AGRICULTURAL MORTGAGE CORPORATION BILL

HC Deb 07 November 1958 vol 594 cc1237-54

Order for Second Reading read.

11.24 a.m.

The Minister of Agriculture, Fisheries and Food (Mr. John Hare)

I beg to move, That the Bill be now read a Second time.

This is a short Bill which is somewhat technical in its provisions, but it is essential to put the Agricultural Mortgage Corporation in a position to continue the operation of its successful credit facilities for farmers. Without the Bill the Corporation might well, by 1960, reach the statutory limit of the amount of its advances. I therefore hope that the Bill will commend itself to the House as an important and good Bill for the farming industry.

As the House knows, the Corporation was set up in 1928. During its early years it ran into difficulties, to which I will refer in a moment, but in recent years it has greatly expanded the volume of its business. It has made loans amounting to more than £57 million since its formation, and more than half of the £57 million has been lent during the last eight years, when the Corporation's advances have averaged nearly £4 million a year. In recent years it has granted upwards of 800 loans a year on average, the average sum loaned being between £4,000 and £5,000. There is no doubt about the need for the service which the Corporation offers to the farming industry.

Mr. H. Hynd (Accrington)

At what rate of interest is the money loaned?

Mr. Hare

At the moment the Corporation's loans are at 6 per cent.

I know, however, that the Corporation has no intention of resting on its laurels. I have had talks with the Chairman of the Corporation and he has described to me the plans which he and his colleagues have for bringing home to the whole agricultural community the facilities which the Corporation can offer. Sometimes there are complaints that the Corporation is in London and has no local office, but with the co-operation of the Joint Stock banks, nearly every branch bank is, in effect, a local office for the Corporation, and bank managers everywhere are ready to tell farmers about the Corporation's facilities.

The Corporation is not content with that. New and more popular leaflets have been prepared. Articles have been written for local papers. The Corporation has been advertising in the main farming papers and in certain professional journals. A mobile branch office has been set up which is able to meet, on the spot, sitting tenants of estates which are up for sale. A special telephone service has been introduced so that prospective purchasers at auctions can be told a few days before the sale the amount of assistance which the Corporation will be prepared to give.

I should also like to emphasise that the Corporation is not concerned only with loans for the purchase of land. It is also prepared to lend money to finance new buildings and fixed equipment. Approaches to the Corporation for finance for improvements of this kind have so far not been as many as I should have hoped. This could, of course, merely show that there is no great need for additional facilities for financing improvements. On the other hand, it is my belief that landlords and owner-occupiers are insufficiently aware of the Corporation's facilities. I know that the Corporation is now seeking to publicise what it can offer. A special leaflet has been prepared in connection with the Farm Improvement Scheme.

I come to the provisions of the Bill. In Clause 1 (a) I am enabled to make further advances to the Corporation's Guarantee Fund. The House may wonder why this is necessary, since the Corporation raises most of the money which it advances through the issue of debentures. The reason is simple and springs from the success of the Corporation's recent operations. The provisions made under the original Act limited the amount of debentures issued by the Corporation so that the amount outstanding at any time should not exceed ten times the advances made by the Minister to the Guarantee Fund together with the issued share capital and the amount standing to reserve.

This was intended to ensure that the Corporation always had adequate reserves. The limit for Government advances has been raised twice before as the Corporation's business has grown. It now stands at £3¼ million, and this has the effect of placing a limit on outstanding debentures of about £46 million. Already the Corporation has more than £36 million outstanding and in a year or two, therefore, the limit will almost certainly be reached.

I propose to increase the limit of Government advances from £3¼ million, where it stands at the moment, to £5 million and so to increase substantially the power of the Corporation to issue further debenture stocks. The Corporation's debentures are authorised trustee securities and I am told that they are in popular demand. We shall, I should like to emphasise, advance the money to the Corporation only as it is needed to form a basis for debenture issues.

