AGRICULTURE (GRANTS)

HC Deb 07 December 1970 vol 808 cc135-62

8.6 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. James Prior)

I beg to move, That the Farm Capital Grant Scheme 1970 (S.I., 1970, No. 1759), a copy of which was laid before this House on 1st December, be approved.

Mr. Deputy-Speaker (Miss Harvie Anderson)

I think that it might be for the convenience of the House if with this Motion we were to discuss the following: That the Farm Capital Grant (Scotland) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved. That the Ploughing Grants (Variation) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved. That the Ploughing Grants (Scotland) (Variation) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.

Mr. Prior

I am glad, Mr. Deputy-Speaker, that you agree that the House might find it convenient to discuss these four Schemes together, because they are all closely related.

I will deal first with the Farm Capital Grant Scheme and the corresponding Scheme for Scotland. These replace most of the existing capital grants with a single unified Scheme. The aim of this exercise is, first, to recast the capital grant arrangements in a form more suited to the organisation of farming today and so make more effective use of available funds, and, second, to replace the differing requirements of the present schemes with fewer, uniform conditions and to reduce paperwork.

As will be seen from Schedule 2, or from Schedule 1 to the Scottish Scheme, the Schemes cover broadly the same items as the arrangements being replaced, except that plant and machinery will not be eligible for grant. There are minor differences in the coverage of the Schemes for Scotland and for England, Wales and Northern Ireland to take account of different legislation relating to drainage and of different agricultural practices.

The standard rate of grant under the Schemes will be 30 per cent, of eligible expenditure. Higher rates of 50 per cent, are payable on certain works and facilities for the benefit of hill land and remodel- ling works certified as a consequence of an amalgamation or boundary adjustment approved under the Farm Amalgamations and Boundary Adjustments Scheme. The highest rate is 60 per cent. on field drainage for the benefit of hill land.

Applications received or approvals issued by 18th March, 1972 will attract an additional 10 per cent. grant to give effect to the increased rates announced at the same time as this year's Annual Review determination by the right hon. Member for Anglesey (Mr. Cledwyn Hughes).

The works and facilities on which smallholdings authorities may qualify for the 10 per cent. supplement payable under Section 51 of the Agriculture Act, 1970 in connection with approved proposals for the reorganisation of smallholdings estates in England and Wales are listed in sub-paragraph (2) of paragraph 3 of the main Scheme.

In fact they include all the works and facilities with the exception of two, one of which is drainage and one of which applies only to hill land, where the rates of grant are already 50 per cent. To qualify for grant, expenditure of a capital nature must have been incurred in connection with an agricultural business. Under sub-paragraph (2) of paragraph 4, the agricultural business must be one which is capable of yielding a sufficient livelihood to an occupier reasonably skilled in husbandry. The intention initially is to regard a net farm income of £880 a year as representing a sufficient livelihood in Great Britain. In Northern Ireland the statutory minimum wage for agricultural workers will be used, reflecting the different structure of farming in that country. For the future, the figures will be increased in line with increases in the statutory minimum agricultural wages.

I mean that in the country as a whole each year the sufficient livelihood test, as it were, of farm income will go up by a figure in line with the minimum agricultural wage. Under paragraph 4(1), bare land holdings will not be eligible for grant on the full range of works and facilities listed in the Schedule. The purpose of that is to avoid the splintering of agricultural holdings. Some bare land will qualify. An exception is made, however, where a bare land holding was created more than five years before an application is made under the Scheme; or where the land in the holding is newly reclaimed for, or restored to, agriculture; or where the separation of the bare land from an equipped holding was not contrary to the interests of good estate management.

Agricultural businesses which fail the sufficient livelihood or bare land tests will still be eligible for grant on certain items—this is important—mainly land operations—provided these would continue to be of benefit to the land occupied by the business if it subsequently became part of a larger unit through amalgamation. That includes such items as drainage and so on.

The Scheme will differ from some existing schemes in not having tests of whether the proposed expenditure is prudent and economically worth while. In future we shall leave those matters to the good sense of the applicants themselves. What we are really saying is that if the applicant is prepared to put down his money, the Government for their part will be prepared to back it by their grant. But, of course, there will still be pretty stringent tests to see that the money is being properly spent. But, as announced at the last Annual Review, grants will not be paid on expenditure totalling more than a ceiling figure of £100,000 in respect of any single farm unit in any two-year period. A further difference will be that the "benefit to the land" test of the present Farm Improvement Scheme has been dropped.

Expenditure which has qualified for the higher rate of agricultural investment grant introduced on 19th March, 1970 will count towards the ceiling of £100,000. The level of the ceiling, which we must watch carefully, will be subject to review. The ceiling will be applied administratively, as it is under the existing arrangements for the agricultural investment grant on fixed equipment.

In administering the Scheme we shall also require the cost of the eligible work included in any one application to be at least £100, as under the current Farm Improvement Scheme, and that the proposed works and facilities are not unreasonable in cost. Applicants will still be required to obtain written authority from the Ministry before starting work.

As in the past, applicants will have the choice of claiming grant on either the actual expenditure or standard costs. I hope, incidentally, to introduce a new set of standard costs in February to coincide with D-day. In the meantime existing standard costs will apply.

Finally, under paragraph 7 of the Schemes, grant may be reduced or withheld where it duplicates other assistance or frustrates the purposes served by other grant-aided works or facilities. This is standard practice under most existing schemes.

As I have already said, no further grants will be paid on plant and machinery. However, after this was announced approaches were made to me on the subject of bulk milk tanks, for which there is still a considerable demand. When the Farm Improvement Scheme was extended originally to cover plant and machinery, these tanks became eligible for grant and the current rate of that grant has been 40 per cent. This is a substantial grant, and those dairy farmers who wish to install bulk milk tanks and can still qualify for the grant by applying between now and 31st December would do well to take advantage of it. If they apply now and if they qualify in this way, they will get the 40 per cent. grant and the 60 per cent. initial allowance on the remainder. So they will do very well indeed. That, incidentally, applies to other plant and machinery including tractors and combine harvesters.

