HC Deb 06 July 1966 vol 731 cc605-29

11.35 p.m.

Mr. Anthony Stodart (Edinburgh, West)

I beg to move, That this House regrets that the Government has failed to improve the position of hill sheep farmers and thus achieve a healthy expansion in the hill sheep industry.

We may safely and truthfully congratulate ourselves that we are adopting Biblical words and watching our flocks by night. It is only right that I should express the appreciation of myself and my hon. Friends of the Government granting time for this by no means unimportant matter, to be discussed. In the Review White Paper of 1966, paragraph 32 on page 12 reads: The total breeding flock has continued to expand, but the expansion is only in the hills. Two paragraphs later are the words: The Government do not wish to check the increase in the hill flock. I do not think it unfair to say that there is nothing either purposeful, positive or pragmatic about that particular statement of policy. It is rather like saying to the Minister of State for Scotland, "We know that you are most productive, or used to be most productive in terms of words, but we are not exactly anxious to encourage you to speak now." The hon. Gentleman is not heard nearly so often as he used to be. I find certain similarities in this example.

Last year saw a marriage in England and Wales between the hill sheep subsidy and the winter keep scheme. It was a somewhat subterfuge marriage, whereby the hill sheep subsidy was included in the Price Review for the first time, in an attempt to put a little, much-needed polish on that most dusty of all Price Review operations. The position now, and I am referring to England and Wales, is that last year's standard rate of 18s. increased by last year's supplement of 3s. 6d. in lieu of winter keep has now been increased by a further is., making 22s. 6d. in all. That is for the standard rate, whereas the reduced rate is 12s. 6d. One should add that at the same time as the Government gave this extra is, they reduced the price of wool by the equivalent of 9d. on every hill ewe. In Scotland the situation is slightly different. There is no reduced rate, and the hill sheep subsidy, at the moment, stands at 21s. This 21s. includes the supplement of 2s. given last year on the same basis as the 3s. 6d. in England and Wales. It was given for eligible sheep maintained on units qualifying for grant under the Winter Keep (Scotland) Scheme". There is a question here of great importance. Are there any hill sheep in Scotland which qualify for the 19s. subsidy and not the 2s. supplement? I put this point last year, and the Joint Parliamentary Secretary to the Ministry of Agriculture replied then that all sheep in England and Wales which had the 18s. would have the 3s. 6d. as well. Does the same apply as regards the 2s. supplement in Scotland?

As it stands, the 21s. subsidy in Scotland is 1s. 6d. less than its counterpart in England and Wales, and the bridge which is supposed to join the two, so to speak, is the acreage payment system, the winter keep grant in Scotland, which does not exist in England and Wales. But is the Minister of State satisfied that these acreage payments under the winter keep scheme in Scotland have the effect of providing that 1s. 6d. per ewe, of which there is a shortage as between Scotland and South of the Border?

If a farm carries a hill sheep flock, it will certainly be eligible for winter keep grant. Of that there can be no doubt. But not every farm which is eligible can have its ground cultivated and thus actually draw the grant for which it is eligible. I am sure that the Ministers will know well the road which runs across the Lammermuirs, from Haddington to Duns. Driving along that road, one comes across six or seven farms all of which are grade C and, therefore, eligible for winter keep grant, but not one of them draws it because they are too high or too exposed to cultivate. Those are facts which I have ascertained. A farm like that is worse off by 1s. 6d. per ewe than an equivalent farm in England and Wales. Can the Minister of State tell us how many farms there are of this kind, that is, farms eligible for winter keep grant but not drawing it for the reasons I have mentioned?

As I have said, the subsidy has gone up by 1s. and the value of the fleece has gone down by 9d. It is ludicrous to suggest that a net increase of 3d. per hill ewe will produce a healthy expansion. I leave out of account for the moment the Selective Employment Tax. I hope that the Minister will not say that this tax will be refunded to hill farmers, because, of course, there are all the incidental effects of it on the ancillaries, the vet, the transport haulier and so on. In any case, of course, it is not a net 3d. on every animal. I am quite sure that the hon. Gentleman will have done a lot of research into gimmers, and to put him out of his agony I say at once that I am not going to talk about gimmers, but I hope he will realise that it is not only the hill ewe which is suffering a reduction of 9d. a fleece but that the ewe hogs are suffering it as well, and all the tups which work on the hill farm are suffering the cut in addition. Therefore, he need not suppose that this is merely a case of a net 3d. all round, because it is not.

I do not believe that this 3d. is likely to produce any healthy expansion, and I underline the word "healthy" for this reason. The number of hill ewes in Scotland in 1964–65 increased by only 0.3 per cent., and even less did they increase if we take the previous year into consideration as well. So there is virtually a standstill in the hill sheep expansion, despite what the White Paper said.

