EMPLOYMENT (NORTH WARWICKSHIRE)

HC Deb 30 January 1968 vol 757 cc1212-43

9.58 p.m.

Mr. Leslie Huckfield (Nuneaton)

May I first say how much I welcome the opportunity to raise the subject of employment opportunities in North Warwickshire at an hour rather earlier than that to which I have been accustomed when speaking in Consolidated Fund Bill debates? I am grateful for this opportunity at this hour, because I do not relish keeping members of the opposite sex who are members of the Government out of their beds, as I did last time.

I have a long list of figures to quote, but I should like to say that I am not basically questioning anything in the Government's overall policy for development areas. I shall be quoting a fair number of figures, but I should not like it to be thought that doing so meant that I did not agree with the basic deployment of industry in areas of high long-term unemployment. I certainly realise that my part of the West Midlands is not the only part of the West Midlands to have serious problems of unemployment.

Mr. Speaker

This is not an Adjournment debate and I hope that the hon. Gentleman will link what he has to say with some item in the Supplementary Estimates. Perhaps he will tell me which.

Mr. Huckfield

I should like to speak on that item in the Supplementary Estimates which refers to expenditure on fuel policy.

Mr. Speaker

Can the hon. Gentleman give me the reference?

Mr. Huckfield

I do not have it with me.

Mr. Speaker

Perhaps I will find it while the hon. Gentleman is speaking.

Mr. Huckfield

Mr. Speaker, I am concerned particularly with the Estimate referring to the future of the coal industry, because my constituency is affected by the possible rundown of the Warwickshire coalfield.

Mr. Speaker

With all respect to the hon. Gentleman, in this Second Reading debate he can raise matters which are covered by one of the Supplementary Estimates before the House. I am trying to find the Estimate to which he is relating his comments. We cannot debate national policy in general.

Mr. Huckfield

It may be that I have been informed about the wrong list of Supplementary Estimates. I wonder if I might be given a copy of them.

Mr. Speaker

I suggest that the hon. Gentleman continues his speech ——

The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dun-woody)

Perhaps I can help, Mr. Speaker It may be that my hon. Friend referring to the Board of Trade Vote and the investment grants.

Mr. Speaker

That is what I imagined at the beginning. Mr. Huckfield.

Mr. Huckfield

I am sorry that I did not come to the central point of my remarks more immediately. I apologise for detaining the House in this way.

I am concerned with the Board of Trade's central policy in issuing industrial development certificates and grants to parts of the development areas. Although the general emphasis of the Board of Trade's grants is on the development areas, it must be stressed that there are places outside the development areas which ought to be included in the Board of Trade's policy.

The employment situation in North Warwickshire is comparable to some of the percentages recorded already in the development areas. To quote the figures for November, 1967, on a percentage basis, Ebbw Vale had 5.3 per cent. unemployment. Llanelli had 3.7 per cent., Teesside had 4 per cent., Workington had 4.6 per cent., and Glasgow had 4.5 per cert. In my constituency, which takes in Nuneaton and the Atherstone area, the percentage recorded was 5.6, while in the Bedworth area it was 9.8.

I admit at once that those figures, to an extent, are inflated by short-time working in the car trade, which is centred particularly upon Coventry. However, my main thesis remains unaffected by the partial inflation of the figures by an amount of short-time working.

All this has had the consequence of causing a great deal of uncertainty among my constituents and has been connected with the future uncertainty of the car trade, the machine tool trade and that of the Warwickshire coalfield.

In the past, the Board of Trade's policy with regard to industrial grants, investment grants and the various other incentives given has been concentrated on the development areas. However, although the West Midlands is classified as a prosperous area, there are parts where I suggest some more selective element should be introduced into the Board of Trade's investment and industrial development certificate policy. I make that point particularly in relation to my own constituency.

Taking the figures in the surrounding towns and employment centres, places like Leicester, Tamworth, Hinckley, Rugby and Coventry will all be found to have much lower percentages in the period between September, 1967, and January, 1968, than that of my own constituency. My constituency has figures as high as 10 per cent., again bearing in mind the partial inflation caused by short-time working in the car trade, whereas other population centres have had figures between 1½ and 2 per cent. over the same period, and they have not gone much higher.

There is a big distinction to be drawn between the two local authority areas which I represent in this House and the other areas in the surrounding counties. I would like to use this point as a basis for arguing the case for more selective making of industrial grants and more selective granting of industrial development certificates.

The policy so far has not been made so selective, because the two reports which have been issued—first, by the Department of Economic Affairs and, secondly, by the West Midlands Economic Planning Council—have pretended to ignore the Coventry sub-region. I believe they have done this on the ground that between 1951 and 1964 there was a 24 per cent. increase in population in this sub-region. For this basic reason and also for the reason that the reports to which I have referred have so far concentrated on the Birmingham overspill, my constituency has not received any attention focused on this particular problem. This may be because in the West Midlands as a whole only 2 per cent. of the population have been involved in mining and quarrying. But in Nuneaton and Atherstone it is possible that some 16 or 17 per cent. of the population are involved in the mining industry. This shows the difference between Nuneaton and other parts of the West Midlands area.

Between 1945 and 1963 government steering policy has had the result of turning away perhaps 100,000 jobs from the West Midlands. This could involve some 200 firms. I put this on a long-term basis from 1945 to 1963, because the area as a whole was regarded as a prosperous area. However, from the figures that I have quoted and from some of the problems to which I have made reference, it can be seen that there is a need for some kind of selectivity, even bearing in mind the bias in the figures I have used.

Apart from this, the non-selectivity and the rather blanket policy concerning development areas and non-development areas has meant that firms in North Warwickshire which have wanted industrial development certificates have not had the opportunity of getting them. A classical example in Nuneaton is the firm of Clarkson's, which exports about 80 per cent. of its total product. When this firm could not get an industrial development certificate for expansion it had to go elsewhere. I am informed by several of my constituents and representatives of local authorities that other firms, too, have made representations to the Board of Trade, but have so far been unable to get the kind of permission which is necessary to set up factories and expand locally.

