AGRICULTURAL AND HORTICULTURAL CO-OPERATION SCHEME

HC Deb 02 March 1971 vol 812 cc1600-25

1.32 a.m.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Anthony Stodart)

I beg to move, That the Agricultural and Horticultural Cooperation Scheme 1971, a draft of which was laid before this House on 28th January, be approved. It gives me a certain amount of relief to see the hon. Member for Erith and Crayford (Mr. Wellbeloved) depart, and to reflect that his wrath, which was being reserved for a later Instrument, is not, I hope, being reserved for this one.

Before describing the effect of this new Scheme I would like to give the House a short account of how the present Scheme has worked during the three years since it began.

Over 1,000 applications have been put in, and these have resulted in £2.8m of grants being approved, some £900,000 of these being for buildings and fixed equipment. The balance has been given mainly for working capital, feasibility studies, the employment and training of managers and formation costs.

Over 400 new co-operatives have been established covering a wide variety of enterprises and commodities. It may be of interest to the House to know that of the total grants paid England received £2.m; Wales £130,000; Scotland £275,000, and Northern Ireland £262,000, which shows how receptive to the principle of co-operation farmers everywhere have been.

It is always essential to pay account to experience, and what has been learned in the last three years has shown that some changes are needed. First, fixed capital grants under the existing Cooperation Scheme are at a maximum rate of 33⅓ per cent. The equivalent grants to individuals are now at higher levels—40 per cent. for agriculture and 35 per cent. for horticulture. In the Government's view, there is no rational basis for this distinction between co-operatives and individuals. The new Scheme provides a maximum rate of 40 per cent. for capital grants.

Eligible co-operatives will receive grants of 40 per cent. for items covered by the Farm Capital Grant Scheme and 35 per cent. for items covered by the Horticulture Improvement Scheme. In short, they will benefit by getting the same treatment as individual producers. Secondly, the new Scheme leaves out the existing provision for grants of working capital to co-operatives for such items as machinery, livestock and operating costs.

These grants have helped to arouse interest in co-operation, but I think that that particular objective has been met. This has been very largely due to the enthusiasm of those who have served on bodies like the Central Council and the Scottish Agricultural Organisation Society, and I found my opinion on the way in which I have seen and heard many of them going about their job.

The Council will in future concentrate on advice and demonstration to illustrate the advantages and techniques of co-operation.

The working capital grants were not available to individuals—

Mr. Thomas Swain (Derbyshire, North-East)

Can the hon. Gentleman say what will be the capital effect of the withdrawal of these grants in toto on the Government?

Mr. Stodart

I shall be coming to that point, if the hon. Gentleman will bear with me.

Those grants tended to put a premium on co-operation, and this led to a certain amount of co-operation merely for the sake of getting a grant.

I am a very strong advocate of farmers co-operating with one another although there are any number of practical difficulties to be overcome. But cooperation is a serious undertaking, and farmers must think very carefully in the light of their own circumstances whether it is a worthwhile proposition for its own sake. There are obvious dangers in distorting investment appraisal, and that is why it is important to maintain parity of treatment between individuals and co-operatives.

It is for these same reasons that the special rate of grant for co-operative projects of a pioneering character has been dropped from the new Scheme. There have been very few grants of this kind, but they have been extremely expensive. The danger with high rates of grant is that they tend to diminish the personal responsibility which is vital in co-operative ventures, and it has been difficult to be sure just what constitutes pioneering at a time when so many developments in co-operation are taking place.

The new Scheme continues the remaining grants for managerial salaries, management training, formation expenses, surveys, studies and research. These are grants which are particularly relevant to the needs of co-operatives rather than individuals. They are closely bound up with the Council's general rôle of encouraging worthwhile and efficient co-operative development.

In addition, the Council will be able to give particular assistance for encouraging co-operation in marketing. I recall saying in answer to a supplementary question in the House some weeks ago that one sphere in which co-operation in marketing is of vital importance is horticulture where a small proportion of produce is at this stage marketed co-operatively. I believe that this could be of tremendous help to the horticulture industry.