The second thing, which is explained in Clause 1 (b) of the Bill, is to enable us to extend for a further fifteen years the power given to the Government by the 1939 Act to make a contribution towards the operating losses of the Corporation. The House may well wonder why an organisation as efficient and forward-looking as this should make losses. The reason lies in what I referred to earlier on, what happened in the possibly somewhat remote past. It springs from the difficulties which the Corporation encountered in 1932.

Between 1928 and 1932, the Corporation borrowed £10½ million on long term, mostly at 5 per cent. and the rest at 4½ per cent. The House will remember that in 1932 the Government, by the successful conversion of 5 per cent. war loan, as it was then, brought down the long-term rate of interest to 3½per cent. The Corporation then found it impossible to lend the money which it had borrowed, except at a loss. The principle of some Government contribution to help the Corporation in these difficulties was introduced in the Act of 1939, and was continued in the Act of 1944.

In recent years the Corporation has fixed its lending rates in such a way as to cover the current cost of borrowing and administration, but the loans made from 1928 until 1948 are, for the most part, still running and still involve the Corporation in losses. They will continue to do so until they are all paid off. That is the reason why the Corporation has still made small losses in recent years. I am glad to say that the amount of these losses has been decreasing. Since 1955–56 they have been running to the order of £50,000 a year and I know that the Corporation wants to improve on that figure. We think it desirable that the Government should have power to make some contribution towards what 1 would call its inherited difficulties for a further period. This will be limited to £100,000 instead of the existing £150,000. I am convinced that this will be adequate.

I hope that the House will agree that the Agricultural Mortgage Corporation has an important job to do and is doing it well. In a sense, the Bill is made necessary by the success of the Corporation's lending activities. The advances which it makes for the purchase of farms are an essential part of the long-term credit structure in agriculture. I know that the Corporation is anxious to extend its advances into the field of buildings and fixed equipment. I think this will be a useful contribution to the medium-term credit required in the agricultural industry.

It is most important that the range of the Corporation's facilities should be fully understood and that people should realise that the Corporation caters not only for the large farmer buying a big property but for the small man wanting a small property or to put up new buildings. Anything that hon. Members on both sides of the House can do to put this over among the farming community will be most helpful. We can all help by publicising the services which the Corporation can offer to agriculture. I appeal with confidence to hon. Members to welcome the Bill, which is necessary if the Corporation's work is to be allowed to continue to expand to meet the needs of farming.

11.35 a.m.

Mr. A. J. Champion (Derbyshire, South-East)

We are grateful to the Minister for the explanation which he has given of the Bill. He described it as a short Bill and it is very short, but it seems to have a very large purpose. It is a small Bill which ought to lead to greater use of the facilities of the Agricultural Mortgage Corporation and certainly it ought to be to the advantage of the industry in the years of development which we hope are lying ahead for the agricultural industry.

I welcome what the Minister said about the increasing enterprise of the Corporation in this respect, because it is enterprise of the right sort. I am not sure that in the past the Corporation's facilities have been sufficiently advertised or known to people who ought to be using them. I understand that the Bill is designed not to alter the principles of the Act of 1928 in any way, but to increase the amount of the State guarantee fund and to make provision for the continuance for a further period of fifteen years of the Exchequer contribution, which was originated by the Agriculture Development Act, 1939, although the maximum rate will be at £100,000 a year as against the present maximum, as I understand it, of £150,000 a year, to which it was raised by the Act of 1944 from the £60,000 of the 1939 Act.

The first part of the Bill deals with the raising of the interest-free guarantee from the present £3¼ million to £5 million. Two questions arise in this connection. Will the proposed level of State guarantee enable the industry to obtain the long-term credit it needs? Secondly, will the guarantee be at a rate of interest which will not prove much too high a drain upon the industry in the future? Those two questions demand an answer before the House passes the Second Reading of the Bill.

