FARMERS who are to be expected to diversify could be financially caned for it, an accountants' leader in York complained today.

David Walker, president of the York Society of Chartered Accountants and director of Botting & Co Ltd of Clifton Moor, is furious that farmers trying to build their way out of the foot and mouth crisis and general decline in farm profitability face the prospect of even bigger rates bills in spite of the Government setting up a rate relief scheme. He wants the rules to be changed.

Mr Walker's protest was triggered by a farming client who has received hefty increases in his rates liability notification from Leeds City Council.

He said: "My client converted some outbuildings into livery stables, believing this was a sensible move in keeping with the calls for farmers to stand on their own two feet and look to other sources of income. He received a rates valuation of £21,700 for the stable block.

"While he will qualify for 50 per cent mandatory rate relief through the Government initiative he must apply to the city council for the other 50 per cent discretionary rate relief, and that will depend upon the council's budget.

"He has now received a rates bill for £9,331 but no relief. That exceeds the profit he would make from diversification which makes nonsense of the exercise. Instead he will have to apply for it now and each year. This will be another source of uncertainty and stress for him to face and does not really encourage entrepreneurial thinking in the farming community."

Mr Walker said that his client had now conducted his own survey of his farming neighbours in the Harrogate area and discovered that their efforts at building their way out of the crisis had also resulted in higher rates bills.

"This is an example of unjoined-up government. The farming group of the Institute of Chartered Accountants believes that a revision of planning rules and the costs involved is essential to encourage farmers to stay in the industry and has in the past given a guarded welcome to the government rate relief scheme to help farmers set up new businesses. This seems to prove that its caution was well founded.

"Complex planning regulations and the cost of planning applications still present considerable hurdles to farmers who need to diversify to make ends meet following the devastating effect of foot and mouth disease. But to then expose themselves to the possibility of increased rates bills makes the whole exercise very daunting."

A survey carried out by the institute's farming group suggests that diversification is clearly not yet providing a significant source of income for farmers. Only a quarter of the farms surveyed had diversified and in only 12 per cent did diversification account for more than ten per cent of the farm income. Only three per cent derived from it more than 25 per cent of farm income.