HC Deb 11 March 1968 vol 760 cc986-91
The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

With your permission, Mr. Speaker, I should like to make a statement with regard to further help for the farms hit by the foot-and-mouth epidemic.

The main problem of restocking will be the pressure on the market for milking animals. I am glad to be able to announce that, with the agreement of the Treasury and subject to Parliament's approval of the necessary Supplementary Estimate in due course, I propose to introduce a new scheme to help with this problem.

Under this scheme grant at £20 a head will be paid on the number of slaughtered dairy herd milking animals which it is estimated would normally have been replaced before 1st October, 1968, but whose replacement is deferred until after then through the farm embarking upon a suitable alternative enterprise. In helping to keep the market for milking animals stable, the scheme will benefit all restocking farmers. It should give them confidence that they need not feel obliged to pay unreasonable prices for replacement stock. It will complement the £10 per acre special ploughing grant which I have already introduced. It will particularly help farmers whose land is not suitable for ploughing. My Department has worked very closely with the National Farmers' Union on the scheme, and the Union has given it a warm welcome. Details will be announced shortly.

On compensation, I recognise the problem resulting from market values for some stock being lower in the early weeks of the epidemic than later on. The valuation records show that it bears mainly on the first four weeks and on cattle other than specially valued pedigree stock and bulls. But there are real difficulties in increasing the rate of compensation paid in respect of the earlier outbreaks. Moreover, to the extent that prices of replacement stock may rise, it is other farmers who will benefit from the increases. Also, the milk returns of other dairy farmers have increased this year because of the epidemic.

Nevertheless, the Government are prepared to help in this matter—and so, I am glad to say, is the industry. The hardship caused by the lower market valuation of earlier compensation for cattle could be reasonably offset at the cost of about £500,000. I have been having discussions with the National Farmers Union about a scheme under which the industry would contribute up to half this sum and the Exchequer would contribute £1 for £1, subject to Parliament's approval of the necessary Supplementary Estimate in due course. I am glad to say that this has been agreed in principle on behalf of the industry by the National Farmers Union, which is discussing administrative arrangements with the Milk Marketing Board. There are some difficulties to be overcome, but if the industry succeeds in providing its share of the cost, details of the scheme will be announced as soon as possible.

Restocking has now begun in some of the areas where infection was lighter and is being as quickly as possible extended to other areas under suitable safeguards. Together with all else that is being done—including the special £10 ploughing grant, the taxation concessions, the help of the Ministry's Advisory Services, the encouragement of existing grant-aid schemes and the National Farmers Union's restocking scheme—these new measures should enable the exacting task of bringing each farm into full production again to be well planned and carried out wisely and steadily.

Mr. Noble

The House will be pleased to hear from the Minister that more action is being taken to help farmers in this sector in the way he has explained. I have one or two questions to put on matters which are not clear to me from his statement.

There are two parts to the arrangements which he has announced. The first, as I understand it, is the £20 per head scheme, which, I gather from what he has said, is designed particularly to help those places where the land is not suitable for ploughing. Why, therefore, has the right hon. Gentleman chosen 1st October as the date, and who is to say what a suitable alternative enterprise is? Is the latter a matter which the Government will decide on their own?

On the compensation side, it seems that administrative arrangements are being discussed with the Milk Marketing Board. Does this mean that the Government's view is that the money which is to come from the industry will have to come from a milk levy? If so, is that the fairest way? It seems to me that the people who stand to gain the benefit may well be those who are selling the dairy cattle. Are they in some way to contribute to the industry's share? Finally, is the right hon. Gentleman satisfied that, in the case of this outbreak, nothing is needed to compensate in any further way either beef or sheep interests?

Mr. Peart

We think that 1st October is the right date, and we have made an estimate in regard to those who would be affected and would qualify. Grant will be paid only if a farmer replaces by 1st October less than 60 per cent. of his animals. We consider that 1st October is right.

The question of the alternative kind of enterprise is a matter on which we would advise the farmer. We would have consultation through our N.A.A.S. officers. It would depend very much on the farm and its equipment. The farmer may need young dairy stock, he could need beef cattle, he might wish to have cropping for hay, and so on. This is essentially a matter on which the N.A.A.S. should give advice, and we shall do it in that way.

I could not commit myself on whether there would b a levy. This is a matter about which the union will have discussions with the Milk Marketing Board. It could well be that this will be the system, but there will be a contribution from the Government on a £1 for £ 1 basis. The details are still being discussed by the unions.

On the right hon. Gentleman's last question, I think that what we have done in the circumstances is right and reasonable, and I cannot go beyond it.