Lastly, the new Scheme does not renew the special provisions for co-operation among small producers. These special provisions were hardly ever used, and I believe that they led to administrative complexity. But the Council can still assist co-operation among small producers under its general powers.

The remaining changes in the Scheme are aimed merely at simplifying the administrative machinery, which experience has shown to be unnecessarily cumbersome. These new arrangements will enable the Departments to handle rather more of the routine work through their existing organisations, and the Council will in turn be able to devote increased resources to what is so important for it—its promotional rôle.

I am glad that the new Scheme has the support of the Central Council, which I think has done a splendid job. I should like to take this opportunity of expressing the Government's thanks to the Chairman, Sir Roger Falk, to the members of the Council, and to the chairmen of the Council panels who carry the heavy responsibility of administering the Scheme.

The hon. Member for Derbyshire, North-East (Mr. Swain) asked me about the cost of something to which I referred. I think that it would be tidier if I asked my hon. Friend who will be replying to the debate to give this answer. No doubt I could find it if I searched the copious notes with which my Department has provided me, but I think that would be the tidier way.

I commend the Scheme to the House.

1.42 a.m.

Mr. Michael Barnes (Brentford and Chiswick)

We are grateful to the Parliamentary Secretary for the explanation which he has given of the new Scheme and the account which he has given of the way that the existing Scheme has been working.

We certainly welcome the revised Scheme so far as it raises the rates of grant on the items which it covers to bring them into line with what is now paid to individuals under the Horticulture Improvement Scheme, 1970, and the Farm Capital Grant Scheme, 1970. But we are very concerned that the provision for grants for working capital, which was in the original Scheme introduced by the Labour Government in 1967, is not to be re-enacted. This was announced in the White Paper presented to the House in January, Command 4564. We took the view then that many of the cuts in those proposed changes in the White Paper were rather parsimonious and short-sighted. But we were told that it was part of the Government's new philosophy that farmers, like everybody else. must be encouraged to be self-reliant and must stand on their own feet.

One intriguing point about the Government, if it is not straying too far from the Scheme, is the way that they mix in philosophy with practical politics. There can surely have been few White Papers on agriculture in recent times—perhaps at any time—in which the word "philosophy" reoccurs so often as in this one. However, I should be the last person to complain about philosophers straying into politics, because I am sure that the world would become more civilised as a result.

Concerning co-operatives, one would think that the right philosophy for these grants would be to lay off the grants where co-operation was proving successful and co-operatives were standing on their own feet, but to keep going with the grants where further help was needed. What the Government are doing by discontinuing the grants for working capital is to take away the help from where it is most needed, because last year half the grants made by the Central Council for Agricultural and Horticultural Co-operation went to small farmers in the West Country, Wales and Northern Ireland. The Council may have started with the bigger people, and the objectives may have been successfully achieved with the bigger people, as the Parliamentary Secretary claimed. But after the third year of operation the Council seems to have reached the point of concentrating its help on smaller co-operatives. Another point which we criticise is the short notice of the cancellation of these grants, because this has put the Council in the position of not being able to meet in full all its commitments for grants for working capital.

But, looking at the positive side, we welcome the part that the other capital grants are going to play in promoting more co-operative production, especially more co-operative marketing. As the Parliamentary Secretary said, in horticulture there will be very stiff competition to be met if the negotiations for this country to enter the European Economic Community are successful, because so much of the competition that we have to face in horticulture comes from Europe rather than from the rest of the world. We can help our own horticulture industry to become more competitive only by encouraging it to achieve a higher level of sophistication in production and, especially, in marketing; and it is Schemes of this kind which help to do that So, while we welcome the increased rates of the other grants, we emphasise that we think it is a mistake for the Government to drop these grants for working capital, most of which at the present time seem to be going to the smaller people who most need help with their co-operative ventures.

