AGRICULTURE (BANK LOANS) (Hansard, 18 July 1968)

§ The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie)
I beg to move, That the Grants for Guarantees of Bank Loans (Extension of Period) Order 1968, a copy of which was laid before this House on 28th June, be approved. The purpose of this Order is quite simple. It extends by five years the present period of three years ending on 31st March, 1969, during which a guarantee given for a bank loan made at the normal interest rate for an agricultural or horticultural business may be eligible for grant under Section 64 of the Agriculture Act, 1967.
The original Government-backed guarantee scheme was introduced in 1964 for horticulture. It was extended to agriculture in 1965, and the whole was consolidated in the Agriculture Act, 1967.
The guarantees are to help farmers, growers and co-operatives who, though otherwise credit-worthy, cannot provide sufficient collateral security to obtain loans in the normal way. For example, there is the young progressive fanner who has not had time to accumulate collateral but who wants to improve his farming and his business.
The guarantees are operated through the Agricultural Credit Corporation and the Agricultural Finance Federation, who charge 1-1½ per cent. for the service. Government grant is payable only towards any expenditure incurred by these institutions if and when it becomes necessary to implement a guarantee. Any claim made on the Government in respect of such a default is at present limited to a maximum of 85 per cent. of the loan. The bank and the Agricultural Credit Corporation or the Agricultural Finance Federation bear the remainder.
By the nature of the problem it seeks to tackle, this is a scheme for a minority of farmers and growers. Nevertheless, I am sure that hon. Members will agree that it is a useful scheme for those who need it. Loans guaranteed under the present scheme amount to about £1¾ million, and so far defaults have occurred in only three cases, totalling £52,000.
The demand for these guarantees continues. Under the 1967 Act the original 1810 period for them ends next March, but the Act provides that it may be extended by my right hon. Friend for periods up to five years at any time, subject to the approval of the Treasury and the consent of this House. My right hon. Friend proposes to extend the period for a full five years and that is the sole purpose of this simple Order. I am sure that hon. Members will agree that this is right, and I commend the Order for the approval of the House.

§ Mr. Bryant Godman Irvine (Rye)
On behalf of my right hon. and hon. Friends I welcome the scheme put forward by the Minister. The hon. Gentleman said that about £1¾ million had been put up in relation to this scheme. According to the information which I have, that covers about 250 separate grants. According to my arithmetic that appears to be an average of about £6,600. Do the grants go mostly to the small man, or the big man? Do they go mostly to agriculture, or to horticulture? Perhaps the hon. Gentleman could say which parts of the country make most use of these grants.
The Minister said that £52,000 were outstanding as a result of bad debts. What has he done about these? How are they recovered? I understand that there are only three claims for £52,000, and it would be interesting to know what policy the Minister adopts in these cases.
Finally, I congratulate the hon. Gentleman on the fact that he has given us plenty of notice of his intentions about the scheme. The present arrangements do not run out until 6th April, 1969. We therefore have notice for five years, whereas the last scheme worked for only three years. This means that the Minister has considerable confidence in the future of this scheme. The debate may be of particular use because, as far as I understand it, not many people in the part of the country which I represent know that the scheme exists. I know that this fact has been brought to the Ministry's attention in the past, but I think that it would help if more people knew about this scheme.
I understood that the amount outstanding in December, 1967, was £1,450,000. The figures that I had for April, 1968, was £1,650,000. The Minister says that it is now £1,750,000. Thus, it does not 1811 seem to have risen as fast between December, 1967, and today as the Minister would like, or indeed as the agriculture industry would like.
We know the economic climate of the country. We know that there is a credit squeeze, but I think that if this scheme were brought to the attention of those who might make use of it more than has been the case in the past it might be of considerable value. The Minister is always telling us about the importance of agricultural expansion, and when he is not telling us about it we are trying to tell him how much we think it ought to be expanded. This scheme seems to be a valuable contribution to the possibility of agricultural expansion. I therefore commend the scheme to the House and ask the Minister to take the opportunity of seeing that it is brought to the attention of all those who might use it.

§ Mr. Mackie
The answer to the hon. Gentleman's question is that one-third is for horticulture, as against two-thirds for agriculture. I cannot give him the geographical breakdown. The scheme is used pretty well all over the country. No particular geographical location has more difficulty in getting credit than any other does.
I agree that the amount is not great, but I think that the period of restraint and the high interest rates which obtained rather cramped the Corporation's style As for publicity, I have a feeling that most farmers know about this, but it is a little more expensive than the Bank rate and it is for a particular class of people whose collateral does not allow them to borrow otherwise. Most people know about it, but 1 hope that this short debate will give it a little more publicity. We shall give it as much publicity as possible.