HC Deb 26 May 1966 vol 729 cc855-75

9.59 p.m.

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

I beg to move That the Cereals (Guarantee Payments) (Amendment) Order 1966 (S.I., 1966, No. 484), a copy of which was laid before this House on 3rd May, be approved. I suggest, Mr. Speaker, that it would be for the convenience of the House to discuss at the same time the following Motion,

That the Cereals (Protection of Guarantees) (Amendment) Order, 1966, (S.I., 1966, No. 485), a copy of which was laid before this House on 3rd May, be approved.

Mr. Speaker

I am agreeable if the House so wishes.

Mr. Hoy

The Cereals (Guarantee Payments) (Amendment) Order deals with the moisture content of wheat qualifying for the guarantee payment. As the House is aware, this payment is made on the tonnage sold by growers and certified for payment by authorised wheat merchants. It is a basic requirement that to qualify for the payment the wheat must be millable. The definition of millable wheat which is set out in the Cereals (Guarantee Payments) Order, 1964, has a long history dating back to the pre-War Wheat Act. It has worked reasonably well over the years. The definition does not, however, include a specific reference to moisture content. This is a matter to which the Wheat and Rye Deficiency Payments Advisory Committee—on which both the farming and trade interests are represented—have been paying increasing attention in recent years.

Two years ago it was decided after consultation with the Committee, to introduce a voluntary code of practice to deal with moisture content. The effect of this has been that the merchants have not been certifying wheat as millable where the moisture content exceeds 18 per cent. We have now had experience of the operation of this code both in the favourable conditions of the 1964 harvest and the exceptionally difficult conditions of the 1965 harvest.

It has been shown that the 18 per cent. requirement works satisfactorily. After consultation with the Advisory Commit tee, we have come to the conclusion that it should now be made mandatory. The Cereals (Guarantee Payments) (Amendment) Order therefore supplements the present definition of millable wheat by providing as an additional requirement that the moisture content must not exceed 18 per cent.

This is the first main purpose of the Order before the House, and I must emphasise that it does no more than prescribe a maximum moisture content for the purposes of the guarantee arrangements. We consider that for these purposes the figure of 18 per cent. constitutes a reasonable maximum standard; in many cases, of course, the requirements of commercial users may call for wheat of a lower moisture content.

The second main purpose of the Order is to deal with the situation created by the growing commercial demand for rolled and flaked wheat. Wheat required for these purposes has to be processed damp; in this condition, it cannot be certified as millable either under the current or the amended definition of millable wheat. So long, therefore, as the guarantee payment is restricted to millable wheat, the position can arise where damp wheat suitable for rolling or flaking has first to be dried in order to qualify for the guarantee payment and then damped again so that it can be processed. So far as we know, this problem has not yet arisen on a significant scale. But, with the extension of the rolling and flaking processes to wheat, it could become increasingly serious as time goes on.

The Order therefore empowers the Minister to make a guarantee payment on wheat otherwise millable but with a moisture content in excess of 18 per cent. It will not therefore be necessary as at present for damp but otherwise millable wheat to be physically dried before it can qualify for deficiency payment. It will, of course, be necessary to take account of the excess moisture in the actual payment. This will be done by basing the payment on an adjusted weight. This weight will be calculated by reducing the gross weight in proportion to the excess of moisture over 18 per cent. subject to the operation of a tolerance which will be kept under review.

The detailed arrangements will be set out in amendments which we propose to issue to the Cereals Deficiency Payments Scheme after consultation with the Wheat and Rye Deficiency Payments Advisory Committee. We are also taking the opportunity in the Cereals (Guarantee Payments) (Amendment) Order of correcting a purely technical error in the wording of the Cereals (Guarantee Payments) Order, 1964, relating to the operation of the standard quantity arrangements.

The purpose of the standard quantity mechanism is to reduce the guarantee payment in any year when production exceeds the standard quantity. The present wording gives the Minister power to make a larger payment in these circumstances. It has not, however, prevented him from operating the guarantee arrangements in the way intended. The Order now before the House puts the wording right by simply transposing the words "production" and "standard quantity".

The second Order, the Cereals (Protection of Guarantees) (Amendment) Order, which is consequential on the first, requires merchants to keep records of the moisture content of all parcels of wheat which they purchase. This provision is necessary for the proper administratior. of the Scheme, and will assist our auditors in their regular checks on transactions attracting guarantee payments.

