agency had been to apply the agricultural exemption to all plant nurseries. However, the ruling clarified that the exemption did not apply to plant nurseries in buildings that were not occupied together with agricultural land, and used solely in connection with agricultural operations on that or other agricultural land. This does not reflect Government policy, and neither does it reflect our commitment to growth in the rural economy. The Bill will therefore amend the Local Government Finance Act 1988 and enable the Valuation Office Agency to return to its former practice of exempting all plant nurseries solely consisting of buildings. It will also enable the VOA to exempt those plant nurseries that have been assessed since the ruling.
The Government have been consistently clear that they would take action on this matter. In March 2017, we set out our intention to legislate in a written ministerial statement. A further written ministerial statement was made in 2018, restating our intention to legislate and for the first time confirming that the measure would have retrospective effect in England from 1 April 2015. In Wales, the measure will have effect from 1 April 2017. The Bill delivers on that commitment and, once enacted, it will restore the previous practice and enable refunds to be provided to the handful of plant nurseries that have already been assessed for business rates as a consequence of the Court of Appeal ruling. While the Bill will restore the practice of exempting plant nurseries and buildings, it will not otherwise disturb the existing boundary of the agricultural exemption. The Bill amends schedule 5 to the Local Government Finance Act 1988, which determines the extent to which certain hereditaments are exempt from business rates.
Turning specifically to clause 1, it amends paragraph 3 of schedule 5 to the 1988 Act, providing that a building that
“is or forms part of a nursery ground and is used solely in connection with agricultural operations at the nursery ground”
will, subject to the passage of this Bill, be exempt from business rates. Clause 1 also contains a provision that the measure will have effect from 1 April 2015 in England and from 1 April 2017 in Wales, as requested by the Welsh Government. That will ensure that the measure has the intended retrospective effect and that refunds can be provided as necessary.
Dame Rosie, you will be pleased to hear that the Bill is non-contentious. It simply fixes the position as it was before the 2015 Court of Appeal ruling and, on that basis, the Opposition are happy to allow the Government to go ahead without objection.
It was said both in the press and when the Local Government Finance Bill was in Committee before the election that the Government were pledging to right the wrong of the Court of Appeal’s hearing after listening to businesses’ concerns, but several other similar representations have been made. For example, in towns where the banks have closed and there is no post office, a convenience store might step in to install a cash machine, but it would straight away be taxed on the turnover of the cash machine, which could take the store over the threshold for small business rate relief. There have been calls for that issue to be examined, but we are yet to see any progress.
Another big issue affecting many high streets and town and city centres is the impact of business rates on the viability of retail. We see companies go under on an almost weekly basis because they cannot afford to meet the high running costs of operating in primary locations. Communities resent seeing their local high streets and town centres go downhill, and businesses and representatives of other organisations have made the same point, but the Government have offered nothing comprehensive in response, because there would be a big bill.
However, the truth is that if we want to save our town centres and high streets, we must be bold and fully examine how such premises are taxed if they are to have any future. This goes beyond business; this is about communities. When people talk about how well or badly their communities are doing, they will often point to their town centres and high streets as a barometer. When people see the roller shutters pulled down or boards over windows, that has a material effect on how they feel about their community, and the Government ought to take note of that.
When the Local Government Finance Bill was in Committee, the Opposition made the offer that where there were non-contentious issues on which local government was seeking progress, we were happy to sit down and go through a plan for the legislation that ought to be brought forward. That would be done away from partisan interests because it is the right thing to do for our communities, and I look forward to the Minister arranging such a meeting.
I am delighted to speak in support of a Bill that rights a wrong that was clearly never intended in the first place, and I have the honour of being the Member who first raised this issue when the Local Government Finance Bill was in Committee last year. Unfortunately, however, the Conservative party’s majority was not the only victim of last year’s general election, because that Bill fell at that point and the amendment that was likely to be made to it could not be passed, hence the need for this new Bill.
Plant nurseries play a vital role in this country’s food production supply chain. At a time when we want to increase domestic food supply and become less reliant on imported food, it is right to do all we can to support an important industry and ensure that we do not impose a further tax on producers that would see them struggle with the additional costs. Many of them would face the possibility of going out of business, with the loss of jobs that that would entail. The Bill sets out to put in place what the Local Government Finance Act 1988 always intended and to ensure that the exemption for nurseries continues. It will support our rural economy, ensuring that we support food production and that jobs are retained in the industry. I am therefore pleased to support the Bill to ensure that it becomes an Act as soon as possible.
Does my hon. Friend agree that this is a crucial Bill, because it gives hope to so many businesses that underpin life in rural constituencies such as his and mine?
I agree that it is vital to support those important businesses in our rural communities. If the jobs that they provide were lost, it would be difficult to replace them.
Does my hon. Friend agree that the Bill is important for farmers wanting to intensify their businesses, because it will put it beyond doubt that any nursery operation will come under the scope of the exemption?
