HC Deb 19 July 1967 vol 750 cc2061-87

11.10 a.m.

The Joint Parliamentary Secretary to the Ministery of Agriculture, Fisheries and Food (Mr. John Mackie)

I beg to move, That the Agricultural and Horticultural Co-operation Scheme, 1967, a draft of which was laid before this House on 28th June, be approved. Hon. Members will recall that, under the provisions of Part IV of the Agriculture Act, 1967, the Government plan to encourage the development of co-operation activities in agriculture and horticulture by the establishment of a Central Council for Agricultural and Horticultural Co-operation and by a scheme of grant aid to be administered by the Council. The proposals for grant aid are embodied in the Scheme. The Government do not believe that co-operation is the answer to every agricultural problem, but they do believe that it can make a vital contribution to agriculture and enable producers to obtain the benefits of scale.

Turning now to the detail of the Scheme, I should like to outline its provisions and comment very briefly where I think this might be helpful. The Scheme provides, in paragraphs 3(1) and 13(3), power to approve proposals and make payment of grants within the scope prescribed in Section 61(1) and (2) of the Act. Perhaps the most important aspect is that through this Scheme we shall be able to grant aid, for the first time, co-operation in production activities. Paragraph 4 of the Scheme sets out the details together with maximum rates of grant. Paragraphs 6 to 11 relate to the way in which proposals should be dealt with and grant paid. Paragraph 8 in particular provides for the Council to deal with applicants for grant through intermediaries, such as the central co-operative bodies, and to reimburse them appropriately. The remaining paragraphs describe the other functions of the Council in administering the Scheme, such as checking applications for payment, and so on. These provisions are in the customary form.

There is one other point to which I should like to refer. Some co-operative organisations have expressed concern that the Scheme will result in the widespread development of small marketing societies to the detriment of existing societies. This is certainly not the Government's intention. We are putting the administration of the Scheme into the hands of an independent Council and giving that Council discretion in its recommendations about grant aid: there is no automatic entitlement to grant. We believe that the Council will act in a responsible manner and in the best interests of cooperation generally. This does not mean that new marketing societies will not get grant aid; but we believe that the Council will keep the whole field of co-operation under review and ensure that the fears which have been expressed will not be realised.

I know that the proposals to give further assistance to agricultural co-operation have already received the support of hon. Members on both sides of the House, and I hope that hon. Members will agree that the Scheme, administered by the Central Council, will make an important contribution to the improvement of the efficiency and productivity of the agricultural industry.

11.13 a.m.

Mr. Bryant Godman Irvine (Rye)

It is well known that nearly all those who take part in agriculture debates in the House have a practical relationship with the industry. Nevertheless, when talking about agricultural co-operation, perhaps I should declare at once that for a number of years I have been actively engaged as a member of an agricultural co-operative and also for some time of a horticultural co-operative. I strongly suspect that there may not be any of my hon. Friends who take part in the debate who may not be in a similar position.

Having said that, on behalf of this side of the House I welcome the Scheme. I was delighted to hear the Joint Parliamentary Secretary say that the object was not to increase the small societies at the expense of the larger and not to proliferate co-operative organisations throughout the country. I want, however, to press the hon. Gentleman a little more about that and to ask three further questions.

If the hon. Gentleman would kindly refer to the White Paper from which all this stems—Cmnd. 2738, of August 1965 —he will find under the general remarks about the co-operation proposals that one of the things which the Central Council would be charged with doing was supplying "a purposeful direction and co-ordination to what would otherwise be, and has been in the past, no more than a piecemeal approach".

In Section 58(2) of the Agriculture Act, 1967, there is nothing about purposeful direction and co-ordination. We simply got down to co-ordinating. In the Scheme, we are only asking the Council to "co-ordinate any form of co-operation". It sets out a number of ways in which it is imagined that co-operation will develop.

In passing, perhaps I may ask the hon. Gentleman whether, when the Scheme's approved proposals finally refer merely to "research and other incidental activities", he has considered the ways in which co-operative movements have developed in different countries, such as Canada and Sweden, and whether he feels that it will cover all possible developments which may come in the not too distant future.

That is my first point. I would like the hon. Gentleman to explain what has happened to the "purposeful direction". It is something which is needed in the co-operative movement. The idea may be that that is what the Council will provide. If that is so, I hope that the hon. Gentleman may spell it out even more clearly.

Paragraph 35 of the same White Paper states that there will be no distinctions among societies, groups, companics or even bodies not formally registered for trading purposes, provided that the body has a definite constitution of a co-operative character. One of the fears of those engaged in the co-operative movement is that there may well be occasions when the real object the Council tries to achieve will be to establish new co-operatives. It may be that an old established co-operative could do very well the precise job which is proposed for a new co-operative. It may have the experience and the membership, but under the Scheme it may be discriminated against in favour of a new co-operative. That is why I ask the hon. Gentleman to look carefully at the original suggestion about purposeful direction, because many people feel that there may be occasions when a new co-operative may be given a favourable position as against an old co-operative.