We are anxious to keep to a minimum the burden on merchants of record-keeping. The requirements of the Order go no further than is directly necessary for our purposes. Thus, the House will note that where the moisture content of wheat as purchased does not exceed 18 per cent., the merchant need record no more than this. A precise figure of the moisture content is required only in the case where the wheat as purchased has a moisture content in excess of 18 per cent. It is only in that case that the exact figure is relevant to the calculation of the guarantee payment.

I hope that I have been able to satisfy the House that the provisions of these two Orders, which are designed to come into operation at the beginning of the 1966-67 cereal year, will help to improve the guarantee arrangements. The modifications that are being introduced have emerged after full discussion on the Wheat and Rye Deficiency Payments Advisory Committee and are supported by the Committee.

10.7 p.m.

Mr. Michael Jopling (Westmorland)

My hon. Friends and I are grateful to the Joint Parliamentary Secretary for giving that explanation of these Orders. We welcome them, although we have certain reservations, some of which I will mention.

I will deal, first, with that part of thet Order which relates to moisture content. I agree heartily that it is sensible to avoid the farce of having to dry wheat and then wet it again for the purpose of meeting the subsidy requirements in the rolling and flaking trade. I regret that a Question of mine about the size of this trade did not receive a more specific reply from the Minister.

How this new system will be brought in and what should be done under it is not as simple a matter as it may seem. The new system hangs on a revised definition of millable wheat and the hon. Gentleman explained that it should not exceed 18 per cent. in moisture content. The hon. Gentleman also pointed out that for wheat over 18 per cent., the moisture content must be specified.

Does the Minister intend to use the form C.D.P.4 for the experimental scheme, the form which has been in use before? How does he intend to convert wheat over 18 per cent. back to the basis of wheat at 18 per cent.? It would appear that a part of this problem has not yet been considered, because I am sure that the hon. Gentleman is aware that when one dries wheat, not only does one lose moisture but also a proportion of dry matter.

Does the Minister intend to evolve a formula to take account of the loss of dry weight, apart from the loss of moisture? I am sure that the Minister knows that, when one dries damp wheat there are considerable "dressing losses". Although the sample may look extremely clean in the wet state, it is surprising how much comes out of it in various forms of solid matter. Unless some formula is evolved for loss of dry weight, apart from moisture, an unfair advantage may be given to sellers of grain with over 18 per cent. moisture content.

One or two other problems and snags arise over the new moisture formula.

What does the Minister intend to do to solve the very thorny problem of sampling? There are very wide variations and they are rather serious. I ask about the fallibility of moisture meters in terms of the new moisture system because in the original code of practice, which was brought in two years ago, a ½ per cent. moisture content tolerance was allowed. I have seen three tests of moisture meters made by the National Institute of Agricultural Engineering, an organisation with which I am sure the Minister is familiar. The tests are impartial and accurate and are done on a thoroughly scientific basis. The test on the Marconi meter, the one in most common use both on farms and in the merchanting trade, showed that over two years no fewer than 39 per cent. of the wheat readings were more than ½ per cent. out and 8 per cent, over the two years had an inaccuracy of more than 1 per cent.

This is a very disturbing background to the introduction of a moisture specification in the wheat subsidy system. This is the first occasion that moisture content has been officially recognised in this subsidy system. I believe there are great doubts on many sides, some of which I have tried to point out. I hope that the Minister will tell us how he intends to resolve these doubts so that we can support the Order, which is sensible, but there are wide disparities with which I hope he will deal.

I turn to another part of the amendments which raises rather serious problems. That is the intention to alter Article 4a of the Cereals (Guaranteed Payments) Order, 1964. This is a highly technical matter which concerns the level of guarantees in years when more than the standard quantity of wheat is produced. Unfortunately there was wrong wording in the original Order. It is the Minister's intention to amend that now. It is unfortunate that this was not spotted earlier. The Order was originally brought in by the previous Government three months before they left office and the amended Order, which we are debating, was not laid until the present Government had been in power for about 19 months. We must not try to put the blame on any one Government. This is an unfortunate matter which we must put right as best we can.

The old wording provided that an increased subsidy should be paid in years when more than the standard quantity was produced, which is exactly the opposite way to that which was intended and exactly the opposite way to that in which agreement was reached with the National Farmers' Unions. Certainly the effect of the wording was against the spirit of all the agreements.

