§ 7.56 p.m.
§ The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Anthony Stodart)
I beg to move,That the Farm Structure (Payments to Out-goers) Scheme 1970, a draft of which was laid before this House on 1st December, be approved.With permission, it might be convenient also to discuss the other Motion—That the Farm Amalgamations and Boundary Adjustments Scheme 1970, a draft of which was laid before this House on 1st December, be approved.The two Schemes are fairly closely related.
§ Mr. Deputy-Speaker (Sir Robert Grant-Ferris)
if that is the wish of the House. I am sure that it is agreeable.
§ Mr. Stodart
These Schemes are made under Sections 26 and 27 of the Agriculture Act, 1963, as amended by Section 32 of the Agriculture Act 1970. I do not pretend that they are models of simplicity. But perhaps I might take this, the first opportunity that I have had to add my congratulations to the hon. Member for Caithness and Sutherland (Mr. Maclennan) to those which my hon. Friend paid him last week. I can recollect that when the 1967 Bill was in Committee, some comments were made about the complexity of these provisions. Looking back, I have no regrets for making those comments.
One thing I am satisfied about is that, in a debate a week ago, my hon. Friend the Under-Secretary of State for Scotland said that he was relieved that he was not on the Committee which gave rise to these Clauses, and that therefore no chickens could come home to roost because of his comments. I have of course taken care to look up my comments on the subject of these Clauses, and find to my relief that, apart from one or two details, I gave the Bill a general welcome.
The Amendments made by Section 32 of the 1970 Act had two main objects. They corrected some defects in the existing legislation and also provided for grant on remodelling works resulting from an amalgamation or boundary 1660 adjustment, to be paid under the proposed Farm Capital Grant Scheme, which was debated in the House last week.
These present two Schemes follow directly from that, and they do not attempt to change in any radical way the existing measures to encourage farm amalgamations which featured in the 1967 Schemes and which these ones will replace. During the next few months we shall, however, be reviewing the operation of the structure schemes generally to see—this requires very careful consideration—whether there is a case for making further changes, in order to give more effective help to the creation of viable units.
I have already mentioned the intention to pay grant on remodelling works under the Farm Capital Grant Scheme, which the House approved last week and which comes into operation on 1st January. This is all part of our recasting of the capital grants to give us a unified Scheme which will reduce paper work. Where a farmer wants to apply for grant, not only on remodelling works but also on other items which are not a consequence of the amalgamation, he will be able to get grant on all the eligible items under one scheme. This apart, the main change which is common to both structure Schemes is that provision is made, following the amending of Section 26(1)(a) of the 1967 Act for an amalgamation to absorb part only of an uncommercial unit. This could apply, and would be useful, for example, where the rest of the unit is going for amalgamation elsewhere or where it belongs to a different owner from the part being amalgamated. We shall, of course, have to be satisfied that there is an actual improvement in farm structure in cases where an amalgamation absorbs only part of an uncommercial unit.
When the revised Schemes are introduced we plan to use more up-to-date standard man-day equivalents in assessing the labour requirements of the farms concerned. It will be common knowledge to those interested in agriculture that even since that slightly jargonistic phrase "standard man-day equivalents" was first introduced, and that is not long ago, there have been considerable changes in the management and output of farms, which have caused us to embark on a reassessment of the whole system of 1661 assessing these standard man-day equivalents. This will bring within the Schemes some farmers whose farms would, on the standard man-day figures used now, be classed as commercial and, thus, would not be eligible for amalgamation under the Scheme. The change would, however, by itself have the effect of making ineligible some potential outgoers with very small farms who are at the bottom end of the scale. They would qualify under the Schemes as they are just now.
We want to give these very small farmers a chance of taking part in the revised schemes, and so we have offset the effect of the change in standard man-day equivalents by reducing the minimum number of standard man-days for the outgoer's farm from 100 to 80. Of the changes made to the individual Schemes, I should, perhaps, mention that the revised amalgamations Scheme sets out, in paragraph 8(2), the types of incidental costs which are eligible for grant, and which were formerly covered by Section 26(3) of the 1967 Act as originally enacted.
In paragraph 9 it also provides for grant to smallholdings authorities, following the provisions of Part III of the 1970 Act, and it will allow the grant-aiding of some amalgamations resulting in permanent intermediate units, where this is part of the reorganisation of the authorities' estates. For reasons which the hon. Member for Caithness and Sutherland will know well, this paragraph does not apply to Scotland.