As for a healthy expansion, the hon. Member for Enfield, East (Mr. John Mackie) made one or two extraordinary statements in a debate the other day. He said that expansion in numbers means prosperity. That was the phrase he used. Of course, it does not necessarily mean that at all. What it can mean is that as the return per animal is reduced so the hill sheep farmer desperately keeps more animals in order to try to keep the same gross return. It is utter self-deception by the hon. Gentleman if he really does think that because numbers go up on any farm, or in any sector of farming, that means that prosperity is attending it.

The hon. Gentleman also said that the Selective Employment Tax would not affect hill farms in Perthshire and other places. I shall not dwell on the tax, but the hon. Gentleman was quite wrong, and I have referred to the side effects the tax will have.

As for the economics of the hill sheep industry, it is most interesting to look at what is an excellent publication, and that is "Scottish Agricultural Economics" put out by the Department each year. I often wish there were a similar one dealing with conditions of farming south of the Border. I have not managed to discover it yet. But in the latest edition, volume 16, we are told that between 1963–64 and 1964–65 the gross output from sheep on a hill farm has gone up by £110 while costs have gone up by £84. That leaves £26 of encouragement to expand in the hill sheep industry.

The hill sheep subsidy is no longer flexible but fixed for a period, and I still believe, as I have said previously, that it would be better to have a two-tier system in which there is a fixed subsidy, with increases in bad seasons—such as we have had on this occasion, with the Sunday Telegraph on Sunday saying that losses on hill sheep farms are likely to be as much as 10 per cent. There should be room on an occasion like this for the second tier of the subsidy to be brought into operation.

To qualify for the payment of the hill sheep subsidy, a flock of sheep must satisfy three conditions, one of which is that it has been maintained on hill land under natural conditions throughout the year in accordance with the recognised practices of hill sheep farming. The only dispensation which the Secretary of State has lies when a flock has been recently established or where it has suffered very abnormal losses.

In light of the new methods which are on the way for this sector of the industry—because in-wintering is coming, I am sure—can the Minister of State say whether thought is being given to what is to be the position about subsidy if, for a month or even a matter of weeks, a flock is in-wintered? Will the industry be able to take advantage of the new methods? Are experiments being undertaken by, for example, the Animal Breeding Research Organisation?

Frankly, I doubt whether much capital Is available to put up the sheds which will be necessary for in-wintering, and I doubt whether the average hill sheep farmer could manage to spend that sort of capital. At the rate the Government are trundling along with the Agriculture Bill, it will be a long time before the farm improvement grant is payable.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy)

Speed it up.

Mr. Stodart

It is hardly the fault of the Opposition that the Government have taken a month to get the Bill even as far as the Committee.

These are questions which are interesting and worrying to many people in the hill farming industry. If the Minister of State can answer some of the points which my hon. Friends and I have put to him, it will be of service to the industry, and this debate will have been well worth waiting for.

11.54 p.m.

Mr. Ian MacArthur (Perth and East Perthshire)

I hope that the Minister of State will realise that those of us who ate concerned with the farming problems of areas in which sheep are raised are extremely worried about the economic position confronting these farmers.

My hon. Friend the Member for Edinburgh, West (Mr. Stodart) has shown that the 1s. increase in the subsidy in Scotland coupled with the fall in the price of wool takes no account at all of the increased costs and the falling returns which the industry faces. In addi- tion, the industry is going through a period of the most seriously restricted credit, and it is a section of farming where the operating margin is generally a very small one, if any margin exists at all. On top of all that, we have the Selective Employment Tax, which will have a serious effect on hill farmers, who will be required to make an interest-free loan to the Government. I wish that I could believe that the concern which we genuinely feel is shared or in any way appreciated by the Minister of State. I should like to think that it is.

My hon. Friend referred to some extraordinary comments made by the hon. Member for Enfield, East (Mr. John Mackie) when speaking from the Treasury Bench during the debate on the Wool Marketing Order some weeks ago. I shall not dwell on the hon. Gentleman's astonishing statement about the Selective Employment Tax, because he was generous enough to write me a letter of apology when he realised that I was right and he was wrong.

During that speech the hon. Gentleman made the extraordinary suggestion that the increase in sheep flocks was a sign of prosperity. It is in fact a sign of increasing hardship. The Minister of State shakes his head. I must disabuse his mind. The hill farmer today, rather like the Red Queen, has to run faster and faster to stay in the same place.

I want to draw attention to the problem of the high lying hill farmer, the man who, on paper, qualifies for the "C" grade winter keep payment. I am concerned about the fact that, according to the 1965 payment figures, which related to 1964, about 9,400 farmers claimed winter keep. The reason for my concern is that about 14,500 farmers were eligible for this payment. The difference between those two figures is 5,100, so it appears that about that number of hill farmers did not receive any winter keep grant.

I cannot believe that this was through any act of negligence, because farmers are not like that. If they are eligible for grant, they will apply for it. It must be that, although on paper they were eligible, they were not able to meet the conditions under which the grant is paid, and this must be a reflection of the fact that of the large number of farmers who fall within the "C" grade, some are high-lying farmers who do not qualify for the grant because their land is so high that they have little or no arable land.