Since the original Order was laid, the situation has been that for the 1964 harvest I calculate that the standard quantity has been exceeded by about 12 per cent. and in the 1965 harvest, which is now coming to the end of its selling period, roughly 20 per cent. more than the standard quantity was produced. I understand that the wheat subsidy during these two harvests and for these two crops has been paid in the way intended and agreed in the arrangements with the unions.

The fact is, though, that the original Order which the amendment tonight changes, directs the Government clearly to pay more than has been paid. The Minister said tonight that the original Order gives the Minister power to pay more than he has paid. I submit that the original Order gave the Minister a definite mandate to pay out rather more than he has done. It is a direction which the original Order gave to the Minister to pay out a larger sum, quite wrongly, in years when more than the standard quantity was produced. For the 1964 harvest I calculate that an extra £4.3 million should have been paid out in the wheat subsidy. On the basis of the projected expenditure in the Price Review White Paper this year of £14.1 million, on the extra crop which it is projected has been grown this year an extra £6.9 million should have been paid. That is a total for the two harvest periods of £11.2 million.

Mr. Hoy

Is the hon. Gentleman saying that a mistake was made in the original Order? Does he then say that as a result of that mistake the Government ought to have paid out another £11 million?

Mr. Jopling

I think we all agree on both sides that a mistake was made in the original Order. What I am suggesting is that not enough money has been paid out for the 1964 harvest and the intention is not to pay out as much money as the Government are mandated and directed to do by the Order for the 1965 crop.

What is to prevent an individual farmer from coming to the Ministry and saying, "You paid me out a lower guarantee for the 1964 harvest, which was completely against the terms of reference of the 1964 Order. I want more."? I should have thought that if a farmer were to sue for the difference he would have a very strong case in the courts. The Order clearly says that "the guaranteed payment shall be the amount …" By what right has the Minister paid out less than that provided for by the original Order? This matter must be cleared up at once. It is a matter of great urgency.

The Minister has two choices. He must either accept his obligation and pay up, or he must at once amend the original Order properly and so eliminate this retrospective liability which is hanging over t im. I do not suggest tonight—I am sure that the more responsible people in the industry would not suggest—that the Minister should pay up. This has been an unfortunate mistake. It ought to be cleared up as soon as possible because, as we are amending a wrong wording in the original Order, we may as well do the job properly.

I have dwelt, I am afraid at some length, on certain difficulties which I see in the amendments and on a serious matter which I think still arises in the original Order. I should be grateful if the Minister would pay attention to these points

10.20 p.m.

Mr. Peter Mills (Torrington)

As has been said, these two Orders are directed to the moisture content of wheat and what is millable wheat. They go together and both are important. It is a far cry from the days of old when a farmer had his ricks and threshed out his corn. He took his sample to the local merchant, and the merchant looked at the grain and tested it. A knowledge of grain and a knowledge of moisture was very much needed then. Today, we have modern methods of testing. But there was a relationship of trust between merchant, miller and farmer, and this continues to some extent today. I hope that, in spite of modern methods, driers, guaranteed prices and these Orders tonight, that basis of trust and intimate knowledge of the trade will not be lost.

Moisture content is not everything. Knowledge of grain, of the type of grain. of the trade and of what the miller wants is still vital. However, these Orders represent a wise move, for it is desirable to have standards for all parties, for farmer, merchant and Government and the miller himself. I consider that 18 per cent. is about right. This figure has been accepted in the trade for some time, and I am sure that what is provided in the Order is right.

If anyone should know something about the problem of grain and moisture content, it is someone who comes from the wetter areas of the South-West. In the South-West we have a difficult climate to combat. One had only to watch some of the combines working in the difficult wet times last year, for example, to see what moisture content could mean. One did not need an instrument to test it; one could see the moisture running out. Yet good crops have been grown and will continue to be grown in this area.

It is vital for all concerned, nevertheless, that we have a fair and accurate test of grain. This is my main point. In certain areas it is difficult to secure what we call a dry sample. Considerable expense must be incurred to bring the moisture level down to the correct figure. It is sometimes difficult to produce what I call evenness of drying. It is easy to take a sample of grain, test it and say, "This is 16 or 17 per cent.". But is that the true picture? Is there evenness of drying throughout the sample? This is vital when money comes into it and when one has to consider also whether the wheat is millable. Is the Minister satisfied that all merchants have adequate and reliable instruments to test grain and that they know how to use them? This will be most important in the future if farmers are to have a fair result.