I do not have to tell the Joint Parliamentary Secretary that in the raising of capital the co-operatives are already in a difficult position. They are not able to say that in five years' time there will be a prospect that their position will have improved and that people will be able to sell their shares at an increased value. All they can do concerning new capital is to say that they will be able to keep some of the profits and put them back into the organisation. That is an entirely different position from somebody who is working in a commercial organisation. If he needs more money, he can go to the banks, the City or elsewhere and obtain it in a much more favourable way. That is one reason for the fear that a new co-operative might be created to get the capital which an old co-operative cannot get and in that way compete with the older organisation.

There is a further way in which this may work. An example which has been brought to my attention is of an area in which two schemes were put up to A.M.D.E.C. to deal with both the procurement and the marketing of pig progeny. Both schemes were rejected. One body then gave up the struggle and the other decided to continue to see what it could do. It has been a tremendous success. That is the sort of problem which the Council will have to consider. It seems to me that there is a good deal to be done in the way of the purposeful direction to which I have referred.

Co-ordination provides a lot of problems in any circumstances. One of the difficulties is co-ordinating co-operative organisations in the competitive situation in which we live today. Even those with very long experience find that this provides grave problems for the co-operative organisation, and that is something that this Council will have to look at very carefully. The Central Council does not yet have, and cannot have, any great experience in these matters. It will be unable to hold up the applications until that experience is obtained and, in any event, if it did so the experience would probably not be gained.

Again, two-thirds of the cash to be provided for these organisations will come from the farmers and members of the co-operatives, and a great deal of the initiative in running them will in any event also have to come from the farmers. If co-ordination is to take place in these circumstances the Council will have to make up its mind on a great number of problems. One of these problems has been clearly pointed out in the recent report of A.M.D.E.C. which states in page 23: A.M.D.E.C.'s experience in the group marketing field suggests that firm contractual relationships may be the most important of all requirements for the successful operation of a group. Anyone who has had experience with a co-operative group knows that lack of discipline is one of the ways in which a group can very easily get into difficulties.

Page 25 of the report deals with another aspect of group training and sets out the work that has been done by the Three Rivers Trading Company. We read: The effect of these arrangements is to reduce the emphasis previously placed on loyalty to the group … A little later it states: At first sight these arrangements appear to be the very opposite to the prime objective of orderly marketing, but nevertheless it appears that groups which adopt the method have a great potential and continue to perform their major function of assembling and sorting produce for dispatch to the most remunerative outlets. I should like the hon. Gentleman to tell us what the Council is expected to do, and how it is hoped it will deal with some of the problems I have outlined.

No one connected with co-operative movements will have any doubt at all that we are in a period of great change. Technological developments are taking place which mean that all sorts of decisions will have to be taken in the future which may not be precisely the same decisions that would have been taken a short time ago. One factor that has to be taken into consideration is the possibility of our joining the European Community. I know that we are not debating that subject now, so I shall not develop that aspect save to quote one sentence from the Report of the Select Committee on Agriculture dated 31st May, 1967.

In that Report we have the evidence given by the Agricultural Co-operative Association. After referring to the Central Council for Agricultural and Horticultural Co-operation, the Report states: It is difficult to envisage how such a body, conceived for national purposes, could fit into the international setting just described, since relations between the Commissions and E.E.C. Associations are in charge of a special Directorate General for Agriculture … Again, perhaps the Parliamentary Secretary will look at paragraph 8 of the Scheme, which states that the work can be carried out by the Council acting through intermediaries. Section 61(3,a) of the 1957 Act is quite blunt and clear in saying that the grant can be payable on …proposals which have been submitted to and recommended by the Council and approved by the Ministers … Perhaps the Parliamentary Secretary can relate the way in which intermediaries have been introduced in paragraph 8 of the Scheme to the very clear direction in the Act that schemes are approved only by recommendation of the Council.

My last point relates to Section 61(3,f) of the Act, which says that the grant may be made subject to any conditions. Paragraph 6 of the Scheme sets out a whole list of conditions, from (a) to (g), so it looks as though specific conditions are being set out in the Scheme that are not envisaged in the Bill. It would be helpful if the hon. Gentleman would look at that matter and explain his position in relation to it.

My main point is that there are anxieties that this new Council may be very anxious to achieve results and will therefore want to see that new organisations are set up to do jobs that could perfectly well be done by the developed and older organisations. I want to hear from the Parliamentary Secretary how such a proposal will be linked with the existing organisations. If all that is to happen as a result of setting up the new Council is the creation of a large number of new and, perhaps, smaller schemes which will compete against the older ones and get all the financial benefits given by the new Scheme we are debating, the new schemes will be able to be more successful in their business than the older ones, and that will do no good to co-operation nor to the agricultural industry in general.

The Council has to face real and practical difficulties, and we must not expect too much too soon from it. Having said that, I welcome the Scheme on behalf of my hon. and right hon. Friends and I will be interested to hear what the hon. Gentleman has to say about the matters to which I have referred.

11.28 a.m.

Mr. Marcus Kimball (Gainsborough)

I hope that the Parliamentary Secretary will be able to clear up some points that are worrying many of us on this side. The first is in connection with paragraph 4(4). That paragraph, as T understand it, contains the very novel consideration that a 90 per cent. grant can be paid to an agricultural co-operative, including the meeting of that co-operative's trading losses. That is a very novel principle, and it could have the most disastrous effects on the pattern of agricultural marketing that is at present being established in the countryside.