I should emphasise that the amount of help available to the farmer wishing to switch to bulk milk collection is now very large. In addition to the grant under the Farm Improvement Scheme, the Milk Marketing Board has received an allowance of ⅜d. a gallon for five years on new bulk milk and we have recently extended this until 30th September, 1973.

Since the Milk Marketing Board also gets a premium of ½d. a gallon for bulk milk from the buyers, and since the Board can use the proceeds of the ⅜d. a gallon in the way which gives incentives where they are most needed, the Board has been able to pay a premium of as much as 1.3d. a gallon to some small producers for the first three years after they change to bulk, with a premium of ½d. a gallon thereafter. The premium enables milk producers to recover a substantial part of the cost of a bulk milk tank over the first three years of operation.

Under the Farm Capital Grants Scheme the grant of 40 per cent. on bulk milk tanks will disappear. It is a general principle of the Scheme that decisions on investment in plant and machinery should be left to the industry. The grant will be replaced by the new system of tax incentives. There will be a first year allowance of 60 per cent. of expenditure on a bulk milk tank, with a writing down allowance of 25 per cent. of the reducing balance in subsequent years.

It has been pointed out to me that this would be somewhat less favourable for the farmer wishing to install a bulk milk tank. I know that, in spite of the allowance of ⅜d. a gallon to the Milk Marketing Board, to which I have referred, and the new tax allowances, the industry has been concerned about this.

Successive Governments have recognised the advantages to the consumer as well as to the producer of more bulk collection of milk, both because of the economies of handling and on grounds of hygiene. I have to tell hon. Members from north of the Border that much better progress has been made in Scotland with this Scheme than in England and Wales where it is estimated that only about 45 per cent. of the total gallonage is collected in bulk.

Obviously the full economies of bulk collection are felt only when a receiving dairy is handling all its supplies in bulk rather than by a mixture of bulk and churn. We have, therefore, agreed that the allowance to the Milk Marketing Board, in respect of milk converted to bulk collection between now and 30th September, 1973, and not qualifying for farm improvement grant, should be raised from ⅜d. to ⅝d. a gallon for five years. I am sure that this will be welcomed by dairy farmers and the Milk Marketing Board. The Milk Marketing Board will, no doubt, adjust its premiums in the way that should give maximum incentive for further bulk collection. In broad terms, what we are now doing will offset the effect of withdrawing the capital grant.

I turn now to the Ploughing Grants (Variation) Schemes, which also were laid before the House on 1st December. Hon. Members will know that the Ploughing Grants Scheme is being replaced by the Farm Capital Grant Scheme. The purpose of the Variation Scheme is to make 31st December this year the last date for receipt of applications under the 1970 Scheme. Applications must reach the Ministry's divisional offices by that date to qualify for the £12 ploughing grant.

Farmers whose applications are approved will have until 31st May, 1971, to carry out the work. After 31st December, it will be possible to apply under the Farm Capital Grant Scheme for a 40 per cent. grant on the cost of ploughing land of the type which is eligible for the £12 grant at present.

I am confident that the Farm Capital Grant Scheme will enable us to give more effective help towards profitable investment by ending outdated restrictions and streamlining the various and complex procedures of the existing grants. I am, therefore, happy to have had the opportunity of explaining it and of introducing it to the House tonight.

I am glad to acknowledge that the Scheme is based on the legislation which was brought forward by the right hon. Gentleman the Member for Anglesey (Mr. Cledwyn Hughes) earlier this year. He and his hon. Friends began the job. We have been able to carry it through to completion now, and I hope that it will have a favourable reception. The Scheme will considerably simplify the task of the farmer in applying for grant and the task of the administrator in deciding whether a grant is available. I believe that it will lead to all-round economies in the management of the Farm Capital Grant Schemes, and for all those reasons I invite the House to approve the Schemes.

8.21 p.m.

Mr. Cledwyn Hughes (Anglesey)

This has been the Minister's first speech at the Dispatch Box since he assumed office. We welcome him, and we are grateful to him for coming to address the House, in spite of having a bad cold. In wishing him well, I congratulate the right hon. Gentleman on selecting a safe subject. He was good enough to acknowledge that the Farm Capital Grant Scheme and the other Schemes stem from an Act for which I was responsible.

May I at the same time welcome to the Opposition Front Bench my three hon. Friends the Members for Brentford and Chiswick (Mr. Barnes), for Merioneth (Mr. William Edwards) and for Caithness and Sutherland (Mr. Maclennan)? One could not have a wider territorial variety to bring colour to the agricultural scene, and I am sure that the House wishes them all well. I feel certain that they will make a valuable contribution to our discussions on agriculture.

As I said on the Second Reading of the Agriculture Bill and during its Committee stage, I thought that the time had come to look at the range of schemes which had developed over the years and to simplify and rationalise them. I look back to the Committee stage with mixed feelings. As those hon. Members who served on the Standing Committee will recall, right hon. and hon. Members opposite made it as long and as arduous an exercise as they could, and we were lucky to get the Act before the dissolution of the last Parliament. However, "All's well that ends well", and the Government are now implementing the Act's provisions. I congratulate them on so doing. What is nonsense in Opposition often makes good sense in Government.

I am sure that farmers generally will find the new Scheme much more satisfactory and effective. As the Minister said, it will save them a good deal of paper work. That was one of the objects which I had in mind, for as I went about the country meeting farmers, agricultural executive committees and branches of the union it was invariably put to me that farmers were overburdened by paper work. The Act and this Scheme under it will cut down that work substantially.

The other important point was that, although there should be less paper work, there was not to be any the less money. I hope that the Government will stick to that, too.