Farmers find it difficult enough in their own driers to get an accurate figure of moisture content. Average moisture content can show marked variations from one part of the machine to another and from one part of the discharge to another. I quote from a test carried out just recently. One drier tested showed a variation over the bulk of grain after drying of the order of 0.5 per cent. and at certain places there were variations as high as 2 per cent. What is most significant about this test was that it was considered an exceptionally good machine for evenness of drying. One could quote from other test reports showing variations of over 1 per cent. in the moisture content of grain leaving the machine.

It will be appreciated, therefore, that scrupulous care must be exercised when sampling grain for moisture content if results of any accuracy are to be obtained. It is very important that we should have an accurate test and that it should be an average test throughout the whole bulk of the sample of grain. If it is not accurate, the farmer will suffer and his wheat will not be millable, and this has a serious financial aspect.

The question of keeping records arises on the second Order. I see that the merchants are to keep the records of moisture content. I am not certain whether the records should be kept of wheat that is over 18 per cent. or of all tests made. Perhaps the hon. Gentleman can clear that point up. I suggest that it might be possible, in order to clear up any misunderstanding, for the merchant to send a little note to the farmer after the test, saying what the result is so that the record can be kept by both farmer and merchant.

With those few reservations and questions, I repeat that these are useful Orders; and another step forward in our marketing arrangements.

10.26 p.m.

Mr. Hector Monro (Dumfries)

As the House will realise, the Orders are of great importance to many areas of Scotland, particularly the East Coast, Berwickshire, the Lothians and Fife, and further north. But we again find ourselves in the position we were in on Monday in that no Scottish Minister is here to answer points on these Orders. We have been treated shabbily all week. It was only by our perseverence on Monday that the Minister of State gave us a visitation and eventually a statement. Tonight we are not even to have the pleasure of his company. On a subject so important to so many Scottish farmers, this is a shocking state of affairs.

Like my hon. Friends the Members for Westmorland (Mr. Jopling) and Torrington (Mr. Peter Mills), I agree that these are useful Orders. The only points we are raising are those of implementation. I, too, am concerned about the arrangements for taking moisture content. As has been pointed out, this can vary in different parts of a bin and there can be room for argument in this respect. I hope that the hon. Gentleman can give more information on what type of moisture meter is to be used and what procedure is to be carried out when there is some dispute on moisture content. We have been shown that there can be error of up to ½per cent., which can be important in relation to deficiency payments.

Agreeing that these provisions work to the benefit of grain producers in general and in the hope that the hon. Gentleman will give more guidance and information on the procedure to be adopted, I support the Orders.

10.28 p.m.

Mr. Mark Carlisle (Runcorn)

I do not claim any knowledge of cereals and want to limit my remarks to a comment on a point raised by my hon. Friend the Member for Westmorland (Mr. Jopling) on the proposed amendment of Article 4(a) of the Cereals (Guarantee Payments) Order, 1964. It would be wrong to allow the hon. Gentleman to pass over this proposed Amendment by saying that it is merely a technical error that has not prevented the Minister from operating quite properly.

It may be a technical error in that it is, to a large extent, an error of wording, but when one looks at the effect of the error one cannot describe it as technical. I appreciate that the 1964 Order was presented by the last Government but it is right and proper, as the hon. Member will agree, that hon. Members should keep a questioning eye on the actions of Ministers and Ministries. The position is that whatever may have been the intention in the 1964 Order, the words in that Order clearly show that throughout the period and indeed until 1st July, the date on which the Amendment is proposed to be brought into force, the Minister is paying out on a basis which is wholly wrong in law.

Mr. Hoy indicated dissent.

Mr. Carlisle

The Joint Parliamentary Secretary may shake his head, but I hope he will answer this point.

I am not making any point out of the absence tonight of a Law Officer from the Government Front Bench. I appreciate that the Attorney-General has had a very busy day in this House, but I suggest that it is a matter of far greater importance than the Minister has yet accepted.

I should like to refer to the point raised by my hon. Friend the Member for Westmorland who said that he could not see what would prevent any individual farmer from deciding to sue the Minister for the difference between what should have been paid under this Order and what has been paid during the perid since July, 1964. Subject to what the Minister may say in reply, I honestly do not see what possible defence the Ministry would have to any such action. The words are absolutely clear. The amount which has to be paid out, unfortunate though the error may be, is clearly shown to be that amount of the guarantee payment above the ordinary market price at the time—in effect, multiplied by the difference between the amount that has been produced over the standard quantity.