Over the last few years we have seen the most enormous growth in co-operative buying groups, many of which are buying, in particular, fertilisers below the price at which the local merchants themselves can buy, but there has not been such an expansion in the actual marketing groups. That is probably because there is the safeguard that if they want to market cereals they must get a licence from the local cereals committee, and this slows down the growth of the groups. The Parliamentary Secretary and I recently had some correspondence about the dilatoriness with which some licences have been granted by the local wheat committee.

The House should bear in mind the part that established merchants play in the agricultural community. Lord Radcliffe, when he looked at the question of credit to the agricultural industry, pointed out the enormous part which the merchants play today. With the treatment that the present Government have given to the farming industry, credits to the merchants and auctioneers is now standing at a record level. Now, when these organisations are carrying such a degree of credit, we are about to pass an Order which will give agricultural co-operatives an unfair advantage over merchants.

How can we pass an Order today—if we do pass it today—which allows public funds to be used to subsidise deliberately incurred trading losses? Unless the laws of bankruptcy are changed, I do not think we can allow this to go through today without some very good safeguards being provided. What is to stop an agricultural co-operative going into an area, knocking out the local merchant by unfair trading knowing perfectly well that the co-operative has a guarantee of 90 per cent. of its losses genuinely incurred, and then knocking the merchant for six on all his lines of business? We recently had the Glenrothes scandal. We do not want to see a recurrence of that kind of thing.

My hon. Friend the Member for Rye (Mr. Godman Irvine) pointed out that the Central Council has to see that there is not a vast proliferation of these marketing groups beyond what is desirable in an area. I hope that when the Council decides to use its discretion on whether a grant should be payable on the establishment of a new marketing group, it will not only look at the welfare of agricultural co-operatives in the area but also at the welfare of existing merchants and firms of auctioneers in the area. They are just as important, if not more important, than the new co-operatives which will come in and may make life more difficult for merchants and auctioneers.

I hope that the Parliamentary Secretary may think this an appropriate moment to pay some tribute to the part which auctioneers and merchants have been playing, and which they will be called upon to play in the next few months to an even greater degree. We have seen in the last few weeks the collapse in agricultural marketing because of the way in which the Government sold us down the river over the Irish trade agreement. Auctioneers will have a substantial burden to carry in the next few months. If the Bank Rate is allowed to go up, auctioneers and merchants will have an even more difficult task.

We might be discussing this Order in October because of the way in which our morning business is arranged. If we still have a morning sitting in October on it, I hope that the Parliamentary Secretary will be able to answer some of these questions.

11.36 a.m.

Mr. John Wells (Maidstone)

I endorse what my hon. Friend the Member for Gainsborough (Mr. Kimball) said about the problems of merchants and of auctioneers. In the experience of most of us directly involved in agriculture, merchants generally look after themselves, but my hon. Friend was right to say what he said about the considerable burden that they are carrying in financing the industry. So also are the machinery firms of all sorts. I see no reason why there should not be extensions of the machinery syndicate concept within the framework of this Order. There might be considerable difficulties in the agricultural engineering sector arising quite unintentionally.

Like my hon. Friend the Member for Rye (Mr. Godman Irvine), I welcome the Order in its generality, but we want a clear explanation on the two points he made about possible difficulties over existing co-operatives and about merchants, and on the point I have made about agricultural engineers. I understand that the Order will come into force 28 days from the time its goes before another place. It will, therefore, come into effect very soon indeed. Assuming that my hon. Friend the Member for Gainsborough is wrong about October, we are likely to have it brought into effect before the harvest.

My hon. Friend the Member for Rye was very wise to lay stress two or three times on the lack of experience which the Central Council will have. It is starting with a clean slate. It is unfortunate that the Minister, in a courteous, efficient but very brief speech, did not give us a name for the chairman of the Council, neither did he announce the composition of the Council. There are people of considerable ability and experience—I cannot underline "experience" too much—in co-operation. I hope that we shall have such a man as chairman, supported by a Council of people with real experience, either in straight agriculture, or preferably in horticulture, or possibly in co-operation elsewhere—that it is co-operation of a parallel nature and that we shall not have a man who makes shirts for the C.W.S. or something of that sort thrust upon us.

This is one of the dangers of the era in which we live. More and more of these chairmanships of boards are going about. This is a new style of government, a new style of patronage. I hope that when he replies the Parliamentary Secretary will give us an assurance about the calibre and experience of those selected for this job, if they are yet selected. If they are not yet selected, I hope that he will pay close attention to my words.

11.38 a.m.

Mr. James Davidson (Aberdeenshire West)

Several of the points which I wanted to make this morning have already been very adequately made, so I shall keep my remarks very short because other hon. Members wish to speak on this Scheme. Although I welcome it, I would have preferred to have a separate council for Scotland, but having read the Act I realise that the interests of Scotland have been well catered for.

I should say in passing that I have some interest in this matter as I am an ordinary member of a butter and meat producers' co-operative society in northeast Scotland. I wish to know what the difficulties of a co-operative might be. A particular example which comes to mind is that of a marketing organisation which is a co-operative in most senses, which is not a limited liability company and which, although it is technically non-profit-making, makes sufficient profit to cover the outgoings of its members. I should like to know where the line is drawn in deciding what are and what are not agricultural co-operatives.