1.47 a.m.

Mr. Elystan Morgan (Cardigan)

This is an important Order, and we on this side believe it is unfortunate that it should have been introduced in the small hours of the morning in this way. Our objection is not so much to what is contained in the Order, but to what is omitted therefrom.

I have three brief points to make. First, it is most significant, as my hon. Friend has said, that this Scheme omits the provision for working capital. I understood the Parliamentary Secretary to say when he touched on this matter that this does not exclude small farmers, but the last paragraph of the Explanatory Note on page 7 states: This Scheme does not re-enact the specific provisions in the 1967 Scheme relating to grants for working capital, for pioneering in new aspects of co-operation or for individual small producers. It must, therefore, be clear that small producers, who were included from 1967 to the present day, are excluded from this Scheme.

We on this side were singularly unimpressed by the justification put forward by the Parliamentary Secretary. He defended his position with very great charm and with his usual ingenuity, but, for all his fertility of mind and subtlety of thinking in this matter, he failed to make out a credible case. He said that because the number of persons who had taken advantage of these Schemes was small—and he did not give the actual number, so I should be most grateful if the Under-Secretary could give us that information when he is winding-up—then it must be clear that the objective had been achieved. I cannot think of anything less of a non sequitur in this situation.

The basis of our objection is not so much what is contained in this Instrument as the fact that this appears to be yet another instance of discrimination on the part of the Government against small farmers and small units. When we discussed another agricultural provision in December of last year the Under-Secretary of State made it clear that it was the Government's aim to drastically reduce the number of small agricultural holdings.

It is still not clear to us why the Government have adopted this philosophy. Do hon. Gentlemen opposite argue that there is a basic unproductiveness in the small farming enterprise? If so, they seem to be wrong. The evidence shows that the income per acre on a small farm is higher than the average income per acre on the larger units. I have on more than one occasion quoted pertinent figures and they have not been challenged.

Or have the Government an obsession to conform with the European pattern? As with levies, there appears to be a frantic determination on the part of the Government to pay the price of entry into the Community even before we have entered and irrespective of whether or not we enter. In any event, it seems to be the motive of the Government to destroy rural communities. As one who represents a rural constituency and who appreciates that the present trends lead in the direction of making the rural communities deserted areas which might be used as playgrounds for people who want to get away from the busy cities at the weekends, I regard this as an absolutely abhorrent development. The overtones in this Instrument are economically unsound and socially unjust.

The Farm Capital Grant Scheme, 1970, is referred to in the Instrument and there is a list of works and facilities which are eligible for the 40 per cent. grant, including the destruction of cover for rabbits, whether or not it is on agricultural land. I cannot understand why, the Government having done away with the 50 per cent. grant that was paid to rabbit clearance societies, they consider that this matter is so important that a 40 per cent. grant should be payable. Was there an oversight on the part of Government draftsmen, did the matter slip the Minister's mind or has there been a radical reappraisal of the situation, in which case are these clearance societies to receive the grant which they got hitherto?

My third point is on paragraph 7 of Schedule 2 to the Farm Capital. Grants Scheme, 1970, which reads: Provision, replacement or improvement of roads, fords, bridges, culverts, railway crossings, creeps"— whatever those might be— piers, jetties or slips. I refer in particular to roads. As the Parliamentary Secretary is aware, on a number of occasions I have put Questions to him on the provision of more adequate finance for farm roads. I have been lavish in my praise of the legislation for which a previous Conservative Administration was responsible, the Act of 1955, which I believe lasted for a limited term of seven years. It brought great benefits to the farming community. My point is that a great deal of this work remains to be completed. Now, with more and more milk producers having their milk collected by bulk tank collection, it is all the more vitally necessary that farms should be served by adequate roads.

As the representative of a rural community, one of my most frustrating experiences is to receive scores of letters in the course of a year from farmers who want the county council to adopt unclassified roads which serve their farms and are open to the public. It is well known that the limited finances of local authorities which operate in my part of the country are such as to allow only perhaps one out of very 10 or even 20 applications to be favourably regarded.