Surely, the Minister must realise that Ministries of the Crown are in no way able to avoid the effect of actions that may be brought against them. Am I not right in saying that the guarantee payments are on the basis of the contract between the individual farmer and the Ministry? If that be so, since under Section 30 of the Limitation Act the time in which anybody may sue the Ministry for breach of contract extends for six years, if we allow this Amendment to go through in the form proposed, for a period of a further four years the Ministry is at any time in danger of being sued by any farmer for an underpayment under this Order.

Therefore, I ask the Minister not to say that this is merely a technical error. It is not a technical error. It is an error which involves, as we have heard, a sum of about 11 million. It cannot be said that that error has not prevented the Order from being operated properly. The Order was operated as it was intended to be operated, but wholly contrary to its wording. The Minister is faced with one or two alternatives. Either he must bring in an Amendment which, however much the House may hate retrospective legislation, is retrospective to the date of the 1964 Order, or he must accept the fact that he is legally liable to pay out the farmers on the wording of the Order. The Order says that the guarantee payment shall be a particular amount.

I have raised this matter because it is important, and though the Ministry may say that it is a technical error, it may well lead it into difficulty in the coming years. While appreciating that at this late hour one cannot expect to have a considered legal reply from the Ministry, I ask the Joint Parliamentary Secretary to look at the matter carefully and to decide whether or not, in view of the matters that have been raised, some other Amendment, regrettable as it may be, is necessary.

10.35 p.m.

Mr. J. E. B. Hill (Norfolk, South)

This is a very serious matter and I should like to support what my hon. Friend the Member for Runcorn (Mr. Carlisle) has said. I had not spoken to him or to my hon. Friend the Member for Westmorland (Mr. Jopling) this evening, but when I looked at the Order, I was surprised by the phrase reversing the words in paragraph 2 and when I read the explanation saying that the Order also made minor Amendments to the description of the manner in which the guaranteed price was to be calculated, my curiosity was aroused. I have since spent some time in the Library looking up the Orders. It is a labyrinth, of course, but in the end I found the relevant Order and it seemed quite clear that even if there were a mistake, the mistake itself was an incontrovertible fact and established the formula which had to be applied.

It would be advisable to put the all-important paragraph on the record. It is paragraph 4 of the Cereals (Guarantee Payments) Order, 1964—Statutory Instrument 1964/840—and it reads as follows: If in any year the annual production of wheat or barley— (a) is not less than the standard quantity the guarantee payment shall be the amount, if any, by which the guaranteed price exceeds the target indicator price, or the average realised price, whichever is the higher, after that amount has been divided by the proportion that the standard quantity bears to the annual production. It so happens that in each of the last two cereal years the annual production has exceeded the standard quantity and in each case the market value, according to the last Price Review, has exceeded the target indicator price.

The fraction by which the deficiency payment has to be divided for the purpose of reducing the payment, as was intended where annual production exceeded the standard quantity, has, because of the mistaken expression, been given upside down. In 1965, the standard quantity for wheat was 3.4 million tons and, according to the 1966 Price Review, annual production was 4.1 million tons.

The fraction as intended in the Order unamended would be the standard quantity above the annual production, which is 3.4 million over 4.1 million. But the resulting quotient when dividing by a fraction which is less than unity is, of course, larger than the sum originally divided. That is the difficulty and that is why my hon. Friend the Member for Westmorland, who has carried these calculations further than I have, reckons that the farmers under the Order as it stands could claim a considerable amount of extra money.

What is significant is that this is against a background of a Price Review which was bitterly resented by cereal growers. In 1965-66 there was a reduction in the guarantee price and the farmers felt that they were seriously under-recouped. We are therefore in the position that, this mistake appearing—and I should like to know how it was found, for I take it that it was not found as a result of a farmer claiming—it would be open to some growers to make a claim personally, as my hon. Friend the Member for Runcorn has suggested, and nothing that the National Farmers' Union might wish to do or that we in opposition might wish to do could alter that position.

The Minister said in opening that the present form of the Order gave the Minister of Agriculture, and I suppose the Secretary of State for Scotland, power to make larger payments than were intended. It has already been pointed out that the wording of the paragraph appears to be mandatory and I ask him where in these Orders we can find any power that the Minister may have to modify the mandatory requirements that seems to be laid on him by Article 4(a).