I assume from reading paragraph 1 of the Scheme that nothing retrospective can be done under the terms of the Order and nothing undertaken in the way of a co-operative activity previous to 28 days before the passing of the Order will be eligible for assistance. Would he confirm the point, which has been very forcibly and well made by the hon. Member for Rye (Mr. Bryant-Godman Irvine) that the co-operatives which have undertaken this pioneering will not gain any advantage from this Order, whereas any co-operatives set up in future, possibly in competition with existing ones, will stand to benefit? I should like this point about whether any retrospective activities will be eligible under the Order to be answered by the Minister.

11.40 a.m.

Mr. Peter Mills (Torrington)

I, too, welcome this scheme. Most hon. Members know that I have been interested in co-operation perhaps more so than most. I must confess my interest in cooperation, because I am a director of Western Farmers. I hasten to add, as I said in Committee, that I am unpaid, but, even so, it has been a privilege to be a director of agricultural co-operative merchants for some time.

The Central Council will help farmers and encourage them to take a very keen interest in co-operative marketing and co-operative production. These are first-class aims which are vitally important nowadays. It is perhaps wrong of me to mention the Community or the Common Market again, but I believe that co-operatives, whether we are in or out, will take an ever-increasing part in the affairs of the agricultural industry.

Co-operative marketing has made great strides in the past, and I hope that the Central Council will encourage this still further. I know from my own practical experience as a member of North Devon Meat the advantages that have been gained. I am pleased to note that the Minister is coming down to open our new factory which has been set up with co-operation from the farmers. It will mean tremendous benefits to the farmers of North and West Devon. I hope that the Central Council will continue to encourage this work.

As for co-operative products, which is still in its infancy, I hope that the Central Council will encourage this movement to grow. I am all for pig groups and cow groups and groups for rearing dairy replacements. All this is in its infancy, but, with the stimulation which the Central Council can give, these groups will go ahead to the benefit of the farming community.

Fears have been expressed by some hon. Members about the future of private enterprise—merchants and so on—but I do not believe that the two interests cannot work side by side; that is, co-operation can and must work alongside private enterprise and private merchants. The one stimulates the other. I do not think that either side of the fence, so to speak, has anything to fear. I do not want to see only private merchants operating or only co-operative merchants; I want to see them both working side by side and stimulating each other. This is possible. Indeed, the co-operative groups can supply and help the large commercial undertakings and can help the merchants and retailers. It is not just a one way movement; it can be two-way. This is co-operation at its best.

The Central Council, if it gets down to business and encourages what I have tried to set out, can particularly help the small farmers. Whether we like it or not, small farmers will be with us for a long time to come and co-operation is one of the means by which they can be helped and can become viable. In the South-West there are many small farmers and I hope that they will take this business of co-operation seriously and, through the Central Council, be encouraged to experiment and to go ahead.

All this means discipline. I mentioned this word in the Agricultural Committee. "Discipline" is a word which we do not seem to like these days, but it is essential in agriculture to understand that we need to have discipline amongst ourselves.

Mr. Deputy Speaker (Sir Eric Fletcher)

Order. I must point out that there is nothing about discipline in the Scheme. We are limited to discussing the Scheme and this Order.

Mr. Mills

With respect, I am seeking to encourage the Council to foster a sense of discipline in production, in marketing, and in the general outlook of farmers. This is shown in the type of animal that we produce, not just the type of animal that we want. This is shown in marketing and in the whole system of contracts. The word "discipline" must come into it and that the Central Council must encourage a certain amount of discipline in the future.

The Central Council must also encourage farmers to be specialists. We cannot forever go on in the haphazard way we have in the past. This is where agricultural co-operation comes in—that certain farmers do certain things for certain people. I hope that the Central Council will stimulate farmers to become specialists in production.

I hope that the farming community will take the Central Council and all that that means and this Scheme very seriously. I hope that it will mean in the years to come that the farming community will become more viable through the efforts of the Central Council.

There is one word of warning, which has been emphasised already, concerning these grants and the danger of underwriting losses. This is wrong because it would create inefficient agricultural co-operatives. It is also unfair on the private enterprise merchants and so on. I hope, therefore, that the Minister will give a clear answer to this problem. I hope that he will not, as it were, cover over these things, but will show clearly to the private enterprise merchants and those who operate in the private field that it is not being unfair, because, on the face of it, it looks as if it is being unfair. The National Association of Corn Merchants has a very real point here, so I hope that he will answer fearlessly and clearly so that we all understand what this means. Otherwise I welcome the Scheme.

11.47 a.m.

Mr. Bert Hazell (Norfolk, North)

I am delighted that this Scheme has come before the House. It would appear that it will receive the unanimous support of the House, and this will certainly give the Scheme a good send-off. If it is generally known throughout the country that all parties welcome this development, as declared here today, the Scheme stands a good chance of getting off on the right foot. However, whatever might be the degree of unanimity within this Chamber, it will take some years to convince, in particular, the small farmers of the need for co-operation.

We all know that there is a reluctance on the part of independent-minded individual farmers to co-operate. All sorts of reasons and excuses are put forward. Nevertheless, in the trend of agriculture today and the trend of the future, there is no doubt that, whatever may be the attitude of individualism within the industry at the moment and in the past, a great deal of change has to come about and a greater measure of co-operation has to be—I was almost going to say "instilled", but perhaps that is too strong a word—but certainly a great deal of educational work has to be done amongst the farming fraternity to show the benefits and advantages which can be accrued by co-operation. I welcome the fact that the Council will have a responsibility for market research, where insufficient work has been done: it will have an exciting time ahead here. Its duties will be widespread and its research can be of tremendous advantage.