Intermediate units are holdings which are at the upper end of the uncommercial scale. They are not intended to reach the two-man size, which is, broadly speaking, the yardstick of a commercial unit.
Paragraph 10(1) provides, in conformity with the announcement following the 1970 Annual Review, for an extra 10 per cent. grant on the incidental costs of amalgamations or boundary adjustments which are submitted or approved in the two years commencing 19th March, 1970.
On the outgoers Scheme, I think the only changes which I need mention are the relaxation of the income test and the additional provision to help widows whose husbands die while their applications are being dealt with. This important point, which is to be found in paragraph 10, was made in Committee. 1662 On the income test, which is to be found in paragraph 7(1), we have followed the intentions of the previous Government and increased from £400 to £750 the amount of non-farm income which can be disregarded before calculating whether three-quarters of the income of the outgoer and his wife comes from the farm.
I hope that the changes which have been made, coupled with the much shorter 15-years period—this matter inspired a very spirited debate in Committee—for which Schedule 3 conditions now apply to amalgamated units, will encourage more amalgamators to take advantage of these grants.
I recognise that the Schemes are not simple, but they reflect to some extent the complexities of amalgamations and of the enabling legislation. As I have mentioned, we are reviewing the measures concerned with farm structure. If our review shows that the Schemes now before the House are not likely to be as successful as we wish, we shall be bringing forward proposals for further changes. But the revised Schemes which are now before us will carry through the process of unifying the farm capital grants and will make a number of other useful improvements. It is on this basis that I invite the House to approve them.
§ 8.8 p.m.
§ Mr. Robert Maclennan (Caithness and Sutherland)
I wish, at the outset, to thank the Minister for his kind personal remarks and to join with him in the pleasing recollection of the passage of the parent Act. Long our sittings may have been, but profitable they certainly were also.
I move to a more discordant note in expressing regret at the fact that he has not found it possible to make more plain which criteria of size or profitability the Government have in mind in initiating their review of the structure of farms. The previous Government gave some indication of the hope they had for a reduction in the number of units that were not viable when the Scheme was first introduced, and it is plain that these targets are very far from having been reached. The take-up under both the existing Schemes has been substantially less than expected.
1663 In initiating a review of the structure of our farms, especially at this time, when the whole question of size and related profitability is so much under debate in the countries of the European Economic Community, it might have been helpful to the farming industry if we had had some idea of the Government's thinking.
These Schemes are very much in the nature of a patching-up operation, and as such they can be welcomed, but they do not go very far. The Minister has probably seen the current edition of Farmers' Weekly, which describes the Schemes asNo more than a tantalising will-o'-the-wisp for the man who cannot afford to expand and for his neighbour who cannot afford to retire.It was the original intention and hope that under the existing Schemes, which the proposed Schemes will replace, the non-viable farms should be reduced by some 15,000 by 1970, that is, about 5,000 per annum. But as I understand it, the figure has been in the order of 1,450 farms which have been amalgamated, fewer than 1 per cent. of the farms which, by the test of the 600 standard man-days, are regarded as viable.
Under the present amalgamation Scheme only 1,700 applications have been approved out of 4,300 in three years. From what the Minister said, I take it that he is not wholly satisfied with the progress made towards reducing the number of non-viable holdings. But I wonder what indications he has had that it is matters which are dealt with in these Schemes which are responsible for the relatively disappointing take-up.
I have heard criticisms, as have my hon. Friends, of the tardiness of the Departments, both in Scotland and in the Ministry, in handling applications, which in itself constitutes some disincentive to go forward with a scheme.
On the lump sum golden handshake, the payment to outgoers, the figures are also very small. As I understand it, only some 740 applications for lump sum payment and 710 applications for annuities have been met, and the total sum paid out is little more than £1,100,000.
When these Schemes were before the House on a previous occasion, the hon. Member for Edinburgh, West (Mr. Anthony Stodart) said that on the Farm Structure (Payments to Outgoers) Scheme, 1664 the nub of the question was paragraph 8, pertaining to the amount of grant. As one expects of him, he was very careful on that occasion to hedge his bets, in a sense, and not to say that the amount was either too small or to large but that we should have to wait and see what happened in the outcome.
§ Mr. Maclennan
If I may use another metaphor, he was very careful to leave the issue open. The hon. Gentleman will agree that he was ready to do so.