The Scheme implements the increased rates of grant which, as the right hon. Gentleman said, I announced in the Price Review statement last March. The main object of the increases was to inject money into the industry in the most effective and meaningful way after an admittedly difficult period for many farmers during 1968 and 1969. I was criticised at the time of the Review statement by right hon. and hon. Members opposite, sometimes in the most extreme language. It is worth noting that after six months in Government and having had ample time to reconsider the position, the Conservative Party has decided that the Scheme and the increased rates are worth putting into effect. I am grateful to the Government for that amount of conversion. Even Governments, from time to time, travel the road to Damascus.

I shall not deal with all the works and facilities covered by the Scheme because I have done that in detail before on more than one occasion, but I shall refer to one aspect of the Scheme which, I know, the Minister takes as seriously as I do. I refer to the problem of field drainage.

The unusually wet weather of 1968 and 1969 brought the importance of field drainage home to us in no uncertain terms, and, as we all know, there is a tremendous amount of work to be done throughout the country before we can begin to be satisfied that our drainage is up to a reasonable standard. The use of heavy machinery has contributed to the problem, and draining, re-draining and ditch maintenance are of the utmost importance. We must hope, therefore, that farmers will take the maximum advantage of the new rates of grant, as they are operative for a limited period. Perhaps the Under-Secretary of State for Scotland will tell us something of the progress which has been made in uptake of grant since I made the announcement last March.

The House may recall that 12 months ago I invited the Agricultural Advisory Council, under the chairmanship of Mr. Nigel Strutt, to look into the problem of soil fertility and soil structure in this country. Its report, when published, may well have something of importance to tell us about drainage, and it will certainly be relevant to the Scheme which we are now debating. Could the Under-Secretary of State tell us when we are likely to see that report? I am sure that it is likely to be a most important agricultural report, and I hope that we shall have opportunity in due course to debate it in the House.

I come now to the questions which I wish to put to the Minister. First, in what ways will farmers benefit, particularly small farmers who in the past have sometimes found difficulty in taking advantage of these schemes? What will be the administrative savings resulting from the simplification?

Second, may we have an assessment of what the effect of the Scheme will be on capital investment in the industry?

Third, the right hon. Gentleman referred to an exceptional arrangement—this is paragraph 4(1) of the Scheme—relating to certain bare land holdings. In what circumstances would these bare land holdings be eligible for grant? Can we be told more about the justification for this and the way in which the conditions outlined by the right hon. Gentleman will be applied?

The House was interested to hear what the right hon. Gentleman had to say about bulk milk tanks. He has said that the grants here will disappear. But he has announced some concessions which obviously will he welcomed, although we must study what he has said to see what the full effect is likely to be. I understand that the Milk Marketing Board is now moving with bulk schemes into areas with higher proportions of smaller producers—producers who will benefit little by tax concessions, and including, for example, producers in South Wales, the West Country and, I assume, parts of Scotland as well.

The whole of an area must, of course, join a bulk scheme for it to be financially successful. Since many smaller producers may find difficulty in raising the necessary credit to cover the whole cost of the bulk milk tank, is it not possible that the absence of these tanks from the items listed as eligible for grant aid will restrict the development of bulk collection to the detriment not only of the producers and the distributors but of the consumers as well? While I am grateful to the right hon. Gentleman for elucidating the position and making some concessions, we shall want to look at this aspect very carefully to see what the total effect will be, especially in the sort of areas I have mentioned.

The right hon. Gentleman spoke about a ceiling on the level of grants to be applied administratively. Can the Under-Secretary of State tell us more about how this will be operated—for instance, in the case of separate units under single management? This is a small but important point which should be cleared up before we see the Order through.

Again as a result of the Chancellor's statement on 27th October, the Scheme, as the right hon. Gentleman has said, does not provide for grant aid on plant and machinery, and harvesters. They will now become eligible for allowances instead. We need to look at this carefully. What will it mean for the industry? How does the Minister see it working in practice? Surely this will mean a financial loss for many of the smaller farmers. The larger farmers will benefit but many smaller farmers will not. I want an estimate of how many farmers the Minister thinks will benefit from this provision.

For example, the average acreage in Wales is substantially lower than the average acreage for the United Kingdom as a whole. How will this affect the Welsh farmers? That is the question which will be put to my hon. Friend and me when we go round the Principality during the Christmas Recess. The larger farmers will benefit, and indeed they can afford to wait for the benefit which will come from a tax allowance. But many farmers cannot afford to wait. As we all know from experience, credit is difficult for them. We need to know a little more about this proposal.

In large part, the success of the Scheme depends on the Ministry's advisory services—on the members of the Agricultural Advisory Service, of the Land Service, of the Veterinary Service and of the Drainage Service. These are the men who will be going to the farmers and discussing the Scheme with them. They are the vital link. The Farmers will decide on their advice what schemes they will put in hand, and their importance is therefore crucial. It is necessary to ask the Minister about the future of the advisory services because there is a great deal of uncertainty about it. We are told that a Departmental inquiry is going on and that farmers may be charged for some of the advice they get. But we do not yet know what will come out of the inquiry.

Mr. James Scott-Hopkins (Derbyshire, West)

I am fascinated to know how the right hon. Gentleman is relating his advice about the advisory services to the Order.

Mr. Hughes

I am sure, Mr. Deputy Speaker, that we are grateful to the hon.

Member for Derbyshire, West (Mr. Scott-Hopkins) for doing your job for you.

The success of the Scheme depends to a very large extent on the advice which is given, and, therefore, it is crucial that we should know what the future of the advisory services is to be. It has a vital bearing on the Order and on the success of the Scheme. I would he grateful if the Under-Secretary of State would tell us what the Government propose. If there are to be changes of this kind—and I think the hon. Member for Derbyshire, West will agree with me here—we shall need to debate them properly and at length. We certainly want to know what is to happen, and certainly whether certain charges are to be imposed in order again to make some small reduction in public expenditure. My fear is that the people who may lose the benefit of this advice because the cost will be inhibiting may be those who need it most. That is the danger.

