HILL LAND IMPROVEMENT SCHEME

HC Deb 27 July 1967 vol 751 cc1124-46

Mr. Speaker

I have heard that it might be possible to discuss the next two Schemes together. If there is no objection, so be it.

10.33 p.m.

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

I beg to move, That the Hill Land Improvement Scheme 1967, a draft of which was laid before this House on 5th July, be approved. I am glad that we are able to discuss with this Scheme the Hill Land Improvement (Scotland) Scheme 1967, because they are on similar lines.

This Scheme, which is made under Section 41 of the Agriculture Act, 1967, provides for grants of 50 per cent. for a wide range of improvements that will benefit hill land and raise its productivity. The improvements eligible for 50 per cent. grants are set out in Schedule 1. They include the improvement of land by cultural operations which covers broadly all the work that is done to make things grow, including of course, the reseeding and regeneration of grazing, and the application of lime and fertilisers.

Among the other items included are reclamation and clearance of land, the provision of shelter-belts, fencing, pens and dips, and the supply of water. The importance of drainage in the hills is recognised by the provision of 10 per cent. supplementary grants for hill drainage.

An outstanding problem in many parts of the hills is that the farms are too small in relation to the quality of the land. To provide grant at the high rate of 50 per cent. for buildings under this Scheme might well tend to perpetuate the present faulty farm structure. The Scheme does not, therefore, cover buildings, apart from simple livestock shelters out on the hills which are not likely to be made redundant by subsequent amalgamations.

But hill farmers, like others, will of course be eligible for amalgamation grants under Part II of the Agriculture Act, 1967, and a Scheme providing for these grants was laid before this House yesterday. Building work that was needed as part of an approved amalgamation would be able to attract a 50 per cent. grant under those provisions.

The land which is eligible under this Scheme is defined in paragraph 2. It covets the class of land which was eligible for grants under the Hill Farming and Livestock Rearing Acts, and suitability for livestock rearing is the main criterion. We recognise that farmers cannot be expected to improve their land if they fear that they will be ruled out of eligibility as a result, and we have therefore included, in sub-paragraph (3) of paragraph 2, a provision ensuring that land in hill areas which is considered inherently poor enough to qualify for these grants will remain eligible for the five-year period of this Scheme even if improve- ment subsequently shows the land to be better than we thought.

It is our hope that when the time comes to make the next five-year Scheme the Government of the day will include a similar provision in it, so allowing a period of ten years free from the fear of "improving out". If Ministers felt it necessary to exclude any farms on quality grounds after that, we trust that a review of eligibility would take place during the second Scheme, in good time for ample notice to be given to those farmers whose land had become too good to qualify.

If I may anticipate legislation which has still to be presented to the House, we propose to include a parallel provision in the Schemes governing the payment of hill sheep and hill cow subsidies—

Mr. Speaker

Order. The Minister cannot anticipate legislation. If he can, the House can debate it. We are discussing an Order.

Mr. Mackie

In that case, Mr. Speaker, I will proceed to the next paragraph.

I should perhaps mention that under this Scheme farmers will be free to submit applications for one or more improvements and to submit any number of applications. There is no requirement in this Scheme, as there was in the Hill Farming and Livestock Rearing Acts, that the improvements should be comprehensive. If a hill farmer wants to carry out a single worthwhile improvement that will raise the productivity of his land he can apply for grant on it under the Scheme. We hope the success of one improvement will encourage him to go further, but he does not have to start with a comprehensive programme.

I do not think I need run through the other paragraphs of the Scheme, since they are self-explanatory. At the beginning of paragraph 5 there is a reference to the payment of grant on the basis of "standard costs" in accordance with regulations which may be made under Section 36(1) of the Act. We are consulting with the industry and the professional bodies concerned on the "standard costs", and my right hon. Friend intends to make Regulations on this subject before long.

Farmers will then be able to choose—

Mr. Speaker

Order. If the Minister is to discuss what is to happen in the future the House may discuss what will happen in the future. We are on an Order and can discuss only what is in it. There is only one rule for both sides of the House.

Mr. Mackie

I submit, Mr. Speaker, that "standard costs" are to do with the Scheme but I stand by your Ruling, as I am sure that nobody wants to give scope for further debate. I will leave it at that.

Mr. J. B. Godber (Grantham)

To clarify the position, paragraph 5 of the Scheme is fairly important in this respect. I did understand that the Parliamentary Secretary was specifically referring to that. I think that some of my hon. Friends may want to refer to it, as it is a fairly important aspect of agricultural development which we have already incurred in other Orders, and it is, therefore, an extension of what has been considered. I should be grateful if you would allow a little latitude.