One can infer from the Scheme before us that the hon. Gentleman must feel that the sums contained in the Payments to Outgoers Scheme were precisely right, because, as far as I can see, no alteration has been made in the sums. If this is correct, it has not perhaps been sufficiently widely appreciated. I noticed the rather misleading headline in the British Farmer of 12th December,Bigger handshake on farm mergers.On my study of the Scheme, that is not an accurate picture of the situation.
What has been happening during this whole period of time—if one goes back to 1960, and the trend has not greatly changed since the Scheme was introduced—has been a contradiction in the overall number of holdings in the country. A very useful survey and study of this has been published earlier this year by the Ministry of Agriculture and the Department of Agriculture and Fisheries for Scotland, on the changing structure of agriculture in this country. It shows that the number of holdings has declined from 440,000 in 1960 to 380,000 in 1968, the last year which the survey referred to; that in the same period of time the average acreage of crops and grass on farms has risen from 70 to 80; and that in the five-year period from 1963 to 1968 there has likewise been a decline in the number of full-time farms in England and Wales, from 175,000 to 156,000, and in Scotland, from 27,000 to 25,700.
It is plain that this process has not been greatly accelerated by the Schemes. I should have liked to have heard from the Minister the pace of acceleration which he and the Government envisage 1665 as desirable. I take it that in initially bringing forward these proposals, the previous Government had in mind something other than merely the assisting out of the agricultural industry all those with unprofitable farms. The purpose was rather more dynamic. It was intended to enable small farmers to become more viable by giving them access to additional land. It was not conceived, as I understand it, that these Schemes should provide the means whereby the large farmer enlarged his domain. It would be most unfortunate if, by the direct intervention of the State, the big farmer should be encouraged in this positive way to become bigger still. Unfortunately, in so far as the new Scheme changes the situation, it may end in that direction. It may tend to encourage the strong to enlarge at the expense of the weak.
I think that the revisions of the conditions as to eligibility arising from the adoption of the revised standard man-day provisions in the 1970 Regulations, will have the effect, as the Under-Secretary said, of making the scheme for amalgamation open to larger farmers, and I wonder whether that was the right end at which to tackle the task. I recognise that he looks upon this as merely a holding operation pending the completion of the review.
A further doubt arises in my mind in connection with the amount of non-farm income which is ignored in applying the outside income test under the Outgoers Scheme. It is now raised from £400 to £750. Again, I am not entirely clear whether the desired end will be achieved.
The original purposes of the Scheme will not be substantially altered by the Measure before us tonight, and to that extent I think it possible to welcome the Instrument on behalf of the Opposition. Like the hon. Gentleman, I consider that the amount of the grantsmust not be so great as to cause a mass exit from small farms."—[OFFICIAL REPORT, 25th October. 1967; Vol. 751, c. 1788.]Those were his words in the debate on that occasion. Nor should it distort the whole balance of farming, which would be disastrous. But I wonder what thought the hon. Gentleman has given to the question whether the sums which the Government set then are right, particularly taking into account the inflation which has occurred since 1967.
1666 The Scheme has, perhaps, suffered from misrepresentation or misunderstanding during the period since it was introduced. Although the then Government and Opposition emphasised the importance of it being understood that it was a voluntary scheme, that has not been fully appreciated, and this may have led to some resistance in certain areas.
I feel, also, that the natural concomitant of the scheme has not been given sufficient emphasis by the present Government. Plainly, to the extent that these schemes succeed, they create a need for extra rural employment. I think particularly of the action of the present Government in Wales regarding the Rural Development Board as indicative of their failure to face up to that need. To the extent that they are successful in creating amalgamations of non-viable holdings, the Schemes create a new need, a greater need for the provision of new jobs in these areas.
Will the Government tell us when they expect that their review of the structure of farming will be completed? What consultations are they having on the subject? Is the review being carried on within the Department, and are they taking the advice of external agricultural economists as well as of the Farmers' Unions and other interests?
I am grateful to the hon. Gentleman for his lucid account of how these rather complicated Schemes have been changed. Like him, I think that clarity may lead to their being more attractive to the general farming community. However, I recall that on an earlier occasion he himself asked what steps were being taken to make the schemes understood, and whether pamphlets were being produced to explain them simply to the public. I repeat the question tonight.
§ 8.25 p.m.
§ Mr. James Scott-Hopkins (Derbyshire, West)
I congratulate my hon. Friend the Parliamentary Secretary on bringing the Scheme forward, and I take it to be part of a much wider review of what is needed.