I am grateful to my hon. Friend for that good point. We should do all that we can to support our farmers who want to diversify and expand their operations to include growing plants in greenhouses and so on, and they should be able to do so with confidence and in the knowledge that they will not suddenly incur a business rates bill. It is therefore correct that we introduce clarity and put right the wrong that the court case created. As I said, I do not believe that that wrong was ever the intention of Parliament or the Government, and we should provide the sector with confidence that horticultural buildings and nurseries will continue to attract the agricultural exemption that they should rightly have.
I acknowledge the role played by the National Farmers Union in bringing the matter to my attention and lobbying on this issue. It has spoken up for its members, ensuring that their voices have been heard. I thank the Minister and the former Local Government Minister, my hon. Friend the Member for Nuneaton (Mr Jones), for listening carefully to the arguments, agreeing to take this measure and ensuring that the matter is corrected. I welcome the Bill and trust that it will pass unopposed with wholehearted support from across the House so that it can reach the statute book as quickly as possible to support this sector.
I rise to support clause 1. As ever, it is a pleasure to follow my hon. Friend the Member for St Austell and Newquay (Steve Double), although he has just reminded me of the Local Government Finance Bill and the many interesting and fun hours that we spent on it, particularly in Committee. Unfortunately, however, those hours were subsequently lost when the Bill fell, so it is good to see this measure coming to the House, as have several other provisions that were in the previous Bill.
The agricultural exemption for nursery grounds has been in place for a significant period, dating back to 1929. Indeed, this issue was raised during the passage of the Local Government Finance Act 1988, when Ministers gave a steer that there was a clear intention that nursery grounds should be subject to the same sort of exemption as other agricultural uses. The Court of Appeal case—the Tunnel Tech case—seems to have driven a coach and horses through the custom and practice since 1929 and the intimation given by the then Government during the passage of the 1988 Act that the status quo would prevail. To put it mildly, suddenly receiving a significant rates bill as the result of a Valuation Office Agency investigation and the subsequent Court of Appeal case has challenged a number of growers in the running of their businesses.
I am pleased in many ways to have played a small part in the Bill. My hon. Friend the Member for St Austell and Newquay apprehended me in the Division Lobby one evening to explain the challenge he was seeing in his area as a result of this Court of Appeal ruling and the problems it was likely to cause growers. We subsequently had meetings with the National Farmers Union, which put a coherent and collegiate case for restoring the status quo.
I am glad that, when I approached the then Secretary of State for Communities and Local Government and the matter was put before Ministers—we do not always receive this type of response—the unanimous verdict was that the Court of Appeal decision was not the right thing for growers and other such businesses and was not consistent with the Government’s intention. I was delighted to publish a written ministerial statement confirming the Government’s intention to restore the position as it was before the Court of Appeal ruling and to allow the agricultural exemption in this regard, as was clearly intended.
My hon. Friend mentions the NFU’s contribution. Will he join me in showing appreciation for its work in representing our farming and agricultural industries, particularly when we are deciding on the future of those industries? Does he agree it is important that the Department for Environment, Food and Rural Affairs, in particular, continues working with the NFU to make sure we get the policy right?
My hon. Friend makes an extremely important and pertinent point. The agricultural industry is very different from many other industries in this country. This country needs to be as self-sufficient as possible in food production, and we also need to consider that it is often difficult for producers in the industry to recover their costs. For example, there has been a perennial challenge for milk producers, which have not been able to realise even the cost of production. That is why organisations such as the NFU are extremely important in bringing such issues to the fore so that we maintain our food security.
Does my hon. Friend agree that, with Brexit, it will be ever more important that this type of horticultural industry is as competitive as possible? Countries such as Holland and Italy are increasingly competing with our industry, and it is much better to grow food here for phytosanitary, employment and all sorts of other reasons.
I completely agree with my hon. Friend. Again he is absolutely right that, wherever we can, we should be producing food in this country for those reasons.
Importantly, clause 1 is a retrospective measure. Such measures are often not retrospective, but it is important that the Bill is being implemented retrospectively, because a number of growers have already been caught by the provisions of the Court of Appeal decision and, as a consequence, have seen their business costs rise significantly. I have mentioned the challenges that agricultural producers often face, and those challenges are compounded when growers are retrospectively asked for an amount of money that they did not anticipate they would need to build into their business costs.
In this case, a number of growers will have already sold their produce and therefore will not have factored this into their price, if they were able to do so. The decision will put a significant strain on the businesses in question, so I am pleased the Bill is being applied retrospectively and that businesses that have already been caught by the Court of Appeal decision will be refunded any business rates they have paid.
Does my hon. Friend share my view that another reason why we need to keep costs down is to allow the industry to invest as much as possible in emerging new techniques and technologies for developing and growing food and increasing yield? An additional tax burden would reduce the amount of money the industry can invest for the future.
My hon. Friend is right. There is huge potential for such industries to grow—pardon the pun—but investment in technology is needed for them to do that. If the Government or, in this case, the Court of Appeal decide to levy an additional cost on such businesses, bearing in mind many of them are small and medium-sized businesses, the chances of their being able to continue investment will be diminished. The Bill will therefore help us to facilitate businesses in taking advantage of new technological advances. By being more likely to invest than they otherwise would have been, they will be able to further themselves, and hopefully not only will their prospects improve but they will add to UK GDP and add jobs in their local area.