Can the Under-Secretary say, therefore, when the Minister will make a statement on this subject? He has said on more than one occasion that he wants to see the farmer standing on his own feet. This generalisation needs analysis. According to the Minister's definition, farmers in the E.E.C., for example, have been standing on their own feet for a long time. But the agricultural industry in the Common Market has not been as efficient as that in this country—not by a long chalk. For all these reasons, I hope that the Minister will soon tell us what he has in mind for the advisory services.

The last sentence of Schedule 1 on page 5 caused me great pain, for it says "Wales, excluding Anglesey", which is my constituency. I am afraid I shall have to put up with that.

Subject to those points, I wish the scheme well. My hon. Friends and I give the Order our general support.

8.37 p.m.

Mr. R. H. Turton (Thirsk and Malton)

Like the right hon. Member for Anglesey (Mr. Cledwyn Hughes) I congratulate my right hon. Friend on the promptness and efficiency with which he has brought in these Schemes, particularly the Farm Capital Grant Scheme.

The hill areas of this country are deeply affected by a Bill which is going through the other place. When dealing with the problem of the hill areas, unlike the right hon. Member for Anglesey, I would say that the fencing of roads was even more important than drainage of the land. In many areas in my constituency the loss on roads which go through moorland areas is six sheep a week. That was a figure quoted only last weekend by the chairman of the Blackface Sheep Breeders Association. It would be of tremendous advantage if we incorporated into the Scheme greater encouragement for the fencing of hill roads, particularly in view of the Animals Bill. Under this Scheme, hill farmers will get a 60 per cent. grant. Will the Minister consider this problem? It may be that it is hard to ask for his Vote to pay more than 60 per cent. grant. But at present, keeping sheep off the roads and preventing their slaughter is not merely the responsibility of the Minister of Agriculture; it is a national obligation. Will the Minister consult his colleagues to see whether he could give a larger grant for this purpose in the period up to 1972, so that, from the points of view of humanity to the animals and farmers' profits, we can remedy this problem.

My right hon. Friend talked about bulk milk collection. In that connection, one important point should be borne in mind. If farms in many hill areas are to produce milk, it is vital for their economy that they should be on bulk milk collection and not on the old churn system. In most parts of the country, before contractors will convert to bulk milk collection, they must be assured that there are no gates barring the way of their bulk carriers. That means not only that roads have to be fenced but that grids must be installed. The latter requirement gives rise to great difficulty. Most highway authorities claim that it costs £750 to construct a grid, which the Ministry's Advisory Service considers completely ludicrous. But, again, cattle grids should be provided more generously in hill areas in order to get our hill farmers advanced.

As I see my right hon. Friend's responsibilities, one of his greatest problems is how to advance the efficiency of hill farming areas. Provided that the rest of his policy goes right, as I am confident that it will, I am not greatly worried about the ordinary farmer in lowland or even upland areas. But the hill farmer has many problems, and he must be helped urgently to become efficient. Roads and cattle grids are two ways in which that can be achieved and on which my right hon. Friend should concentrate his attention.

There is a third way. I notice that the Scheme refers in the Second Schedule to bracken control as being one of the objects for which a grant is given. I should like to hear how the Government contemplate this form of bracken control. Looking ahead, I think that Irish stores will cease to be a source of supply for beef production in a few years. We have to get more stores on the hills. The great drawback to that at present is the large acreages of hill land which are at present under bracken. A late constituent of mine invented the Holt Bracken Breaker, an important endeavour in killing off bracken, though it took some years and longer than the inventor thought. But it held back bracken and in some hill areas eliminated it. I believe that the way to exterminate bracken will probably be by aerial spray, as is being done with other weeds in many parts of Africa. At the moment, it is extremely expensive. I should like the Minister to attack this problem. If he could exterminate bracken in the hills, he would make a large area suitable for raising stores, and that would be extremely valuable for Britain's future.

I merely ask him to consider this bracken control, and whether in hill areas 60 per cent. is a reasonable contribution or whether there should be a larger grant for the purpose, which would be much more in the interest of the nation than those of individual farms. In the course of his administration, which I know will be very successful, I hope that he will consider this problem. We want more store cattle. We can get them from the hills if the pasturage there is not poisonous, as it is at the moment with the land under bracken.

Farm Improvement Schemes administered by successive Ministers of Agriculture have always had a stupid administrative provision, and I wonder whether my right hon. Friend has been able to eliminate it in this Scheme. In a remote area like that which I represent, anyone intending to make an improvement to a farm building finds that it is not sufficient to get a responsible tender from a local builder and that he must obtain an alternative estimate. How that alternative estimate is secured when the next builder probably is 15 miles away is best left to the imagination. I assure hon. Members that one of a sort is always obtainable after a time, but clearly it would be uneconomic for another builder to go into the problem of the cost of providing an improvement when he might have to travel another 15 miles and arrange a survey which might cost him £10 or £15. I hope that the Minister will get away from this system of alternative tenders.

I know that most people, not excluding those in the Ministry, are convinced that the present system is a waste of time. I do not want the Minister ever to authorise the payment of a grant for a tender which is extravagant, but I know from my knowledge of those who serve the Minister that having an alternative tender is unnecessary, for they know when a tender is bogus. I know that the Minister is trying to streamline administration in his Ministry and I hope that he will try to eliminate what was a waste of time when the right hon. Member for Anglesey (Mr. Cledwyn Hughes) was Minister and during the time of his predecessors, for this is a nonsense which runs across the parties. If a constituent of mine wants to improve a cottage under the Housing Act he does not have to get an alternative tender. The body which examines his application for a grant takes the trouble to see whether it is an economic tender by a prudent builder, and that is how I should like this grant to be administered.