I was utterly bewildered by the hon. Gentleman the Member for Caithness and Sutherland (Mr. Maclennan). I could not discover whether he approved of the Scheme or thought it a bad thing. He seemed to contradict himself as he 1667 went along. At one point, the hon. Gentleman seemed to question whether it was right to raise from £400 to £750 the disregarded part of private income, yet almost in the next breath he spoke of the effect of inflation, which made me think that he ought to have suggested that the figure should have been increased even further.
None the less, the hon. Gentleman raised the basic question about which we should be thinking: Are we doing the right thing in the wider context? When introducing the Scheme, my hon. Friend said that it was a holding operation while a wider review was going on. Always, after a scheme has been running for some time, one finds fewer applicants to come forward. In my view, it must be right to take out non-viable farms and, if appropriate, put them into larger units. I disagree entirely with the hon. Gentleman when he argues that it is not a good thing to put these non-viable pieces of land into a large farm unit. If such land can go conveniently into a larger farm, so be it. I am all in favour of it happening.
§ Mr. Maclennan
The hon. Gentleman completely distorts what I said. I entirely accept the principle that it is desirable to create viable units. I was emphasing the concomitant desirability of creating alternative employment for those who have to give up their non-viable holdings.
§ Mr. Scott-Hopkins
That was the second point which the hon. Gentleman raised. If he reads his speech in HANSARD, he will see that at an earlier point he questioned the propriety of taking some non-viable land out of the hands of the small occupiers or tenants who have it now and amalgamating it with a larger farm. He said that this was not what he had regarded as the concept in the mind of his right hon. Friend the Member for Workington (Mr. Peart) when he introduced the Act under which the Scheme is made. In my view, it is something which could and should happen in many instances. It is necessary to take non-viable land out of use.
One has to ask oneself whether this is the right way of proceeding. What does my hon. Friend think? Has the present Scheme been succeeding so far? Were the figures quoted by the hon. Member 1668 for Caithness and Sutherland the correct figures? Is my hon. Friend satisfied with the progress that has been made? Is he satisfied that even this improved Scheme, marginal though the improvement is in several aspects, will meet the intention? Presumably, over a period of five or seven years we are seeking to get the maximum amount of unviable land amalgamated into viable units. Will the Scheme achieve that end? I confess to some doubt. That is why I am glad to have been told that this Scheme represents only a holding operation during a wider review of the whole structure of farming and of Government aid to farms.
How much money should we now be giving to get people out of farming into different work? Is payment necessary, or will ordinary economic circumstances force unviable land out of business? Several years ago about 4,000 farms a year were going out as a result of amalgamations brought about by the economic facts of life. People were selling farms which, once sold, were amalgamated. But there are still parcels of land which people are keen to take over and on which they lose money. It is one of the most incomprehensible things I have ever known. These people carry on for three or four years and lose what little money they have, then someone else takes over and the process is repeated time and again. I know that it is that sort of land which my hon. Friend seeks to bring under the Scheme, but will the proposed payment to outgoers prove a sufficient inducement?
I turn to one or two points of detail. My hon. Friend will see in page 2 under "tenant" that executors and administrators of tenants are excluded. I have no quarrel with the first case, but does the definition of an administrator include someone, himself a tenant farmer, with a power of attorney for a tenant who has had, say, a stroke and has not been able to execute a power of attorney? I do not know why such a person should be excluded. This may be a small point but it has caused difficulty in a case which has been brought to my notice.
Again, paragraph 3(1) refers to a period of seven years. Can we be told what is the particular magic about a seven-year period?
In general, I welcome the Scheme. It is an improvement on the original 1669 Scheme although the improvements are only marginal. Is he satisfied that he is going far enough, and must we await the review of farm structure before going further? How has the Scheme succeeded so far? Is my hon. Friend satisfied that even this interim Scheme will bring about the very necessary amalgamations?
§ 8.33 p.m.
§ Mr. Elystan Morgan (Cardigan)
As my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) said, and as has been acknowledged by the other side, the changes brought about by the two Schemes will not be very considerable. I agree with what my hon. Friend said about delays. We should see a very material improvement in these Schemes if the Minister would consider whether the Ministry was deploying enough staff to deal with these matters. I have had a number of complaints of delay in Cardiganshire, and I know that other rural Members have had very much the same experience. Delays of six or nine months or longer, are very much the ordinary thing.
My criticism of the Schemes is twofold. I believe, on the one hand that they encourage indiscriminate and wasteful amalgamations and, on the other hand, I hold the view that the Government have failed to take positive action to assist the small farms as much as they could and should be helped.