I am grateful to my hon. Friend the Minister, who is now taking the Bill forward. The Bill is a positive step to put right a Court of Appeal decision that most rational people consider to be wrong. I am extremely glad that the Bill is being applied retrospectively. As colleagues have said today, not only will it enable growers to continue growing produce to sell on to other growers, who can then provide the produce we all buy in the shops and subsequently eat, but it will enable growers to invest for the future. The Bill will make sure this country continues to be a leading player in advancing how we grow our food and sustain our population.
It is extraordinary that this House has spent so long talking about doing such a simple thing as undoing the errant court judgment, and I suspect we may even continue talking about it for a few minutes yet. However, that is only fitting, because, as has been said by a number of my hon. Friends, including the Minister, and by the Opposition, we are all here concerned about this issue as we understand the profound impact that a single court judgment could have had, not only on businesses up and down the country, but on the food chain and even on the communities and local economies that those businesses support.
I have talked in the previous debate on this matter about the individual constituency business that came to me to discuss the impact this court judgment would have had, not only on its business and bottom line, but, crucially, on the income to the local internal drainage board. This would have meant that in my constituency, which is the most at risk of flooding in the country, according to the Association of British Insurers, not only would businesses and livelihoods have been affected, as others have said, but, even worse, that huge swathes of the area would have been at greater risk of flooding. That would have posed a real threat to the broader economy, the food chain and huge numbers of people who live in areas at or sometimes below sea level and who rely on those internal drainage boards being able to function.
The Bill is therefore a hugely important tweak to the legislation that was inadvertently altered by the court judgment, and it is a fitting tribute to the change that the previous Minister and this Minister are initiating and seeing through respectively that we have devoted a reasonable amount of parliamentary time to it. However, it is worth pointing out that we would hope in future, in legislation generally, not just in this area, to avoid a single court judgment having the kind of ramifications that this one has had here. We would all like not to put our constituents through the genuine trauma of knowing that the business they work for might face real financial difficulties simply because of a single court judgment. Somewhat unusually, these people in my area may also face the risk of their homes and businesses being flooded, which is an additional factor.
Although it is good that the Government are fixing this and the Opposition parties have co-operated so readily in fixing it, we should also bear in mind that it would have been better not to have found ourselves in this situation in the first place. So my plea to the Minister is to see what he can do, working across the Government—I do not pretend that all the problems are in his Department, by any means—to avoid legislation where we have not thought through all the potential consequences of the precise wording. We spend a lot of time in Bill Committees and in Committee of the whole House going through pieces of legislation line by line, paying close and deep attention to every moment in those Committees, but sometimes such things lay themselves open to unintended consequences, so we would all welcome anything that can be done to try to avoid them.
Clearly, the Government have acted as quickly as they can, given the unfortunate situation with the previous Bill, to bring this piece of legislation back individually, notwithstanding the election interrupting the previous passage of the Local Government Finance Bill. Obviously, that Bill was going to do a number of things far wider than this one and it is clearly the right thing to have adjusted how the legislation has been formatted so that we can do this quickly. It is likely we would have ended up seeing businesses paying large sums and going through significant difficulty only then to be given that money back. Of course it is a good thing that this legislation has been moved on faster than it otherwise might, but I hope that we would all like to avoid this sort of situation in the first place.
I will close simply by saying that I hope the Minister will do all he can to avoid this sort of situation arising again, should he have the opportunity. I re-emphasise how good it is that we have been able to bring this matter to a relatively speedy conclusion and how heartening it is to see so many colleagues discussing a matter that otherwise would have passed with relatively little attention. This is a good example of the Government giving real attention to an important matter and acting quickly to correct a court judgment that was never intended by any previous Government. I welcome the actions that the Minister has taken and, as I said previously, that his predecessor has taken. Perhaps weirdly, I welcome, above all, the co-operation of the Opposition in getting on with this ever so quickly. I hope that the constituents who raised this issue with me see that this is an example of action being taken and are genuinely reassured.
It was particularly moving to be in here as we heard the sound of the RAF fly-past a few moments ago to mark 100 years of the RAF. It was 100 years ago this month that my great, great uncle John Headlam was killed while serving in the RAF, so it is nice to be able to pay tribute to his service and sacrifice.
We are a nation of gardeners, and it is important to us all that our nursery sector thrives. It is a particular pleasure to see my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) on the Front Bench as the Minister today, because my constituency abuts his and it is home to some of the nurseries that I know very well—Cherry Hill and Strikes in Stokesley, which was subject to a recent devastating fire. I know that I speak on behalf of lots of people in my constituency when I say that I hope Strikes is back up and running in its normal place as quickly as possible.
The nursery industry is extremely significant for growing produce for our home market and for ensuring the sustainability of our rural economy. At a time when there is fierce competition from the supermarket and similar sectors, there is no doubt traditional nurseries need all the support they can get that Agricultural land has been exempt from business rates for almost 100 years.