Dr. John Dunwoody

I assure my right hon. Friend that his statement today will be widely welcomed in the rural communities. Could he now make an estimate of the total cost to the Exchequer of this epidemic?

Mr. Peart

I could not do that as yet. What I have announced today could affect the Exchequer to the extent of approximately £500,000, that is, £250,000 for one scheme, linked with £250,000 from the industry—which will be £500,000 to the farmers who will be affected—and the alternative enterprise scheme could cost the Exchequer something in the region of £250,000.

On e wider question of how the industry has been affected by foot-and-mouth disease, it is very difficult to give an estimate. The compensation is well over £30 million, but the consequential losses are considerable.

Mr. Biffen

The right hon. Gentleman said that he had been discussing these arrangements with the industry. As a result those discussions, has he had an indication that the N.F.U. insurance for consequential loss, which is related to the original compensation paid by the Ministry, will be revised in view of the increased compensation which can now he paid in certain circumstances?

Mr. Peart

That point has been put to me. I cannot be precise or definite. It is a private arrangement outside my responsibility. It could well be affected, but I cannot be sure. I would rather be frank with the hon. Gentleman and say that.

Mr. Dalyell

Could my right hon. Friend say something of the financial arrangements in those cases in which the Army has done very valuable work in preparing the conditions for restocking? Credit is due to the Army, is it not?

Mr. Peart

I have always paid tribute to the Army and the work that it has done. I cannot be precise about the cost of employment of troops. I do not think that we would want to ascertain it. The fact is that this help was given.

Mr. Hooson

As the Minister has had many brickbats thrown at him, and will have more yet in regard to the epidemic, will he take it that the news which he has given will be generally appreciated? I should like to ask two questions. With regard to the first scheme, is it intended to pay the money after restocking has taken place after 1st October? As to the second scheme, is it intended or envisaged that the contribution made by the industry will be, as it were, across-the-board in the dairy industry?

Mr. Peart

On the latter point, as I have said, the National Farmers Union is having discussions with the Milk Marketing Board. I cannot say precisely what will emerge from their discussions. It could well he as the hon. and learned Member suggests. That was why I had to give the answer which I gave to the previous question about the possibility of a levy. On the question of the date, it will be for farmers to apply now if they wish.

Mr. Grant-Ferris

Is the Minister aware that I certainly could not, on behalf of my constituents, give unqualified approval to what he has said up to now? We need a much closer look at the position to see how it operates in all fairness. Will the Minister say, however, whether the drainage grant, which he knows about, could be applied to people drawing the £20 allowance?

Mr. Peart

That is an interesting point. I have suggested that there could be alternative enterprises. There are many ways in which help could be given. Certainly, this suggestion could be considered and I shall look at it. The N.A.A.S. would advise individual farmers.

I am sorry that the hon. Member cannot give unqualified approval. All I can say is that the scheme has been welcomed by the industry.

Mr. Temple

The Minister has said that the whole agricultural community will make a contribution towards the compensation payments. Does that include Scotland as well as England and Wales?

Mr. Peart

It could well be that farmers outside the area would make a contribution to help. This is why, in a sense, the scheme which has been suggested and agreed in principle can be an attractive one.

Sir G. Nabarro

While expressing my gratitude to the Minister on behalf of Worcestershire farmers, who, I am sure, will welcome the announcement which he has made today, may I ask whether he realises that there was great dubiety last Wednesday night about the taxation of compensation for foot-and-mouth disease? Will the right hon. Gentleman assure the House that neither the £20 per head nor the £10 per acre ploughing-up grant following foot-and-mouth affliction will be assessed to Income Tax, Surtax, Corporation or Capital Gains Tax?

Mr. Peart

I cannot say that about the subsidies which are given in the normal way. The normal law applies. I have looked carefully at what the hon. Member said the other day when he asked about Corporation Tax. The three-year concession, which has nothing to do with what I have announced now, applies to Corporation Tax, too. Individual companies would, however, be well advised, before electing to make use of this concession, to consult their tax advisers.

There is no liability to Capital Gains Tax on any part of the compensation which is used to replace a slaughtered animal by a similiar animal within five years. I have followed up the point rightly raised by the hon. Member last week. What I have said now should make clear whether any particular subsidy is covered.

Mr. Peter Mills

The Minister's announcement will, of course, be of help to the farmers in question, but can the right hon. Gentleman help them in the very real problem of how they can retain their cowmen and others who are leaving at an alarming rate? That is the real problem in the present situation.

Mr. Peart

The release of labour is another matter. In the areas in which there was the foot-and-mouth epidemic this was a real problem at one period, and I confess that I was worried about it, as were the leaders of the industry, but the position has now settled down.