The sites are available. We have one on the site of the old Haunchwood Colliery. I know that the Nuneaton Borough Council is very interested in the expansion of this site. We feel that the centring of Galley Common Village and the surrounding population on the old Haunchwood Colliery and the closing down of the colliery has left that part of my constituency without a nucleus. If some kind of industry could be started on this very good site it would form an excellent basis for future expansion.

I have already had an opportunity of putting this point to the chairman of the West Midlands Economic Planning Council and to the Hunt Committee which is at present considering, on behalf of the Government, the future of what has been called grey areas. Basically, I am advocating more selectivity, especially for the areas which have so far been classified as the prosperous areas, because I believe that Nuneaton, not only in being adjacent to the A5 and the main electrified railway line to London and the North, has some very good amenities to offer in social and recreational directions.

What I am basically seeking is work in North Warwickshire and local jobs for local men. This is my main point. I am sorry if I have appeared to stray in essence from my intention, but I would like to refer briefly to an answer which I received from my right hon. Friend the Minister of Labour today. He said that in considering applications for I.D.C.s his right hon. Friend the President of the Board of Trade would take full account of any colliery closures and the level of employment generally in North Warwickshire. I would like a more definite answer from my hon. Friend, because I know that it will be very much appreciated, not only by the 8,000 miners who still work in the Warwickshire coalfield, but also by the many more of my constituents whom I represent in this House.

10.11 p.m.

The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dunwoody)

I appreciate the concern which my hon. Friend the Member for Nuneaton (Mr. Huckfield) has expressed about the employment situation in North Warwickshire. Before I come to the question of investment grants and the whole question of selectivity, perhaps I might briefly discuss some of the difficulties which are bound to arise with unemployment at the present level.

There are doubts about two coal mines in the area, but I think that we must look at the situation in the context of the employment position in the area as a whole. For a long time this part of the Midlands enjoyed low rates of unemployment. Coal mining is important in the area, but it by no means dominates the industrial structure, and as the economy moves forward the demand for labour is again likely to increase. Compared with many districts, particularly in parts of the development areas, North Warwickshire should be better placed to absorb a rundown in coal mining.

The whole rationale behind the Government's policy in the development areas is that there is a desperate need for employment in them. Some of them have a continuing problem of very high unemployment. Unfortunately, the amount of industry on the move never seems quite to keep pace with the needs, and we must do all that we can to bring work to these very hard hit areas. I was glad my hon. Friend said that he supported the measures to bring them help, but I am afraid that this can be done only by taking a firm line on applications elsewhere, and, much as we would like to assist industrial expansion in many places, it must be faced that there is a limit on what can be done in establishing new, expanded industries. Faced with a decision whether to agree to industrial development, we must, if we consider that it should go ahead in a development area, give that area preference.

My hon. Friend mentioned the amount of travel to work in North Warwickshire. I am afraid that I have no recent information about this, but the movement of workers is undoubtedly extensive, both to and from Nuneaton and Bedworth in particular. Travel out from the area greatly exceeds that inwards, mainly to the industries in Coventry. We realise that there are undesirable features about excessive travel to work, and to the existence of what may be described as dormitory areas. The distances are not, however, very great, and I have little doubt that workers attracted to Coventry by the range of employment and the good wages that they can obtain find the journey worthwhile. It is vitally important that industries should be able to attract workers. I do not think that it would be sensible to establish enterprises in the surrounding areas which would draw that labour away. Travel to work within an area such as this is part of the normal pattern today, and as such should be accepted. We do not, of course, want to see people forced to travel many miles to get a job, but the distances involved here do not seem to be excessive.

My hon. Friend raised the whole question of investment grant policy. If we are to attract industry into the development areas, investment grants are an active plank in our present plans. My hon Friend suggested that we should consider varying the rate of investment grant payable for qualifying grant and machinery. We have received many similar requests from other areas, notably North-East Lancashire, Yorkshire, and Humberside. The long-term prospects of North Warwickshire are better than those of many other areas.

Mrs. Jill Knight (Birmingham, Edgbaston)

Would the hon. Lady bear in mind the great difficulty now experienced by Midlands firms due to the increased cost of transport to the docks because of the new Transport Bill, which is another——

Mr. Speaker

Order. We cannot discuss new legislation in this debate.

Mrs. Dunwoody

On the whole problem of investment grants, the rationale behind them was to attract employment very much to the development areas, and at present there is no intention of varying their payment on the selective lines requested by my hon. Friend.

However, to follow his particular point, we are concerned that there may be pockets of unemployment in those areas which are, because of their overall employment rates, thought to be generally much more prosperous. We do not underestimate the difficulties which this creates for particular areas, but we do not feel that the varying of investment grants would deal with it efficiently and we are using our industrial development certificate policy to consider sympathetically those areas with a particular problem relating to colliery closures.

My hon. Friend, of course, mentioned the Hunt Committee which was set up to examine the problems of areas in which the rate of economic growth has given us cause for concern. It is conducting a study in depth which can be expected to make a considerable contribution to our consideration of the problem and is, of course, considering all the evidence submitted to it. It knows the importance which the Government attach to its report and is pressing ahead as quickly as possible.

I must say, however, that the problems of North Warwickshire do not appear to be as severe as those of many other areas which the Committee will, no doubt, consider. I do not want to give the impression, however, that we are unsympathetic to the problems of areas other than development areas. We must give their special needs priority, but, subject to this, we can and do operate a flexible policy towards industrial development. The needs of places outside development areas, including North Warwickshire, where employment can be affected by colliery closures, are taken into account in the issue of industrial development certificates, as well as the current and local employment position.

I can assure my hon. Friend that applications for industrial development certificates in areas of above-average unemployment in North Warwickshire are considered more sympathetically than those for development in the highly congested parts of the West Midlands.

Mr. Huckfield

I am most grateful to my hon. Friend. She was saying earlier that it would appear that the distance between Nuneaton, Atherstone, and Coventry is not great. Is she aware that some of my constituents are spending as much as £2 a week in bus fares and have to travel as long as an hour either way to and from work? Does she regard this as a satisfactory long-term answer for North Warwickshire?