Unless he has that power and has exercised it, we seem to be in the difficult position that over this period a farmer could make this claim. I have come to the same conclusions as my hon. Friend the Member for Runcorn, but I must repeat that I have had no conversation with him. This new Order does not rectify the position at present—it only does so in the future—and we are left with this very strange position in which farmers may come and say, "We do not understand this. Can we make a claim?" It may be that my own farm manager, who is not very pleased with the prices for 1966, may ask if we cannot get a bit more back.

We certainly do not want that position to obtain generally, but the danger remains. This Order does not correct the position as far as the past is concerned, although I see that it is signed by no less than three Cabinet Ministers and has the signatures of two Lords Commissioners attached. It cannot be said that this Order has not been scrutinised at the highest level, even if it remains an incomplete answer to what is at law, a very real difficulty which would obviously require further action by the Government.

10.43 p.m.

Mr. Paul Hawkins (Norfolk, South-West)

I do not wish to follow my hon. Friends for Norfolk, South (Mr. J. E. B. Hill) and Runcorn (Mr. Carlisle) through the labyrinths of this legal difficulty. In my area, which is one of the finest wheat-growing districts in the world, we should very much welcome any addition that may come as a result of the discovery of a mistake in the Orders. We have felt for some time that cereal growing has been right down on the bottom and that our prices were not good enough.

This will be welcomed so far as the practical side of moisture definition is concerned. The Amendment is very necessary. In the town in my constituency in which I live there is one of the largest mills in the country which makes biscuit meal. I do not know the intricacies of milling, but perhaps the Minister could tell me whether biscuit flour comes within this rolling and flaking definition, to which he was referring.

Perhaps he can give me some information, which would be welcomed by farmers, about what effect variety of wheat has upon the moisture content. Another question which is relevant is what effect different types and quantities of manuring have upon moisture content. These matters will be important to farming in future and I should very much welcome any information which the Minister can give.

10.45 p.m.

Mr. J. B. Godber (Grantham)

I rise only for a few moments, because my hon. Friends have adequately exposed the points on which we want clarification. I want to make one serious protest, and to take up the point about the error. My protest relates to the fact that, very much as on Monday night, apparently one Minister responsible for the Ministry of Agriculture is dealing with Orders which apply to Scotland as well.

On Monday night, we made a protest. It was not a frivolous protest, but one which was strongly felt. I am sure that I say this in the presence of someone who is sympathetic to it, because the Joint Parliamentary Secretary represents a Scottish constituency and has some knowledge of feelings in Scotland on these matters. Really, it is not good enough to have no Scottish Minister present to deal with points raised by hon. Members concerned with local Scottish interests.

I would ask the hon. Gentleman to represent to his right hon Friend the Minister and his right hon. Friend the Secretary of State for Scotland that a Scottish Minister should be present when Orders dealing with agriculture come forward. I hope that we shall not have to make the protest again. I thought that our protest on Monday night would be sufficient, and I am seriously concerned to see that no attempt has been made to meet a very proper request by the House.

When I was Parliamentary Secretary, it was always the practice to have a junior Scottish Minister present when such Orders were before the House. I must warn the hon. Gentleman that if a similar situation arises in future, he will find serious difficulty put in the way of his getting the Orders through.

I come now to the matter first drawn attention to by my hon. Friend the Member for Westmorland (Mr. Jopling), which was elucidated further by my hon. Friend the Member for Runcorn (Mr. Carlisle) and my hon. Friend the Member for Norfolk, South (Mr. J. E. B. Hill); namely, the error which has emerged in the original Order to which this amending Order refers. I accept that the error took place during a period of Conservative government, and I make no point about that at all. However, the Order ought to have been put right at the first oppor. tunity when it was first discovered, and I would ask the Joint Parliamentary Secretary when it was discovered.

There is also the relevant point which has been made so clearly that an amendment made in the form given in the Order is inadequate because it does not deal with retrospective aspects. For anyone to demand retrospective legislation in the House is almost unheard of, and I should not normally dream of doing so. And I would make it clear to the hon. Gentleman before he replies that it is not our intention to claim that farmers may wish to take advantage of what is an error. It has been referred to tonight as a technical error. In the wording of the Explanatory Note, it is a minor error. Both expressions are misleading. It is a grave error which should he put right so as to make it clear beyond peradventure that there is no question of any claims resulting in advantage to farmers who might choose to bring a case in the courts.