The Minister reminded us that the Agricultural Mortgage Corporation may, under the terms of the original Act, issue debenture stock up to ten times the amount of the paid-up capital, plus any amount standing in the general reserve, and, as he said, plus the Government guarantee fund. The Corporation's balance sheet for the last financial year shows that the paid-up capital stands at £750,000 and the general reserve at £317,000. Together with the existing Government guarantee of £3¼ million—I think the Minister gave a rather different figure but it will not alter my reasoning on this point—they will enable the Corporation to issue debenture stock up to a maximum of about £43 million. I know there is a slight discrepancy between our figures, but anything I have to say will not be invalidated by any slight difference in this connection.

The existing amount of outstanding debenture stock is about £31.3 million and bank advances stand at about £2¼ million. If the bank advances are counted as part of the liability for this purpose, the Corporation could, on my reckoning, immediately issue a further approximate amount of £7½ million. I know these figures are very approximate and I hope no one will quote them against me. They are near enough for my purposes here.

The Bill proposes to raise the State guarantee to a figure which will bring the maximum possible debenture issue up to £60 million or thereabouts, an increase over its present issue of £24½ million if bank advances are counted in the overall amount, or to about £28.7 million if they are not so counted.

The question we are asking—and which the Minister must be asking—is, will this be enough to enable the Corporation to meet demands for long-term credit? As the Minister said, he wants to see more use made of this Corporation for the purposes of loans on buildings and fixed equipment of a medium and long-term character for the farm. Is the Minister being bold enough in the figure he has put in the Bill, this maximum of £5 million? I know perfectly well that there are varying estimates of the industry's capital needs. We have had them from all sorts of sources, but I must admit that I was enormously impressed by a paper given to an excellent conference convened by I.C.I. in 1956. The paper was given by Dr. O. T. W. Price, who said At a conservative estimate, the gross capital formation in new agricultural buildings and works (including farm water schemes) currently running at £25 million might need to be raised to between £30 million and £40 million per annum. Later in the same paragraph of this paper, he said: It is probable that in the first instance landlords and owner-occupiers would have to borrow most of the additional capital required. As I understood him, he was talking about the next ten years and his esti- mate means a total over and above the currently running £25 million per annum of between £50 million and £150 million required by the industry for these purposes. Of course, it must be remembered in this connection that much of the £25 million at which such investment is currently running is borrowed money. The higher estimate of £150 million over the period is, it seems, somewhat similar to the estimate the Minister must have made when he introduced the 1957 Act to the House, except that that Act made provision for a lot of works requiring only short-term credits. At least that is how I understand the list of works in the Schedule to that Act.

Quite clearly, if Dr. Price's estimate bears any relation to the truth, and allowing for the fact that the Corporation is not the only source of long-term agricultural credit, this Bill is not making sufficient provision for the future capital needs of the industry. Of course, I realise, when saying that, that this guarantee is something in the nature of a hidden subsidy to the industry, for it is a loan to the Corporation interest-free, and the interest lost to the Government as a result, or the interest they pay on the money they borrow, is a subsidy of a hidden kind. It is a further agricultural subsidy. I say at once that I have no fault to find with that, for I believe that this industry must be given a chance to become a completely viable one as soon as is humanly possible. It is our job at this time to struggle towards a completely viable farming industry.

The second question I want to ask is on the rates of interest. The rate at which the Corporation lends money is closely related to the Bank Rate and within recent years it has risen to 7 per cent. I understood the Minister to say that it is now running at 6 per cent. Such a rate of interest for loans to agriculture, I am fairly sure, never entered the minds of those who passed the Act of 1928, for it has been described as an Act designed to fill what was then a gap in the commercial credit organisation for providing facilities for long-term loans on agricultural properties at relatively favourable rates of interest. I do not know how favourable 7 per cent. was at the time when lending was at 7 percent. I do not know how favourable 6 per cent. is today. Perhaps money could not be got elsewhere at that rate and, therefore, it would be regarded as favourable, but certainly it is not a desirable rate at which to have to lend money to the agricultural industry. It is not a happy thing for the man who borrows the money to visualise that over the life of the loan—which may be twenty years or more—he has to pay 6 per cent. or 7 per cent. The Act itself said that it was the statutory duty of the Corporation to provide

loans on terms most favourable to borrowers. Now of course, it is the case that those who borrow money from the Corporation at prevailing rates of interest, or those who have borrowed at 7 per cent., are to be saddled for the life of the loan with these cripplingly high rates of interest. We have to remember in this connection that the loans are mortgage loans with a corresponding lessening of risk to the Corporation, the lender. The most recent balance sheet of the Corporation, covering the last financial year, tells us that the outstanding loans of approximately £32½ million are secured against property valued at £56½million, so they are very well covered for the amount outstanding.