Mrs. Dunwoody

No one would regard too great a travel-to-work problem as being a long-term satisfactory answer, but the point in relation to other areas, for instance development areas, is that many workers do not have the choice even of travelling to work distances like this. Although we are not sanguine about the difficulties of workers faced with unemployment problems, even in these circumstances priority will still go to those areas with much higher and more continuous rates of unemployment.

10.19 p.m.

Sir John Gilmour (Fife, East)

Scotland plays a very important part in providing not only its own meat supplies but a large part—particularly the quality part—of both beef and lamb supplies for the South of England market. Given the absence of foot-and-mouth disease, it could and would take an active part in export trade as well.

The Vote on which I am speaking covers the hill cattle and hill sheep subsidies in particular as well as the winter keep grants, from which a considerable proportion of the meat supplies originates. Of course, the very fact that these supplies originate in the furthest parts of the country makes one interested in what the cost of transporting this meat may be in future from these areas and makes one wonder —

Mr. Speaker

Order. Such interest may be highly commendable, but it is quite out of order at the moment.

Sir J. Gilmour

I apologise, Mr. Speaker. When discussing an industry like this, which has so many ramifications, it is difficult to be certain which parts are in order to be discussed and which are not.

Farming in Scotland can play an important part, as it does now, but it must do this against an extremely difficult background. For example, 5,000 acres a year go out of farming use for roads, industry and housing. The majority of this is good farming land. It means that by the end of the century we will have lost about 150,000 acres of land, which probably means that about 1,000 good farms will go out of the active production of meat.

Apart from the challenge of devaluation and import substitution, we need to look carefully at what is covered by these Estimates and what happens as a result. If one looks at page 16, one sees that the hill cattle and hill sheep subsidies are increased under the 1967 Annual Review and that the same applies to the winter keep grants. This means that, although we are now discussing the extra amount of money necessary to implement the Government's policies, in fact the Government did not place their plans for the implementation of these policies until after the general Estimates for the year had been laid before Parliament.

This leads me to think that the Price Review takes place at the wrong time of the year. Urgent consideration should be given to this aspect because, if we altered it, we would obviate what occurs in these Estimates—of, nine months after the Price Review has been laid before Parliament, having to ask for an increase in the Estimates. The farming community must lay its plans well ahead. In the industry which we are considering tonight—the meat supply industry—if we are marketing an animal aged 18 months, the animal was conceived another nine months before that. We are, therefore, working on a long-term strategy.

As I understand it, the Government have often resisted the idea of bringing forward the date of the Price Review because they feel that they would not have collected enough information. However, I suggest that all the information is available from year to year so that adjustments in values could be made. If we are to achieve what the country needs by way of import substitution, it is wrong—and this complaint has been registered for some months—that we should have to wait until after March, after which practically all the planning, including cropping plans, have been made. These plans are important in that we are producing feed for cattle. A decision in this matter should have taken place before that time. I trust that urgent consideration will be given to this, to see if the planning of our agriculture production can be done with the avoidance of these sorts of Supplementary Estimates, so that the matter can be got into perspective, for this would be in the long-term interests of agriculture.2

If we are to achieve the extra production we want, it looks, under the present system, as though we must always be adding to the guaranteed price. Had it not been for the foot-and-mouth outbreak, the Estimate which had been prepared—I have details of it with me because of the outbreak it was withdrawn—would still have necessitated a further payment of Exchequer funds towards the price guarantees.

From the point of view of livestock producers throughout the country, and particularly those in Scotland, between the 12th and 34th weeks of the fatstock year there was, in every week, a deficiency payment of 30s. or more being made to producers. In the weeks 16 and 17 of the fatstock year there was an abatement of 10s. 5d. a cwt. and in another week an abatement of 12s. 6d. a cwt. This means that if we are to get an extra farming production we are up against the imposition of Treasury control to keep down the amount of money that is voted.

Surely we must have some measure of import control and a target set for the home industry which would say, "We wish you to produce so many more tons of meat a year and we in turn will guarantee that we shall not allow the market to be disturbed by abnormal quantities of meat from the Argentine or any part of the world". If small amounts of imported meat come on to the market it disturbs the market and then we have to have deficiency payments. It is essential that the Government should not only give a guaranteed price but also a target and that deficiency payments should not skyrocket so that as a result the Treasury clamp down on increased production and the good work which could be done in home production is lost.

On page 16 of the Estimates I call attention to the Subheads B and 0. One refers to lime subsidy and the other to grants for the promotion of agricultural investment. It is said that there was a reduction in purchases of lime. This movement must be against the interests particularly of livestock producers whose land can be improved by the use of lime. It means that the system at the moment does not give farmers confidence to put money up. Because of high Bank Rate and the squeeze, the farmer has not the money to put up.

Under Subhead 0, Grants for Promotion of Agricultural Investment, there is a grant not exceeding 12½ per cent. on fixed equipment and long-term improvements. There were fewer applications than were anticipated. Although the Government are willing to pay money, the situation in which the farming industry is placed does not allow that money to be spent. The same applies under paragraph 2 for grants not exceeding 15 per cent. on specified types of self-propelled machines where there were fewer applications than were anticipated. There is the sum of £415,000 which might have gone to finance the efficiency of the industry in Scotland but which has not been met. That is because the policies the Government have pursued have lost the confidence of the farming community. It is essential now that we are coming to the Price Review time that urgent steps should be taken to restore that confidence so that the good which could be done for British agriculture and for the country as a whole can be realised.

10.29 p.m.

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

The 1968 Price Review White Paper says in relation to improvements and alterations in some of the Review prices: These determinations.. —the increases in the hill cow and hill sheep subsidies and the alternative head-age payments for winter keep alone— above will ensure the upward trends of production needed in the national interest. In relation to this I wish to examine the position of upland hill farmers in Scotland in relation to meat production. When he replies, can the Joint Under-Secretary for Scotland give the approximate breakdown of the numbers for the headage and the farms involved in the change over from the winter keep payments, plus hill cow subsidy, plus the headage payments for hill cows as nearly as possible?