Mr. Speaker

I am prepared to allow a little latitude. What I am not prepared to allow is, under this Order, anticipation of what things might happen in the future. Whatever is under paragraph 5 is in order.

Mr. Mackie

The point I was making is that farmers will then be able to choose whether to have grant based on actual costs or on "standard costs" which may suit them better if they do the work themselves.

We expect that the cost of this Scheme, together with the similar Scottish Scheme, will be about £1 million a year. These grants will give valuable help and encouragement to hill farmers for improvements that will increase the productivity of their land. In this way it will help them to improve their incomes and to continue the important rôle they are playing in getting the selective expansion we need.

I invite the House to approve these two Schemes.

10.40 p.m.

Mr. Anthony Stodart (Edinburgh, West)

It is generally agreed that one of the deficiencies of the Scheme is the total omission of houses and buildings. The Parliamentary Secretary said that one exception is simple livestock shelters, but there is, possibly, over-emphasis throughout the Common Market on structural improvements, which are largely to do with things like buildings, although admittedly amalgamations as well. When production grants as we know them are ambiguous in the E.E.C., it is regrettable that the scheme has this omission.

Also, certainly in Scotland, houses and buildings accounted for over 50 per cent. of the cost of the Schemes from 1946 to 1959, and there is, therefore, no question of where the emphasis lay. This is a considerable deficiency also in view of the possible future of more elaborate structures, like indoor sheep houses and indoor cattle sheds, which the Estimates Committee's Report yesterday specifically recommended should be included.

Another grant which used to feature in the previous Schemes was electricity for domestic purposes. Will that be included, or has it gone down the river? Another such item was the production of fertilisers, which the hon. Gentleman said would be included, but what about things like the removal of bracken and whins and the destruction of pests? Do they all come under the heading "Improvement of land …", in the First Schedule? If so, why have they not been specified as they used to be? May we be assured that full details of what is available will appear on the relevant application forms?

The hon. Gentleman estimated the cost at £1 million. What will be the cost in Scotland? Perhaps the Under-Secretary of State could also tell us the estimated number of Schemes which will be undertaken. It is significant that the number of approvals per year under the previous Schemes was 2,000 in the early 1950s, had dropped to 1,500 by the late 1950s, and was only a little over 100 in 1963, and that, in the last year of the Scheme, 94 were approved in Scotland.

I presume that the Department has some indication of what the demand will be for the Scheme. This Scheme will be of merely academic interest if farmers are unable to find the other 50 per cent. It is stated that the hill land to which the Scheme is confined means … land situated in an area consisting predominantly of mountains, hills or heath, being land which is, or by improvement could be made, suitable for use for the breeding, rearing and maintenance of sheep or cattle …". I have no hesitation in saying that, as long as the money is available, schemes of this kind are valuable. But I do not believe that this can come about from the income at present being received from the breeding of sheep and cattle. The majority of hill farmers are tenants and, therefore, their security for borrowing is that much more difficult. I need not emphasise the hopelessness of their income last year or the prospects for this year. Without wishing to spread gloom, the catastrophic fall in the fatstock market in recent weeks is bound to be reflected in the income of store farmers.

Apparently, their drop in income is all part of the Government's policy, for Lord Hughes said in another place last week that somehow, somewhat lower market prices must be expected to follow from the success of the policy of somewhat higher deficiency payments. Nothing is more calculated to smash store production and make absolute nonsense of schemes of this sort than a complete collapse of the store market. The opening prices at the lamb sales in Scotland three weeks ago were 6s. per head down on a year ago, and last year they were down by between 10s. and £1 on the previous year.

This is not talking gloom, but facing the facts squarely. I urge the Government to realise that, if these schemes are to be successful, the price policy which provides an income for those who are to take advantage of these schemes must be vastly improved.

10.49 p.m.

Mr. John P. Mackintosh (Berwick and East Lothian)

The hon. Member for Edinburgh, West (Mr. Stodart) raised a number of points to which I had intended to draw attention. The objective of the Scheme is entirely admirable. It is the improvement of hill land, something which I would like to see happen. While more intensive cultivation is desirable, along with the improvement of the hill livestock position, one must consider whether the Scheme sets about achieving these objectives in the best way.

The Scheme is based on the assumption that investment will take place in these areas. This must, therefore, be encouraged and grant-aided. But has the Minister any evidence to show that investment is taking place? Such evidence as I have about the hill farms in my constituency leads me to believe that disinvestment is taking place.

The problem is entirely the opposite, and if we wish to shore up our hill farms and get the type of improvements the legislation seeks it is puttings things on a totally old-fashioned basis to go on the assumption of capital and confidence that do not now exist in this section of the industry.