An alternative way is to give a little more on the standard grant system so that more people work on the standard grant system than on a grant based on actual cost. The standard grant is successful except that at the moment there is a considerable difference between the amount which may be obtained under the standard grant system and what may be obtained against the actual cost. In other words, as prices are always going up, the standard grant system tends to fall behind. It would help the Ministry and eliminate much of the administrative work if the standard grant were made a little more generous. At the same time, I hope that the Minister will do away with the system of the alternative tender.

These proposals are a landmark in the history of farm improvements and the new Minister is to be congratulated on the way in which he has introduced them.

8.45 p.m.

Mr. James Scott-Hopkins (Derbyshire, West)

I join my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) in congratulating my right hon. Friend the Minister on the introduction of the Scheme. I am certain that it will make things much easier for the farmer. It will improve and streamline administration and do away with many aggravating and annoying delays. I agree wholeheartedly with what my right hon. Friend said about the standard grant, but I will not pursue that matter now.

I am delighted that the Minister has introduced a definition of hill land, which will play an important role in the future of the farming economy. In his definition he has detailed the counties within which the hill land is to be. I am surprised that he should have defined it in this way now that we are starting with a Scheme like this, and I wish that his definition had gone a little wider. Over the years there has been constant friction about whether hill land has come within the old definition. Some land in some areas is outside the counties mentioned in the definition and it will not qualify. Perhaps my right hon. Friend will consider whether the definition should not be widened as experience is gained of the working of the Scheme.

I am glad to see that it is provided that when land has been improved, as it always is by the expenditure of these grants, it will not be taken out of the definition of hill land and so be unable to qualify for further help in later years. This is a great improvement. In the past, it was one of the restrictions which caused enormous bitterness among hill farmers. They applied for grant, they got it and they used it. Their land was thereby improved, sometimes only marginally, but it was improved. They then found that the Minister had excluded that land because of the improvements which had been effected on it. I am delighted to see that my right hon. Friend has done away with this restriction. I am sure that this is right.

I am a little confused about the definition and the separation between agriculture and agricultural businesses. This applies particularly to the land and build- ings provisions in paragraph 4 of the Scheme. According to subsection (3), the Minister can make an arbitrary division between agricultural business and the land. This occurs also in the case of buildings, and so on, of agricultural businesses. Perhaps my right hon. Friend can define a little more clearly the exact difference in this context.

I am particularly glad that provision has been included in paragraph 4 that land which has no buildings on it shall not qualify for Schedule 2 grants and that land which has been hived off from a farm to form another smaller unit shall equally not qualify for grant unless, under the provisions of subsection (5), it is in the interests of good estate management.

There has been a great deal of confusion about this from Ministry officials during the past two years concerning the interpretation of the existing Statutory Instrument. There have been cases in my constituency in which Ministry officials have recommended for the purposes of the grant the splitting-off of one farm from another. Great difficulty has been caused because, accordingly to the existing provisions, this should not be done.

I imagine that there is a small drafting error in paragraph 4(3), which refers to any work or facility which is of a kind specified in any of paragraphs 4 to 17". I assume that this must refer to Schedule 2, although it does not say so. The comma at the end of the line makes this a separate reference.

There are several parts of Schedule 2 where I hope that my right hon. Friend will be able to increase the level of grant, although it is fairly generous until 1972. I have in mind particularly land which is liable to river or sea flooding, in respect of which the levels of grant after 1972 could well be looked at. The reclamation of waste land is another point which, I hope, will be considered, because this is an excessively expensive operation and I do not believe that it will be covered, or can be covered sufficiently, by the grant which will operate after 1972.

The right hon. Member for Anglesey (Mr. Cledwyn Hughes) made a cogent point concerning small farmers. I was particularly glad to hear what my right hon. Friend said about bulk milk tanks. I do not think that there is any dispute between my right hon. Friend and I on this. If possible it would have been better to say that the bulk milk tanks for a certain period of time would continue to qualify for grants. I understand his reasons for taking all fixed machinery out. It is difficult, if this is done for the purposes of grant, to start making exceptions for this or that particular type. I hope my right hon. Friend will bear in mind that the smaller farmers, be they in Wales, or Cornwall, my old constituency, or my present one of Derbyshire, West, will feel the pinch here.

True, the initial allowance of 60 per cent, brought in by the Chancellor will be there. A farmer has to make a reasonable profit to get the full advantage of this allowance, and there are some small farmers who will find it difficult to get this grant.

For some time now it has been known outside that the fixed equipment grant was coming off and would last until 31st December. The initial investment allowance was announced by the Chancellor and there has been a period of time when the two have been running side by side, the 40 per cent. grant and then the 60 per cent. on the remainder as initial allowance. It has been very nice for those farmers who have been able to get their applications accepted.

It has been brought to my notice that a lot of manufacturers of equipment are refusing or discontinuing their out-of-season discounts over this period. This is something at which my right hon. Friend should look, although I know that there is not much that he can do. It is a practice which I very much deprecate. Manufacturers are taking advantage of the fact that the customers are receiving the 40 per cent. and the 60 per cent. grant and refusing to give the out-of-season discount allowances.

Turning to the grants which are to come, my right hon. Friend said that in the new Scheme the ploughing grants will remain the same. I do not believe that this is so, because in subsection (14) of Schedule 2 the wording for an application of the percentage ploughing grant is for land which has not been ploughed or used for arable crops for at least 12 years. That is not exactly the same wording as in the existing Statutory Instrument, which reads: Only if the Minister is satisfied that the ploughing operation is likely to involve expenditure which is substantially heavier than normal for such operations… What this means is that the new ploughing grant will not have the qualification of having to be more extensive than the normal ploughing operation for which no ploughing grant was available. My right hon. Friend is opening the door wider than before, and it is arguable whether this is right or wrong. As long as he is clear about that, then I agree that it is an advantageous thing to do. I believe that it will make things easier in agriculture. I am not convinced that sufficient emphasis has been placed on the plight of the smaller farmer, particularly in the hill areas. I am not sure that he will benefit as much as I would like, but by and large, the "pluses" are so much bigger than the "minuses" that I can with great pleasure welcome this Scheme.