I want to pick my hon. Friend up on the point about supporting nurseries and this kind of industry. Does he agree that it would be right for this place to make a plea to our constituents, not just in this area, but across our high streets and in all sorts of other areas, to support independent local businesses such as these nurseries to ensure that they can continue to exist in the future?
I thank my hon. Friend for that intervention and he is right in what he says. That is something people really care about, and people often regard these nurseries as a hub in the local community. They are not just another shop; they are often dearly loved, and this fits with the spirit of the time, when people increasingly want to buy local.
Until recently, the exemption that applied in this case had been assumed to be uncontroversial and would fit with the understanding of both rating valuers and practitioners. That was the situation until the 2015 court judgment in the Tunnel Tech case, which was a great mistake. I am delighted that the Government have taken steps to reverse it, as such judicial activism simply is not appropriate. The Bill will ensure that plant nurseries in buildings will once again benefit from the business rate exemption, which restores the law to the same state in which it existed before the Court of Appeal decision. I am pleased that the Bill will apply retrospectively, so that those nursery grounds in England that have been charged business rates will now be refunded.
The Government should be congratulated on acting so swiftly to rectify this wrong and on demonstrating common sense. This is so clearly the right course of action that there is no controversy anywhere in this House, and the Bill has received full support from the NFU. I pay tribute to the NFU, because I know full well the value of the work it does in supporting farmers in rural East Cleveland. Indeed, I had the pleasure of going on a farm visit with the NFU recently to see Capon Hall farm and Peter Humphrey. That is exactly the kind of work the NFU does day in, day out, and it should be saluted.
The legislation needs to be viewed in the broader context of the Government’s commitment and keenness to support our agricultural sector and small businesses, especially those in rural areas. Last week, I spoke out about my deep concerns regarding the future of business rates, but it is worth noting that as a result of measures taken by the Government, more than 600,000 small businesses—occupiers of a third of all properties—now pay no business rates at all. The Government doubled small business rate relief to 100% and raised the threshold from £6,000 to £12,000. At the same time, the Government doubled rural rate relief from 50% to 100% for eligible businesses. Such reliefs are hugely welcome for many small businesses in my constituency.
I am tempted to point out that the opportunity to use the “green shoots of recovery” line is simply too good to pass up in such a debate. It is with absolutely no hesitation that I support the Bill and the Government’s other continuing efforts to ensure that rural small businesses in this country get the best chance to succeed.
I am delighted to speak in support of the Bill. This is a most pertinent time to talk about measures that will aid our worthy horticultural industry—not least because it is the tennis season. In particular, it is the time of that most prestigious of world-class events, Wimbledon. What is even more important about Wimbledon than the tennis, Sir Lindsay? The strawberries. People were wondering how I could get tennis into the debate—
But more so the cream.
I have written down in brackets “and cream”. During the tournament last year, more than 166,000 portions of strawberries were served, with cream. That is 33 tonnes of strawberries. Were I not speaking in this debate, I would be at Wimbledon. That is how important I think it is that we get our business through.
Many strawberry plants, like other plants in the horticultural chain, start life being propagated in nursery grounds, which are often the lifeblood of the horticultural industry. They are the hotbed of germination, propagation and cultivation, and we are discussing them because the Bill exempts from non-domestic rates buildings that are, or form part of, a nursery ground, as several hon. Friends have already said. It gives nursery grounds parity with their agricultural counterparts.
The south-west region, where I come from, is a rural region with a good climate for gardening, growing and horticulture, and it supports so many businesses in the sector, not least in Taunton Deane, which is one reason why I particularly wanted to speak in this debate. I also wanted to speak because in a previous life I worked for the National Farmers Union and got quite involved with the horticultural industry, and I was for many years a horticultural and gardening journalist and broadcaster, so this subject is close to my heart.
I certainly appreciate the hard graft—to use a horticultural term—involved in the industry and the very tight margins, especially for those at the start of the chain. It is difficult for them to pass on their costs: they cannot have huge add-ons because they do not deal with the general public. For this small sector of the industry to discover recently that it was to be penalised by having to pay business rates, when previously it had been exempted, like its agricultural counterparts, was a bitter blow.
Let me give some background. Nursery grounds were exempt from non-domestic rates from 1928 until recently when, through one particular court decision, about which we have heard from colleagues, it was found that the exemption was an incorrect application of the law. This was a bolt from the blue and, as can be imagined, caused a huge amount of angst in the nursery industry, which was already up against the tight margins that I mentioned. The Horticultural Trades Association reported that the change would be detrimental to the industry: if nurseries had to pay business rates that they had not paid previously, that would inevitably drive up costs that would be passed on to the consumers at the end of the chain. As Conservatives—we are the party of business—that did not sit easily with us. The HTA reported that some of its members could face bills to the tune of hundreds of thousands of pounds if the situation was not rectified.