On the first point, as is obvious to the House, these grants are available to the owner of a big farm who wishes to add a holding to what is already a bountiful agricultural unit, as indeed they are available to a small man who wishes to acquire land to achieve viability. The small farmer who feels that he must have hand to give himself and his family the chance to reach a reasonable standard of living must compete in the market with his more powerful and affluent neighbour.
If the position as regards farm amalgamations were fairly static, it could well be argued that that was a rather inequitable position which it would be right for Parliament to correct; but the position is not static. Between 1960 and 1968 the number of farm holdings in England and Wales fell from 480,000 to 420,000. In Wales 12,000 farms have disappeared since the end of the Second World War. 1670 I am sure that the Minister will confirm that the present rate of disappearance of farm units is running at about 2 per cent. per annum.
Many people lament the decline in the number of small farms, but protest without a constructive alternative plan is futile. It is clear that unless something substantial is done this relentless, unremitting process will continue. I believe that the choice confronting successive Governments is between consolidation of small farms or their destruction.
§ Mr. Scott-Hopkins
We are not talking about small farms. We are talking about unviable units. There is a tremendous difference between the two. Is the hon. Gentleman saying that unviable units must be held in a state of inaction, for want of a better word?
§ Mr. Morgan
I was using the rather general term "small farms", but I accept the hon. Gentleman's correction that I should be talking about unviable units. If a small farm is such an intensive farm as to be viable there is no reason why it should be called a small farm at all.
I was using the term "small farms" to mean unviable holdings. If we think of 10 small farms existing now, it may well be that in 10 or 20 years time, if nothing is done, all of those farms will have been bought up and subsumed within the boundaries of larger units. The alternative is to consolidate the pattern and encourage some of the owners of those farms to buy farms coming on to the market so that ultimately there could be four, five, six or seven of those farms, viable and with the chance of continuing to exist. The present pattern is so riddled with weaknesses that it cannot continue. Anybody who wishes to destroy Britain's small farms pattern need only sit back and do nothing.
My second point is that the Government have lost the opportunity of discriminating in favour of the small, unviable farm. They could have brought in a differential scheme of grant and they could have gone out of their way to weight the situation so as to give the small man a chance to compete in the market with his bigger and more powerful neighbour. A scheme of grant or loans that is designed to deal with that problem is the way by which the Government could have cancelled some of the fundamental disadvantages which the small 1671 man suffers when he tries to accrete to his unit to make it viable.
I know that the Under-Secretary will readily agree with me that the major problem facing farmers is the problem of credit, and that problem is felt the more acutely by small farmers. If the Government wish to help small farmers they will apply their minds very earnestly to this question.
It was said by my right hon. Friend the Member for Workington (Mr. Peart) when he was Minister of Agriculture, and by my right hon. Friend the Member for Anglesey (Mr. Cledwyn Hughes), that they had no wish to eliminate the small farm but wished rather to strengthen it so that it could be a viable unit, protected for the future and enabled to make its best contribution to British agriculture. But it appears to me that behind these Schemes there is a rationale which is founded upon the hypothesis that small farms are an evil. Dreary sermons on farm structure are read by Ministers from time to time.
We are told that 5,000 very large farms—farms having more than 3,600 standard man days a year or over—although they represent only 2 per cent. of the holdings in England and Wales, are responsible for a total agricultural output of not less than 21 per cent. We are reminded that the top-sized 1 per cent. of farms in Britain between them are responsible for an aggregate production of about 15 per cent. of the total, and that one-quarter of the larger farmers are responsible for three-quarters of the agricultural production. On the other hand, we are told that the holders of small-sized units, representing 25 per cent. of the totality of British farmers between them are responsible for only one-sixth of the total output.
An unbiased person listening to such statistics would gain the impression that small farmers were lazy or incompetent, or were in a position where they could not fairly contribute to the success of British agriculture. What is not said by the reciters of these statistics is the amount of land held by the larger farmers, the character and quality of the land, how much capital is invested in those larger enterprises and how much labour is engaged. Only after computing those 1672 factors is one in a position to judge whether, all things then being equal, small farmers are more productive or less productive than their bigger brethren. Seldom in these statistics is prominence given to figures of the totality of land held by the larger farmers.