It appears from these figures—and my local experience confirms this—that many of those hill farmers who are most in need of winter keep grant are not receiving it, not because of any deficiency in their farming operation, but because the climatic conditions in which they have to farm are such that they are precluded from making a claim where the qualification for winter keep is based on acreage and acreage alone.

I am sure that the Minister will agree that it is these high lying farmers who can make a great contribution to sheep rearing in Britain, and yet these are the people who, although most in need of help, appear not to be receiving the winter keep grant because, climatically, they are not eligible for it. In those circumstances, surely there is a case for changing the basis of the scheme, at least for the high-lying farmer, the "C" grade farmer?

On previous occasions my right hon. and hon. Friends have proposed that there should be a shift from the acreage qualification to a headage qualification for winter keep. I suggest to the Minister of State that the figures which I have quoted show that there is a case for introducing at least an optional scheme for "C" grade farmers, whereby they can opt for payment either on an acreage basis, or on a headage basis.

If that idea were adopted, it would overcome the difficulties which confront many high-lying farmers who are excluded from the benefit of the scheme because of the base on which it rests. I hope that the Minister will consider this, and if possible give us some indication of his thoughts on the matter when he replies.

When we make suggestions from this side of the House we are often told that, attractive though our suggestions may be, it is administratively impossible to carry them into effect. I do not believe that that argument can apply in this case, for the good reason that all these farms are classified already. The Department knows all about them. The farms are all listed. Their physical characteristics are known, and I should have thought that there would be no great administrative problem in introducing an adjustment to the scheme of the kind to which I have referred.

I end as I began, by emphasising to the Minister the clear fact—known to all of us who live in country of this kind—that many hill farmers, particularly the high-lying ones, have been going through the greatest period of difficulty that they have known for years. On top of the problems of rising costs and falling returns they are now emerging from a period of very great loss. It has been a long winter; the losses have been extreme, and I am assured by some farmers, whose word I trust, that they simply do not know how they are going to manage in the next few months—and this is the time when they are threatened with the Selective Employment Tax.

I hope that the Minister will consider the argument sympathetically and will give thought, if not now at least in the next few weeks, to a possible adjustment of the basis of the "C" grade scheme.

12.2 a.m.

The Minister of State, Scottish Office (Mr. George Willis)

I want first to reply to some of the Scottish questions before speaking to the Motion itself.

The hon. Member for Perth and East Perthshire (Mr. MacArthur) is 12 months behind in his argument about the 14,000 farms graded as eligible for winter keep. We had this debate last year—

Mr. MacArthur

Can the hon. Gentleman give me any later information?

Mr. Willis

I shall reply to the hon. Member's point. We had a debate last year on the question why 14,500 farms were graded as eligible for winter keep and only 9,000 were receiving payment. The hon. Member for Edinburgh, West (Mr. Stodart) raised this question, and I wrote to him afterwards expanding my answer fairly considerably, and probably to his satisfaction—

Mr. Stodart indicated dissent.

Mr. Willis

The hon. Member shakes his head, but he has not raised the question again tonight. The short point is that this figure of 14,500 farms includes a large number of very small places—glebes, cots and smallholdings—which provide only part-time or spare-time employment. From all the evidence we have, 9,000 is roughly about the number that should be in receipt of the winter keep payment.

His second point concerned the question of giving an option to take either headage or acreage payments. I am sorry to inform the hon. Member that this would be administratively rather difficult. It also raises the question whether some people south of the Border, who might be suffering as a result of headage payments instead of acreage payments, would also ask for an option. The hon. Member must face that possibility.

Some people may be not so well off as a result of our system in Scotland, and they might benefit by his proposal, but generally it has been accepted that in Scotland there is not a considerable demand to change the present system. In any case, as I have said, it would be extremely difficult, administratively, to do as he suggests.

Mr. Stodart

Where does the difficulty arise? We all know that these farms are graded. What is the administrative difficulty of saying that a farm which is graded "C" arid which is to be paid by the Department £5 per acre, should have the choice of claiming the headage payment? Where is the difficulty? Is it the duty of the Minister to say that it would not be popular in England? Is not his job to stick up for the Scottish agricultural system?

Mr. Willis

The hon. Gentleman should not put words into my mouth. I said nothing about the popularity of this in either Scotland or England. I have stuck up for Scotland in Parliament far more than the hon. Gentleman and I assure him that I said nothing about popularity. I merely pointed out that if this choice were given in Scotland, it might also be raised south of the Border. This seems a reasonable deduction. I should have thought that the hon. Gentleman would have appreciated that immediately. I am surprised that he is so sluggish in understanding this. My information is that this would create administrative difficulties.

Mr. MacArthur

Will the Minister note that from the point of view of the sort of Anglo-Scottish competition that exists—[Interruption.] Why is the Minister looking so surprised? Why does he think that if this sort of optional scheme existed in Scotland, the farmer in England would insist that such a scheme should exist in England? Surely in England there is already a differential in the subsidy payments. That would to some extent be balanced out if there existed in Scotland the sort of scheme I proposed. It would be balanced out in favour of the very high-lying farm which is frequently found in Scotland. There is no weight in the Minister's argument.