9.0 p.m.

Mr. Robert Maclennan (Caithness and Sutherland)

Perhaps the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) will forgive me if I do not take up his remarks as I wish to confine my comments to the Scottish Capital Grant Scheme.

The Scheme is a fruit of the previous Government's sensible decision to seek to simplify the capital grant system, and it has been widely welcomed on that account. I wish to add my welcome to it and to put a few specific points to the Under-Secretary of State. Perhaps one should qualify one's enthusiasm by pointing to an unfortunate omission from the Scheme, to which the Minister referred, namely, the fact that plant and machinery, tractors and harvesters will cease to be eligible for grant after the end of this year. This is perhaps somewhat surprising in view of the tempestuous discussion which we had on this matter during the Committee stage of the parent Act.

We welcome the fact that the Government have seen fit to introduce a sensible scheme not only rationalising the applications for grant but also implementing the levels of grant which were set by the previous Administration at the Agricultural Price Review. As the percentages seem not to have been varied, I should like to ask the Under-Secretary of State whether he can say anything about the effectiveness of the increases and tell us the rate of take-up in Scotland of the existing grants under the previous Capital Grant Schemes. I do not expect him to enumerate all eleven Schemes in this debate but perhaps he can give us some idea whether the unfortunate downturn in the take-up which was noted in the spring has been arrested. His reply will put us in a better position to judge whether the levels of grant in this Statutory Instrument are adequate to the purposes for which it has been introduced.

I was glad to hear from the Minister some further detail than is contained in the Statutory Instrument about the "sufficient livelihood" requirement. Setting the figure at £880 per annum may not convey exactly how many people will be precluded from applying for capital grants, particularly in the hills and uplands of Scotland, where a number of farmers find it quite difficult to achieve an income of that order. Perhaps the Under-Secretary of State will tell us what percentage of farmers, particularly in the hills and uplands, he would expect to be covered by the Scheme and to be able to apply for capital assistance under the Scheme.

A point which may be of some significance in Scotland which was referred to by the Minister concerns the reduction or withholding of grant where assistance may be given otherwise than under the Scheme. As I understand it, he referred to this as standard practice. But there is a special case in Scotland, and perhaps the Under-Secretary of State for Scotland may have something to say about it; namely, where the Highlands and Islands Development Board may be interested in particular schemes, to which it might give capital grant or loan assistance. As I read the Scheme before us, it rather suggests that the Highland Board is to be precluded, as it has been in the past, from topping up grants, by the prospect, at least, that the Department would cut back on capital grants if the Board were to make grants itself out of its own funds. Is this, in fact, the purpose of the Scheme, or would it be its effect?

I would like to ask why the opportunity has not been taken, in view of the strong pressure which the previous Administration bore from hon. Members opposite when they were in Opposition, to reclassify those buildings intended for temporary accommodation of livestock in the hills as eligible for the 60 per cent. grant under paragraph 9 of Schedule 1 of the Scottish Scheme instead of only 40 per cent. under paragraph 1. It seems that this would have been the opportunity, which some of us were expecting that the Government would seize, to put right the anomalous situation of the hill shelter which consists of more than three sides being ineligible for grant at the rate of 60 per cent. I wonder whether the Under-Secretary of State would look at this point. If he is not able to answer it tonight, perhaps he would give me some indication in another way.

Next, there is a point which appears to apply only to the Scottish Scheme. It relates to paragraph 6 of Schedule 1; grants available under the Scheme for the making, improvement or alteration of the banks or channels of watercourses. It occurs to me that not only is this different from the English provision—and the Minister has referred to the different legislative histories of these drainage and protection schemes—but it could conceivably be rather too restrictive in its effect in its reference to watercourses and not, for example, to banks of standing waters or lochs. It seems to be rather narrow. The sort of situation which I have in mind is where a loch is flooded, or it is apprehended that it might be, so that its banks are broken by an unusually heavy rainfall—the kind of situation which we have seen only last week in Sutherland, at Loch Shin. There is, so far as I see, a real possibility of this sort of work not being eligible for grant. If so, then I think that unfortunate.

In conclusion, I should like to add my own welcome to the Measure before the House. It implements the intentions of the previous Government in rationalising the Capital Grant Schemes, making the lot of farmers applying for assistance a much easier one, and greatly simplifying the administration of the Schemes.

9.9 p.m.

The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith)

I should like first of all to congratulate the hon. Member for Caithness and Sutherland (Mr. Maclennan) upon making his first appearance at the Dispatch Box tonight. I am personally particularly pleased to welcome him there because I have debated with him on many previous occasions when I was on the back benches and he was on the back benches, and it is very nice that we should be able to continue our battles from the Front Benches as well. I know how close to his heart are the interests of Scottish farmers and Scottish agriculture. We look forward to his constructive contribution to these debates.

We also welcome other members of the Opposition team to the Front Bench. My right hon. Friend and I am impressed that the Opposition felt they had to double up for each of us on this side of the House. We are quite prepared to take them on on those terms, not only tonight but in the future.

There have been many references to the debates in Committee earlier this year on the Agriculture Bill. It is perhaps fortunate that neither my right hon. Friend nor I were members of that Committee, since we were in no position to give to the Opposition any hostages which they might have been able to quote tonight. We appreciate that the genesis of the Schemes was the Bill and, although the right hon. Member for Anglesey (Mr. Cledwyn Hughes) may have supervised the gestation period, we will look after the child he has delivered to us very carefully. From the way in which the Scheme has been welcomed we can see that the right hon. Gentleman feels that he has handed it over to good hands. We will look after the interests of the industry and continue the good work.