In "The Changing Structure of British Agriculture", published in June of this year, we see that farms of 300 acres or more, although between them they represent only 5.7 per cent. of the totality of holdings, hold 33.5 per cent. of the agricultural land in Britain. It is by taking into account the amount of land that is held and the proportion of capital assets dedicated to agriculture that one finds a true basis upon which to make a meaningful calculation.
There is an influential section of agricultural opinion that is affected by the phobia that the small farm is an institution which is standing in the path of agricultural progress. I have said on many occasions in the House that I do not believe that sufficient credit has been given to the factor of intensive farming by the small farmer. It is not a situation which comes about by nice calculations of profit, but it is forced upon him by the harsh law of economic necessity. Some years ago studies were made by the University of Exeter on the net income per acre of farms in various groups. If the Minister will study those figures, he will find that for farms of between 20 and 50 acres the average net income per acre was £21.03; between 50 to 100 acres, £13.03 and between 100 and 150 acres, £10.74.
I represent a constituency in Mid-Wales, which is very largely an area of small farms. I was one of those Members who welcomed the proposed setting up of a Rural Development Board for Mid-Wales in 1967. I gave support to it, not because I believe that it would be an engine of tyranny—indeed, the compulsory powers which it was proposed should be vested in the board were very much milder than those vested in a parish council—but because such a board could bring about such a situation that considerably more small farms would be in existence five, ten or 15 years hence than if it were not created.
The Conservative Party did not show initiative in objecting to the proposed board. I do not believe that one speech 1673 was made from the Conservative benches against the principle of setting up a rural development board. Certainly there was no division about it during the Committee or Report stage of the Bill. But the Conservative Party was very quick to take opportunistic advantage of ruthless turmoil created by others. There was a campaign of foul misrepresentation and of exaggerating every possible peril and disadvantage of such a board and writing down and denying every advantage which could flow to Mid-Wales from its creation. As a result, Mid-Wales, which has been neglected for so long and has such great needs and complex problems, finds itself deprived of a board of the sort which is bringing such prosperity to and showing such promise for the Pennines.
Farming is not only an industry; it is a way of life in the countryside. It is a repository of standards, outlooks and attitudes. That is the structure of a rural society and not just a process by which food is produced for the State. If the pattern of small farms is destroyed, many communities such as mine will disintegrate. In any event, the life of Britain will have lost something invaluable. I do not believe that the Government are doing all they can to assist small farms. I ask the Minister, in the review which he is undertaking, urgently to apply his mind with imagination and vigour to that very principle.
§ 8.48 p.m.
§ The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office (Mr. Alick Buchanan-Smith)
We have had a very useful debate. Hon. Members on both sides of the House have put forward very constructive thoughts on the problem of small farmers and of farm structure generally. I think that all who have spoken were at some stage members of the Committee which considered the Measure which is the parent of the Scheme we are discussing, because the Committee stage stretched over two Parliaments.
One of the more philosophical questions raised in the debate—and this is particularly true of what the hon. Member for Cardigan (Mr. Elystan Morgan) said—has been about how we view the future of small farmers. If one took some of the hon. Gentleman's remarks completely at their face value, one would think that, through having schemes like 1674 this—and he spoke of small farms being an evil—it was the object of successive Governments—
§ Mr. Buchanan-Smith
Perhaps the hon. Gentleman will hold himself back for a moment. He quoted statements that people had said that the improvements of small farms were an evil. That is where I was quoting the hon. Gentleman. There is danger in a debate like this of an impression going out that it is the object of successive Governments to get rid of small farms. This is where the intervention of my hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) was so right, as was acknowledged by the hon. Member for Cardigan—that it is not the small farmer as such who is the problem.
The figures quoted by the hon. Gentleman in terms of productivity and output per acre show that it is often the small farmer, who, perhaps because of the small size of his holding, has to work his land very much more intensively, so that the output per acre is very much greater than on a farm of larger size. In the part of the country which I represent it is often the small farmer, through the intensity of his business and through his attention to the commercial aspect of his farm, who in many ways sets an example and sets the pace in terms of business efficiency. He often sets a high standard for farms which are very much bigger.
§ Mr. Elystan Morgan
I believe that I made it clear that I was talking about small, unviable farms. I ask the hon. Gentleman to pay attention to the fact that the figures I quoted from the Exeter study applied largely to non-viable farms. I think that they are non-viable but that nevertheless their contribution to the success of British agriculture is very considerable.