I put down a Question to the right hon. and learned Gentleman the Secretary of State for Wales a few weeks ago, asking what proposals he had for more adequate finance to meet what is a genuine need in the countryside and a need strongly felt by the agricultural community, and I was told that he had no proposals in this direction. I hope that the Minister will say exactly how extensive is this provision about roads in paragraph 7 of Schedule 2. Does he envisage that this provision could be used to provide the finance which I have mentioned in relation to this most deserving heading of expenditure?

Those are my three points, and I should be very grateful if the Minister would give a full and detailed reply on each of them.

Mr. Arthur Lewis

On a point of order, Mr. Speaker. I have just been for some refreshment and to attend to the wants of nature. A number of my hon. Friends have asked me to raise with you a point of order. They wish to protest and to ask, Mr. Speaker, whether you could take some action to get the Government to arrange their business differently or that you, Sir, could protect the interests of Members of the House. Many of my hon. Friends now on the Scottish Committee wanted to take part in this debate and to hear the Parliamentary Secretary. They tell me that they cannot leave the Committee because that is meeting upstairs. They cannot be in the Committee and in the Chamber of the House. They want to be in two places at once, but that is impossible. Therefore, they asked me to raise this matter with you to see whether action could be taken to help them to undertake their duties to the House, which they wish to do, but obviously without obviating their duties to the Committee on which they are now sitting.

Mr. Speaker

That purports to be a point of order. It is not one. The arrangement of business is not for the Chair. The necessity to be in two places at once is a long-standing shortcoming attached to membership of the House.

2.0 a.m.

Mr. Gwynoro Jones (Carmarthen)

I support my hon. Friend the Member for Cardigan (Mr. Elystan Morgan) in deploring the fact that this important Scheme is being debated at this early hour of the morning. I must express my utter dismay at the absence yet again of the Secretary of State. Only a matter of days ago, in the debate on rural bus services, the Secretary of State's absence was commented on when a matter of such importance to Wales was being debated. Either the Government should try to get the Secretary of State here or they should change the order of business so that debates which are of concern to Wales can take place in mid-afternoon, when the Secretary of State might find it easier to be present.

Carmarthen being one of the three largest agricultural constituencies, the Scheme is of significant importance to it, especially the last sentence in the Explanatory Note which refers to what is excluded or what is not re-enacted from the 1967 Scheme. There are significant economic benefits stemming from co-operation. Many farmers have benefited from that Scheme. The Government's failure to re-enact the proposals regarding working capital and the aid and grants for small producers will hit rural communities which are far removed from markets and which it is difficult to farm. The marginal land farmer is of great importance in the industry. A fair proportion of land in Carmarthen can be termed marginal land. The Government are taking the alarming step of removing from farmers benefits or grants which were previously available, on the pretence that such benefits were too expensive or administratively too complex. Could not a scheme affecting the small producer be so devised that the grant could be maintained for the benefit of the small producer? The administrative side, and not the farmer, should change.

The Parliamentary Secretary said that working capital had helped to arouse interest. Now that interest has been aroused and people are forming co-operatives, the Government are abolishing the grants. People did not come together out of interest. Farmers, like everybody else, desire and demand and are entitled to a fair living. One reason why farmers' interest was aroused was that the grant was available. I shall be interested in the rate of increase which occurs with the disappearance of the grant. The Government's philosophy in failing to re-enact the grant is biased yet again against rural areas, against areas far removed from the market. It is biased against areas where farming is a major part of our local community. The great argument for the small farm in rural areas is that it is the backbone of the community.

