AGRICULTURE (INVESTMENT GRANTS) (Hansard, 21 June 1967)

§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie)
I beg to move, That the Agricultural Investment (Variation of Rate of Grant) Order 1967 (S.I., 1967, No. 825), dated 24th May 1967, a copy of which was laid before this House on 1st June, be approved. This Order, which is made under Section 34 of the Agriculture Act, 1967, gives effect to the increased rates of agricultural investment grants which were announced and debated on 17th January, 1967 during the Report stage of the Bill.
We are concerned here only with increases in the grants payable under Sections 31 and 32 of the Act. Section 31 provides for a 10 per cent., grant for fixed equipment, fixed plant and machinery and for long-term land improvements which do not attract other grants. This grant will now be increased to 12½ per cent. for expenditure incurred between 1st January, 1967, and 31st December, 1968. The Order also provides for an increase from 10 per cent. to 15 per cent. in the grant payable under Section 32 for new tractors and self-propelled harvesters, effective over the same period. These increases, which apply throughout the United Kingdom, are expected to cost between £2½ million and £3 million in a full year.
The higher incentives for which this Order provides for this two year period correspond to those announced for industry by my right hon. Friend the President of the Board of Trade in December last. The increased industrial investment grants were announced following signs of a prospective fall in private industrial investment for 1967. In the agricultural sector we were also concerned about the possibility of a drop in agricultural investment. In particular, there were indications of a special need for some additional incentive in the case of tractors. After a promising start early in 1966, there had been a steep fall in sales which had led to some short-time working in the tractor industry. It was for this reason that we decided in providing these increased incentives to place the main emphasis on the grant for 1640 tractors and harvesters, raising it from 10 per cent. to 15 per cent. I am glad to say that the position has already improved. Firms which were working short time are now back on a full week and sales show signs of recovery.
We also felt that there was a good case for temporarily increasing to 12½ per cent. the rate of grant for fixed equipment. This will assist fixed investment of a kind which does not attract grant from any other source.
While, as I have said, these increases correspond to the increase in investment grants for manufacturing industry I must make it clear that it is not the intention that these agricultural grants should be automatically altered whenever there is a change in industrial investment grants. The needs of agriculture will have to be considered on their merits, as they have been on this occasion.
The higher rates of grant provided by this Order are important and valuable. Together with the additional encouragement to production given in this year's Price Review, they should provide a worthwhile additional stimulus to investment necessary to secure the selective expansion which we need.

§ Mr. Bryant Godman Irvine (Rye)
We on this side of the House welcome the increase which the Joint Parliamentary Secretary has just announced. I have only two questions. First, the Order increases the rates of grant which was set out in the Agriculture Act. I have not been able to trace the way in which the power has been given to pay that grant. I am sure that there is a simple answer to this question, but as we are increasing the grant it would help if the hon. Gentleman could tell us.
Secondly, the hon. Gentleman said that the rates have been increased under two heads, the first of which is Section 31 relating to fixed equipment. Can he give us the figures of what has been happening in respect of fixed equipment? I have the figures for 1960–65, but not those for 1966. In 1960–65 investment in fixed equipment rose from £45 million by progressive stages to £68 million. The House would be interested to hear the 1966 figures, if the hon. Gentleman has them.
1641 The second head is Section 32 relating to agricultural tractors. The hon. Gentleman said that there had been a steep decline in home sales. The figures are worth setting out. The hon. Gentleman might have mentioned that the figures fell from 14,563 in the first quarter of 1966 to 6,736 in the fourth quarter of 1966, representing a fall in value from £11.3 million to £6.5 million, a very steep decline over one year. In the fourth quarter of 1965 12,705 tractors were sold at home as compared with the 6,736 in the fourth quarter of 1966. The decline has been progressive—14,000 in the first quarter, 13,000 in the second, 8,000 in the third, and 6,736 in the fourth. It would help the House if the Parliamentary Secretary would explain what has been happening since then. With those observations, on behalf of the Opposition I welcome the increase.

§ Mr. James Davidson (Aberdeenshire, West)
I have one question concerning the definition of "fixed equipment". I am not trying to make things awkward for the Joint Parliamentary Secretary, but what instructions are being given to the Departments about this definition? What will be eligible for the grant?
I declare an interest. At the moment I am trying out, partly as a test case, an application for a grant on a piece of fixed equipment which may be typical of many problems which will concern the Department of Agriculture in Scotland and the Ministry of Agriculture, Fisheries and Food in England. It is of a type which is specifically designed for something which is undoubtedly fixed, like a sealed grain store, but which might be removed in winter weather when not in use, for fear of deterioration from rust and wind, and which can be re-fixed in its operating position when required for use. It is the type of equipment that might not or could not be used for any other purpose. Would such a thing within the meaning of the Order be classified as fixed equipment? This is a definition which will have to be made sooner or later.

