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 Councils can tax second homes at full rate

Town halls will be able to levy the full council tax rate on second homes under a five point plan unveiled by John Prescott to transform the countryside with more affordable housing and improved services for remote communities.

The new deal for rural England, which will safeguard post offices, subsidise village shops, pubs and garages, improve public transport and bolster market towns, will also bring about wholesale changes to the post-war planning system which has kept intact the best farming land.

Unveiling a lengthy rural white paper, the deputy prime minister announced that the number of "social" homes let by housing associations would be doubled to 3,000 a year in three years time.

One housing charity said this move would merely bring the number to the level provided in 1996 by the last government.

However, the biggest uproar yesterday was caused by plans to let councils charge, after consultation, the full council tax for more than 200,000 second homes (a further 300,000 are let as holiday properties). At the moment second home owners get a 50% tax discount, which costs councils an estimated £150m annually in lost revenue.

While some Conservatives labelled the move vindictive, the chairman of the government's countryside agency, Ewen Cameron, who is effectively the prime minister's chief rural adviser, came close to accusing ministers of fighting shy of tougher measures.

Mr Cameron, a Somerset farmer who once chaired the Country Landowners' Association, said ministers should have forced councils to slap the full tax on second homes, rather than give them discretion to do so. He said: "People who have moved to a community because they think it is desirable have contributed very little to make it desirable and the least they can do is pay the full council tax."

Moria Constable, chief executive of the Rural Housing Trust, backed the criticism calling the move a fudge and warning that many councils would not increase the tax unless directed to do so.

But generally all parties welcomed many of the white paper's proposals.

Mr Prescott told the Commons that the government wanted a "living countryside with thriving rural communities and high-quality services...a working countryside". The plan, he said, was dedicated to tackling poverty, improving services and the economy, protecting the environment, and giving people a wider choice. Referring to Labour's measures to regenerate cities, with construction on brownfield sites, so saving perhaps thousands of acres of countryside, Mr Prescott warned against dividing town and country. He would study all proposals for building in rural areas. "We will build on urban brownfield first and greenfield last."

Some of the most adventurous proposals involve radical changes to the post-war farming policy. Funds will be diverted from agriculture to support other rural enterprises - a recognition that farming is in such steep decline that radical measures are needed to transform the countryside without damage to the environment.

By 2006, through a switch of EU common agricultural funds, about £1.6bn - 10% of total agricultural support - in Britain will go annually on other ventures, including tourism and alternative industries. Besides this, the agriculture ministry's veto on planning applications for agricultural land will be lifted. Since 1945, governments have stipulated protection of land classed as "the best and most versatile".

Mentioning the new legislation giving greater access to the countryside and its protection, Mr Prescott was at pains to underline the government's green credentials.

Other ministers weighed in yesterday to support the rural agenda of Labour, which now has more rural MPs than the Conservatives. David Blunkett, the education secretary, said the government had cut the number of village school closures to only four a year - from an average of 30 - and that this year £80m had been earmarked to support small country schools.

The main points

• Town halls to be given powers to levy the full council tax on second homes

• 50% rate relief for village shops, pubs and garages which offer wider benefits to the community such as cash machines

• £100m for one-stop health centres in 100 communities

• Revitalisation of rural post offices with £270m of investment

• £240m for rural transport schemes in addition to a £15m special transport fund to support taxis, car clubs and community transport

• The strengthening of parish and town councils by awarding the best of them new powers to provide a range of facilities while drawing up local plans


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