Unless we can do something about these so-called "favourable" rates of interest the industry will not, I think, tool itself up for the tremendous job it has in hand of trying to become a viable industry. Unless it can secure money at a lower rate of interest it will not be able to do that. So much of this present capital requirement in fixed equipment in the industry is the result of gross neglect of the industry in the inter-war years, much of the period up to 1914, and for some part of the last century. I feel that this industry cannot itself bear the whole burden of catching up. There were many years of Tory disaster for this industry. years of Tory control when agriculture was grossly neglected by members of the party opposite, who now say they have such an interest in agriculture.

Now we have to get the industry back into a condition in which it can earn its own living. I regard the tenants' capital position at present as reasonably satisfactory at last, thanks to the deliberate injection of capital into the industry in the immediate post-war years and a state of reasonable prosperity brought about by Labour's Act of 1947. We may claim credit for the fact that a tremendous amount has been done regarding tenants' capital and that, for the most part, the tenants have reasonable capital equipment for the things which they have to buy.

I am of opinion that some farmers are over-capitalised, and that something should be done to achieve more cooperation in the use of what can be extremely expensive capital equipment. I regard the farmer as the worst "looker-after"—if I may use that expression—of machinery and equipment of any of the sections of industry in this country where machinery is used. So often farming equipment is left to rust in the fields, but I must not discuss that matter here. True, in some cases the care of equipment is greater than it used to be, but a lot remains to be done.

We are lagging behind in the provision of fixed equipment for the farmer and streaking ahead regarding tenants' capital. Quite often this means that a farmer is using a twentieth century tool with one hand and an eighteenth century tool with the other. One part of his equipment may be appropriate to the jet age while the other belongs to the era of the stage coach. It is with these obsolete and unserviceable farm buildings that the Bill is designed to deal so that they may be replaced by modernised farm layouts. More stress must be laid on an aspect which the Minister rightly mentioned, that of loans, not merely for purchasing farms, but for modernising fixed equipment.

The second part of the Bill deals with grants or loans made to the Corporation under the Agriculture Development Act. 1939. At that time Sir Reginald Dorman-Smith was the Minister of Agriculture, and what an unhappy job that must have been in those days. I am glad that the present Minister does not find himself faced with the same sort of difficulties as faced the Minister at that period. At least the occupant of this post in these days is in a more stable position than was the case in the years between the wars when we had a succession of Ministers.

Sir Reginald Dorman-Smith said in June, 1939: It is intended to enable the Agriculture Mortgage Corporation, which is the principal organ of long-term agricultural credit in England and Wales, to overcome certain difficulties which have hampered its activities in recent years. Owing to the fall in rates of interest, the Corporation has found itself unable to lend money at corresponding rates without incurring losses. This Bill provides for Exchequer assistance by way of grant or loan, up to £60,000 a year for 20 years to cover the losses during that period, so that the Corporation will again be in a position to fulfil those functions for which it is designed."—[OFFICIAL REPORT, 15th June, 1939; Vol. 348, c. 1586.] The Minister told us today that part of the difficulty of this period was the fall in interest rates. Under the post-war Tory administration the trouble had been caused by exorbitant interest rates, and I should like to hear from the Minister how the money granted to the Corporation by the 1939 Act, increased by the provisions of the 1944 Act, has been and is being used. He has explained part of the purpose, but it appears to me that if money has been lent at 7 per cent., it has not fulfilled its purpose of permitting the Corporation to lend money at reasonable or favourable rates of interest.