§ Mr. Buchanan-Smith
I endorse what the hon. Gentleman said. Small farms, like big farms, make their contribution. This is why, in the Scheme as administered, we use the standard of standard man days, which is the nearest standard we can apply. It is perhaps a rough and ready way, but it is the best available in commercial standards in trying to determine what is a viable and what is not a 1675 viable unit. To that extent, we look upon the Scheme not in terms of size of acreage but in relation to the business capability of the farm.
There is another serious aspect in considering the disappearance of the small farmer in efficiency and other terms. Is a community better off with very small, unprosperous farmers, struggling for a living, or better off with farmers earning a reasonable living? I would choose a prosperous community as contributing more to the countryside than an unprosperous community.
I accept the concern of the hon. Member for Caithness and Sutherland (Mr. Maclennan) about the problems of depopulation. But when an amalgamation takes place it does not necessarily mean a decline of population in that area. The land still remains and still needs people to farm it and look after livestock. The fact that we are likely to create a more commercial and viable unit has the effect in the long run probably of keeping people on the land rather than losing them. At the same time, I accept that, in some of our rural areas, we have problems of depopulation which, of course, can have an effect on the whole structure of local society.
Before coming to the general aspects and how we see future prospects, I want to answer some of the points raised in the debate.
My hon. Friend the Member for Derbyshire, West asked a technical question about the power of attorney. He asked whether someone in the circumstances he described would qualify. The Order would not exclude a man incapable of making his own application because of some mental or physical disability. I hope that that will set my hon. Friend's fears at rest.
§ Mr. Scott-Hopkins
Does that mean that the person acting for him will be able to make the application'?
§ Mr. Buchanan-Smith
It is the spirit of the Order that that should not be a problem. However, I should like to write to my hon. Friend about the legal question of the power of attorney for someone acting as an administrator or executor.
My hon. Friend asked a question about the seven-year period, but that is a prob- 1676 lem which is covered by the parent Act and nothing can be done about it in the Order.
The hon. Member for Caithness and Sutherland mentioned publicity. I am glad to be able to say that a draft explanatory leaflet has been prepared—I have a draft in my hand—and it is now at the printers. I hope that the hon. Gentleman will think that it explains the scheme fully and simply and will show those who wish to take advantage of the scheme exactly what is involved.
He mentioned the Rural Development Board for Wales, as did the hon. Member for Cardigan. That is not included in the Order and I do not intend to be drawn into discussing it.
I thought that the hon. Member for Caithness and Sutherland was rather grudging about the fact that we had raised the income test for non-farm income. We believe that this will help. We have had evidence of hard cases. One example is of a farmer who had fallen ill and whose wife had gone out to work to support the family. In such a case the farm income of the husband and wife might be very small compared with the non-farm income. I have had specific cases raised in my own constituency. We believe that this increase will be of genuine help to people in difficult and sometimes tragic circumstances.
§ Mr. Maclennan
I want to correct any impression that I did not welcome the increase. I was asking who would benefit and drawing attention to the fact that it seemed to allow for inflation, whereas the grants remain static for a period of three years.
§ Mr. Buchanan-Smith
I shall deal with inflation later. I am glad to hear that the hon. Gentleman appreciates that this increase will give considerable help to those able to use it.
Several hon. Members have been worried lest an effect of the scheme is merely to make big farms bigger. I have read this point of view and it has been expressed by various commentators in the agricultural Press and elsewhere. But one of the encouraging features of the scheme so far has been the number of amalgamations between non-viable units. I quote the figures for Scotland, but those for the rest of the country are similar, and in Scotland nearly half the 1677 approvals have involved amalgamations of two uncommercial units. What is particularly significant in Scotland is that in crofting areas the figure is higher still. This encouraging trend shows throughout the rest of the country.
As to the take-up of the Scheme, it is difficult to make comparisons between what has been happening under the Scheme and what happened before, because it is only sensible to compare it with the period before the Scheme came in. We can make such comparison, but it may not be statistically correct because some people may have been anticipating the Scheme. In the two or three years before the Scheme in Scotland amalgamations appeared to be taking place at something like 200 a year. Since the Scheme, this has gone up to about 450 amalgamations a year, and the same is true of other parts of the country. While we cannot be absolutely accurate, it appears that the Scheme has had the effect of bringing about amalgamations.
Speaking for my own part of Scotland, the North-East, an area with a high number of small farms, probably similar to parts of Wales, the rate of take-up there was far in excess of what my Department anticipated. There is regional variation and perhaps the rate has not been so fast in other areas. There can be no doubt but that the Scheme has had the effect of speeding up amalgamations.