Mr. Willis

That is the hon. Gentleman's opinion. I again object to hon. Gentlemen opposite putting words into my mouth. I did not say what he suggested I said. I simply said that we have our system in Scotland and that some people consider that they might be better off if they had a headage payment. The hon. Gentleman says that we should give them a choice, and I pointed out that people in England who are in receipt of a headage payment might then ask for exactly the same arrangement. I just made the point that that might happen. I do not know what all the trouble is about. I am surprised at the inability of hon. Gentlemen opposite to understand the simplest of propositions. Why are they misinterpreting what I am saying?

Mr. MacArthur

The trouble is about a certain number of farmers in Scotland who are not receiving anything under the winter keep scheme because their farms are lying too high. That is what the trouble is about and the Minister should recognise that he should try to take some trouble to benefit those people who are at present excluded from the scheme.

Mr. Willis

If they have hill sheep, they get the headage payment. If they are cropping, they get the acreage payment. If they are not cropping and if they have sheep, they get the 2s. [Interruption.] I am explaining the position. I wish hon. Gentleman opposite would try to understand it. They do not get the acreage payment, because that is given for something else. This scheme was accepted in Scotland as being most in accord with Scottish conditions, and I recall that the hon. Member for Edinburgh, West had something to do with its acceptance.

Mr. Stodart

The Minister said something extremely important just then, possibly in the heat of the moment. Is he saying, as an answer to the question I asked, that for every sheep in respect of which the farmer receives the 19s. subsidy, he receives the 2s. supplement?

Mr. Willis

Those on land eligible for winter keep.

Mr. MacArthur


Mr. Willis

I will answer the hon. Gentleman's point.

The Motion deals with a healthy expansion in the hill sheep industry. We made our position clear, as a Government, in the National Plan published in September in which a programme of selective expansion for agriculture to meet the expected increase in the demand for food was announced. No specific production targets were set in the plan, because, as the White Paper says, the desirable rate of expansion of different targets must depend on a number of factors. But for sheep and lambs it is envisaged that, consistent with our commitments to overseas suppliers, home production should make an increasing contribution to increasing demand.

It was agreed by the National Farmers' Union that the Annual Price Reviews should be used as a means of keeping under constant review the progress being achieved under the planned programme for agriculture and of assessing the resources required.

Of course, we are not talking about expansion at any cost. Clearly, one of the factors which must he constantly kept in mind is the resources in manpower and materials which are needed to achieve expansion. In the Government's view, expansion which ignored the cost in manpower, material and money and which was not specifically geared to the market demand would be far from healthy.

The Motion also alleges that the Government have failed to improve the position of hill sheep farmers. I would remind the House that, after the 1965 Annual Review, the Government placed the hill sheep subsidy on a new basis which was calculated to give more assistance. Instead of a variable subsidy, which might be paid in some years and not in others—in five years out of the ten in the 1950s, no subsidy was paid at all—according to the assessment or the circumstances of the hill sheep farm in the previous year, from 1965, hill sheep farmers have known in advance that they would receive sufficient to cover any normal variation in weather conditions from year to year.

The rate of subsidy was fixed at 18s. for each eligible ewe, which compares with an average of 9s. 6d. for the five preceding years. No one has questioned that this was of real value to hill sheep farmers, nor has anyone suggested that the rate of 18s. was ungenerous. In fact, it was very widely welcomed at the time.

After the last Annual Review, we made two further changes. The returns from wool form a substantial part of the income of hill sheep farmers. If the arrangements between the Government and the British Wool Marketing Board are to work as intended as a price-stabilising mechanism, there must be a reasonable prospect that the guaranteed price and the market price, which is largely determined by the world market, will equate over a period. The Government accordingly reduced the guaranteed price of wool by 2d. a pound.

The effect of this reduction will vary for hill sheep farmers according to the breed and type of sheep which they keep and the part of the country in which they farm. On average, however, and allowing for the wool clipped from animals which are not eligible for the hill sheep subsidy, the addition to the subsidy of 1s. per eligible ewe is calculated to do rather more than offset the reduction in the wool price and to give a further small incentive to those who maintain our hill stocks.

At the same time, the price of fat sheep and lambs was increased by ¾ d. It was the first time that there had been an increase in this price for several years. It had been going down. This represented roughly ¼ d. as compensation for the reduction in the wool price and ½ d per lb. as a direct encouragement to sheep production. Many hill farmers will be able to benefit directly from this additional ½ d but others will not. However, since the lambs which come off the hills are finished on the lower ground as fat lambs or enter the mutton low ground flocks even those hill farmers who cannot sell any of their lambs fat should benefit indirectly from this increase.

I will not weary the House with a long recital of figures, but I think just a few should be given to get this matter into its proper perspective. The number of hill ewes subsidised in Scotland in 1940 was 2,278,000; in 1950 it was 2,380,000, and in 1960 it was 2,399,000. The number subsidised in 1965 was 2,465,000, and in the light of the Government's policy and actions, and the figures I have just given, I am afraid that we cannot accept this Motion.