The December, 1967, Agricultural Returns show that there has been a 4 per cent. decline in the overall sheep flock in Scotland. The breakdown, as far as I can find out, is not yet available for the various areas, but in the North-East of Scotland the fall in the sheep flock has been going on steadily since it reached its peak in 1962 of 1,600,000. In June, 1965, it had gone down to slightly over 1 million, and in December, 1965, it had gone down to just over 800,000. So what we are seeing is a continuing trend in the fall of the sheep flock. I think the area I have cited, the North-East of Scotland, is indicative of what is going on throughout Scotland, because it is an area which includes not only Banff, Moray and Nairn, but Aberdeen, Kincardine, Caithness and Orkney.

The fall in the sheep flock is not only brought about in the hill areas but in the lowland farm areas, and it is there that the decline is most noticeable. The fact is, of course, that the price of the end product is simply not enough to encourage breeders in these lower lying farms, and the breeding is left almost entirely to the hill men. The number of sheep in the upland or hill farms, I am led to believe, has not fallen nearly as much proportionately as it has on the lowland farms, and the reason is not difficult to determine. The lower land farmers are able to turn to other things; the hill farmers in many areas, and the ones I am thinking of particularly, have no alternative but to carry on; there is literally nothing else to which they can turn for their livelihood. The lowland farmer can turn to grain, but the hill farmer has nothing else but hill sheep, or hill cattle, for his livelihood. It is a disturbing trend, and I think the whole House would agree.

On the other hand, it is sometimes said — indeed, it is often said—that farmers should do a great deal more to help themselves. Marketing is said to be the weakest factor of all the agricultural economy in the whole of the United Kingdom. Therefore I think it is right to commend to the House, and, indeed, to the country, the Scottish Quality Lamb Association.

Now, if the lamb is not forthcoming this scheme is going to fall flat on its face. That is self-evident, and unless we can give encouragement and confidence to the hill farmers to produce more lamb, and more quality lamb, then we are not going to achieve anything like the kind of production we really need.

As with every other commodity, whether it be a farming commodity or a manufactured commodity, a thing of quality will sell, and it is already proven that the activities of the Scottish Quality Lamb Association have made considerable sales as far apart as Brussels and. of all places, Hong Kong. I now understand that the pilot scheme for the sale of Scottish lamb is to be produced in February in southern England, and that is at a time, of course, when Scottish hoggets are at their very best.

I would suggest that when the flock number is falling then it is time action was taken in the North-East, and in addition, of course, in all the sheep-rearing areas of Scotland. When the St. Andrew's cross is put on those carcases we naturally hope that it will be a common sight throughout England and the whole United Kingdom. At the moment the system works on a limited scale through a limited number of markets. I hope to see it expand, and I am sure that the whole House not only applauds the Association's efforts but wishes it well.

A remarkable and admirable survey was carried out by Mr. A. B. K. Tracey for the North of Scotland College of Agriculture on hill farm incomes between 1965 and 1966. He selected 20 farms, all of which received the hill cow, hill sheep and winter keep payments where applicable. Nine farmed with cattle and sheep and 11 were farmed without cattle. Almost entirely, therefore, the latter section was dependent on sheep for income. In every case there was a larger or lesser acreage of arable ground devoted entirely to producing winter keep for cattle and/or sheep.

The winter keep scheme virtually prohibits any fattening. Therefore the stock was, and still is, sold as stores in the autumn in which the progeny were born. One interesting observation by Mr. Tracey was that the unit costs of hill farms with cattle were very much higher than those entirely dependent on sheep for their income. The most interesting fact that his survey brought out was that the Exchequer assistance to the nine farms with cattle—those which received the hill cattle subsidy at that time, not the headage payment—was 128.4 per cent. of their farm net income. On the farms entirely dependent on sheep for their incomes the Exchequer support was 38.7 per cent. of the net farm income.

The farms in the survey received the hill cattle subsidy, hill sheep subsidy, and, of course, the calf subsidy. In some cases Winter keep payment was also applicable, where cattle were involved. Eight of the farms—40 per cent. of the sample—had a net income of less than £750 in 1965–66. Admittedly, in 1966 sales of weaned calves, calves which had been punched and whose dams had received the hill cow subsidy, were considerably down on 1965.

Although there was a certain amount of improvement last year, the prices of all these animals which had received subsidy were still £5 to £8 lower than those received in 1965. The price of the end product is the one that matters. It is reflected right the way back to the calf or the lamb. If the prices of the end product are not sufficient, we shall get a continuing decline in the sheep flock.

I agree that the figures I have quoted do not take into account the increases that they have received and which we are discussing on this Supplementary Estimate. But far too much of these farmers' incomes comes from the Exchequer and far too little from their product. The figures I have quoted illustrate this. No market, either last year or the year before, was available for the second and third cuts of calves. In the case of Leicester cross-lambs, the poor price of 1966 was continued into 1967 and it is still about 7s. behind that of 1965. The sale for black-faced lambs was not one bit better.

Something must be done to correct this and to allow the Government's hopes and predictions to come true. In other words, if the agricultural communities in these uplands areas are to realise their potential, something radical must be done to improve their incomes, otherwise the sheep flocks and, indeed, the cattle headage will fall in the uplands farms continually and for a long time to come.

The only way to correct the situation, in my judgment and that of many of my hon. Friends, is to change the present price support system and to introduce a system of levies on imports and thus allow the final product of these farmers, their meat, to reach world prices so that the price will be reflected right back to the calves and the lambs.

10.42 p.m.

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

I want to emphasise that the problems dealt with by my hon. Friend the Member for Banff (Mr. Baker) in relation to his constituency's hill areas are reflected in Kincardineshire and some of the glens of Angus as well. Farm income figures published by the Department of Agriculture are even more alarming than some of the North of Scotland figures he has quoted.

The figures for 1965–66—which included the bad store price of 1966—show that, on certain types of hill and upland farms, the amount of average production grant for the farms was greater than the net income. That was an extreme year but it illustrates the problems of these farms in that so much income comes from grants of various kinds and is not received from market prices.

Mr. Baker

I said that, in one case, the net farm income was 128 per cent. and based entirely on Exchequer grant.