I am delighted to say, though, that through the ripening of this small but perfectly formed Bill, the wrong has been righted. The fruitful outcome that we are witnessing today clarifies once and for all that the situation will again be aligned with the previous practice of exemptions. I am particularly pleased to hear that the funds will be backdated, as specified in the Bill. The Bill demonstrates that, in such an instance, where unfairness has so obviously been demonstrated, the Government, particularly the meticulous and attentive Minister, have listened—and they have not just listened but acted.
The Bill is fully in step with the Government’s commitment to a vision of a productive, competitive and sustainable UK agricultural sector, of which horticulture and the plant nursery sector are an important part. In fact, I believe there is great scope for the industry to grow and blossom, particularly as we exit the EU. With the right back-up, such as that demonstrated through this Bill, there is an opportunity to grow more of our plant material at home, to fuel our landscaping and ornamental plant industry, thereby avoiding the inherent plant disease and pest threats that are associated with importing plants for this trade. For example, we hear a great deal about the disease xylella, which is wiping out olive trees and many other herbaceous and woody commercial plants in Europe. We do not want that in the UK.
After the granting of Taunton’s new and most welcome garden town status, designated through the Ministry of Housing, Communities and Local Government, I am working to see more trees included in our townscape. Would it not be wonderful if, at the same time as improving the environment and people’s health and wellbeing, along with all the other benefits that we get from trees, those trees were home-grown, so that the economy benefits at the same time?
Let me touch on the idea of growing the whole horticultural industry and why it is important to put in place measures such as the Bill to stimulate the industry. It is thought that there is great scope to grow the industry, perhaps by as much as an incredible £18 billion. In fact, tomorrow the all-party group on gardening and horticulture is holding an inquiry into how we can skill up the industry and what we need to do to make that happen. There is consensus from the Horticultural Trades Association that if the gross value added—that is, the goods and services that emanate from the diverse horticultural and gardening industry—was measured, which it currently is not, it would demonstrate exactly how valuable the sector is to the economy. It would then be easier to make a case for putting in the right measures, including research and development and so on, to grow the sector.
This small but perfectly formed Bill rights an injustice relating to the imposition of business rates on a special sector of the important horticultural industry, one of the very veins of the supply chain. In so doing, it benefits the industry by not saddling it with an unwelcome property tax and thus helps all those who work in the trade and the whole economy, by giving back to the industry one of the benefits that it needs to thrive. It will have particular resonance throughout the south-west, so I fully support the Bill.
It is a pleasure to respond briefly to the various points raised. I thank my opposite number, the hon. Member for Oldham West and Royton (Jim McMahon), for the typically constructive way he has approached this type of legislation; of course, we do not agree on everything, but it is fantastic to be able to move these relatively technical matters through the House speedily.
The hon. Gentleman expressed, as he has before, a specific concern about whether the presence of an automated teller machine in a convenience store could take the rateable value of that small shop above the threshold for small business rate relief. Having looked into the matter, I am delighted to tell him that we do not believe that that should be the case. If an ATM is rateable, it would appear as a separate assessment on the ratings list and the ratepayer would typically be the financial institution that operates the ATM, not the shop itself. I assure the hon. Gentleman that we are discussing the specific issues with the Association of Convenience Stores to ensure that its concerns are investigated and addressed.
The hon. Gentleman turned to the important topic of high streets. I know that all of us in this House celebrate our local high streets; they are vital parts not just of our communities, but of our economies. I am very pleased to tell him that my hon. Friend the Member for Rossendale and Darwen (Jake Berry) is the Minister for high streets and is fully focused on the issue at hand through the Future High Streets Forum. More excitingly, he has just launched the Great British High Street Awards 2018. I will do a plug and call on all Members to nominate their local high streets. Nominations are open until the end of August. The last iteration of the competition saw almost 1,000 entries from across the country and hundreds of thousands of votes from the public to choose the eventual winner. There is a considerable cash prize on offer for the winner and, indeed, a new rising star category. The winner will also receive expert advice from industry professionals. I hope that the hon. Gentleman knows that we take the issue of high streets very seriously indeed.
Let me touch briefly on some of the other contributions. My hon. Friend the Member for St Austell and Newquay (Steve Double) should take enormous pride in the role that he has played in ensuring that we are discussing this important issue today. Hopefully, this legislation will eventually receive Royal Assent and that will be in no small part owing to his efforts to put this issue on the agenda of Ministers, and he deserves enormous credit for that.
My hon. Friend the Member for Nuneaton (Mr Jones), who had this job before me, put in motion the Bill that we are discussing today and engaged with my hon. Friend the Member for St Austell and Newquay on this important topic, ensuring that when I arrived in the Department this agenda was ready to take forward, and he also deserves credit for that. It is always intimidating to have to respond to him in this Chamber, as I am always reminded that so well did he do this job before I inherited it that the job had to be split between two different people. The Under-Secretary of State for Housing, Communities and Local Government, my hon. Friend the Member for South Derbyshire (Mrs Wheeler), sits beside me on the Bench. The two of us together do our best to replicate what he did before us and we are grateful that he left everything in such good shape for us to pick up.