I wish to know how much of the money thus granted has been by way of loan to the Corporation and how much has been an outright grant. All the legislation, including this Bill, says that money can be lent under these means or money can be given. That is how I understand it. I should like to know how much of the £150,000 a year over the past years since 1944 has been loaned to the Corporation and how much has been in the form of what I might call a gift or a grant to the Corporation.

In the present difficult circumstances and the situation facing agriculture as a result of prevailing high interest rates how does the Corporation propose to use the £100,000 a year for which we are now making provision? Will any of this money be used to afford a decreased interest rate, something less than the rate at which the Bank Rate is now running? Will it be enough to enable the Corporation to fulfil its original purpose of lending money at favourable rates of interest?

I am of opinion that investment in efficient buildings and investment generally in what is known as landlords' fixed equipment is falling behind the huge investment in tenants' capital, so that today the industry is completely out of balance. It is so lopsided that production is seriously hampered.

I believe that full value for the investment in tenants' capital can be received by the farmers and by the nation—the nation's sacrifice came into this in those post-war years when the capital injection was going on—only if the investment in landlords' capital and the modernising of farm layouts and so on is stepped up considerably in the years immediately ahead. That must be done, if we are to cure the present lopsided situation of the industry and provide balanced equipment for the farmer to use. We must step up our investment in the fixed capital of this industry.

I realise that there are serious limitations in the Bill and I have mentioned some of them; but, despite that, on behalf of the Opposition, I give a sincere welcome to this Measure.

12 noon.

Mr. John M. Temple (City of Chester)

It is a great privilege to follow the hon. Member for Derbyshire, South-East (Mr. Champion). During the Second Reading of the Agriculture Act, 1957, he followed me after I had made by maiden speech and I believe that this present Measure is, in many respects, associated with some of the provisions contained in that Act.

I wholeheartedly welcome this Bill, and I agree with a number of the points made by the hon. Gentleman, such as the fact that the viability of the industry will be encouraged by the injection of capital. In the course of his speech he alleged that the members of the agricultural community were perhaps the worst of any "lookers-after" of machinery, but very often that is not the fault of the agriculturists.

The provision of this extra capital through the Corporation, and, in turn, through the improvement grants which are being made all the time under the 1957 Act, will be for the advantage of the industry, as it will increase agriculture's ability to provide the necessary buildings and cover for the protection of that machinery. The hon. Member also referred to the "stage coach" era, and to agricultural machinery. It should be remembered, however, that a lot of the agricultural machinery of today is quite as large as the old stage coach and takes a great deal of housing. That is buildings on a large scale will be required in the future.

In relation to its turn-over, the industry requires a great deal of capital. The turn-over must necessarily be slow. It is generally possible to get only one crop in a twelvemonth. It is not possible, as it is in industry, to utilise the velocity of turn-over of capital, so that the necessity for large investments in fixed capital is very great, and I believe that this investment of capital will have one effect to which attention has not yet been drawn.

It will increase the ability of the agricultural worker to earn a higher wage. Only when we can provide the agricultural worker with more fixed equipment and more stock, which, incidentally, will use the fixed equipment, will it be that lie can earn for himself a living comparable to that of the worker in industry, who is able to have great capital at his disposal.

One aspect to which I should like to draw attention is that this very increase in capital in the countryside may lead to a decrease in the number of agricultural workers, but I would not necessarily deprecate that if those employed in the industry were able to earn a higher living. I believe that this Measure will bring about a state of affairs in which the agricultural worker, relative to other industry, will be able to earn a higher income.

The big question in agriculture has always been: Where is this additional capital to come from? When considering this point, one has to look at the structure of the industry. Agriculture is still the largest single industry in this country, and its structure, both in the landlord and in the owner-occupier sphere, is based very largely on individual ownership. It is there that lies the great difference between agriculture and outside industry, and the great nationalised corporations.