Mr. Buchanan-Smith

That is the point. But it is not just in the North of Scotland that this situation exists. The figures for the whole of Scotland reflect the same problem. Therefore, the Government must pay more attention to the end price for what is produced in these areas. That is the best way of trying to infuse prosperity again into such areas.

Mention has been made of the Scottish Quality Lamb Association in marketing and the improvement in marketing methods of store stock in particular, and this could be one of the most hopeful factors. A minor experiment in Argyll is under way and I hope that this movement will be reflected elsewhere through a much more scientific approach to the problem of store stock than in the past.

I should also like to commend my hon. Friend the Member for Fife, East (Sir J. Gilmour) for initiating the debate and drawing attention to the decrease in the amounts paid out on the lime subsidy. This is a particularly serious indication, because the use of fertiliser, particularly lime, gives some indication of the level of productivity in agriculture. We all know that the use of these fertilisers helps productivity. We are talking about the need to increase home production and the need to make better use of limited land resources. We are talking particularly of the hill and upland areas, and it is in those areas that there is greatest scope for increasing production. Because of this it is disappointing to see the reduction in this subsidy.

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

I may be mistaken, but I thought that we were discussing the hill and upland areas exclusively, not particularly, as the hon. Gentleman has said.

Mr. Deputy Speaker (Sir Eric Fletcher)

Order. What we are discussing at the moment is anything relevant to the Supplementary Estimates and in particular the winter keep grants and the lime subsidy.

Mr. Buchanan-Smith

Lime is used in areas of Scotland other than the hill and upland areas and, in the same way, grants for the promotion of agricultural investment are also paid in areas other than the hill and upland districts. The debate is surely on the wider issue of meat supply in Scotland in relation to these Estimates. Therefore, I am certainly of the opinion that this debate is within the scope of the Supplementary Estimates, and is not confined merely to hill and upland areas. I am rather surprised at the intervention, and hope that it does not display an ignorance of what happens in Scottish agriculture.

Mr. Buchan

I rose merely to draw attention to the rather wide-ranging nature of the debate, in view of the subjects listed for discussion.

Mr. Buchanan-Smith

These are not exactly limited subjects in Scotland, when one considers that the livestock industry is the most important sector of Scottish agriculture.

Sir J. Gilmour

Everything that originates on the hills is almost certain to finish up in the Lowlands, and be mixed through the whole of Scottish agriculture. That is why we are so worried about meat supplies in Scotland.

Mr. Buchanan-Smith

This is one of the most important sectors of Scottish agriculture. It is relatively far more important than the livestock industries in England and Wales. It is a very important and weighty part of the agricultural industry that we are discussing.

The fall in the lime subsidy concerns me because it indicates that we are not creating the greater use of resources which we need, particularly in the hill and upland areas, where there is more scope for the use of lime. In the Lowlands of Scotland, we are nearer to an optimum level. This is a way of increasing output and efficiency. This is perhaps a reflection of the bad lamb stock and store calve prices in the autumn of 1966 which destroyed quite a lot of confidence in the industry in the following winter, when money was short. There was pressure from bank managers in these areas and people probably did not invest and spend as much money as they might otherwise have done.

The particular point that I want to make relates to the supply of calves, which we are discussing under the Estimates for the calf subsidy. This refers not only to calves from the hills or the beef herds, but also to those from the Scottish dairy herds. We have to remember that about two-thirds of our home beef supplies come from the dairy herds. That is why I welcomed, as did many of my hon. Friends, and those in the industry, the fact that in 1965 the National Plan recognised that if we were to increase our meat supplies, particularly supplies of beef, a certain amount would have to come from the dairy herd as well as from the beef herd, and that as a result, there would be an increase in dairy cow numbers. But, because of the standard quantity system in the dairy herd industry, that would have meant dilution of the guaranteed price for milk. That was recognised, not only in the National Plan in 1965 but in the Price Review White Paper in 1966.

The dilution factor was recognised, and the Government said they would take action if and when the necessity arose. It has not arisen until this year. We are now getting to a stage when, for the first time, because of Government action, which I welcome, there is more confidence in the dairy industry and a considerable increase in the size of the dairy herd. At the moment, however, the increase has been chiefly confined to England. Whilst production has increased in Scotland, we have not seen the same increase in cow numbers. We have not seen the same contribution in Scotland.

I am sure that the Under-Secretary will recognise that there is in Scotland at present a genuine concern lest this so-called "dilution factor"—a slightly technical matter—is applied on an area basis. That would be to the benefit of England, because it is there that there has been an increase in the herd numbers. It would mean that England and the English dairy farmers would get the protection of the Government assurance that the increase in dairy cow numbers will not mean that the price will be cut back because of the standard quantity. There is a rumour that in Scotland. where we have not had the same increase in dairy cow numbers, we shall not see any benefit.

It would be wrong for the Government to look at the problem on an area basis. It is much better to look at the country as a whole, because already Scotland supplies many of the dairy cows and in-calf heifers which are sold to England while, at the same time, there are being bought back from England many of the beef calves which the Government, through their subsidy schemes and in other ways, have encouraged the industry to keep rather than slaughter. I therefore hope that in this year's Price Review the anti-dilution factor will be applied on a national and not on an area basis which, if applied strictly, would discriminate against Scotland.

Mr. William Young, the Chairman of the Scottish National Farmers' Union, spoke yesterday in Ayr to the executive of the N.F.U. there. I am sorry that the hon. Member for Central Ayrshire (Mr. Manuel) is not present, because I know that there are many dairy farmers in his constituency. Mr. Young, in his own very strong terms, drew attention to the present problem, and expressed the hope that the Scottish representatives of the N.F.U. would bear this point very much in mind during the Price Review, and would try to see that Scotland was not discriminated against.

I ask the Scottish Ministers to see that in the Price Review negotiations the dilution factor is not applied in such a way as to discriminate against Scotland but is applied on a United Kingdom basis. This is important, because the dairy farmer has a great contribution to make towards our beef supplies as well as to milk supplies. At the moment, we are not getting the increase in dairy cow numbers that there has been in England, so we do not want to do anything to discourage our dairy farmers from playing their part in the agricultural industry.