We have this on the Ministry's own figures. The Price Guarantee White Paper for 1967 pointed out that in the category of farms to which this Scheme refers, the upland rearing farms, the annual income declined between 1964–65 and 1965–66 from £1,308 to £1,166. I would be very surprised if there has not been a further decline this year. I have no evidence from anywhere of upland farmers going round thinking of how much more money they can put into this part of the industry. They are worrying, rather, about whether they can preserve their farms, and whether to encourage their children to go on with this form of occupation. That is the real problem, with which the Scheme does not grapple because it is working on the older assumption of an expansion of activity.

I was with the hon. Member for Edinburgh, West (Mr. Stodart) in a lot of his remarks, but I lost him at that point, which he so often reaches, when he seems to believe it to be necessary to cover up his own renegade Liberal past and push out into party political polemics by saying that the drop in hill prices is the result of Government policy. He knows as well as anyone that if the Government would do anything they could to shore up this section of the farming industry, because it saves time and trouble if hill prices can be maintained.

When the Government put up subsidies on hill cattle and increased the end prices they wanted to shore up these markets, but there is the much more subtle problem of trying to understand why there is this gap between the store market price and the end guaranteed price. Someone is making money in between, and that is one of the difficulties we have to analyse in looking at the health of the industry.

Another aspect is the tremendous import of cheap beef, which is part of the trading problems we face. Again, I wonder whether the Government are following this, and whether they are prepared to react to it. When he replies, I would like the Under-Secretary to answer the following specific questions. Has he evidence of investment taking place in hill farms? To how many hill farms in Scotland will this Scheme apply? How much money does he expect will be handed out under the Scheme?

A further question I put to my hon. Friend is: how much does he expect the administrative costs of the Scheme to be? I have become more and more worried over these highly selective grants, even if we are to stick to this system of administration. On 3rd July, I asked my right hon. Friend the Secretary of State for Scotland for details of the present administrative costs in Scotland of agricultural subsidies of the type proposed in this Scheme. Hon. Members may have noticed the Answer that of the £35 million worth of subsidies distributed in Scotland, administrative costs totalled £1,390,000, and that of this by far the most went in the particular detailed type of subsidy of which we have an example here.

If one takes the Scottish subsidies for livestock rearing and hill farms alone, the administrative costs are £314,000. I seriously wonder whether the policy embodied in the Scheme is not mistaken, and whether we should not take the money that the Government now propose to make available and then put the administrative costs on the end price of the product of these farms. It seems to me that this would do something to restore confidence in the area and improve the position of the hill farms.

I will admit that there is a weakness in my argument, because even if the end guaranteed price is maintained for fat sheep and fat cattle why is it that the men who rear the cattle and sheep and sell them for fattening are getting so much lower a price?

What is the reason for this gap? I am puzzled why more farmers are not going into this market and buying sheep and cattle for fattening when they know that they will get the guaranteed price and can get them cheaply. I assume that the answer is that they have not the money to put into it. We should examine the whole question.

I hope that the Government will take steps to check imports. There are such steps within their power. The policy under the Order is sensible, but it is a little out of date. We want an injection of confidence and capital. I am not sure that we have reached the end of this structural readjustment. I hope that the Order will succeed and produce the end effect we want, but I very much doubt that under present circumstances it will. I hope that the Under-Secretary can give an assurance about imports of beef.

Mr. Deputy Speaker (Sir Eric Fletcher)

I very much hope that he will not, because it would be quite out of order to deal with imports when discussing this Order.

Mr. Mackintosh

Thank you, Mr. Deputy Speaker.

I hope that he will assure us that those in the sphere of the industry with which the Order deals will have fears and worries removed and confidence restored to enable it to make investment and thus claim the over 50 per cent. grant.

10.56 p.m.

Mr. W. H. K. Baker (Banff)

I endorse a great deal of the sentiments which the hon. Member for Berwick and East Lothian (Mr. Mackintosh) has expressed, especially those about confidence in the industry in the upland areas and particularly in relation to breeding livestock.

I wish to ask one or two questions of the Joint Under-Secretary of State for Scotland. Perhaps he will confirm that the operation of the Scheme as it affects Scotland will be to cover those areas which get the Winter Keep Scheme either under the varying categories of A, B or C, or on a headage basis. Could he define a little more explicitly than is done in the Order in paragraph 2(2) the expression "material extent" in its relation both to hill farming and fattening of cattle and sheep? The wording seems somewhat loose.