I do not want to see, however, a rapid mushroom growth of small co-operatives which start on a bad footing with insufficient capital, even with the grants, and in twelve months have a semblance of an organisation which has no chance of getting going. I am sure that the Council will bear this in mind. Perhaps the larger co-operatives have not done all they could to foster co-operation among farmers, or branch out as they might have done, and have therefore encouraged small syndicates or co-operatives.

The changing pattern of the use of labour over the next few years will mean much more pooling of labour. As labour costs inevitably rise, small units will be able to command the services of skilled personnel, and labour will have to be spread over a number of units. In the dairy world, relief milkers already operate on a small scale, but this will have to expand. There will have to be co-operation to pool the limited amount of labour.

Equally, there is far too much capitalisation on machinery. It is difficult to convince a farmer to use someone else's combine or deep furrow plough, since he feels that he must have his own, even if second-hand, when it often lets him down just when he wants it. He would do better to accept that, with the cost of modern equipment, the only way to make himself efficient is co-operation. I hope that the small syndicates and the pooling of machinery will be urged forward by the formation of new co-operatives or the extension of existing ones.

I have one criticism. I said that I did not want to see small co-operatives mushrooming, because that would harm cooperation and the interests of the small people, but occasionally some areas will not be covered by certain co-operatives or not in the desired sphere of activity, in which case a co-operative might start in a small way. The Council might consider a project and decide against it, yet it may prove ultimately valuable in that sphere.

Paragraph 6(5) says: If in any case the Council decide not to recommend a proposal for approval they shall inform the applicant in writing of their decision. This is not enough. For the secretary of a group of farmers or horticulturists who have put forward a scheme in good faith to be informed that it has not received the Council's support is a little unjust and I would prefer some appeal if the Council rejected a scheme in this way. Those with the courage and initiative to try to form a co-operative should have the last word.

Anyone concerned with the future of horticulture and agriculture can see that co-operation, whether or not we join the Common Market, is absolutely essential. It is, therefore, pleasant to find unanimous support of these proposals, although we may not all be happy about details.

11.57 a.m.

Mr. Julian Ridsdale (Harwich)

Having been a small horticulturist for about five years, I know that one can be either a grower or a marketeer, but cannot combine the two functions efficiently. There are excellent co-operative marketing societies in north-east Essex, particularly the Land Settlement at Box Ash, and particularly the co-operative schemes of apple growers who have been able to market their apples more efficiently in this way.

There may be unanimity about some of the details of the Scheme, but I hope that the Parliamentary Secretary will tell us whether it will apply to existing organisations. New organisations with a 90 per cent. backing to make good losses from public funds may not be very helpful. Surely the Government should support the existing successful organisations and not proliferate a huge number of new ones which may compete against the existing ones, with the unnecessary aid of public funds.

I am anxious about the appointment of the chairman. I hope that he will be a man of great horticultural and agricultural experience. May we be told his name, as this will allay the fears of many merchants in my constituency who see that the Council will make the plans for the industry in the next ten years? A blueprint by the chairman and the Council would help to establish confidence. Will it be a political appointment, or will he be a good, independent man with independent views, with the support of the industry?

Mr. Deputy Speaker

Order. I do not think that we can discuss the Council's constitution under the Order, which merely relates to the Scheme. The Council is set up under the Act, and we are not discussing the Act or anything which arises under it, but only the Scheme.

Mr. Ridsdale

I shall certainly abide by your Ruling, Mr. Deputy Speaker.

Finally, I want to ask four questions, and I think that the Minister's replies will probably allay the fears of some of the merchants in my constituency. First, how can payment from public funds to cover losses incurred in a commercial venture ever be justified? Second, what safeguards are there to prevent things like the Glenrothes pig scheme failure? Third, what will the Central Council do about preparing a blueprint for the agricultural industry? Fourth, can an assurance be obtained that it is not the intention to permit it to foster a mass of small marketing groups?

12.1 p.m.

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

When the Parliamentary Secretary said that the agricultural Lobby was descending on the Chamber for the debate, I wonder if he noticed that no fewer than eight Members of the Select Committee on Agriculture had entered. Owing to the clash of business, we have had to change our sitting. Luckily, as we had no important witnesses today, we were able to do so, but it shows our difficulty when there is agricultural business in the House on Wednesday mornings.

The Scheme is important and complex. It is natural that we want to ask many questions of detail, partly because the Scheme is not very tight, as most such Schemes have been in the past. This is to some extent an enabling Scheme. There is a great deal of discretion for the Minister and the Central Council.

Paragraph 3 deals with approved proposals. Apparently approval can be given after the work has been carried out. Does paragraph 3(2) imply a change in what has hitherto been the established Treasury rule that grant aid is not usually given retrospectively? Could the Minister suggest what classes of case he has in mind that might obtain retrospective aid?

Secondly, paragraph 4, which deals with the amount of grant, fixes limits and not rates. Therefore, it seems that there is nothing automatic about the grant that the Council could recommend. Would the Minister suppose that in the normal course of events it would be usual to give the limit of grant for the different categories? Perhaps more important, would he ensure that the Scheme is administered consistently?