10.55 p.m.

Mr. Hector Monro (Dumfries)

Everything my hon. Friends have said tonight indicates how topsy turvy are Government priorities on farming in Scotland and indirectly in the whole of the United Kingdom. I begin by looking at the decrease in these Estimates and I will point out to the House what a reprehensible situation is brought out in them. Last time we discussed the Lime Subsidy Order many hon. Members on this side pointed out that here was a Government action which in the long term would have a serious effect on the output of Scottish agriculture. Lime is a long-term investment. Here we had a subsidy cut which, as we pointed out was likely to be the case, was followed by a reduction in purchases of lime. This is something the Government will regret one day, because it is vitally important to put back into the land a high proportion of lime. It is the key to fertilisers and it is a very short-term policy to reduce the subsidy year by year.

The other reduction is in agricultural investment grants, which, as my hon. Friend said, indicates the trend in farming, that the farmer has not now got the capital available to invest in new plant and machinery. Therefore, there should be no phasing down of the small grants for fixed machinery and self-propelled machines. During the Price Review negotiations, the Government must look again at the fact that agriculture has no capital to invest in new plant and machinery. I am sure that this is so, from talking to my neighbours and to machinery salesmen, who are having a pretty lean time now. That was the disincentive side, where I think Government policy has failed.

We look at the hill cattle subsidy and the hill sheep subsidy, the winter keep grant and the calf subsidy and see that the Estimates are increasing and that, thereby, the deficiency payment is increasing also. The Government should appreciate that the farmer wants to see his major return from the end product and to get away from continual reliance on the decisions of the Price Review and the deficiency payment level.

Hill farmers and all other farmers realise that the price of lamb per pound is today roughly what it was 10 years ago, 3s. 5d. to 3s. 6d., and that this is set against a large but fully justified increase in wages. Hon. Members must realise that it is impossible to make a profit on a hill farm at the moment. What is the hill farmer forced to do? He cannot cut down on wages because one cannot ask two shepherds to do the job of three. One then begins the fatal spiral of the death rate going up, lambing percentages going down, and lamb and wool prices going down. It is therefore vital that the income for the hill farmer is kept up at a fair level. This is patently not so at the moment.

We are all well aware of the grants which the Government make available, same of which we are discussing tonight, but any hon. Member who is in close contact with hill farmers knows that they are now going through a stickier period than ever in the history of hill farming. Certainly something dramatic must be done in the near future. It is not as if the Government have not been given warning, or advice what to do. For three years there has been constant indication from this side of the House that action towards import control and the levy system might well bring a substantial increase in the end product. This is now accepted by the vast majority of farmers as the only way out of this impasse to give them an increased income.

We certainly support the views of my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) in regard to the calves which can be helped to provide the beef about which we are talking tonight from the dairy herd. As for winter keep, it is a fact that so many of these calves from the dairy herd could have been increased much more rapidly had the winter kee grant been available earlier.

It is time that barley was included as a crop acceptable for the grant. Modern barleys which have been carefully selected and well farmed can produce a better forage in the winter than a middling crop of oats. These are not new points to the Government since we have been putting them forward for years, but I hope that the Minister in his reply tonight will indicate that there is a change of heart and will not give us the kind of platitudes which have emanated from the Front Bench opposite for the last three years. It is high time that we had some action.

11.4 p.m.

Mr. Ian MacArthur (Perth and East Perthshire)

I hope the Under-Secretary will remember that we have had similar debates to this year after year. Each time the Government give us comforting replies which are not matched by action. Year after year one sees the position of the Scottish hill and upland farmer deteriorating even further. I believe that if there is not a substantial improvement very soon, we may see a final and ultimate decline which will throw the Scottish agricultural scene into the gravest possible position.

The hon. Gentleman may well say that 1967 was in some respects marginally a better year than 1966. I would remind him, however, that 1966 was a disastrous year for the hill farmer, and that 1967 was not much better. The underlying threat is serious indeed. The hill farmer today is in an economic straitjacket with no alternative, yet the hill farms of Scotland have the most enormous potential for a very large increase in the meat supplies which our country needs.

We have said time and again that the upland farmer depends on the low-ground men who fatten the product from the hills. The vast majority of the stock from the hill farms is sold in the store markets, and this outlet has been shrinking in recent years. The solution to this matter does not lie in fiddling about with production grants and the like. No matter how much production may be encouraged, production itself becomes meaningless unless there is a large and rising market for the end product. That market is not there, as is reflected in the prices which are at present being obtained. There must be an improvement in the market price if the industry is to survive, let alone flourish.

The hon. Gentleman may be interested to hear some figures which I was given a few days ago about prices obtained for the top-draw of cast ewes from a farm in Perthshire. In 1957, the price was 120s. It fell steadily during the years which followed to an all-time low since the war of 62s. last year. That was a drop from 120s. to 62s. in 10 years. The farmer concerned pointed out to me that his grandfather was receiving 25s. in 1867 for his best cast ewes. It is remarkable to see how the price in 1967 is so little ahead of that a century before.

When one looks at the trend of prices in the last 10 years, one sees a very disturbing and sharp fall while costs of all kinds continue to increase. In that context, farmers in Scotland are flabbergasted to see the hon. Gentleman and his colleagues in the Scottish Office tolerate the introduction of the Transport Bill, which will increase the cost of agriculture even more.

The only solution to the present position that I can see is a gradual movement towards a system of import controls and levies. Unless the Government face this obvious need, I see no solution to the problems of Scottish hill farmers.

There is another aspect to this which worries me more than any other, and it is the steady and continuing fall in the labour force on hill farms. Year after year, we see more and more people leaving the hills and glens of Scotland. I wonder sometimes if an urban-minded Government such as the present one can appreciate the concern which many of my hon. Friends and I feel about the constant growth of urbanisation in Britain. This loss of people from the hills is very serious socially. The drift from the land has gained pace and far exceeds the Government's estimate. The people who leave the land do not come back again; once they go, they are lost for ever. I believe that this constant and increasing drift from the hills, which is a reflection of the financial problems facing our hill farmers, is a dangerous and constant sapping of much of the strength of the nation.