Through the capital market in London, industry is able to raise money for itself. The nationalised industries have their own means of getting capital, but agriculture does not have the same facilities for raising it. Therefore, it is handicapped vis-à-vis these big industrial corporations, and it is just through such organisations as the Agricultural Mortgage Corporation that the industry can finance itself.

The 1957 Act makes provision for the Minister to approve, through his agricultural land service, schemes for the improvement of agricultural holdings. When the schemes have been approved, the Minister makes a grant of one-third towards the capital cost of the improvements, but what I am always asked is: Where is the other two-thirds to come from? During the Second Reading of the 1956 Agricultural Mortgage Corporation Bill, the then Minister of Agriculture—now my right hon. Friend the Chancellor of the Exchequer—said: … the Agricultural Mortgage Corporation is an important source of long-term credit for, the agricultural industry."—[OFFICIAL REPOR 13th March, 1956; Vol. 550. c. 259] The Corporation's pamphlet No. 195 of October of this year has a bold heading: "Long-term agricultural loans". I believe that my right hon. Friend's statement that the Corporation is going in for medium-term credits is a tremendous factor, and should be drawn to the attention of the industry in very definite terms. I was very pleased to hear my right hon. Friend say that he wished the maximum publicity to be given to this facet of the Corporation's lending.

Throughout the industry we hear that this provision of medium-term credit is the one thing that is needed. In my opinion, this lending over ten years, as opposed to the 20-year term envisaged by the then Minister of Agriculture during the passing of the 1956 Agricultural Mortgage Corporation Act, ties up immensely well with the improvement grants. When an agriculturist gets his improvement grant, he has to find the other two-thirds of the money, but, under the Income Tax Acts, he is able to set off against his profits accruing from the investment of capital one-tenth of the capital that he himself has put down. This is done over a period of ten years, and he is thereby able to get back his money over that ten-year period.

This additional credit which is being made available to the Corporation by this Measure will be utilised very much by the medium-sized and smaller farmers. It will form a useful source of capital for them, and will, in every other way, be of great assistance in making the industry viable and prosperous. The Bill's major feature is this provision of medium-term credits, and I have no hesitation in giving it a wholehearted welcome.

12.9 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber)

I am most grateful both to the hon. Member for Derbyshire, South-East (Mr. Champion) and to my hon. Friend the Member for the City of Chester (Mr. Temple) for their very helpful contributions to what is a most important matter. Of course, the hon. Member for Derbyshire, South East did, on one or two occasions, allow his fancy to stray when he got near to questions of party politics. That we can all understand, but I must confess that what puzzled me was why the packed benches behind him did not then cheer him loudly.

Mr. Champion

What about the benches opposite?

Mr. Godber

I do not propose to follow him in that, although I have been reading a most interesting document on this matter. Instead, I shall address myself strictly to the provisions of the Bill.

The hon. Member asked one or two questions and, in particular, he asked whether the level that is being provided in this Bill will be sufficient. He admitted that his figures did not quite correspond with those given by my right hon. Friend. My right hon. Friend gave a figure of £46 million as the present position, while the hon. Gentleman spoke of £43 million, rising, I think, to £60 million. I want to make it clear that the amount which will, after the passing of the Bill, be possible for the Agricultural Mortgage Corporation to lend will be in the region of £70 million, not £60 million.

The point which, perhaps, the hon. Gentleman missed is that, when the Corporation's debentures exceed £50 million, then its share capital and reserve need be increased by only 7½ per cent., not 10 per cent. as for under £50 million, for all additional sums. I think that that is probably where the hon. Gentleman's figures went slightly astray. The fact is that the figure will go up to about £70 million, a very substantial increase on the present level.

While I would not say that this is the ultimate limit of all possible lending, it is a very substantial increase. If or when the Agricultural Mortgage Corporation finds that it is able to utilise effectively all its additional funds and wants still more, it certainly will be open to it to come back to the Government to discuss the position further. We are putting on no ceiling at all. I should have thought that the addition we are making at the moment is very substantial indeed, but at the same time I accept the point that there is much scope for additional use of the A.M.C. As my right hon. Friend indicated, the Corporation is actively engaged in trying to promote further business by reminding the farming community of the services which are available to it. This is, generally, an indication of its determination to press forward, and this large increase which we have given should be sufficient. I would say, for a considerable time.