I welcome the large grant of 75 per cant. for surveys and research and for training managerial staff, because in agriculture and horticulture—particularly in co-operation—as in most other forms of commercial enterprise, expert management is the key to success.

Paragraph 4(4) deals with large grants given for setting up co-operatives to pioneer new aspects of co-operation in agriculture or horticulture. Will the Minister clarify exactly what is meant by "new"? Does it mean a practice that has not hitherto obtained in Britain? I suppose that many new aspects which we might wish to introduce here are not absolutely new but may be adaptations of practice overseas.

It is also vital that the Council should realise the possible danger to the public purse. We have not heard what the maximum expenditure authorised under the Scheme could be, and perhaps the Minister will tell us.

Much will turn on the membership of the Council. I understand that it is taking over the work of A.M.D.E.C. I am sorry that it is not taking over its chairman as well to enable continuity of direction. What would be the relationship between the Council and the Agricultural Co-operative Association and the Agricultural Central Trading Association?

Paragraph 6(3) mentions criteria for the eligibility of proposals. May we have an indication of what criteria the Minister has in mind? It would be helpful if they could be published, and I hope that before they are finalised there will be consultation with the industry.

Like the hon. Member for Norfolk, North (Mr. Hazell), I am somewhat concerned with the Council's power simply to refuse in writing an application, without apparently having to give reasons. I hope that it will have to give reasons, and that perhaps an appeal machinery will be added.

The Scheme is said to be intended to run for 10 years certain, to May 1977, and there is power to extend by another five years. Therefore, we inevitably ask how far the Minister has considered compatibility with the existing common agricultural policy in the European Economic Community, especially with our application pending. It so happens that the Community comparatively recently published proposed regulations in the same sphere, and it is clear that there are differences of principle and detail.

Has consideration been given to whether the Council would be an appropriate body to represent British cooperation in C.O.G.E.C.A., the organisation in Brussels of the cooperative movements of the Community's member countries, if and when the question arises? I do not want to trespass outside the rules of order, but it seems to me that it is doubtful from the nature of its appointment whether it is sufficiently independent of Government.

There are difficulties about compatibility which are important. Although the Minister may say that all this can be left to a possible transition period, we are at the moment putting forward an application to join the Treaty of Rome. As evidence of the earnest of our intentions, I would have hoped that we might have taken the opportunity to try to align our practice more with policy in the Community.

I have no doubt that the best hope for small producers is to join together in all the processes leading from production to marketing. The key factors are quality products, good presentation and proximity to markets. I wish the Scheme well, but I am bound to express some doubt about the degree of response likely to come until the present uncertainty overhanging the industry is resolved one way or another.

12.8 p.m.

Mr. Alick Buchanan-Smith (North Angus and Mearns)

I wish to make three points briefly, beginning, with the general point of how the Scheme will work. Like other hon. Members, I feel that the industry is particularly well served by commercial firms and others in the procurement of supplies. Where we want to see expansion of co-operation particularly is in processing and marketing. Looking towards Europe, we in Britain have very little to fear as producers, but when it comes to processing and marketing we really need an improvement if we are to compete successfully.

I wish the Scheme well, particularly in relation to processing and marketing of farm produce. My first specific point follows on from the general point raised by the hon. Member for Aberdeenshire, West (Mr. James Davidson) about cooperatively run auction marts. I should like an assurance that these and other co-operative groups of farmers engaging in slaughtering and processing meat in that way will come within the Scheme. There is a great increase in sending beef to England in carcass form, with the development of the freightliner train, and special containers are accelerating the development. Therefore, I should like an assurance that this is the sort of development which will be encouraged.

I am glad that the Joint Under-Secretary of State at the Scottish Office is in the Chamber. I should like to raise a specific point about co-operative societies in Scotland. The hon. Gentleman knows that in Scotland there are many co-operative societies which are not confined to agriculture. In the crofting counties, in particular, they assist in fishing, in minor industrial projects or craft projects of one sort or another. In this respect, co-operative societies in Scotland tend to be different from those in England and Wales. The situation has been catered for by the S.A.O.S., the central organisation in Scotland. Although the Order applies to agricultural matters, I should like an assurance that co-operative societies, particularly in the crofting counties of Scotland, involved in fishing or craft projects and other activities will not be inhibited in the assistance which they are able to get.

12.11 p.m.

Mr. J. B. Godber (Grantham)

The Joint Parliamentary Secretary will, I am sure, be glad of the degree of support which the Scheme has had, although he may not be so happy about the length of time during which it has been expressed. I will not take more than a moment or two because we all want to hear the hon. Gentleman's answers to some of the important questions which have been asked.

The degree of interest which has been shown illustrates the importance which hon. Members on this side of the House, in particular, attach to the Scheme and to the setting up of the Council and the duties which it will have to perform. We were all glad of the Parliamentary Secretary's assurance about the intention not to proliferate small co-operatives. That is very important in the effective running of co-operatives in this country. I hope that the hon. Gentleman will be able to give a very clear response to what my hon. Friend the Member for Harwich (Mr. Ridsdale) said about the effect on existing co-operatives, because I think that the hon. Gentleman would agree that it would be quite wrong if they did not share in the same way. My reading of the Scheme is that they will share, but we should like the hon. Gentleman's assurance on that point.