11.9 p.m.

Mr. Anthony Stodart (Edinburgh, West)

I am sure that hon. Members will be grateful to my hon. Friend the Member for Fife, East (Sir J. Gilmour) for giving us the chance of discussing this important matter.

I realise the importance of not being unduly pessimistic, doing what the Government did when they were in opposition on all aspects of the Scottish economy, and saying that things were terrible all the time. However, the dividing line between pessimism and realism is one which I have always found to be extremely narrow.

I cannot look at the situation of upland farmers without considerable misgivings. The Department of Agriculture for Scotland produces one of the most valuable booklets published on agriculture, called "Scottish Agricultural Economics". There is a wealth of information to be found in it, and it is published in June of each year.

One needs only to look at the latest issue, for June of last year, to see that, in the three years beginning 1964–65 and ending 1966–67, both the numbers of sheep and cattle in Scotland and the tonnage of beef and mutton sold in Scotland were down. I will admit that it is not all that much of a fall, but it is quite definitely perceptible. That is despite the call in the National Plan for an increase in beef production to the limits of technical possibilities.

What disturbs me perhaps even more —certainly just as much—is that, while numbers and tonnage have been coming down, if one takes the subsidies and grants paid to these sectors over those same three years, they have been going up at quite a considerable rate. One would expect to see a response from that, but in fact no response has been forthcoming. This makes me have the gravest doubts, which I have been holding for some time, about the rightness of the system of support which we have at the present time. Many of my hon. Friends have drawn attention to the need for a swing over from a system of Treasury support to one of import levies. It is most significant that subsidies between 1964–65 and 1966–67 have risen by 40 per cent.

Turning to the net incomes which upland farmers have enjoyed in those three years—perhaps enjoyment is describing them very much more knowingly than the situation merits—in every single acreage bracket on upland farms there is a decline in net income to the tune, on average, of 12 per cent. So, too, if one looks at the figures for output of either beef or mutton from these upland farms.

The return on capital which is enjoyed by an upland farmer is received with absolute incredulity by any businessman, so low is it. As my hon. Friend the Member for Banff (Mr. Baker) has pointed out so rightly, there are no alternatives open to these upland farmers. They cannot grow wheat. Even if General de Gaulle were to allow us into Europe and we were to get the European price for wheat, I doubt that it would be economic Dr wise to grow wheat on the top of Ben Nevis.

I know only too well from my own experience that lamb prices, which provide me with much of my farming income, though better than they were last year, are still far lower than in 1964, while costs have gone soaring up. I subscribe to the comment made by my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) about how one is expected in these areas, which are mostly a long way from the market, to absorb the extra costs that will be imposed by the Government's Transport Bill. I hope that the Minister will be able to explain that to us.

There is, quite frankly, a terrifying instability about a situation in which over 100 per cent. of an upland farmer's profit comes from Government support. If ever there was a situation in which a building is built upon shifting sand, one has it here.

There is no doubt that a considerable area is open to us in import substitution. Every year the United Kingdom imports meat to the value of very nearly £400 million. Scotland produces about £155 million worth of meat at the present time. We supply only 76 per cent. of our own market in beef and we supply oily 43 per cent. of our market in mutton and lamb. If one considers all meat, and averages it over the board, one sees that we supply 48 per cent. of the lot.

Scotland is particularly suitable for meat production, and the expansion thereof. We have had extremely good results. In the 10 years prior to 1964, the size of the hill cow herd in Scotland doubled. We could still get a tremendous increase. There is no doubt about this, provided that the proper conditions are created for it to happen.

I subscribe to the point made by several hon. Friends that the most alarming decrease in the Estimates is that which refers to the use of lime. I would go so far as to say that we should start thinking in terms of using more lime and more slag—and possibly subsidising these to a greater extent—and carrying more stock. This might be a way of substituting to a certain degree the present system of headage payments.

I believe that the reduction in the use of lime is symptomatic of a shortage of cash in the hands of those who would like to use it. I think it not unfair to say that, generally speaking, farmers on the low ground are more fertiliser-minded —and I include lime in the general category of fertilizers—than those on the uplands and high ground, in that if cash gets tight that is one of the things the latter tend to cut down, with, I believe, disastrous results.

I do not wish to suggest that everything is up to the Government. There are many things which hill farmers would do well to consider, and would if they had more confidence in the future. One of these is to improve grazings to enable them to keep more stock on them, and with any luck not sell so many lambs as stores, but fatten them and sell them direct to the fat market.

Secondly, they should go in for better marketing. I hope that they will read the report commissioned by the Scottish N.F.U. on the proper marketing of store stock, because there is tremendous scope for improvement here.

It is, however, up to the Government to create a climate of confidence in which people will adopt the methods which I have suggested. Meat production is vital to the prosperity of Scottish agriculture. It is far more important to Scottish farming than it is to its English counterpart. I think I am right in saying that one out of three sheep in the United Kingdom lives in Scotland, and about one out of five cattle live there. As one of my hon. Friends said, the hills form a reservoir for the finished article from the low ground. If we cut off the reservoir by making things uneconomic and anprofitable, and discourage production there, there will be widespread ripples and repercussions everywhere in the industry.

I hope that the hon. Gentleman will show himself fully appreciative of the situation, and thoroughly clued up about the importance in the coming Price Review of giving encouragement to a very important sector of the agriculture industry.

11.20 p.m.

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

The debate has extended widely. I take the point that, generally, all things stem from this source. I recognise the importance of meat in the Scottish economy. With the best will in the world—and I do not always accuse hon. Members opposite of having the best will in the world—it is difficult to restrict our remarks to the immediate Vote with which we are concerned.

One difficulty in replying to a debate of this nature is that a Minister is asked to give assurances in a situation in which no assurances can be given. Many of the points raised fall to be dealt with in the Annual Price Review. I take the point about the decrease in the number of lambs, and the consequence. It is an example of the kind of valuable lesson that we can learn from a proper interpretation of the situation. I also take the point made by the hon. Member for Edinburgh, West (Mr. Stodart) that there is a tendency for the lower land farmers to be more fertiliser-minded, and that it is not only a monetary question.