My hon. Friend the Member for Boston and Skegness (Matt Warman) has been a stalwart in speaking about business rate tweaks. I join him in hoping that there are far fewer of these to come in the immediate future, but thank him for his support of the Bill. He spoke eloquently about defending the rural interests in his constituency, which will benefit from this Bill, as he did when we enabled business rates relief for new fibre installations, a topic that is dear to his heart and which he pushed hard for. He should shortly be seeing the benefits of that policy in action across the country.
My constituency neighbour, my good hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), has, as I know at first hand, a very mixed constituency. As ever, he did an excellent and eloquent job in talking about the importance of small businesses across Teesside and the efforts that this Government have put in place to ensure that the tax burden on those small businesses is as low as possible. I welcome his support for the £10 billion-worth of measures to alleviate the burden of business rates on small enterprises across Teesside. I am glad that they are benefiting from that. In the rural part of his constituency in East Cleveland, the agricultural community will, I am sure, welcome his support and lobbying for this measure as it can ensure that its productivity remains high in the months and years to come.
What better place to end than with my hon. Friend the Member for Taunton Deane (Rebecca Pow)? As ever, she gave us a brilliant defence and a brilliant celebration of our rural economy and everything that it contributes to our national life. We are, of course, grateful to her for gracing us with her presence today, when she could have been at Wimbledon enjoying the strawberries, the Pimms, the cream and everything else on offer. I must say that, when it comes to slipping requests, she clearly has a much better relationship with the Whips than I do, as my previous requests for various exemptions for cricket matches and tennis matches were firmly denied, so I have something to take up with the Whips in due course.
I am glad that we have had a very constructive discussion today and that there is widespread support for this particular clause.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2 ordered to stand part of the Bill.
The Deputy Speaker resumed the Chair.
Bill reported, without amendment (Standing Order No. 83D(6)).
Order. As indicated on the Order Paper, the Speaker has certified that the Bill relates exclusively to England and Wales on matters within devolved legislative competence. As the Bill has not been amended, there is no change to that certification. Copies of the certificate and the consent motion are available in the Vote Office. Under Standing Order No. 83M, a consent motion is required for the Bill to proceed. Does the Minister intend to move the consent motion?
The House forthwith resolved itself into the Legislative Grand Committee (England and Wales) (Standing Order No. 83M).
[Sir Lindsay Hoyle in the Chair]
On a point of order, Mr Deputy Speaker. I beg to move that the Legislative Grand Committee do sit in private.
As we both know, you cannot move that motion at this stage.
Further to that point of order, Mr Deputy Speaker. Can you clarify that the reason that I cannot move that motion is because I am a Scottish MP and have been rendered a second-class Member of the House as a result of English votes for English laws?
Mr Linden, you may wish to judge yourself as a second-class Member, but let me reassure you that I will always treat you as a first-class Member. On that basis, you will still not get your way.
I remind the House that only Members representing constituencies in England and Wales may vote on the consent motion. I call the Minister to move the consent motion.
Motion made, and Question proposed,
That the Committee consents to the Non-Domestic Rating (Nursery Grounds) Bill.—(Rishi Sunak.)
It is a great honour to serve under your chairmanship, Sir Lindsay, and, indeed, it is a pleasure to serve on this esteemed Legislative Grand Committee of England and Wales. I look forward to making a few observations on the Bill, which has been certified by Mr Speaker as competent for EVEL. It is of course a real pity that, should the Bill divide the Legislative Grand Committee, I and my hon. Friends from Scotland will be excluded from having our vote counted. Indeed, Scottish colleagues have to endure the immense indignity of being ordered by Government Whips to traipse through the Lobby to have their vote discounted in person. It is all incredibly sad. My immense sadness in this regard is founded upon the view that, during the Scottish independence referendum of 2014 and indeed after it, we the people of Scotland were told that Scotland is an equal partner of the United Kingdom. The Secretary of State for Scotland might have strayed off that line a couple of weeks ago, but I am sure that that was a mere oversight on his part.
Today, we have been relegated from legislators to narrators, and so can only speak in the Legislative Grand Committee—and speak I certainly will. Before I continue with my remarks, let me say that I am conscious that I must stick to the strict parameters of this fine Bill. I wish to offer, though, a few thoughts on the English votes for English laws mechanism and, in particular, Standing Order No. 83.
In essence, Scottish Members of this House have become second-class MPs in the House of Commons. EVEL basically excludes MPs from Scotland, and in some cases MPs from nations other than England, from voting on legislation that could have consequentials and affect other parts of the UK. There are also financial implications, as decisions taken for England only can lead to changes to Scotland’s budget from the UK Government.
I rather suspect that the days of the English votes for English laws are numbered, but, for so long as this legislative apartheid continues, I shall continue to be a diligent participant in the Legislative Grand Committee.
I just want to note the fact that my hon. Friend the Member for Perth and North Perthshire (Pete Wishart) is unable to be here, as he is in the Scottish Affairs Committee. Unfortunately, that brings my hon. Friend the Member for Glasgow East (David Linden) closer to beating his record of being the Member who has spoken the most often in the Legislative Grand Committee. The ironic thing is that Members from England and Wales never actually speak in the English Legislative Grand Committee.