Under paragraph 3(2) the applicant may propose more than one improvement in his application". think that the Parliamentary Secretary in introducing the Order said that it could cover any number of applications. In Schedule 1 there are the words: Improvement of land by cultural operations and by the laying down of permanent pasture. How is the Department of Agriculture to assess this? Is it to be done on the time spent by the farmer on the land, the amount of labour put into it, the hiring of machinery, or perhaps contractors' bills? Will fertiliser and lime costs be included?

My hon. Friend the Member for Edinburgh, West (Mr. Stodart) alluded to supplies of electricity, which have been covered by previous Schemes. Why are they not included in this Scheme? I imagine that this may be because the 1967 Act precluded building improvements from hill farm grants. It seems hard that if an area which was previously without electricity now has a supply, the hill farms there should be excluded from the grant. No doubt they would be entitled to a lesser grant under a farm improvement scheme, but it seems unfair to exclude them from these provisions. Perhaps the Government will look at this again.

Is a minimum and maximum acreage laid down for shelter belts? Will the species of trees to be planted be specified? What part, if any, will the Forestry Commission play in planting the shelter belts? Will it be obligatory for the farmer to take advice from the Commission or will this be done entirely by the Department of Agriculture? Will there be an obligation on the farmer to undertake proper silviculture operations, thinning out, and so on? Lastly, on this point, will fencing against stock, rabbits and, indeed, deer in the higher uplands be obligatory on the farmer when he plants these shelter belts.

The Estimates Committee's Report on the improvement of agricultural land, published on 24th July, suggested in paragraph 52 that the Ministry of Agriculture and the Department of Agriculture for Scotland should examine the possibility of including within the scope of the Scheme such buildings as will be needed to enable the full livestock carrying capacity of the land to be realised. My hon. Friend the Member for Edinburgh, West alluded to this point. The Committee went on to say that it would be unfortunate if farmers were deterred from increasing their herds of store cattle by being unable to obtain grant for the necessary buildings. The main purpose of this Scheme is to improve the land, and if the land is improved it will carry more grass and, therefore, more livestock. The Government would be well advised to look at this point again.

My next point relates to the reference in the Schedule to the improvement and protection of river banks. Is this intended specifically to help in the prevention of flooding? Who will be the recipient of the grant in this case? Will it be the river boards, private individuals and riparian owners?

I come finally to the question of silage. There is no doubt that it is necessary for winter keep. It seems to me that it is ridiculous to leave out from such a Scheme as this any provision for silage pits, silage towers and silos generally.

The hon. Member for Berwick and East Lothian referred to the prices of cattle and sheep. There have been devastating drops in the prices. I have the record of one farmer in my constituency who has already shown a net loss this year over last year of £475 on the sale of roughly the same number of store sheep. How can any industry or any individual make investments on the scale necessary for the improvement of these upland farming areas if that kind of loss has to be faced?

There is no confidence left in the upland areas, and this is reflected in my own receipts on my farm, which is a category A farm in the Winter Keep Scheme. In 1964 the sale of weaning calves averaged £47 per head. In 1965 a similar number of calves averaged £44 per head. In the autumn of 1966 it was a complete failure, and I was able to sell less than one-third of the annual crop of calves. When they were finally sold in March, April, and June of this year—and sold literally in driblets—the average price was only £36 per head, which represented a deficit of roughly £10 per head; and that was for 60 weaned calves. Furthermore, in addition to the drop in price, there was the winter keep which had to be bought in to keep them going.

With such drops in price, how can this Scheme be effective? What is necessary is a great deal more confidence, and that can be injected into the industry only by a change in Government policy and the keeping out of fat cattle. Let the Minister remember that it is the price of the end product that counts.

11.6 p.m.

Sir John Gilmour (Fife, East)

As a lowland farmer who has the benefit of the end product of the grants to farmers selling fatstock, I wonder if sub-paragraph (2) of paragraph 2 of this Scheme is really meeting the needs of the uplands and hill areas of Scotland or, for that matter, of England and Wales. I know very well from my own experience that because I am able to carry my stocks on, and get the benefit of the guaranteed price willy-nilly, whatever mistakes the Government may make, whatever happens about imports into this country, or whatever other changes in policy there may be, I have the safeguard against my final return because there is the guaranteed price system. So, I would ask if this sub-paragraph (2) is really meeting the sort of future of developing farming in the hills which most of us realise is necessary.

One of the things which happens more and more is that industry gets into what we call vertical integration. Those who spend their time producing things, want in some way to command the end product which they sell. I think of my hon. Friend the Member for Banff (Mr. Baker) talking of calf sales, and incidentally, he may have gone on to Hereford bulls rather than Aberdeen Angus, but that is a private matter between us. What I want to ask is whether we could not alter the provisions of sub-paragraph (2) so as not to restrict us so much; in other words, the only way to get hill farming grants is to become a store stock producer.