§ Mr. Hector Monro (Dumfries)
Does the Joint Parliamentary Secretary intend to adhere to the nonsensical regulation that a tractor must be registered before the 1642 grant can be paid? This materially reduces the grant over the years, if the licence fee has to be paid each year. Is not a receipt from the agricultural engineer who sells the tractor adequate? Is it not unnecessary to have to provide registration particulars? On many farms only one of the tractors need go on to the public highway and the vast majority of the tractors, or even the two or three other tractors, normally stay on the farm and work in the fields. Further red tape and expense are here being pushed on to farmers unnecessarily.
Can the Joint Parliamentary Secretary assure the House that the purchase of a tractor costing £800 on a reasonably profitable farm will, under the new system of grant, make the farmer materially better off than he would have been if we had continued the previous system of depreciation and investment allowances, which suited some forms of book-keeping and accountancy very much better than the new method?

§ Mr. John Mackie
The hon. Gentleman the Member for Rye (Mr. Bryant Godman Irvine) asked where the statutory provision was allowing us to make payment of the grant. The relevant provisions are in Sections 31 and 32 of the Agriculture Act, 1967. He asked, also, about the value of fixed equipment. I cannot give the figures off the cuff, but I shall find them out and let the hon. Gentleman have them.
The hon. Gentleman referred to the steep decline in tractor sales. Tractor sales vary considerably from month to month and from one part of the year to another. The early part of the year is the main time for tractor sales. The figures for the first quarter of this year show an improvement. We have not got figures for this quarter, but, if the improvement carries on, considerable recovery will be shown. The main point is that short-time working on tractor production has stopped. That is the best information I can give.

§ Mr. Bryant Godman Irvine
Could the hon. Gentleman give the figures for the first quarter of this year?

§ Mr. Mackie
In January 3,084; in February 3,794; in March 5,481. They 1643 are coming up, though not up to the 1966 figures.
The hon. Gentleman the Member for Aberdeenshire, West (Mr. James Davidson), raised the question of the definition of fixed equipment. I understand the difficulty here, but he will appreciate that we must have a scheme which we can administer. If it were too loosely worded, so as to cover equipment which could be fixed in a temporary sort of way and then removed and, perhaps, sold straight away, the Treasury would be on our top at once, as the hon. Gentleman knows. Practically everything of a permanent nature which is fixed for its job comes in for grant. We have issued instructions to our officers in the field, and they will be fairly flexible where there is doubt about a particular machine. I gather that the hon. Gentleman has a certain case in mind. I think that the appropriate expression there is that it is sub judice. We look forward to seeing the result of what is happening.
The hon. Member for Dumfries (Mr. Monro) raised again the question of our insisting on registration for licensing purposes, saying that it was nonsense. Again, I emphasise that we must have a simple and administrable scheme. Hon. Members opposite are always on our tops saying that things must be simple, should not require a lot of civil servants and should be straightforward to administer, yet, when we produce a simplified scheme, they complain bitterly. They cannot have it both ways.
We must have a scheme under which we can trace the machinery, and the simple way to do it is through the log book showing that the vehicle has been licensed. As the hon. Gentleman knows —or, perhaps, he does not know; I suspect that he does not because he is always raising points like this and saying that we are talking rubbish—"six-mile" registration, without payment of the licence fee, is available for any industrial as well as any agricultural machine, so that we might find ourselves paying grant to someone who did not use his machine for agriculture at all. The log book, on the other hand, shows that it is an agricultural machine. This is a necessary requirement, and I cannot emphasise too much that it must be done in this way 1644 in order that we may have a record of the machine all the time. As the hon. Gentleman knows, the tractor grant is not paid out until the end of two years, a reasonable period.

§ Mr. J. B. Godber (Grantham)
I am following the Minister's argument carefully, but he has not explained why he says that this is such a simple scheme. I accept the need for simplicity, but how is the present system more simple than the old investment allowance system which farmers had before?

§ Mr. Speaker
Order. We cannot discuss the merits of the two systems now. I know that the right hon. Gentleman appreciates this. We are considering only the variation of the rate of investment grant.

§ Mr. Bryant Godman Irvine
rose—

§ Mr. Speaker
Order. The hon. Gentleman has exhausted his right to speak.

§ Mr. Godman Irvine
I was hoping that I might intervene to help.

§ Mr. Speaker
The hon. Gentleman may ask a question before the Minister has sat down.

§ Mr. Godman Irvine
I thought that I was doing that, Mr. Speaker. I did not understand that he had finally sat down. Has the hon. Gentleman anything to say about fixed equipment under Section 31 and what the level of investment has been in 1966 or since?

§ Mr. Mackie
I said that I could not give the figures off the cuff, but I shall let the hon. Gentleman have them.

§ Mr. Monro
Before the hon. Gentleman sits down, I must reject his argument that the requirement which he makes is more simple than production of a receipt issued by an agricultural engineer showing that an agricultural tractor has been bought. Why should a farmer have to produce the log book as well?

§ Mr. Mackie
If the machine is licensed, the log book shows if it has an agricultural licence. I do not imagine that many people would want to get round the scheme in order to get a grant, but the hon. Gentleman knows that there are ways and means of doing this sort of thing. I do not suggest that we have a cast-iron system now, but if we did 1645 not insist that the machine was licensed it would be possible to produce a receipt showing that the machine was an agricultural tractor although it was, in fact, used for industrial purposes. Anyone could do that. Our purpose must be to keep the grant for agricultural machinery.

§ Mr. Monro
rose—

§ Mr. Speaker
Order. The Minister has finally sat down.