I accept the point which has been made about the increased figures not meaning, necessarily, greater prosperity. This is a difficult matter on which different interpretations can be placed. One might well be that more efficient methods have helped, but I do not want al this hour to enter into an argument along those lines although I accept what has been said.

There is an inevitable tendency, and one which is understandable, to consider in isolation the guaranteed price of a particular commodity, or the subsidy given to a special branch of farming. Yet I am sure that hon. Members will agree that this is a rather unrealistic way of looking at things. Each decision must be taken as part of general policy. Each grant must be looked at in relation to the whole complex of grants and subsidies. It is true that hill farmers do not obtain the same benefits as others have from the guaranteed prices and subsidies which are generally available, and this is, indeed, one of the main reasons why successive Governments have ensured that specific means of assistance are available for them.

Many hill sheep farmers do, however, obtain substantial help from other sources than the hill sheep subsidy and since their customers are, in the main, farmers on lower and better ground, they are assisted indirectly, but none the less effectively, by the measures taken to maintain profitability of farming as a whole. The Government, furthermore, have not been content to rest on well tried methods of assistance. The hill farm improvement schemes were brought to an end in 1963 by our predecessors, and in the Bill now upstairs in Committee we are proposing to introduce new and generous grants for the improvement of hill land.

We are also proposing that the hill sheep and hill cattle subsidies, and the winter keep grants should be put on a permanent basis, instead of leaving them as formerly, that is, to be renewed from time to time. There are also other sections of the Bill, principally those dealing with farm structure and co-operation, which will also have a useful impact in the hill areas. All this gives some certainty, and makes it easier to plan ahead.

It might be convenient if I now answer some of the specific points which have been raised. I was asked how many do not get the 2s. supplement. The answer is about 125,000 or roughly 5 per cent., but this figure refers almost entirely to split units.

I was also asked whether the winter keep grant payments make up the difference between the 2s. payment in Scotland and the 3s. 6d. in England. The answer is "Yes". On average, it is estimated that the acreage payments and the 2s. supplement are equivalent to the 3s. 6d. in England.

The hon. Gentleman then asked me how many winter keep farms do not get acreage payment because they do no cropping. I am sorry, but we have no figures, so I cannot readily answer his question. The hon. Gentleman will probably appreciate—

Mr. Stodart

I cannot see the difficulty in, say, the Lothians area, of asking the Department's inspectors this very question. I believe that they would be able to tell the Minister almost off the cuff.

Mr. Willis

I have just asked, and they have not been able to tell me off the cuff, which is, I think, the answer to the hon. Gentleman. If the figures can be obtained easily, I will certainly try to get them for him, but, at the moment, we do not have them.

The hon. Gentleman referred to in-wintering experiments. These experiments are being conducted, as I think he probably knows, by the Hill Farming Research Association, by agricultural colleges and also on private farms. The results will be taken into consideration when we frame new schemes after the lapse of the present hill sheep schemes.

Hill sheep farming has been carried on in Britain for a long time, but the methods have not changed greatly. The present systems were dictated by the economic conditions of their times, and many people are now wondering whether they are necessarily the best suited under modern conditions for all hill farms. The Government have said that they will keep the detailed conditions of the hill subsidies under review so as to permit the best use of hill land in the light of modern technological advances.

We have recently reconstituted the Scottish Hill Farming Advisory Committee, and have been fortunate to secure for that body the services of experienced, able and enthusiastic hill farmers. There is a similar body for England and Wales. These bodies are being asked, as part of the Government's review, to consider the extent to which the conditions of the subsidy scheme may need to be adapted in the light of modern developments in hill farming practice. The economic conditions of the hill sheep industry will, of course, continue to be examined each year as part of the annual Price Review. I should have thought that all these measures indicated the Government's intention towards the industry—the intention to see it develop as outlined and set forth in the National Plan.

12.23 a.m.

Mr. Peter Mills (Torrington)

Perhaps we might now turn our eyes from Scotland for a few moments—[HON. MEMBERS: "Why?"] It seems to me that so far our consideration of this matter has turned entirely on Scotland, but there are other parts of the country that are interested in sheep, and particularly in hill sheep—and none more than the South-West. with Dartmoor and Exmoor. It is, therefore, right that we should say something about that aspect.

To say the least, the last winter has been particularly difficult for the sheep farmers, and particularly those on Dartmoor and in other places. It has been very wet and cold, and this increase in the subsidy in no way makes up for the very severe setbacks that the sheep farmers have had. Indeed, that is my main point tonight. We have had loss of lambs and loss of ewes.

Here, I must declare an interest. Although I have a lowland farm and keep a lowland flock, we have had considerable losses of lambs and ewes, and farmers on the moors have suffered even greater loss. Lamb prices are down, and so are ewe and wool prices. The Minister may not think this has affected the industry, but the recent loss of export lambs has already made quite a difference to the price of lambs in the markets.