In the remote parts of the Highlands and in the Islands, people should have encouragement to benefit from the final size of the price guarantee system. So long as we go on giving encouragement by way of grant only, but with no certainty about the end market price—and that is what matters—there is no confidence for farmers to develop their land; and if there is no confidence, then there will be a cutting down on the stock which they produce. I ask the Minister to consider whether it would not be well to modify the Scheme so as to allow greater guarantees in the final reckoning for the fatstock producer on the hill land.

11.10 p.m.

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

I am interested in the Government's admission in respect of areas of special difficulty. When I looked at the Government's publication, "The Structure of Agricultures", I find in paragraph 19 that it is stated: The chief characteristics of hill farms are the high proportion of the land which is rough grazing and the consequent low level of output per acre. Typically, hill farms achieve £10 to £30 of gross output per adjusted acre, compared with, for example, about £50 on good lowland farms in England. Hill farming has therefore to be carried out in larger units than elsewhere if reasonable net income is to be attained. When one looks at paragraph 43 of the same study, one sees that, in the case of sheep flocks and beef herds, there is a lower rate of movement into larger enterprises. In beef cows, the annual increase in size to 50 or more cows an enterprise is 2.5 per cent. per annum and this applies to breeding ewes also. The significance of these figures is that they show that movement towards larger units appears to be going more slowly in beef and sheep.

What scope does the hon. Gentleman think there is with this Scheme for improving the productivity of this grassland, bearing in mind that the adjusted acre is the equal to three acres of rough grazing which the Scheme hopes to improve? It seems to me that, unless we can get more livestock units per acre, there is not much chance of maintaining incomes.

That brings up the crucial point as to whether investment is going to go into these areas. There is the test in paragraph 4(2), … capable of yielding sufficient livelihood' … Quite clearly, the fall in prices will discourage immediate investment, but I am concerned at the extent to which this net increase in the hill farming areas is dependent upon the production grants themselves, simply because these grants are at risk vis-à-vis the Common Market agricultural policy.

The N.F.U., in a recent study of the Government's farm incomes scheme, has quoted various factors, all of which show a large percentage of hill farming net in- come dependent upon the production grants. In England and Wales in 1964, the proportion of net income attributable to the hill sheep, cattle and calf subsidies was 41 per cent. and it rose to 51 per cent. in 1965.

If, as we know, an expert in Brussels is going to examine this Scheme as soon as the House has passed it and note which side of the line of admissibility he thinks it falls, it is vitally important that the Minister should make the best possible case for the policy of maintaining farming population and farm incomes in our difficult areas.

We could argue that the whole Scheme is not distorting competition but removing deficiencies in that, without it, the landscape would be depopulated and there would be a decreasing production from these difficult areas. We could argue that the only use these areas have is to produce the raw materials of lowland farming—producing livestock units which can be reared on the hills and then fattened on the lowland farms. I hope, therefore, that this will be vigorously defended.

In paragraph 4(3), there is a reference to where a proposed improvement would be rejected because the cost is too high in relation to benefit. There is the statement that, by taking a notional idea of what would have been an acceptable cost of benefit, the grant would be given on that reduced amount.

Could the Parliamentary Secretary say whether this is a new principle and, if it is, is it proposed to extend it to other forms of agricultural improvement?

I hope that the Scheme, which is mainly structural, will succeed. I am sorry that the Parliamentary Secretary has not thought fit to include the items which my hon. Friend the Member for Edinburgh, West (Mr. Stodart) mentioned, which are included in Europe. It is a mistake to leave them out.

11.15 p.m.

Mr. Jasper More (Ludlow)

I must apologise to the Parliamentary Secretary for not being here to listen to him introduce the Scheme. I should like to give it a general welcome, both because the constituency which I represent includes large areas of hill land and because I laboured with the Parliamentary Secretary and other hon. Members in Committee on the Agriculture Bill and we will all be glad to see some results of our labours in the form of the Scheme.

The problem of hill land is a continuing one. It is encouraging to see that a real effort is to be made to tackle it and that the Minister is to take these powers. One of the disappointing features and continuing troubles with any capital Scheme is that it is not a permanent solution. One of the lessons which we have learnt in the hill areas of Shropshire since the war is that it is not sufficient to do the job once. There has to be a continuing effort. An improved grassland does not remain improved. One has to watch it and improve it again.

The Scheme, though it may not go as wide as some of my hon. Friend's would wish, represents a continuing effort to tackle this extremely important problem which affects so many hill farms over a wide area. I have great pleasure in giving it my support.

11.17 p.m.