My hon. Friends have referred to the composition of the Council and its chairman. I would not wish to impinge on your Ruling, Mr. Deputy Speaker. All that I would say is that I think that this is a genuine indication of our concern that the right people shall be responsible for this very important task. We should recall the work which A.M.D.E.C. has done, and if there can be a continuation of responsibility this will carry the good will of the industry, which is important.

It would have been very helpful—I put it no higher—if the Parliamentary Secretary could have told us the composition of the Council. Perhaps he can shed some light on this matter and say whether any decisions have been taken or, if not, when they are likely to be taken, since if the Council is to start operating in 28 days it is important that the names of its members should be announced as soon as possible. It is unfortunate that we have not had them as yet.

The point which my hon. Friend the Member for Gainsborough (Mr. Kimball) made so strongly about paragraph 4(4) of the Scheme was important. We all share my hon. Friend's view about the important part which the corn merchants and others play among the agricultural community. No one on this side of the House would wish them to be unfairly prejudiced by the operation of the Scheme.

I hope that the Parliamentary Secretary will tell us that he attaches great importance to the words "any approved proposal" which I have underlined in the second and third lines of paragraph 4(4). In giving approval for a proposal, safeguards should be provided for those who have existing and legitimate commercial operations in the area concerned and no proposals should be approved which would bear unfairly on existing traders. I hope that the Parliamentary Secretary can give us some firm information on that point and that care will be taken to ensure that no unreasonable authority is given for the setting up of co-operatives to carry out activities of the type to which my hon. Friend the Member for Gainsborough referred. I hope that it will be clearly stated that there is no question of paying losses in full when any co-operative has acted unreasonably in its commercial operations. An assurance on that matter would go a long way towards diminishing the fears expressed by traders.

Perhaps some of the difficulty which arises stems from the fact that we have not been able to debate the two Reports of the Wise Committee dealing with smallholdings. Smallholdings are the very essence of the people who need the co-operative activities. It is very unfortunate that the Government have not been able to find time to debate the proposals of the Wise Committee. It is indicative of the mess which the Leader of the House has got the business into. I asked the right hon. Gentleman several weeks ago to arrange a debate on the Wise Committee's proposals. Had we been able to have such a debate we should have known the Government's views about those proposals before we discussed this Order, and we could have pressed the needs of the smallholders who occupy a very important place in our agricultural community. I hope that the Parliamentary Secretary will tell us that the new Council will take special account of their needs and that we shall have that debate, which is so badly required.

There are many other points which I could have raised, but I wish to give the Parliamentary Secretary ample time to respond to the debate. We welcome the setting up of the Council and we wish it well, but we hope that it will be composed of people who understand the needs of agriculture and horticulture and that we shall have the names of its members at a very early date.

12.17 p.m.

Mr. John Mackie

I should like, first, to deal with the point which has been raised about the names of the members of the Council. The difficulty in a debate like this of giving names when there is a Parliamentary Question down for answer this afternoon is germane to the point made by the hon. Member for Gainsborough (Mr. Kimball). If hon. Members have patience, they will get the information which they require. I am not sure about the rules of order on giving beforehand answers to questions which have been tabled, but I can say that I am sure that when hon. Members see the names of the chairman and the members of the Council their fears about the quality of it will be allayed.

I shall have great difficulty in dealing with all the points which have been raised because there were so many. As the hon. Member for Gainsborough indicated, this shows the importance of the Council. I appreciate the interest which hon. Members have taken in the Council and I thank them for the welcome which they have given to it.

The hon. Member for Rye (Mr. Bryant Godman Irvine) suggested that there were many problems which the Council will have to settle. I do not belittle the fact that it will have a big job to do. We hope that we have appointed a Council which will deal with the problems, but I should not like anyone to think that we believe that it will be an easy job.

Hon. Members have referred to the possibility of the proliferation of small co-operatives. The job of the Council will be to examine every scheme put forward and to deal with it as it sees fit. I am sure that the Council would not agree to anything that would lead to a proliferation of small co-operatives, which everybody fears.

Reference has been made to the difficulty of existing co-operatives in raising capital. The Industrial and Provident Societies Act, 1967, gives them wider powers to raise capital.

Several hon. Members raised the question of A.M.D.E.C. The hon. Member for Rye said that one of the greatest difficulties of co-operation was the lack of firm contractual agreement and the lack of discipline. The hon. Member for Torrington (Mr. Peter Mills) stressed that point. I could not agree more. A.M.D.E.C's period of office runs out in March next year and we will be considering its future. Although nothing has been decided, I think that there can be little doubt that some of its work is likely to be taken over by the Council. That, however, is for consideration. I should like, as other hon. Members have done, to pay tribute to the work of A.M.D.E.C. under its Chairman, Lord Nugent.

As to the E.E.C., hon. Members will agree that we must carry on with our policy in agriculture. The previous Government's experience of what happened to applications to join E.E.C. should have made them ultra-cautious. To get on with our plans as we at present see them is the best way of proceeding. I would not wish to enter into an argument about joining E.E.C. or anything else.

The hon. Member for Rye spoke about approval by the Council. It is true that applications must be approved by the Council, but there is no reason why the preliminary work should not be undertaken by a co-operative organisation acting as agent for the Council under paragraph 8 of the Scheme. The hon. Member said that the Minister could impose conditions. This is merely a provision of the Act in general terms. The Scheme sets out the conditions in more detail. I assure the hon. Member that we have no hidden conditions up our sleeve.