What hopes do we have for the Scheme? A number of fairly basic criticisms have been voiced about it. The hon. Member for Cardigan said that all the Government seemed to be doing was making a Scheme that was not entirely effective, and only marginally better, rather than producing a new one. I do not accept that as a fair criticism. A new Scheme would require new legislation. We have to make the best of the Scheme in our hands, provided by an Act of Parliament passed by the previous Government. There have been other, deeper matters raised tonight which we will take up in the review.
I was asked: What are we aiming at as the typical commercial unit? I do not think that there is any secrecy about this or about the number of standard man-days that we use for a commercial 1678 unit. The unit we want is one that would provide an adequate living for the occupier, adequate scope for the use of modern methods and labour-saving machinery and which would generally enable him to employ two men including himself. That is the general aim in bringing forward this Scheme for amalgamations. The detailed criteria must be left to the review and in that review we will certainly take account of what has been said tonight.
What we come back to are the debates we had in Committee. These centred around whether we want to see, in such a Scheme, amalgamations being positively encouraged by the Government and which change the structure of agriculture, or whether on the other hand there should be merely an oiling of the wheels of the amalgamation process taking place in any case. I know that some hon. Members on both sides believe that such a Scheme should be no more than an encouragement of the process already taking place. I am surprised that the hon. Gentleman has not looked back to this in Committee, because it may have been a view I expressed at the time, namely that if we provide a Scheme which is too fast at one end of the scale we may produce an artificial structure too quickly which may not be in keeping with the commercial and economic future that will face agriculture. Equally, on the other hand, we do not want a Scheme which is too slow and does not help to meet the problems which we have to face. Obviously, this is a question which we shall look at during the course of the review.
§ Mr. Elystan Morgan
The hon. Gentleman well appreciates, I believe, that five-sixths of the farms in my constituency are below the limit at which, he maintains, the Government are aiming. Does he appreciate that if that process took place, three-quarters of my constituency socially-speaking would be little more than a desert?
§ Mr. Buchanan-Smith
The hon. Gentleman is entitled to his view of what the effect would be but he demonstrates, I think, that if a scheme went forward too fast, it could have deep repercussions on a locality and on society within that area. The hon. Gentleman has underlined the point which I was making.
1679 The one criticism which we have had—and I give the assurance that this will be borne in mind in the review—is of the apparent slowness of administration between application and the making of payment. I accept the criticism. I would merely say that it is not necessarily a criticism of those who have had to administer the Scheme.
I speak from experience in my constituency in saying that one of the greatest difficulties is the legal stages which have to be followed when an amalgamation takes place. The criticisms that we receive are not so much from the point of view of amalgamators but rather concern the outgoer's payment. In cases which I have handled, hardship has resulted when, in prospect of an outgoer's payment, somebody has left his farm, invested his savings in a house and then has had to wait perhaps two years before either receiving a lump sum or the first instalment of an annuity. I know that this has caused considerable embarrassment and financial difficulty.
In all the cases which I have raised, there has been no fault by those administering the Scheme but the amalgamator has met problems in legal procedures or otherwise in carrying forward his half of the Scheme before the money could be paid out. I give the assurance that this factor will loom very high in the review which takes place, because if the Scheme is to be effective it must work quickly and its effects must work through to those who hope to benefit from it.
We hope that the review—which will be a departmental review and will take place within the Agricultural Departments—will take something like three months or, perhaps, longer. We shall, of course, consult the interests involved, the National Farmers' Unions, and we shall also take into account the views of two university departments of agricultural economics which have studied the working of the Schemes. We want the review to be thorough. We want to use all the work which has been done, in addition to our own experience of the Schemes, before we bring our conclusions to the House in due course.
The Schemes which we are discussing certainly have their defects, but I think 1680 that everyone in the House tonight is in agreement with the general aims. Certainly, the proposals before the House tonight will help the existing Schemes within their limitations. I hope that they will encourage those whom amalgamation and outgoing payments will help to take advantage of what the Schemes have to offer. As to the future, we take the criticisms which have been made and I assure the House that we shall take them fully into account in the review.
§ Question put and agreed to.
That the Farm Structure (Payments to Out-goers) Scheme, 1970, a draft of which was laid before this House on 1st December, be approved.
That the Farm Amalgamations and Boundary Adjustments Scheme, 1970, a draft of which was laid before this House on 1st December, be approved.—[Mr. Stodart.]