All this is reflected back to the farmer on the hills who produces store lambs. It is a rather hackneyed phrase, but hill farmers who produce hill lambs are vitally important. It is vitally important that we should keep them going so that they can produce store lambs and so that the lowland farmer can fatten them. We have heard in this debate that lamb flocks are going down. It is still vital to maintain hill farmers so that they can produce the necessary store lambs and to give them every encouragement.

It might be said that the hill farmer is not doing too badly with all the subsidies he gets, but he deserves all the help and encouragement he can get for it is not easy to farm under the conditions in which he seeks to farm. It is a difficult job with many set-backs. He is doing a very important job in helping the total effort to reduce overseas expenditure. I think that this increase will not make up for the difficulties he has experienced. In his Annual Review and Determination of Guarantees 1966, paragraph 34, the Minister says: The Government do not wish to check the increase in the hill flock, and that the 1s. which the Government are now giving. provides a small incentive. "Small" is the right word. If we work it out we find that it is very small indeed. For a 400 ewe flock it amounts to £5 extra a year and for an 800 ewe flock the farmer will get only £10 extra a year. This is minute and does not make up for all the extra costs which these farmers have had.

The Minister of State has referred to what happened under previous Administrations. What he does not appear to realise is that costs of production have risen fantastically. Various Government measures have affected this very much besides general rises in wages, cost of petrol and a host of things. When a farmer with a flock of 400 ewes gets only £5 extra, we are justified in claiming that the increase does not cover his increased costs during the difficult winter which many such farmers have experienced.

There is much more that I could say, but I do not want to prolong the debate for too long, because other hon. Members wish to speak. It is important to remind the Minister that in the description of sheep I see no mention of Dartmoor sheep. The schemes refers to local breeds as he may approve I hope that he will continue to approve some breeds in the South-West.

Overstocking might become more important when one considers the Commons Registration Act and the effect which it might have on the total sheep population. The Minister has power to reduce the subsidy if he thinks that there is over-stocking. He can seek to reduce the number of ewes by taking away the subsidy. It would be interesting to know how many times he has had to use that power. Reference has been made to management. A condition of the scheme is that correct hill farming practices must be carried out. I hope that the Minister will be flexible about this. I hope that his officers will be flexible and that the Minister will take into account new techniques. It is important to think of the increased productivity we have had in sheep farming and in farming as a whole.

If there were hon. Members opposite to hear it, I could assure them that there is no need to fear that we are taking advantage of these subsidies and wasting them. This is money well spent. There is no question that agriculture and sheep farming have a wonderful history of increased productivity, amounting to at least 6 per cent. This is something of which we should be proud. There need he no sneers or fears that this is wasted money. Indeed, it is money well spent. Productivity is the result of this. Industry and the country as a whole can take a leaf out of agriculture in the increased productivity that arises from new techniques, subsidies and so on.

When one takes into consideration the losses and the problems that these sheep farmers have had during the past winter, and of course the tremendously increased costs, this Is. is a very minute increase indeed.

12.31 a.m.

Mr. Hector Monro (Dumfries)

What I found so extraordinary in the speech of the Minister of State was that there was no recognition of the fact that the plight in the hills is serious and that if much more drastic action is not taken on behalf of the hill farmers many of them will go to the wall and go out of business.

In the White Paper the Government say that they do not wish to check the increase in the hill flocks, but every step that they take will drive sheep off the hills and will turn the best of the sheep ground into forests. Sheep farmers are tired of exhortations to higher efficiency. They would all have gone bankrupt years ago if they were not supremely efficient at their form of husbandry.

What we should be talking about tonight is not so much 1s. on the hill ewe subsidy as a rescue operation for the whole of hill shep farming. True, we should remember the very great deal of good that has been done by the hill farming scheme, but if we continue with the depression of the hill sheep industry these farmers will not be able to maintain the improvement they carried out some years ago.

One only has to look at the cost of hill drainage at the moment. Ten years ago it was 3s. 3d. a chain. Now one is very lucky to get it done at 7s. 6d. Naturally, the draining that should be done to maintain the hill improvement schemes is beginning to deteriorate. It is not possible to mechanise the shepherd's work. Some people have tried ranching, and it does not work. Others have tried using Land Rovers, and so on. But the shepherd has his particular area to look after and there is no other means of doing it but on foot.

We need all the encouragement we can get to improve draining, to deal with top dressing and fencing, but there is not the cash to do it as it should be done. At all times hill farmers have ploughed back money into their hills when they had it. They have always purchased the best tups and have put on the best hill cattle that they could afford. The important point is that they do not really want a subsidy or a grant. They want much better prices for the three commodities that they can sell. They can sell mutton, wool and cast ewes. All these items are fetching considerably less than they were 10 years ago.

Shepherds' wages have gone up 85 per cent., and they certainly deserve it. According to the latest figures of the Wool Board, rates have gone up 94 per cent., and the increase is probably nearer 100 per cent. after revaluation. Rent has increased by 98 per cent., and the Bank Rate by 66 per cent. Now the hill farmers are faced with the Selective Employment Tax loan.