I shall try to answer as many as possible of the many points which have been raised. I hope I shall be forgiven if I miss any technical points and I shall try to answer them in other ways if I do not manage to do so tonight.

The hon. Member for Caithness and Sutherland raised several specific points about Scotland. He mentioned shelters and water courses. I assure him that I will look at these technical points. If he knows of specific cases where an application for a grant has been refused and there has been difficulty I shall be pleased to hear about them. Specific examples are helpful.

The hon. Member mentioned the Highlands and Islands Development Board. He is correct in saying that the Board is not permitted to top up other agricultural grants and subsidies. Any assistance from the Board would be taken into account in assessing the amount of grant payable under the Scheme. This means that, whilst a producer in the Highland areas is eligible for grants from the Board, he does not get specially favoured treatment in relation to the Scheme compared with producers elsewhere.

On the take-up of grants, which was raised by several hon. Members, there has been a considerable increase in the take-up of grants since the rates were increased by the right hon. Gentleman at the Price Review earlier this year. I know the right hon. Gentleman is interested in drainage and it is a matter which is important to many other questions. There has been an increase of about 24 per cent. in the rate at which drainage applications are coming forward. For example, in 1968–69 grant has been paid on about 146,000 acres. For 1969–70 it would appear that grant is likely to be applied for in relation to about 200,000 acres. It is therefore clear that there has been a considerable increase in take-up. The same is true of grants under the Hill Land Scheme. In that case applications seem to have risen even more—by about 35 per cent. It is encouraging to see this increase in the rate at which grants are being taken up.

My hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) raised many points. It was significant that he, like other hon. Members, showed concern about hill and upland areas. Scotland does not have a specified definition of counties containing hill land, because of her different situation. In England and Wales this is done by reference to counties because we believe it best to continue the existing definition, which makes clear the areas that we intend to benefit. Some hills, the Downs and the Chilterns, for example—are outside these counties, but in the generally accepted meaning of the term, hill farming is confined to areas of mountains, hills or heaths—to use the classical definition—in the counties named in Schedule 1 to the Scheme.

My hon. Friend also raised the question of agricultural businesses, which is very important. By providing grants for capital expenditure for an agricultural business we can pay grant on expenditure that would previously not have qualified under the narrower concept of expenditure for the benefit of agricultural land. For example, if a farmer proposes to erect buildings for livestock which will depend mainly on bought-in feedingstuffs, in the past we have been unable to pay grant assistance to him for his improvements, because they could not be said to have benefited the farming of the land. But such expenditure will be for the purposes of the agricultural business, and we shall be able to pay grant on expenditure of this kind under the new Scheme.

Mr. Scott-Hopkins

Is my hon. Friend saying that if I put up an intensive unit on a small acreage of land and the stock inside subsists entirely on bought-in foods it will qualify for grant? If so, it is a great widening of the previous definition.

Mr. Buchanan-Smith

There is a widening. I know that the hon. Member for Caithness and Sutherland and the right hon. Member for Anglesey will bear me out that in many cases, especially in some hill and upland areas, the only way in which farmers have been able to survive is by intensifying their farm businesses as such and by carrying on an enterprise which is not necessarily totally supported by the farm. This extension wil be of great benefit to such farmers.

My hon. Friend the Member for Derbyshire, West also raised the question of ploughing. The types of ploughing that will qualify are made easier to understand in the explanatory leaflet that will be issued.

The last of my hon. Friend's questions concerned drafting. I can assure him that the words in paragraph 4(3,a) are meant to be as they appear. If he reads the words as being in brackets rather than between the commas in which they now appear, he will see exactly what is meant. I have looked at the provision several times. I may not have his probing eye, but to me it is understandable.

My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) among a number of points referred in particular to hill areas and to the Animals Bill. It would obviously be out of order here to refer in detail to that Measure, but I might in passing say that in another place an Amendment was moved which I hope will be helpful. We will be able to debate this matter in more detail later.

Mr. Turton

But that Amendment has nothing to do with the slaughter of sheep. What this Bill should seek to prevent is the slaughter of the sheep, and if the Minister would give a higher rate of grant for the fencing of moorland roads he would stop the slaughter of the sheep.

Mr. Buchanan-Smith

As I understand him, my right hon. Friend is going even further than did those who in another place criticised the Bill more superficially. However, I take note of what he says.

My right hon. Friend referred to cattle grids. These grids are helpful but grant in respect of them is payable at the higher rate of 60 per cent. and not at the lower rate that was payable under the old Farm Improvement scheme. It is encouraging to see the increased rate of uptake under the hill land scheme as well as under this Scheme. One thing that concerned me was whether, knowing the economic situation in the hill areas, we would see this greater uptake resulting from higher rates of grant, and it is significant that this has taken place.

My right hon. Friend is right in saying that bracken is a scourge of many of our upland areas but, as I have seen, and as I am sure others have seen, where general schemes of land improvement are carried out it is very noticeable how, quite apart from specific measures, bracken can be controlled in the process. If I had the time, I should like to take my right hon. Friend on a tour of some places in Argyll where a considerable improvement has been carried out, as a result of work of no exceptional nature nor involving the use of new techniques. Proper stocking has had its effect on the bracken. Nevertheless, we take to heart what my right hon. Friend has said about the need, by research and in other ways, to make sure that our techniques are best suited to deal with this problem.

Sir Fitzroy Maclean (Bute and North Ayrshire)

Will my hon. Friend give us just a hint of how he got rid of bracken?

Mr. Buchanan-Smith

I have not claimed that I have got rid of bracken but I know that it can be controlled, and if my hon. Friend would like to see for himself I can give him the necessary references.

My right hon. Friend referred to tenders. I appreciate as well as he does that in the remoter areas, and I represent that sort of area, tendering can present a very practical problem. Administrators and department officers are sensible in this respect. Where they realise that it is not reasonably practical to get more than one tender and where the tender submitted shows a reasonable cost they are already prepared to dispense with the requirement of further lenders. Care has to be taken, obviously, because we are here dealing with public money and we must make sure that the costs are reasonable. We are at the moment reviewing the general requirements for tendering and I am sure that what my right hon. Friend has said will be borne in mind.