Mr. Michael Jopling (Westmorland)

We have had an extremely good debate. Many questions have been asked and I hope that the Under Secretary of State will try to answer as many as he can. The theme which has run through the whole debate is the question: where is the extra 50 per cent. to come from? This question appeared in the speech of my hon. Friend the Member for Edinburgh West (Mr. Stodart). My hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh) drew attention to the lack of confidence in the hill areas and the crises which they had last autumn, and which it seems likely they will have this autumn, in the sale of store cattle and sheep. My hon. Friends the Members for Banff (Mr. Baker) and Fife, East (Sir J. Gilmour) also drew attention to these problems.

This seems to be the theme which has run through the debate. It is not much good the Government bringing out Schemes of this sort unless the means are open to farmers to find the other 50 per cent. so that the Schemes can be brought into being.

I hope, like other hon. Members, that this Scheme will lead to a great many hill farms being improved. Much remains to be done in the hill areas. The advantages of modem "know-how" and agricultural science means that there is great potential for improvement. I agree with my hon. Friend the Member for Ludlow (Mr. More) about the importance of continuing with good management once the land has been improved. Most of us know how hill land can be improved. Going from the valleys to the hills one can see quite clearly the improved areas.

I, too, wish to refer to the deficiencies of the Scheme—that is, the exclusions of houses, on the one hand, and of buildings, on the other hand. We understand much of what the Parliamentary Secretary said when he opened the discussion about his reservations against including buildings because there might later be amalgamations. I do not, however, understand why it was not possible to include a degree of discretion to the Minister's officers to approve schemes which include buildings in hill areas which would be unlikely to be made redundant by subsequent amalgamations. Surely, this could easily have been done and would have been most important.

I am glad that my hon. Friend the Member for Banff referred to the Report, published yesterday, of the Estimates Committee, which came out clearly in favour of including some buildings in the Scheme.

Mr. Baker

Would not my hon. Friend agree that amalgamations are far less likely in upland than in lowland areas and that, therefore, the danger foreseen by the Parliamentary Secretary is, to some extent at least, less likely?

Mr. Jopling

I accept that, but we cannot escape the fact that there might be some amalgamations in hill areas.

The Scheme covers, broadly, the areas covered by the hill cow subsidy area. I am glad that paragraph 3(2) has been included, so that land which has been improved cannot work itself out of the hill subsidies. This is extremely important. Most of us have known of land which has been worked out of these subsidies.

What disappoints me about the Scheme is that it has not been possible to extend it wider than those areas. The Government, I believe, have done nothing to help the upper dales land, which does not qualify for the hill cow and hill sheep subsidies. That land is predominantly a livestock rearing area, which the Scheme sets out to help. Certainly, livestock rearing is in the best interests of those areas. If the Joint Parliamentary Secretary refers to HANSARD of two years ago, he will find that his right hon. Friend the Minister of Agriculture agreed that farms in the upper dales areas, which do not qualify for the hill subsidies, suffer the worst economic difficulties.

One problem which will emerge from the inclusion of paragraph 2(3) is that, because the land is to be improved and does not work itself out of the hill subsidies, a natural corollary will be that an element of fattening and of milk production will inevitably creep into areas which qualify for hill cow and hill sheep subsidy and for the hill land improvement grants. That is quite outside the spirit of paragraph 2(2).

That will give rise to the ridiculous situation, which admittedly is difficult to avoid, that fattening and milk production will occur at farms qualifying for the hill land improvement grants, whereas land which is outside the area and which does not qualify, where people do not perhaps indulge in fattening or milk production, will be excluded from the scheme. That anomaly would cause us all a great deal of difficulty.

A man who rears livestock will be able to point to a farm probably a little further up the hill where fattening and milk production are taking place and where hill grants are being given. I hope that the Under-Secretary will comment on this problem. Whilst one must agree with the basic implications, the difficulty lies in not having extended the scope of the schemes further down the valley.

This Scheme gives 50 per cent. grant for most of the improvements. One problem which the National Farmers' Union has put to me is that it feels that drainage schemes, which qualify for 10 per cent. supplement, making, sensibly, a 60 per cent. grant, just do not work out in this sort of way in hill areas. The Union believes that the grants do not amount to 60 per cent. and in many cases do not amount even to 50 per cent. The reason for that is that the Ministry's inspectors have lower standards of drainage methods and schemes than those which the farmers who are actually working the land demand. I know that the Estimates Committee referred to this, and that there was evidence on this point from the Ministry and the National Farmers' Union to the Committee, which has been so helpful to us. A point which the National Farmers' Union has put to me is that the Ministry's inspectors are saying that lateral drains should be 11 yards apart, whereas the hill farmers in many cases know they must be seven yards apart if they are to get the maximum benefit of the drainage scheme. This seems to me a serious anomaly, and if the Minister cannot answer the point specifically tonight I hope that he will undertake that it will be looked at very carefully. I know that there is not a rule book on the matter for the inspectors, but many farmers are dissatisfied about it.