I see no way in which the present Order can be read to cover the previous two harvests. Unless it can be, it should be withdrawn and reworded, or an amending Order should be brought forward at the earliest opportunity to cover the point substantively.

I am surprised at the words used by the Joint Parliamentary Secretary and the words in the Explanatory Note itself, It is a pity that it was not clearly brought forward and dealt with more definitely.

10.50 p.m.

Mr. Hoy

I shall deal with the question of wrong payment a little later if I may, because I should like to say a word or two more about it. Perhaps I might deal first with the technical point. The hon. Gentleman the Member for Norfolk, South-West (Mr. Hawkins) wanted to know what advice we can give. We are always delighted to do this, but this Order relates to the moisture content of wheat at the time of certification. It does not deal with its eventual use or the farmer's husbandry practices, and therefore I could not quite understand where the hon. Gentleman was getting with that point.

The hon. Member for Torrington (Mr. Peter Mills) and the hon. Member for Dumfries (Mr. Monro) said that my hon. Friend the Minister of State for Scotland should have been here. It is true that there are two Scottish Members present, one on either side of the House, but the hon. Member for Dumfries had no contribution to make to the debate. [Interruption.] I listened carefully and made a note of what he said. He raised the question of the moisture content, and I agree that it is important, but this matter was raised by nearly everyone who spoke. If I may say so, I think that I am as competent as anyone to say a word about Scotland, and this Order applies to cereal production wherever it takes place.

A number of questions have been asked about moisture content and moisture meters. I am a little surprised that producers and merchants have some doubts about this. We have had two years' experience of the use of moisture meters. They have been used under the voluntary code of practice, and the arrangements have worked satisfactorily. I think that most farmers and merchants would agree that this is so, and I am sure that the hon. Member for Norfolk, South-West would have been the first to say so if it was not. These meters have been used after consultation with all concerned. The Government did not say, "You have to do this", and the right hon. Gentleman knows perfectly that this has been done after consultation with the Wheat and Rye Deficiency Payments Advisory Committee, which includes representatives of both the farmers and the trade. We are satisfied that we can make this moisture content mandatory, because we have the agreement of all the parties concerned. I am sure that hon. Gentlemen will be prepared to accept that.

The hon. Member for Torrington asked about records. As I said when I moved the Order, the merchant has to keep an accurate and precise figure if it is over 18 per cent. If it is below that, he merely has to keep a record that the moisture content does not exceed 18 per cent., so to that extent I hope that I have made it clear that the point is covered.

Questions were asked about how this moisture content was taken into account, and I shall try to make the position as clear as I can. I hope that I can make it a little clearer than the hon. Member for Norfolk, South (Mr. J. E. B. Hill) did when talking about the technical errors. He gave us a long algebraic exercise, which, in the end, amounted to the fact that when it was first in the Order it was 9 over 10, instead of 10 over 9. I shall deal with that later. I merely use it as an example to show that this is a little difficult, and if it cannot be absorbed now, those concerned will be able to read it later.

The calculation of guarantee payment on wheat not millable solely by reason of excess moisture is on the following basis: In making a payment on wheat which is not millable solely by reason of its moisture content exceeding 18 per cent., it will be necessary to take account of the excess moisture. This will be done by calculating an adjusted weight on which the guarantee payment will be made. For the purpose of calculating this adjusted weight we shall make a percentage deduction for the excess moisture at the rate of 1 1/5 times the excess over 18 per cent.

This calculation will be subject to a tolerance of ½ per cent. on the moisture content recorded by the merchant which will be applied automatically by the Department. The reducing factor which I have mentioned has been in use under the voluntary code of practice, and we think that it is reasonable to continue it in its present form. This proved workable and reasonable, and we think it should be continued. But we shall wish to review the operation of the tolerance with the interests concerned in the light of experience. We would proceed to continue to look at the question to see if any improvement could be made.

The hon. Member for Dumfries raised a question—

Mr. Peter Mills

The hon. Gentleman said that my hon. Friend did not raise anything at all.

Mr. Hoy

I do not know what has gone wrong with the hon. Member for Torrington. I shall give a reply to the points he raised. The hon. Member for Dumfries asked what would be the position if a dispute arose between the farmer and the merchant. The experience we have had with the voluntary code of practice over the past two years has shown that the assessment of moisture content normally presents no difficulty for the growers and merchants, but we shall have to provide in the Scheme for cases where the exact moisture content of a parcel of wheat may be in dispute. This will include a procedure for referring samples to analysts approved by the local wheat committees. This is how we propose to deal with that situation if it arises, but we have had no difficulty in this respect so far.