I am grateful to my hon. Friend for that powerful intervention. Perhaps today we might find that Members from English constituencies will rise to speak, but I would not necessarily hold my breath for that.
When I first looked at the Order Paper last week and saw that we were debating the Non-Domestic Rating (Nursery Grounds) Bill, I excitedly and somewhat naively thought that this was about nurseries in the sense of toddlers and early years. There was I planning to come to the Legislative Grand Committee to talk about the SNP Scottish Government’s childcare revolution.
I should declare an interest: my three-year-old son, Isaac, starts nursery next month and is thoroughly looking forward to starting Sgoil Araich Lyoncross. The incredibly good news about that childcare revolution is something that will be welcome from Shettleston to Shetland.
Of course, had the Bill been about nurseries in the early years sense, I could have regaled the House with some wonderful nursery rhymes, such as my favourite, “The Grand Old Duke of York.” It rather reminds me of the right hon. and learned Member for Beaconsfield (Mr Grieve), with regard to Brexit, particularly the lines,
“He marched them up to the top of the hill,
And he marched them down again.”
Alas, the House will have to wait for another day to hear me pontificate about nurseries and nursery rhymes. Instead today, we have the delight of discussing non-domestic rates for nurseries of a plant variety, and what a treat that is.
The Bill’s purpose is to reverse the effect on valuation practice for non-domestic rating of the 2015 case, Tunnel Tech v. Reeves. In brief—I shall try to be brief, because I know other Members want to get on to other business soon—the case established that, where a business operates a plant nursery or nursery ground where agricultural operations take place entirely indoors, it cannot benefit from the general business rates exemption for agricultural land and buildings. The Government made a policy commitment to legislate to establish that nursery grounds should be entitled to an agricultural exemption and to apply that exemption retrospectively, back to the 2015-16 financial year.
The Legislative Grand Committee will doubtless be aware that, on 9 July 2015, the Court of Appeal gave judgment in the case of Tunnel Tech v. Reeves. I am sure that all members of this esteemed Legislative Grand Committee will have read in full that judgment from the Court of Appeal. The case concerned the rateability of a property occupied by the company Tunnel Tech in Stockbridge, Hampshire. The property was used for growing mushrooms from spores. I myself absolutely abhor mushrooms and feel that they can really ruin a rather good lasagne, but I do not want to digress too much from the subject at hand.
A mixed material was fermented and then used to fertilise
“mushroom mycelium grown through sterilised wheat or rye grain produced in laboratory conditions”.
After 20 days, mushroom tendrils have grown within the material. It is very interesting that, at that point, Tunnel Tech removed the material and transferred it to specialist mushroom farms. I have never had the pleasure of visiting a mushroom farm myself, but I am only young. [Interruption.] I am glad to hear that the hon. Member for Ogmore (Chris Elmore) has visited a mushroom farm. Perhaps he might extend an invite to me to visit one in his constituency. I am still relatively young; there is plenty of time left to visit mushroom farms in my life.
The court found that the property in that case was liable for business rates because the mushrooms were produced in order to be sold on to complete the cultivation process elsewhere, not direct to consumers, and because of that, the property did not attract an agricultural exemption. In rating terms, it was a “nursery ground” and not a “market garden”. It is very important that the Legislative Grand Committee takes that seriously.
The Valuation Office Agency rating manual defines a nursery ground as
“land in, or on which, young or immature trees and/or young plants are reared (not necessarily being grown in the actual soil of the nursery) until fit for transplanting or sale: the emphasis on young plants should be noted. Even though plants are raised in containers on the land rather than by rootstock in the soil, such ‘grounds’ should be treated as exempt.”
The rating manual defines a market garden as
“a holding cultivated wholly or mainly for the production of vegetables, fruit and flowers for sale in the course of a trade or business.”
The definitions are used for internal guidance purposes by the VOA and do not have the force of law, but they are based in part on case law discussions of the definitions of those terms.
On Second Reading, the Minister—who I know is playing very close attention to my remarks today—said:
“A nursery ground is where small plants or trees are propagated or sown with a view to their being sold on to someone else for growing on to their mature state, for sale to or use by the end consumer, whereas a market garden”—
this is where there is a differentiation—
“is where fruit, vegetables, flowers or plants are produced to be sold directly or indirectly to members of the public for consumption.”—[Official Report, 5 June 2018; Vol. 642, c. 259.]
Agricultural land has been exempt from business rates since 1929. I do not want to test the patience of the Committee too much by going back to 1929. The Committee will be relieved to know that I do not plan to do that. However, areas within an agricultural property that are used for farm diversification such as a farm shop or holiday accommodation on what was previously a farm are liable for business rates. The current legislative authority for that can be found in schedule 5 of the Local Government Finance Act 1988. I am sure that all members of the Legislative Grand Committee have paid close attention to that. Before that, agricultural land had been subject to a 75% discount on rates from 1923, a 50% discount for poor law rates and a 75% discount for sanitary-related rates from 1896, known as partial derating.