How much will the Government save? Of the £130,000 allocated to Wales, how much was in working capital and how much was in grant aid to the small producer? It would be very interesting to find out whether a proportion was geared to areas in most need. What does the Minister expect will be the effect of the failure to re-enact the Scheme? What is his forecast of the effect on co-operation? How much consultation was there with the Council? In the short time since it was set up under the previous Government the Council has done a great deal of work. Its report says that in 1969–70 288 proposals costing £4 million were approved, a significant figure. Does the Minister agree that if we enter the E.E.C. co-operation will become far more important even than it is today, certainly to rural areas?

My hon. Friend the Member for Cardigan referred to unclassified, unadopted farm roads. Only last Friday at a meeting of the Parliamentary Committee of the National Farmers' Union in my county grave concern was expressed because farmers were complaining of the problem of milk lorries finding it difficult to collect milk. Farmers had had to move their point of collection because of bad road conditions.

Mr. Caerwyn E. Roderick (Brecon and Radnor)

In addition to milk lorries, there are other very large lorries going along the lanes, carrying supplies to the farms. I face this problem more often than that of the milk lorries. The drivers, coming from distant towns, are unfamiliar with the lanes. I continually receive requests to beseech the county council to adopt such roads. I hope that the Minister will reconsider the need to adopt the unclassified roads in view of this even more important reason.

Mr. Jones

I am grateful to my hon. Friend for making the point more clearly. I am sure that our farming friends in our constituencies will be pleased that we have drawn the Government's attention, albeit at this early hour of the morning, to the great concern which exists. We must endeavour to assist the small farmer, who is the backbone of our rural communities.

2.11 a.m.

Mr. Eric Deakins (Walthamstow, West)

I, too, deplore the lateness of the hour at which we are discussing these vital matters. I regard this Scheme as the most important Statutory Instrument on the Order Paper. It is a sad commentary on the state of their business that the Government have to push through Statutory Instruments in the small hours of the morning, perhaps in the hope that not too much attention will be paid to them.

I should like to make a couple of preliminary remarks about the interpretation of the Scheme before coming to my main point. I want to make some remarks which apply to the work of the Labour Government and the work which has been done by the present Administration.

My first point relates to the definition of "appropriate Minister". I hope that my hon. Friends from Wales are listening because their attention should be drawn to the derogation of the dignity of the Welsh people and nation, if it is a nation, involved in this definition. Paragraph 2 of the Scheme reads: 'appropriate Minister' means, in relation to any proposal originating in Scotland, the Secretary of State for Scotland, in Wales, the Minister and the Secretary of State for Wales acting jointly". If that definition means anything, it means that the Secretary of State for Wales cannot be trusted to take decisions under this Scheme but must have the backing, and perhaps the connivance and agreement, of the Minister of Agriculture.

Mr. Elystan Morgan

It happened under the previous Government.

Mr. Deakins

That does not make it right. It should not happen. Either we have a Secretary of State for Wales who is capable of performing functions under this Scheme or we do not.

Mr. Roderick

Is my hon. Friend aware that the Minister responsible for agriculture in Wales is a farmer and should know better than to allow this state of affairs to happen?

Mr. Deakins

I was not aware of that, and I am grateful for the information.

I do not wish to dwell on the point whether Scotland can be trusted whereas Wales cannot, but there is something funny here which I hope the Minister will explain for the benefit of new Members like myself who are not aware of the complexities of drafting Statutory Instruments.

Paragraph 1 of the Scheme says that it applies throughout the United Kingdom. But there is no mention in paragraph 2, under the definition of "appropriate Minister", of Northern Ireland. Presumably the Minister of Agriculture in England acts for Northern Ireland. I thought that constitutionally the Northern Ireland Government had a Minister of Agriculture. I wonder whether he is even less to be trusted in carrying out functions under this Scheme than the Secretary of State for Wales. There seems to be a ranking order. England has a Minister; Scotland is allowed to decide for itself through the Secretary of State; in Wales the Secretary of State must consult the Minister; and in Northern Ireland the local Minister does not have any say at all.