I cannot pursue some of the questions in terms of the forthcoming Annual Price Review —

Mr. Buchanan-Smith

I appreciate the hon. Member's difficulty in giving assurances, but can he at least confirm that the points that we have raised will be considered in the Price Review negotiations?

Mr. Buchan

I was going to have a brief look at this and tie it up with the point hinted at about the importance of this sector in the present economic situation—the question of import-saving in the post-devaluation period. The Government must pay attention to this aspect. On the point he raised, the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) should know my right hon. Friend and me well enough to know that particular Scottish interests will not go unrepresented at any discussion about the Annual Price Review. I hope that they will give us credit at least for that.

An interesting point was raised—it comes up every year; it has done so even during the period of the previous Administration—concerning the question whether the Price Review is held at the right time of year. This year, because of the need of the farming industry to know where it stands in the post-devaluation situation, we made certain statements in advance, and we are trying to push through the technical discussions a little earlier this year than in the past. In this debate I cannot follow the general argument as to whether this is the right time of the year.

There are many things to think about in terms of the Annual Price Review, and we should be more concerned in seeing that the right answers are arrived at. It would appear from what was said by some hon. Members that one or two useful things began to happen in this sector in connection with the Review. I take the point about the 27 months—the period of time that has to be added before there is a return on an animal. Nobody can deny that there was a considerable restoration of confidence last year, as compared with 1966.

One of the reasons was the presence of a Labour Government, because Labour Governments have always had a natural ally in the British farmer—although that fact is not always reflected in certain terms—from the time of Tom Williams. At present there is a clear understanding that some of the solutions put forward by hon. Members opposite are not the best ones.

I appreciate the great interest of the right hon. Member for Argyll (Mr. Noble) in hill sheep. He will know that there is a good deal of confidence, much of which is due to the existence of a Labour Government.

Mr. Michael Noble (Argyll)

Does not the hon. Gentleman realize—and I know he is taking a very great interest in this industry—that it hardly does justice to what he is trying to say when the extra subsidies have amounted to 40 per cent. but the income has dropped by 12 per cent. during the three years of the Labour Government. Farmers are not as stupid as that.

Mr. Buchan

I have never suggested they were. The suggestion of them being unable to interpret figures does not come from me. But I take the point completely. The solution is put forward of, on the one hand the import levy, and on the other hand that the real panacea is an the end price. However, with respect. I do not think is of itself a panacea. I accept the importance of it, but I think this inordinate and curious faith in the fair working of an open market system, the end price and so on filtering back to the primary producer, does not necessarily work out so simply.

I think it would be wrong for us at the present time to think of scrapping the whole laborious system of subsidies in order to substitute something purely based on end price and hope that it affects the industry in the right way. This, I think, is a shibboleth. It may be that a different balance between the two might be the right answer, but I think hon. Members go overboard on this point and tat they are going overboard in the wrong direction.

Mr. James Davidson (Aberdeenshire, West)

Would the Minister admit that what the farmers are really after is a managed market that will be achieved only by some form of import regulation?

Mr. Buchan

I am merely saying that on the question of direct subsidies of o le kind or another—hill sheep, winter keep and so on—these cannot precisely be tied to development of a particular sector in terms of a managed market.

It is important that we do not go overboard on this. I think the hon. Member probably agrees with the point I am making here.

One or two points were made to the effect that the increase in the winter Estimates showed an inadequacy of planning. Of course, I could accept that there has not been the adequacy of planning in our agriculture that we might have had, although agriculture is one of the best planned industries we have in Britain despite that. But it does not follow that increases in the Winter Estimates are due to any inadequacy of planning.

One of the interesting increases, if I can find it, was the figure of £500,000 on the original estimate for the hill and upland sheep subsidy. It has now gone on the Winter Supplementary Estimate at over £2 million. This was not lack of planning; this was recognition that when we brought forward the payment in the previous year, the 15s. remained a payment to be made plus the addition to be paid with the change of year, and this made this kind of thing inevitable. Similarly with the Supplementary Estimate on the winter keep grant of an additional £445,000. This stemmed from the fact that we introduced yet another benefit, the question of the option, and the whole point of an option is that people choose what it is they think best and tend to draw more money from Government revenue, and so there is an inevitable increase in this. But this, of course, makes sense. Similarly, the hill cattle subsidy. This again is not so much inadequacy of planning as, to some extent, successful planning. There were more cows, more cows were eligible for subsidy, and the subsidy was increased.

The original Winter Supply Estimate for the calf subsidy went up by £170,000 and this was also due to the increase in the calf subsidy of £1. As I list these, I am astonished at the failure occasionally to recognise the volume of additional points which we brought in last year precisely in this sector and I hope that it will begin to show results. I am sometimes depressed by hon. Members opposite—I am frequently depressed by them, come to think of it—when they use this opportunity not only to bring legitimate pressure to bear to direct one's thinking on what they think are the correct lines in the Annual Price Review, but also to produce a much stronger than necessary mood of depression.

This disappoints me, because another thing which we should consider is not only the system but the need for different methods in fattening and in considering the whole complex of hill lands and uplands and to see what technological change is possible to assist in this. The hon. Member for Edinburgh, West will know a number of names concerned in a great deal of experimentation on these lines, and I am pleased that much research is going on. We should not think that an increase in the end product will solve the problem of hill sheep farming. It involves many other factors. It means more research, more prolificity, better husbandry and building methods, as well as opening up marketing opportunities. Like the hon. Member for Banff (Mr. Baker), I pay tribute to the Scottish Quality Lamb Association, which is a great step forward since expansion of this market will benefit every one. This was launched last year and I hope that it will continue, because this kind of imaginative step is also necessary.

My conclusion is the usual one in these cases; things are neither as bad as hon. Members opposite say, nor as good as we sometimes say, but there is no reason for depression. Fortunately, with this natural alliance between the farmers and a Labour Government and the intelligent application of Socialist planning and thinking over the Annual Price Review, despite what hon. Members opposite say, we will solve our problems.