I am really only clearing my throat at the moment, but I am conscious that scores of other right hon. and hon. Members, especially for English constituencies, will wish to contribute to the Legislative Grand Committee of England and Wales.
Before my hon. Friend comes to a conclusion, I want to reflect on his earlier point about “nurseries” and “nurseries”. It is a good opportunity to pay tribute to the Children’s Wood in my constituency, an outdoor play facility that hosts a nursery for young children but also has an allotment that in itself is a nursery for vegetables. It shows that the two things can be brought together and serve important educational purposes, and we should pay tribute to that kind of thing.
I do not want my hon. Friend to think that I am coming to the end of my remarks too early. I am only a third of the way through. He is right to pay tribute to the organisations in his constituency, and while I have the floor, I pay tribute to Eddie Andrews of Connect Community Trust in the Wellhouse area of my constituency, who does a sterling job of looking after that allotment. There is a long-standing problem that allotments have not been given the focus that they require, especially in Glasgow. We now have an SNP Administration—
Order. Perhaps I can help. If the hon. Gentleman is suggesting that he needs an Adjournment debate, he should apply for one on allotments, because obviously we will not be discussing that as part of today’s debate.
I am grateful for your guidance, Sir Lindsay. That is much appreciated. I am conscious that scores of MPs from English constituencies will wish to take part in this important Legislative Grand Committee. Members fought for it for a long time; it was the English Parliament. I expect to see hundreds of MPs rush into the Chamber to get to their feet and make their voice heard. There is still time for that, but I shall return to my own remarks.
Tunnel Tech sought to argue that its use of the property constituted that of a market garden. The term “market garden” has no statutory definition, but using several examples of case law, it argued that a hereditament is a market garden if any part of a process of horticulture is carried on there with a view to ultimate consumption by the public, even though the produce of the hereditament is not itself, when it leaves the hereditament, an article capable of consumption by the public or indeed intended for consumption by the public. For the purposes of time, I will not read out the full 2015 judgment; the Chairman is indicating that he would prefer me not to read it out. The judgment found that Tunnel Tech’s use of the property meant that it constituted a plant nursery and not a market garden. The produce of a market garden is suitable for direct or indirect sale to consumers, whereas the produce of a plant nursery is not. I found that fascinating when I read the briefing note for this.
This distinction was important because Tunnel Tech’s operations took place entirely within the buildings. The provision for the exemption of agricultural buildings is found in paragraph 3 of schedule 5 to the 1988 Act. It says, and it is important that the Committee understands this:
“A building is an agricultural building if it is not a
(a) it is occupied together with agricultural land and is used solely in connection with agricultural operations on the land”
(b) it is or forms part of a market garden and is used solely in connection with agricultural operations at the market garden.”
The 2015 judgment noted that paragraph (b) does not include plant nurseries in the definition of agricultural buildings. It is important that we make that distinction. Therefore, a plant nursery that is located entirely indoors does not constitute an agricultural building and is not exempt from business rates. I am a frequent visitor to garden centres and there is one in the constituency of my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows). We in the SNP Whips Office have been there before to enjoy some tea and cake and I commend the garden centre to anyone visiting central Scotland.
It is worth noting that garden centres, including those calling themselves nurseries—I ran an election campaign from a nursery in 2016 in Barrhead in the constituency of the hon. Member for East Renfrewshire (Paul Masterton), but I will not go into that in great depth—are not considered to be agricultural land or agricultural buildings. They are subject to normal business rate liability and will continue to be so if and when the Bill receives Royal Assent.
I can see that some colleagues are getting a bit impatient at the length of my remarks—[Interruption.] The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) says, “Carry on!” I am tempted but I had better not. I know that countless hon. Members from English constituencies will be wishing to take part in this Legislative Grand Committee of England and Wales, so I shall conclude by thanking you for your forbearance, Sir Lindsay, and wishing this Bill a very speedy passage when it goes to their noble lordships.
Question put and agreed to.
The occupant of the Chair left the Chair to report the decision of the Committee (Standing Order No. 83M(6)).
The Deputy Speaker resumed the Chair; decision reported.
I beg to move, That the Bill be now read the Third time.
I thank all hon. and right hon. Members who have contributed at the various stages of the Bill in supporting the measures involved and highlighting the contribution that it makes towards furthering the Government’s ambitions to support agricultural and horticultural productivity. I am grateful to the Clerks of the House and for the work done by the officials both in DEFRA and in my own Department.
I thank the National Farmers Union for its strong support for the Bill. We have worked closely with the NFU to make sure that nurseries benefit from the exemption in the Bill. I am grateful for its invaluable insight and expertise, which has helped to bring these effective measures to the House.
This Bill is just a small part of how the Government are using the business rates system to create opportunity and drive growth across the country. It has wide support, restores a long-standing policy position, and will support a vibrant and sustainable rural economy. I commend it to the House.
Question put and agreed to.
Bill accordingly read the Third time and passed.