I now turn to the technical error which was made in the original order. I cannot understand why the hon. Member for Westmorland made the point again. I thought that I had said explicitly that power had been given to the Minister to pay out more than was necessary.

Mr. Godber

My hon. Friend was right about that, because this is a misuse of words. It is not a question of power being given; it is a question of compulsion being laid on the Minister, which is wholly different from giving him power, which would be permissive.

Mr. Hoy

All I was saying was that that was what I had said. The hon. Member said that I had said it, and I am not denying it. It was a technical error. Everybody admits that. It was made by the previous Government when they drafted the Order. If the words had been reversed, as I suggested to begin with, the error would not have arisen. This is what we are putting right tonight.

Article 5 (1) and (2) of the 1964 Order provide that any payment made under Article 4 may be made subject to such conditions as the Minister determines, and the conditions are laid down in the Cereals Deficiency Payments Scheme, which sets out the detailed arrangements for the payment of a smaller amount per unit when production exceeds the standard quantity.

So we have not been paying less per unit than we were bound to, because this question lay with the Minister. That is why I said that it had been a technical error. That was the basis of the Scheme. I took great care about this. I was asked how we discovered the error. When a new Order had to come in we naturally looked at what had happened before, and it was then found that our predecessors had made this mistake. I am advised that the Minister had this power to modify the payment, but we thought we would put it right. We did not seek to mislead the House in this respect. This is what is honestly felt. This is the opinion of my Department. I do not profess to have tremendous legal knowledge, but I took care before I came to the Box to find out if this was so, and I am assured that it is.

It was because of that that I stuck to the original words and said that it was a technical error arising from the previous Order. I hope that hon. Members will accept this not only as my opinion but also that of the best advice that I could have in the matter.

Mr. Godber

The Joint Parliamentary Secretary is making a very important statement. He is now hanging the issue on Article 5(1), and is trusting to the words: … subject to such conditions as he may from time to time with the approval of the Treasury specify … The words "such conditions" were surely never intended to cover this issue. Is the hon. Gentleman really saying that legal reference to "such conditions" provides a cover against a mandatory provision which says "… shall be the amount …"?

Surely these conditions relate to the conditions in which payments are made, and not to the percentage which is specifically laid down? I do not pretend to legal knowledge of these matters, but I cannot believe that these words "subject to such conditions" can possibly override the mandatory provision of Article 4(a). I ask the hon. Gentleman most seriously to have this matter re-examined by the Law Officers of the Crown.

Mr. Hoy

I have said that payment is made under Article 5 and that these conditions specify a smaller payment when production exceeds the standard quantity. I am advised that, because of that, we have therefore not been paying less than we were bound to. I took great care to inquire into this, and that is why I am not inclined to change the original wording.

Mr. Jopling

Will the hon. Gentleman give the undertaking that he will look at this matter again, and consult the Law Officers of the Crown, as my right hon. Friend has asked him to do? We on this side of the House feel that this is a very serious matter, one which could lead the Government into untold trouble in the months ahead, and I do not believe that it could be examined too carefully.

Mr. Hoy

I did not think that this was leading the Government into untold trouble until the hon. Gentleman threatened to get the farmers to apply for £11 million. The hon. Gentleman was saying that, as a result of a mistake made by the Conservative Government, they might saddle the present Government with £11 million. If there were the slightest doubt, of course I should check. I have checked this, but if it can be re-checked, I shall certainly look at it, because nobody wants a mistake to continue. I should be delighted to bring in another Order and say that the mistake of our predecessors was even worse than I had thought and that I wish to put it right.

Mr. Godber

Is it not extraordinary that, having been in office for 20 months, the hon. Gentleman did not observe it before?

Mr. J. E. B. Hill rose

Mr. Deputy Speaker (Mr. Sydney Irving)

I think that the Minister has sat down.

Question put and agreed to. Resolved,

That the Cereals (Guarantee Payments) (Amendment) Order, 1966, (S.I. 1966, No. 484), a copy of which was laid before this House on 3rd May, be approved.

Cereals (Protection of Guarantees) (Amendment) Order, 1966, (S.I., 1966, No. 485), copy laid on 3rd May, approved.—[Mr. Hoy.]