I want to show how their income has dropped catastrophically. I have got the average figures from one of the largest auction markets in the South of Scotland, selling tens of thousands of lambs from the Cheviots and the Southern Uplands. I have taken representative figures, with no particular year in mind. In 1957, the average price of these thousands of Cheviot wether lambs was £5 7s. 10d. a head. Last autumn, it was £4 9s. 1d., which was 18s. 9d. down, and so a farmer who is selling 1,000 lambs will lose about £1,000 on his income straight away.

Even more significant was the price of Cheviot draft ewes. In 1957, it was £6 7s. 10d., and last year it had nearly halved, to £3 15s. A large part of the hill farmers' capital is tied up in stock, and it is being halved by the price of their product at present.

I should like to have gone through the large number of letters that I have received from flock masters throughout the South of Scotland, but time is short. Those letters all indicate the considerable drop in the average price of top wether lambs, many of them of over £1 and the fact that draft ewes dropped by 50 per cent.

I had a letter from a farmer who had 2,200 ewes in 1957, and whose gross sale of wool and lambs was £14,000 in that year. Last year, that figure dropped to £12,000—a drop of £2,000 on lambs and wool. Against that, another farmer's expenditure on 1,800 ewes has gone up from £4,000 to £8,000. The income is dropping and the expenditure is rising dramatically. I could continue with many other examples.

Mr. Hoy

Is the hon. Member saying that the figures he has given were of total income or sales. or had the subsidy /o be added to the figures?

Mr. Monro

I was giving the total figure of sales in the market of lambs and wool.

Mr. Hoy

Excluding subsidy?

Mr. Monro

There is no subsidy on store lambs.

Mr. Hoy

I thought that the hon. Gentleman was talking about sales off the farm, and if any subsidies were included I wanted to be sure what the hon. Gentleman was saying.

Mr. Monro

We want also to see more money spent on research into disease control. Some hon. Members on this side of the House visited the Rowat research establishment, in Aberdeen, this week and saw the great benefits that we shall obtain from its work in the years to come. But it could do with more money and more buildings in the very near future.

One other point that has not been mentioned tonight is the severe discrimination under the Selective Employment Tax against the operations of the Wool Board. These are subject to tax, but the Board's direct competitors, man-made fibres, are not; they will, indeed, receive the premium. This will make it harder to sell wool, and result in a lower income for the hill farmers.

I want to emphasise again that the situation is desperately serious, and the hill ewe subsidy is but a drop in the ocean. I implore the Minister to take immediate action to help this most important branch of farming, particularly in Scotland, where, if the autumn store sales do not show a very considerable improvement in prices, many hill farmers will be bankrupt by next winter.

12.39 a.m.

Mr. Hoy

I apologise to the hon. Member for Dumfries (Mr. Monro) if I did not understand him clearly on one point and thought, when he was dealing with hill sheep, that he was talking about sales off the hill, and wondered whether he had included the subsidy. I am sorry if I misinterpreted what he was saying at that time.

The hon. Member and one of his hon. Friends argued that more should be done for the hill farmer. I shall not suggest that we have done everything possible, but, when he complains about the subsidies that have been paid, let me compare what the Government have done with the previous record. In five of the years between 1951 and 1963 no subsidy was paid for hill sheep, and in five years the subsidy was 5s. or less. On two occasions it was between 5s. and 10s., and on one special occasion, which the right hon. Gentleman the Member for Argyll (Mr. Noble) will remember, it was 25s. That is the history of the subsidies over this period.

We have put the subsidy on a firm and continuing basis. Previously, the rate of subsidy, if there was one at all, was assessed retrospectively in the light of a review of the economic circumstances of the hill sheep industry during the year. Then, and only then, was any assessment made. Because of their intermittent nature, the hill sheep subsidy payments were not taken into account in the Annual Review. This is the reason for it, as the hon. Member for Edinburgh, West (Mr. Stodart) knows well. This system had several drawbacks, the most noticeable of which was that farmers did riot know in advance whether a subsidy would be payable in any year. The industry, not unreasonably, complained of a. lack of assurance and stability as a result.

We therefore decided, with the agreement of the National Farmers' Unions, to put the subsidy on a flat-rate annual basis and within the ambit of the Annual Review. The standard rate of 18s. determined at the 1965 Annual Review was paid in respect of of ewes kept in 1964 and was sufficiently generous to cover fluctuation in returns due to normal variations in the weather and to allow farmers a reserve against the event of a severe winter. That was why it was fixed at that rate, which was not ungenerous.

This arrangement compares not unfavourably, to say the least, with what happened in previous years. In the event of a disastrous winter and losses occurring, the Government, of course, would have to consider at that time whether special action would have to be taken; but they have been sufficiently generous to cover ordinary circumstances.

Then we looked at the winter keep scheme. This, too, was not working satisfactorily, not least because many hill farmers—for example, those with no in-bye land—were ineligible. We therefore discussed the matter with the Farmers' Unions and it was agreed to discontinue the previous arrangement and pay winter keep on a headage basis instead as a supplement to the hill sheep subsidy.