I turn now to some of the major points raised earlier in the debate by the right hon. Member for Anglesey. I already dealt with the question of drainage, but he also referred to the Strutt Report on soil structure. We on this side regard this as an extremely important and valuable Report, and on behalf of my right hon. Friend I may say that he is very grateful for the work that has been done by the Committee. There is no doubt at all how important it is. We hope that the Report will be published soon—I should think early next year, if not sooner. I again emphasise that we regard it as a Report of major importance.

I assure the right hon. Gentleman that we shall see how the question of bulk milk tanks operates and ensure that the benefit percolates through to the ordinary producer.

I come now to the two most fundamental points which were raised in the debate. I apologise if I have missed out any more detailed points. The two most fundamental points which have been raised concern the effects of the grants first on the hill and upland areas and, second, on the small farmers.

I will mention in passing a point of detail which I have not dealt with so far. It is the opposite end of the small farmer problem, namely, the upper limit of £100,000. This is one which we shall cover in relation to separate units. Units must be in single ownership; but if they are separate in terms of agricultural production or work force or organisation they will be looked at on their own merits. The assurance the right hon. Gentleman wanted is that this will not militate against the interests of agriculture as a whole.

The concern that we have for production in the hill and upland areas has been shown by what I have said in relation to drainage, which is so important, and in relation to the small farm problem; because the small farm problem and the hill farm problem are often synonymous.

To deal specifically with the question of the small farmer, I believe that the new unified grant scheme will be of benefit to him, as it is of benefit to the larger farmer. After all, the first benefit of the Scheme is that it simplifies matters. By simplifying matters, it helps in particular the smaller farmer, who does not necessarily have the same access to advice or understanding of the complications of a series of different Schemes which answer different needs. The mere fact of making the Scheme will benefit the smaller farmer.

The main advantage is that we drop the benefit of land test. This is the point I mentioned earlier in relation to a matter raised by my hon. Friend the Member for Derbyshire, West. The dropping of the requirement that farms must be sufficiently large to grow half the food for their livestock affords the livestock farmer—often the smaller farmer is the livestock farmer—a greater opportunity to take advantage of Schemes like this.

It is also helpful that there is now no requirement that the land occupied by a business must be in single ownership or occupation. In future, a producer who owns part and rents part of his holding may qualify for grant on the whole of the expenditure instead of just the proportion relating to the land that he owns. This again is important as helping the small farmer, because it is the small farmer that has to face this problem at present.

The other advantage that the small farmer has is that the small farmer who does not satisfy the sufficient livelihood requirement will now be able to get grant for many items, provided that they will continue to be of benefit to the land if it subsequently becomes part of a larger unit. The sufficient livelihood test does not apply to improvements which will benefit the land.

I reiterate the point that the sufficient livelihood test applies after the improvement has taken pace. Therefore, in considering any application, even if a farmer is below what is called the sufficient livelihood level at the moment if the fact of the improvement will take him beyond that this will obviously make him eligible and bring him within the terms of the Scheme.

Hon. Members opposite made a number of points in relation to the removal of plant and machinery grants and their replacement by tax allowances. This was compared with the removal of grant for which the Labour Government were responsible in relation to tractor and combine harvesters.

All I would say to the hon. Gentleman is this. Whilst obviously the removal of plant and machinery from this Scheme will reduce the amount of money applied through the Capital Grants Scheme—the right hon. Member for Anglesey is correct in this—it will only reduce it in proportion to the amount that was earmarked for plant and machinery. It will have no effect on other items. Hon. Members opposite removed tractors and combine harvesters from grant, but in contrast to that, whilst we are taking plant and machinery out of the terms of the Scheme, we are introducing more generous tax allowances for fixed plant and machinery. When hon. Members opposite removed the grant from combine harvesters and tractors, it was not replaced by any comparable concession. We are introducing tax allowances which will help those who will not benefit directly from capital grants. It is, therefore, wrong for hon. Gentlemen opposite to cricise us on this point. We are merely replacing that section which was previously eligible for grant with a new form of assistance which, I may say, has been welcomed by many sectors in the industry.

Finally—and I am sure that this is uppermost in the minds of everyone in the House—a Scheme like this, valuable as it is to help farmers and to improve the structure and competitiveness of agriculture in Britain, must be looked at against the background of the prosperity of the industry as a whole. These grants are only percentage grants and a very large part of expenditure is left to the individual producer to find for himself. The advantage of this Scheme is that it gives back to the producer much more control over his own investment decision. This is the important factor. But it still leaves him having to find a large part of the expenditure necessary.

This is something with which I know my right hon. Friends the Minister of Agriculture, Fisheries and Food, the Secretary of State for Scotland and the Secretary of State for Wales are concerned. Schemes like this can only be a supplement to making sure that the conditions in the industry are right, that the returns and prices are right within the industry so that farmers may be enabled to take up the opportunities given to them. I hope that they will take up the opportunities of this Scheme, and, for that reason, I have pleasure in commending it to the House.

Question put and agreed to.

Resolved, That the Farm Capital Grant Scheme 1970 (S.I., 1970, No. 1759), a copy of which was laid before this House on 1st December, be approved.

Mr. Speaker

We have already debated with that Scheme the next three Schemes which appear on the Order Paper.

Resolved, That the Farm Capital Grant (Scotland) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.—[Mr. Buchanan-Smith.]

Resolved, That the Ploughing Grants (Variation) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.—[Mr. Prior.]

Resolved, That the Ploughing Grants (Scotland) (Variation) Scheme, 1970, a copy of which was laid before this House on 1st December, be approved.—[Mr. Buchanan-Smith.]