The hon. Gentleman spoke of the dangers there are today in farmers using—he had a rather picturesque phrase—certain twentieth-century tools side by side with eighteenth-century ones. He was referring to buildings very largely at that point and was dealing more with medium-term credit. I could not agree more with his point about buildings, and I am glad to have this confirmation from him of the value of the Government's Farm Improvement Scheme which we introduced in 1957. It is doing a great deal of valuable work.

Those owners or occupiers who wish to make use of the Agricultural Mortgage Corporation for loans to help them in this respect will, I am sure, find their applications welcomed. While, as my right hon. Friend indicated, not many people have come forward, I think that the number is beginning to increase now, and I hope that this extra publicity will encourage more. Certainly, the Farm Improvement Scheme itself is going ahead extremely well and, in the long term, I am sure that it will do a great deal to get rid of those eighteenth-century buildings to which the hon. Gentleman so rightly objected. The Farm Improvement Scheme, plus this provision we are making, will be very helpful.

As regards the rates of interest, which the hon. Gentleman suggested were high for the long term, I have been looking at the actual rates charged by the Agricultural Mortgage Corporation over a long period. I see that, for the first six years from the Corporation's inception, the rate was 5 per cent., so there is not such a very large discrepancy there. However, the Corporation is, naturally, anxious to lend as cheaply as it can, and this guarantee from the Government will help in this respect. The hon. Gentleman was absolutely right in saying that it is, to some extent, a hidden subsidy to the agricultural community. I am sure that we ought not to forget that.

The hon. Gentleman referred to the annual credits granted by the Government and asked whether they were loans or grants. If I may put it in this way, they are grants subject to a contingent liability. Almost at the bottom of the balance sheet shown in the Agricultural Mortgage Corporation's Annual Report, it is said: The Corporation may be required to refund the grants received if at any time the Minister and the Treasury consider the Corporation's revenue position is sufficiently assured for them to do so. It is a grant, but it could be called back if it were felt that the Corporation's position was such as to justify it.

As regards the amounts involved, as my right hon. Friend pointed out, the ceiling is being lowered from £150,000 to £100,000, but, in actual fact, the amounts which have been granted over recent years have been steadily falling. They are well below even the lower level last year, when the figure was £49,000. The year before that it was £47,000; the year before it was £54,000. Before that it went to £90,000 and to £118,000. It is a gradually declining figure. Clearly, the £100,000 will be more than adequate. It is something which is gradually working out of the system. The earlier loans which were made at lower rates than the level at which the Corporation was able to borrow are being paid off and they are, obviously, being got rid of. In due time, of course, the Corporation should begin to benefit from some of the repayments of the other loans which came in when interest rates were lower, and this should enable it, in the years ahead, perhaps, to be able to lend more effectively than it can at the present time.

While the rate of interest at the present moment is 6 per cent., which is as good a figure as anyone could borrow at long term in the market generally, there is a prospect that, at any rate, the A.M.C. should be able to maintain its competitive position in rates as the years go on and the other loans are repaid. I think that the position is healthy in this respect, and the level being asked at the moment is certainly not unreasonable. The fact that the amount of business is increasing all the time is an indication that it is a fair one.

I have endeavoured to deal with the points which the hon. Member for Derbyshire, South-East raised. As regards the contribution of my hon. Friend the Member for the City of Chester, I very much welcome what he said about the medium term aspect of the matter. As my right hon. Friend indicated, this is something in regard to which we are most anxious to see the A.M.C. doing more, and we see no reason that it should not be stepped up. By and large the comments have been extremely helpful, and I am most grateful to the House. I am sure that the Bill will prove helpful and effective in further improving the position of the industry in regard to long term credit.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Hughes-Young.]

Committee upon Monday next.