The hon. Member made the point that the words "purposeful direction" were omitted from the Statutory Instrument. I would not like to suggest a reason for this except that they were probably words that lawyers do not like in a Statutory Instrument as distinct from a White Paper. We use the word "co-ordination". We want the Council, of course, to give purposeful direction. That is one of its jobs.

The hon. Member for Gainsborough wanted assurance that co-operatives would not enjoy an unfair advantage over private merchants. He knows as well as I do that there is room for merchants. I subscribe to what the hon. Member said about the value that merchants have been to the agricultural community. As has been shown in the past, there is room for both. I do not think that merchants have anything to fear. The hon. Member made some remarks, which had nothing to do with the Scheme, about the collapse of the market, which it would not be in order for me to deal with now.

The hon. Member for Maidstone (Mr. John Wells) was also worried about the effect on merchants. Again, I suggest that there is room for all these people in the business today.

The provision that the Scheme shall come into operation after 28 days is designed simply to give the Council time, after it has been appointed, to get organised. The composition of the Council will be seen from the Answer when it is given later today.

The hon. Member for Aberdeenshire, West (Mr. James Davidson) would like a separate scheme for Scotland. At the same time, he was worried about proliferation of schemes. He cannot have it both ways. He asked for a definition of "co-operative". It is defined fairly well in paragraph 2 of the Scheme.

There cannot be retrospective payment. There are, of course, existing schemes to help co-operation, but, no doubt, many people are waiting for something better under paragraph (1) of the Scheme. I was asked about the benefits of pioneering. We are all in the position that we would not like to think that somebody had come along a year after we had gone into a scheme and got grant. On the other hand, we cannot make the benefits of pioneering retrospective, either.

I thank the hon. Member for Torrington (Mr. Peter Mills) for his unstinted praise concerning the whole concept of the Council. I agree thoroughly with his emphasis on the importance of cooperation, groups and everything else. The hon. Member's only word of warning was about losses. The Scheme provides that any losses could be met in full, but I cannot emphasise too strongly that the use of this power would be exceptional. The Council will be part of the set-up and it will agree to schemes, but it might make mistakes, like everybody else. It could, for example, be that a set of producers might go into cooperation in production; if something wore to break down they might not be able to return to their own original system from which they made their living. I emphasise, however, that payment for losses would be exceptional. Responsible body that it will be, the Council will not allow people to go barging into schemes which it does not think will be successful.

My hon. Friend the Member for Norfolk, North (Mr. Hazell) mentioned cooperation in the use of labour. I could not agree more that this could be a tremendous help in agriculture. With the right hon. Member for Grantham (Mr. Godber), my hon. Friend was worried that a scheme might simply be rejected in writing with no reasons given. There would, however, be considerable personal discussion with the bodies concerned before the right to object was exercised. I would be prepared to consider whether there is any reason to have a system of appeal. I have had a lot of discussion with people who have come to see me about co-operatives and in these cases I think that they get a fair idea of any objections before the final objection is put in writing.

The hon. Member for Harwich (Mr. Ridsdale) asked whether support could be given to an existing co-operative. Any scheme that an existing co-operative puts forward under the Scheme would receive the same support as any other. Several other hon. Members were worried about this.

Mr. Godber

The hon. Gentleman has made the point about not answering our questions concerning the membership of the Council because a Parliamentary Question is to be answered later today. I have looked at the Order Paper and notice that the Question was put down only last night. It seems an affront to put down the Question in that way and stop us pursuing the matter now.

Mr. Deputy Speaker

Apart from that, the constitution of the Council does not arise under the Scheme.

Mr. Mackie

The hon. Member for Norfolk, South (Mr. J. E. B. Hill) mentioned the Select Committee and the arrangement of Parliamentary business. Again, that is outside the Scheme.

The hon. Member mentioned A.M.D.E.C. and asked what was meant by a new system. That is something which the Council must decide, whether something is new in this country or outside it. I do not think that I have any more points to answer on the general picture and I hope that the House will now agree to the Scheme.

12.28 p.m.

Sir Frank Pearson (Clitheroe)

I have not as yet had an opportunity to intervene in the debate on a Scheme which is of considerable significance both to agriculture and to horticulture.

The Under-Secretary of State for Scotland (Mr. Norman Buchan)

On a point of order. Would it be in order, Mr. Deputy-Speaker, for me to move, "That the Question be now put"?

Mr. Deputy-Speaker

No.

Sir F. Pearson

As I was saying before I was interrupted, the Scheme is of considerable significance to both the horticultural and the agricultural sides of the industry. We are living at a time when co-operation among all classes of industry and people is of the highest importance. We see it in the international sphere. We see it in the monetary sphere. It covers most spheres of national life. I am particularly glad to be able to speak for only a brief time to say how extremely pleased I am to be able to welcome the Scheme, which extends the sphere of co-operation to the agriculture and the horticulture industries.

One of my hon. Friends raised the important question of marketing and the presentation of produce, as organised by any co-operative association, and I would agree with him that this is probably one of the central—

It being half-past Twelve o'clock, the debate stood adjourned.

Debate to be resumed Tommorow.