Another point worrying the National Farmers' Union is that the Scheme does not allow water to be put into buildings up the hill. As I understand it, Schedule 1 allows the supply of water to be taken to off-buildings up the hill but does not allow the water to be taken through the walls and installed in the buildings. We are told that this grant could apply to simple shelters. I hope that the point will be looked at, that the supply of water through the outside walls of buildings will be eligible for grant.

The final question about the operation of this Scheme arises in Schedule 1, the eligibility of grants for making piers, jetties and slips. I want to ask a specific question on this. My constituency consists of most of the Lake District, where one would imagine piers, jetties and slips would be useful, but I could not imagine farmers wanting to put them in for the purpose of improving their land. I asked myself why this provision was put in. I am told that one reason is that the National Agricultural Advisory Committee has been doing a lot of work on the Minister's hill farms, particularly in Wales, where there are lakes on hill farms. It has been doing a great deal of research on fish farming in those lakes on those hill farms. I believe that N.A.A.S. has been reducing the acidity of the water and feeding the fish to see if trout can be grown to commercial levels. I believe that the Ministry has become excited about the prospects. What I want to ask is whether it would be within the terms of the Scheme for grants to be made for piers, jetties and slips for this purpose of fish farming on lakes on hill farms. I know that this topic has aroused a great deal of excitement and interest in the Minister's Department.

Those are the questions I wanted to ask, but I cannot resist coming back to the point which has been made so often tonight by hon. Members on both sides of the House, and that is how it is that the Minister expects farmers to find the other 50 per cent. That 50 per cent. has got to come out of the profits of farming. It is no good thinking that it will come from capital reserves, because unless the confidence is there in the industry, unless the farmers know that by producing more store cattle and sheep they will get a fair return, they will not make the investment; indeed, the money will not be forthcoming to go towards the other 50 per cent. It is absolutely vital at this time that hill farmers should have buoyant store prices and they can be buoyant only if the livestock markets themselves are buoyant.

That brings me back to the point which my hon. Friend the Member for Edinburgh, West raised when he referred to the speech of the noble Lord, Lord Hughes, in another place, in which—and I know that the hon. Member for Berwick and East Lothian crossed swords with him on this—he said that somewhat lower market prices must be expected to follow from a policy of higher deficiency payments. This makes quite clear that this is Government policy and that lower market prices for store owners are part of Government policy. We must have an answer on that—

Mr. Deputy Speaker

I do not think that arises on this Scheme which deals merely with subsidies for improvement grants.

Mr. Jopling

I bow to your Ruling, Mr. Deputy Speaker.

Confidence for the hill areas is necessary, in terms of the extra 60 per cent. and getting the necessary work done. Livestock farmers are uneasy, and none more so than the livestock farmers in the hill areas who are supposed to be helped by this Scheme. Unless the Government are prepared to do something about confidence in these areas, this Scheme, which is worthy, will not have the opportunity to succeed which it deserves.

11.32 p.m.

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

It is perhaps regrettable, Mr. Deputy Speaker, that you ruled out of order the hon. Gentleman's comments about Government policy being to produce lower store prices, because there is a complete answer. What the hon. Gentleman said is not only out of order; it is rubbish. I am sometimes appalled that hon. Members opposite find it difficult to say anything good about the Schemes we bring forward, when they recognise them as necessary and desirable.

We have had a number of speeches, but very few have recognised, as farmers recognise, the value of the Scheme. Hon. Members have discussed the problem of marketing. We all recognise this, but hon. Gentlemen opposite say that we must not talk gloom about marketing, and then proceed to talk gloom themselves.

Mr. Stodart rose—

Mr. Buchan

No. The hon. Member knows that I have waited on four occasions. He has had his say, and now, with respect, I will have mine.

We recognise the problem of cattle and sheep, and I recognise something of the weight of the argument put forward by hon. Members but this is not the time to enter into debate on that. [HON. MEMBERS: "Why?"] Because we are discussing the merits or otherwise of the Scheme and I am not going to embark at this time of night on a major theoretical debate on agricultural problems. We have had that on several occasions in the last few months.

The question of piers and jetties was raised. It is a curious combination of fish and land farming. I will not explore that point further, but one reason for this provision might be that some farms are on islands and it might be useful.