I see on the Government Front Bench the Under-Secretary of State for Home Affairs and Agriculture, Scottish Office, and the Whip with whom I have been spending happy hours debating in Committee the Rating Bill, which is concerned with the derating of intensive livestock buildings. On page 2 of the Scheme there is the following definition: 'Producer' means a producer of agricultural or horticultural produce". Had I not been serving on the Committee on the Rating Bill, I might have taken that definition for what it was—a straightforward, succinct, concise and clear definition of a producer. But my experience in the Committee has taught me that "producer" does not always mean what it says. We have had a number of friendly discussions in that Committee on what constitutes agricultural produce. Reference has been made to the Agriculture Acts of 1947, 1957 and 1967. It seems that there is one definition for rating purposes, another in regard to the definition of "livestock", and yet another in this Scheme.

I hope the Minister will say that agricultural produce does not include animals for the production of furs or skins, meaning mink, chinchilla, and so on. Today on the Rating Bill we concluded some vigorous discussion on whether such animals were agricultural produce and, if so, whether buildings in which they were kept should qualify for derating. This is an important point.

In view of the uncertainty about the definition of agricultural produce, I hope we shall be told clearly that agricultural produce means what it says and does not include livestock as defined in the 1947 Act. Section 109 of that Act says that "livestock" means any animal kept for fur or wool or skins for commercial production.

That brings me to my main point, the definition of "co-operative". Because I was not here in 1967—I list a famous byelection—I did not have the opportunity to take part in debating the original legislation which extended widely what up to then had been generally understood to be co-operatives both in agriculture and elsewhere. Section 61 of the 1967 Act says: The Ministers may, in accordance with a scheme made by them with the approval of the Treasury, make out of money provided by Parliament grants in connection with the carrying out by any person of proposals designed to organise, promote, encourage, develop or coordinate any form of co-operation in agricultural or horticulture, including co-operation and mutual assistance in production, storage. preparation for market, marketing, transport. Those words are repeated in Schedule 3 of the Scheme. The definition was too wide in 1967 and continues to be far too wide.

Mr. Elystan Morgan

Perhaps I could make a non-political point and draw my hon. Friend's attention to Section 61(2) of the 1967 Act, which excludes agricultural co-operative societies which, in the eyes of many, should have been the first beneficiaries under Part IV of the Act. Far from its being too wide, it was far too narrow.

Mr. Deakins

I am grateful for that intervention, but I do not think it affects the point I am about to make. The Labour Government, wrongly in my opinion, but rightly in the opinion of Parliament at the time, decided that grants would be made to a large number of agricultural organisations which were not at the stage when the Act was passed into law by any definition agricultural cooperatives in the traditional sense. I believe the then Minister felt that there was a need to widen the field of agricultural co-operation, but the method chosen was one which meant that grants could be made through the new Central Council for Agricultural and Horticultural Co-operation, whose wings have since been clipped. Grants could be made not only to traditional co-operative societies but to groupings of producers which in some way could bring themselves into the definition of Section 61 to qualify for grants.

The Minister made an interesting statement. He said that grants from 1967 onward had in some cases led to cooperatives being formed for the sake of getting the grant. I have had some experience of working in agricultural marketing, and I thoroughly endorse his remarks. I think it thoroughly regrettable that the previous Administration should so have widened the definition of cooperatives as positively to have encouraged the formation of producer groups many of which, I confirm from bitter experience, came into existence solely for the purpose of obtaining Government money.

I also confirm from my experience in an agricultural marketing organisation unconnected with the Government that whenever one offers money to producers on the basis that they must get together first to benefit from the money, they will always get together for that purpose, but whether or not they put the money to good use is very doubtful. In some cases they do, but in some they do not. It would be interesting to see after the first three years of the Labour Government Scheme, comparing the amount of money paid out with the number of organisations which benefited, exactly how many so-called groups brought within the ambit of the definition in 1967 in fact managed to survive with their own resources after the grants were withdrawn.

