§ 3.2 p.m.
§ The Earl of KINNOULLMy Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they consider the current lending rates of the Agricultural Mortgage Corporation to farmers are in accordance with the duty laid down under Section 1 of the Agricultural Credits Act 1928; whether these rates are included in the cost of living index; and why farmers are still being charged a minimum of 14 per cent. when seeking funding for food production.
§ Lord PEARTMy Lords, the lending rates of the Agricultural Mortgage Corporation, which are currently 10½ per cent. for variable rate loans and 12½ per cent. for fixed rate loans, are reviewed from time to time by the Corporation and reflect the cost of borrowing on the market for subsequent long-term lending. The rates are not included in the retail prices index. 1620 The Government are satisfied that the Corporation continues to act in accordance with the requirements of Section 1 of the Agricultural Credits Act 1928.
§ The Earl of KINNOULLMy Lords, I should like to thank the noble Lord the Leader of the House for that reply. I do not think he answered the question of whether it comes within the cost of living index.
§ Lord PEARTMy Lords, that is the policy and I stand by it. When I was Minister of Agriculture I had to operate this Act. I think it works well.
§ The Earl of KINNOULLMy Lords, I thank the noble Lord for that reply. Would he agree that long-term finance for agriculture is a vital part of industry? Would he also agree that the Committee of his noble friend Lord Northfield, who are examining at present the ownership of land, should consider the not unimportant aspect that the young farmer had to pay earlier this year 17 per cent. for fixed-term finance, whereas the foreign competitor was probably paying a great deal less?
§ Lord PEARTMy Lords, I understand the problem. It is quite right that the Corporation which we are talking about provides funds for the farming community and it is welcomed by the farming community. I think that our own method of not subsidising credit but giving direct grants is a far better system than operates in most other countries.