One hon. Member raised a valuable point when he asked why the 60 per cent. grant for drainage was always rejected. We shall look at this. It is a matter of judgment. The position varies considerably from area to area and, very often from inspector to inspector. It is something which is frequently drawn to our attention. It is one of the matters which we are asked to look at, and certainly we will look at it again.

The question of buildings came up a number of times in the course of the debate, and reference was made to the Report of the Estimates Committee, published today. It is of value to remember the sentence in the relevant paragraph which was not quoted, which says: Your Committee believe that the general principle to be embodied in the Hill Land Improvements Scheme of giving grants for improvements to land, rather than to buildings and fixed capital, is sound. We must keep that in mind, because it is the basis of the Scheme. That sentence should have been quoted. We have taken note of the last sentence in the paragraph, and the matter will be kept under review.

The hon. Member for Edinburgh, West (Mr. Stodart) raised a point about electricity. It is not really appropriate to this Scheme, and certainly it is not covered by it. Electricity supplies to farms, but not houses, are assisted under the Farm Improvement Scheme.

Bracken destruction is covered in this Scheme. Item 2 in the First Schedule provides for the clearance, levelling and reclamation of land, and that would extend to bracken.

Questions were raised about the total cost of the Scheme by the hon. Member for Edinburgh, West and my hon. Friend the Member for Berwick and East Lothian (Mr. Mackintosh), who advanced the ingenious argument that, if we saved this Scheme and added on the cost of administration, we could really put something on the end product. However, I do not think that we solve all our agricultural problems by looking at them purely from a market point of view. We have to think of the direct assistance which we can give.

It is difficult to give an exact answer to the direct question raised, but we expect 2,000 applications in a full year in Scotland, at a total cost of something like £600,000 to £700,000; that is, £300,000 to £350,000 in grants. The cost of administration in England and Wales was something of the order of £36,000, and we can assume in Scotland a figure added on to that of about £12,000, making £48,000 to £50,000 for the complete Scheme.

A number of hon. Members raised the question, as a test point, is investment still taking place in hill farming? One possible method of judging that is to see whether the old Hill Farming Scheme is still being approached for grant. On that, we are paying out nearly £500,000 in grant in Scotland, which means that investment is still taking place commensurately. In England and Wales, the figure is something of the order of £600,000.

The hon. Member for Norfolk, South (Mr. J. E. B. Hill) raised a question under paragraph 4(4,b). The grant may be paid on a qualifying cost, representing the reasonable cost of providing the facilities in question. It is intended to cover the sort of case where, for example, an applicant wishes to erect an expensive wooden fence when the Department considers that a cheaper wire fence would meet the need satisfactorily. The applicant would be allowed to erect the wooden fence, but grant would be related to the reasonable cost of the cheaper wire fence. This is not a new principle. It has been in operation since about 1946.

I think that I have dealt with most of the points which were raised. If I have not, I regret it very much, but there are one or two points which must be made clear. The Scheme must be seen against the background of a good Annual Price Review. Hon. Members have referred to the problems facing us at the present time. We recognise these, but we must take into account the possible effect of this year's Price Review, which was the most generous since 1948—again under a Labour Government.

We must take into consideration the attempts which have been made to help farmers, not only by this Scheme, but by the hill sheep subsidy and the extension of the uplands sheep subsidy. The hon. Gentleman asked why we did not take into consideration the problems of the uplands and the dales. He said that some farmers felt that they had been badly dealt with compared with men farther up the hill. Where does one draw the line? When does a man become "further up the hill"? We have to arrive at a definition, and we believe that the definition we have chosen is correct.

Mr. More

The weakness of the administration in my area is that the divisions have always been too rigid. There will be a much better spirit if these things are determined more on the facts, on the type of farming in which the man wants to engage, rather than on rigid definitions of contour lines, elevations and so on.

Mr. Buchan

There are two things to remember here. First paragraph 2(2) gives the definition. Secondly, there is a system of appeals by which these problems can be sorted out. I cannot see the problem here. If the hon. Gentleman is thinking of giving more latitude I must tell him that the problem will become greater rather than be diminished.

We have had a good debate. Underlying the points made by hon. Gentlemen opposite was a general recognition of the generous and worthwhile efforts which have been made by the Government to deal with the problems of hill farms. To a great extent we have the confidence of the farmers, and I know that behind all the criticisms which have been made this evening hon. Gentlemen opposite recognise that.

Question put and agreed to.

Resolved, That the Hill Land Improvement Scheme 1967, a draft of which was laid before this House on 5th July, be approved.

Hill Land Improvement (Scotland) Scheme 1967 [draft laid before the House, 5th July], approved.—[Mr. Buchan.]

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