§ The Question was as follows:
§ To ask Her Majesty's Government how it is proposed that capital should be raised to assure the expansion of agriculture required in the White Paper Food from Our Own Resources (Cmnd. 6020).
§ The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick)My Lords, in her Majesty's Government's view it should be within the industry's capacity, given reasonable profitability, to finance the capital formation necessary for expansion averaging 2½ per cent. a year. The Government will, however, be keeping under close review the level of capital investment in the industry.
Earl FERRERSMy Lords, I am grateful for that reply. Does the noble Lord realise that it is totally unrealistic? Would he not agree that capital will have to be found to replace that taken out of agriculture by capital taxation and also to take care of inflation, which is running at 25 per cent., just in order to enable production to remain at the existing level? If the Government wish for expansion, which we all do, does the noble Lord recognise that this can only come about as a result of additional capital over and above that required for the other two items?
§ Lord BESWICKMy Lords, there are problems, and these problems are being considered, as between the National Farmers' Union and the Minister. I do not think the noble Earl should exaggerate them, however. The farmers have 1012 had two very good years—cereal farmers, at any rate. The expansion is only 2½ per cent. per year; and provided prices are reasonable it ought to be possible to plough back some of the revenue received.
Earl FERRERSMy Lords, does the noble Lord realise that the Government's own White Paper on Agriculture said that the farmers' income had dropped by 12 per cent.? With regard to realistic prices, does the noble Lord realise that the price of wheat has dropped by £20 a ton in the last six months? Would he not agree, if this expansion is to take place, that realistic prices have not in fact come about?
§ Lord BESWICKMy Lords, income—we are talking about net income—has fallen because of the need to plough back a higher percentage of revenue. This is a fact. I am not belittling the difficulties ahead. All I am saying is that if the prices are right—and there is a floor now—it ought to be possible to finance this expansion. I also said that there are particular points, as the noble Earl probably knows, that are now the subject of discussion between the NFU and the Government.
§ Lord TRANMIREMy Lords, is the noble Lord aware that small farmers are especially hit by the high interest rates on the money they have to borrow? Would Her Majesty's Government consider some system of giving cheap money to small farmers for the purposes of expansion?
§ Lord BESWICKMy Lords, the high rate of interest is undoubtedly one of the difficulties. On the other hand, the answer presumably—or what the noble Lord is really implying—is that the Government should make available other sums of money. I hear from time to time from the Opposition criticism of Government expenditure.
§ The Earl of ONSLOWMy Lords, would the noble Lord also undertake on behalf of Her Majesty's Government that the Government will never again do what they did in 1974 and suddenly withdraw any form of support from the beef market? In view of the fact that cereal prices have fallen considerably, and 1013 possibly below the economic level of production, will they bear both of these factors in mind?
§ Lord BESWICKMy Lords, I will accept a lot of criticism; but what I will not accept are the consequences of our entering into the European Economic Community.
§ Lord HAILSHAM of SAINT MARYLEBONEMy Lords, does not the noble Lord remember that it was precisely because this Government refused the £18 or £20 a ton for beef that the crisis arose earlier last year?
§ Lord BESWICKMy Lords, what I remember is that we had a first-rate scheme which was temporarily scuppered because of our entry into the Common Market. My right honourable friend contrived to get a combination of our old policy together with the EEC's intervention prices. His having achieved that, I object to the noble Earl going back to 1974.
§ Lord FORBESMy Lords, will Her Majesty's Government ensure that capital injection into the agricultural industry is done on a long-term basis, bearing in mind that farmers cannot turn their produce over more quickly than the natural cycle will permit?
§ Lord BESWICKMy Lords. there is a need for special consideration to a long-term investment. But, as the noble Lord knows, it is possible to make grants for fixed equipment. It is also under consideration now whether grants may be made available for items which, under the old definition, were not fixed equipment but which, nevertheless, are needed over the long term.
§ Lord BALFOUR of INCHRYEMy Lords, could the Minister explain to me—I am a simple fellow—a contradiction? On the one hand Her Majesty's Government are asking for more capital to be invested in the agricultural industry; on the other hand they are proposing to take it away with the wealth tax. How does the noble Lord explain that contradiction?
§ Lord BESWICKMy Lords, a special dispensation has been made for the farming community in this matter.
§ Lord LEATHERLANDMy Lords, will my noble friend bear in mind that 1014 farmers are always living very near to the poverty line? May I ask him also whether it is a fact that most farmers usually obtain their capital requirements from the banks, and that the banks at the moment have far more money available for lending than borrowers are prepared to take up?
§ Lord BESWICKMy Lords, I hope that noble Lords opposite were paying sufficient attention to what my noble friend has said.
§ Lord CARRINGTONMy Lords, would the noble Lord give an assurance—as I understand he has already done—that, should a wealth tax be introduced, farmers will have special provision?
§ Lord BESWICKMy Lords, I am not sure that the noble Lord, Lord Balfour of Inchrye, was talking about the wealth tax. There are other matters which the noble Lord, with his interest in this field, will know have been introduced by the Treasury and to which I thought he was referring.
§ Lord HOYMy Lords, will my noble friend remember that a year or two ago the farmers were paying exhorbitant prices for calves in the expectation that the beef market was going to move up to such a level that there was a lot of money to be made out of it? In as much as the market may have fallen because of the economic effect, I hope my noble friend will not accept any responsibility for a bit of mismanagement in agricultural circles.
Earl FERRERSMy Lords, does the noble Lord realise that one accepts that there is no easy solution to this problem? Will he also accept that we on this side of the House are in favour of the expansion of agriculture for all the reasons we know? Will the noble Lord invite his right honourable friends, both the Minister of Agriculture and the Chancellor of the Exchequer, to address their minds to the real problem of how you get the capital into agriculture to enable this expansion to come about?
§ Lord BESWICKMy Lords, there is nothing between the noble Earl and myself; what he says is perfectly straightforward and sensible. There was a meeting between the Minister and the NFU on 14th May to consider these matters. 1015 The noble Earl has no doubt seen from Press reports the subjects which will now be a matter for further discussion.
§ Lord PANNELLMy Lords, will the noble Lord bear in mind that that which is dimly apparent to those people who speak from the Front Bench of the Opposition must be blazing, daylight-clear to the Chancellor of the Exchequer?
§ Lord KINNAIRDMy Lords, is the noble Lord aware that what the noble Lord, Lord Hoy, referred to as "mismanagement" was not mismanagement? The farming population, having been urged to undertake certain lines in con-ducting their affairs, found that Her Majesty's Government then withdrew the grants which had been promised.
§ Lord BESWICKMy Lords, I am not certain that the noble Lord is correct. What I saw in the markets a couple of years ago, when we were bidding against each other for calves and yearlings, indicated that a lot of people thought they were in for a good thing, but they made a mistake.