That decision was endorsed by the Hill Farming Advisory Committee. The rate was set at 3s. 6d. in England and Wales. We know that it was done on a different basis in Scotland, where there is a combination of both headage and acreage payments. They are not always quite so simple to work out, because even before I came to the Department I had long correspondence with the hon. Member for Edinburgh, West, when he was Under-Secretary of State for Scotland, concerning payments and who should be classified in categories A, B and C under this basis. I remember meeting some farmers who argued that apparently all the C classifications of farms occurred on one side of the hill adjacent to the hon. Gentleman, while all the others were on the Galashiels side of the hill. This is not, therefore, a new problem, and the hon. Member knows this. It has existed for a long number of years.

I was surprised to hear the hon. Gentleman say that it would be quite easy to get the number of farms from the inspectors concerned. All I can say is that the hon. Gentleman never succeeded in getting the number while he was Under-Secretary of State.

Mr. Stodart

I entirely agree that this is not a new problem, but it has nothing to do with what we are discussing.

Mr. Hoy

It was the hon. Gentleman who raised the matter. Indeed, he suggested to my hon. Friend the Minister of State that even within that compass it should be possible to decide which type of grant was wanted even under the A, B and C categories. I was merely reminding the hon. Gentleman that it is a problem.

When the hon. Gentleman mentions the road between Haddington and Duns and the farms as being under difficulty, I am not denying it. I have travelled that road often. I did it at the weekend. The farms were under that difficulty even when the hon. Gentleman was Under-Secretary of State for Scotland. They have not changed the geographical position—they are' still there just the same as when he was there.

I ought to say that the combined payment in England and Wales on each hill ewe is 21s. 6d., and the total amount paid in 1965 was £2.94 million. The total for the United Kingdom was £5.064 million. In this year's Annual Review we raised the rate of subsidy by another Is., making the combined rate for England and Wales 22s. 6d., that is 1s. on the previous year. Recognising that we only had statutory authority to make schemes up to 1966, we decided that this was not a satisfactory state of affairs, since farmers could have no certainty that the subsidy would continue, and that is why we decided to seek powers to extend indefinitely the period in respect of which subsidy schemes may be made.

During the duration of any particular scheme it will be limited to a maximum of five years and we have made provision in the Agriculture Bill accordingly. These are substantial measures to meet the lot of the hill sheep farmers. Since they have all been taken in the last 18 months we have not wasted very much time in taking action.

Mr. Michael Jopling (Westmorland)

His hon. Friend quoted the rise in the price of mutton and lamb. Would the hon. Gentleman not agree that the increase of 3d. per head for hill ewes does not apply to hill farmers because they rely on the market? In view of this, would he not agree that hill farmers will be worse off next year than this, as a result of rising costs?

Mr. Hoy

No. This extra Is. was awarded and it is no use trying to fritter it down to 3d. My hon. Friend was saying fat lamb has gone up and that it might be reflected in the better prices paid to the hill farmers. That was all that he said, that hill farmers might indirectly benefit.

For the future the Government have made it clear that they are concerned to see the best use made of agricultural resources in the hill and upland areas. This is quite apart from hill subsidies. We have made the necessary provisions in the Agriculture Bill which is now before the House. Hon. Gentlemen have complained about there being a delay in it going into Committee. It was ex- plained at the first meeting why this was so and all that I would say in reply is that we will be grateful for the cooperation of hon. Gentlemen in speeding up the procedure a little and letting us get on with the business.

We have set about tackling the problems facing our hill sheep industry. I agree with the hon. Member for Torrington (Mr. Peter Mills) that the farmers have a very important part to play in our expanding agriculture, and we shall continue to see that they can play that part effectively. It has been said before, but I only wish that every section of industry had increased its output in the same way that agriculture has done.

I am grateful to the hon. Gentleman the Member for Edinburgh, West for thanking the Government for this debate. Without it, it would not have been possible to have a debate at all. We are glad to have been able to have this debate and I can assure hon. Gentlemen who have taken part that as far as we are concerned we will do all that is humanly possible to help this very important section of agriculture.

12.50 a.m.

Mr. Michael Jopling (Westmorland)

I shall not detain the House long, but I wish to say, on behalf of my hon. Friends, how much we appreciate the Government's giving time for the debate. We thank the two Ministers who have spoken for trying to help us. The interest shown by those of my hon. Friends who have been present, but who have not been able to speak, serves only to emphasise that this has been a worth-while exercise.

I beg to ask leave to withdraw the Motion.

Mr. Deputy Speaker (Mr. Sydney Irving)

Only the hon. Member who moved it may ask leave to withdraw the Motion.

Mr. Stodart

I am sorry, Mr. Deputy Speaker. I was not sure that I should have permission to speak again. In view of the replies we have had, not that we are by any means satisfied by them, I beg to ask leave the withdraw the Motion.

Motion, by leave, withdrawn

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