Thousands of shops, pubs and garages in rural areas are set to get business rate relief as New Labour seeks to ditch its image as an urban Government.

Deputy Prime Minister John Prescott's Rural White Paper today received a cautious welcome in North Yorkshire.

The National Farmers' Union (NFU) president, Ben Gill, from Easingwold, said the white paper could provide valuable foundations on which to build initiatives to revitalise farming and rural areas, but warned these will only work against the backdrop of a prosperous agricultural industry.

Selby Labour MP John Grogan backed the rural masterplan, saying: "It gives a comprehensive overview of what the Government is doing in the countryside. It provides a framework where we can continue to make progress."

But Ryedale MP John Greenway said: "The Government is trying to make out that they are trying to help yet with virtually every policy they pursue at the present time they are making the situation of the rural economy worse. There is a large contradiction in reality with what is happening on the ground and what the ministers want to do."

Pig farmer Robert Bulmer, who lives near Malton, said there needed to be a definite commitment to farming.

He said: "Labour has talked of encouraging diversification of farming but so far there has been no support from the Government. Ideally what farmers need is something like a grant system or a low-interest loan to allow us to put our diversification ideas into practice."

The proposals include:

* 50 per cent mandatory business rate relief for up to three food shops in many rural communities, as well as for pubs and garages

* A rate relief scheme to help farmers diversify away from agriculture

* £37 million extra for market town regeneration, bringing total funding of this programme to £100 million

* Allowing local councils to abolish the 50 per cent council tax discount on second homes with the proceeds ring-fenced to provide additional affordable


* £240 million for rural transport schemes over three years, with a new £15 million Parish Fund for community-based solutions.

Meanwhile, a new comprehensive guide to farm diversification in North Yorkshire has been launched by North Yorkshire County Council, the county's district councils and national park authorities, as well as the Country Landowners' Association and the National Farmers' Union in response to the crisis in agriculture.