The grants were scaled down from a large amount in the first year, less in the second and still less in the third, and after that they were cut off. In livestock and pig marketing a large number of groups were formed for the purpose of getting the grant. They convinced the Minister and the Central Council that they would do a good job, but at the end of that time, having used most of the grants to employ a marketing officer, they had not done sufficient ground work and structuring to gain enough loyalty among their members to ensure that after the three years they could survive as viable entities. It would be interesting to know how much public money has been thrown down the drain in the three years, after which these organisations have ceased to exist. I suspect that it has been a fair amount. It was taxpayers' money. If these points had been made in 1967, some or all of that loss could have been avoided.

Schedule 4(1), which deals with the amount of grant, gives the Minister a great deal of discretion in deciding what percentage of any appropriate grant laid down in paragraph 2 he can give to any particular grouping of individuals, an individual or a co-operative. It seems that this is giving the Minister a great deal of discretion. I would have thought that in agriculture we need, as far as possible, to make certain that money is disbursed according to rules laid down by this sort of Statutory Instrument. In view of what has been happening, particularly with groups over the past few years, we should not look kindly on the renewal of discretionary powers. The Minister ought to think again or at least give us some explanation why these powers should continue.

Another thing that worries me is in Schedule 4(1), which says that the Minister may calculate, in his discretion, the percentage grant by reference to expenditure reasonably incurred. That is beyond dispute. But he may also calculate it by reference to an estimate of expenditure so incurred. It seems that this is a concession to the sort of groups about which I have been talking, which may not keep sufficient records to satisfy normal accounting procedures. Because they have put in a scheme which was approved, got the money and spent it or are on the way to spending it, the Minister is having to say that it is the best that can be done and an estimate has been taken of what would be spent and the grant based on that.

I want to stress the point that estimates of expenditure in any area can be way out. It is seen in all sorts of things, and in industry generally. How much more so is this true of livestock, when we are dealing with living animals which cannot be assessed in the same way as the raw materials for something like the RB211? If anyone knows anything about agriculture, he will realise that it is impossible to tie the hands of people who want to get grants in quite the same way as it is possible in industry. It should be possible for any worth-while co-operative which wants a Government grant to apply after it has spent the money or when it has a water-tight scheme, which does not provide a reasonable estimate to the Minister but makes certain that the money has been spent and spent wisely.

The last five words of the paragraph: … or in any other way give the Minister a wide-ranging discretion to pay out these grants on any basis whatsoever. Perhaps the Minister will explain why the wording … or in any other way should be necessary. Why should any form of agricultural co-operative, set up for whatever purpose, not have to fulfil the normal obligations of any organisasational group of people applying for money from any body; namely, the need to put in a workable scheme, to cost it as thoroughly as possible and to go ahead on that basis, coming back if things go wrong? There should be no reason for these words.

My basic point is in Schedule 4(2)(e), which refers to grants relating to the setting up of a co-operative association. "Co-operative association" means more than "agricultural co-operative". I wish it merely meant that. What it means is what the Labour Government meant in 1967 in Section 61 of the 1967 Act, namely, any group of producers which gets together for the purpose of forming some form of co-operative or engaging in a co-operative activity merely for the purposes of getting money from the Government.

In view of what the Minister has said about groups being formed specifically because money is available, and in view of what I have said, from which the Minister did not dissent, about a number of groups disappearing after the 3-year grant period was over because they were not viable, the wording "co-operative association" needs to be looked at closely. Experience has shown it to be too widely drawn. I hope there will be machinery to ensure that money is not thrown away on ad hoc groupings formed for the purpose of getting money.

I should like to see a report by the Council on the workings of groups which have received grants after the grants have been withdrawn. Once aid stops the groups no longer figure in the annual report of the Council. It is the groups which disappear from the limelight after having received taxpayers' money which worry me.

It may be thought that I have been prejudiced in singling out certain groups, but the whole tone of Parliament on agriculture is that farmers and producers must stand on their own feet and organise their own marketing. I received a reply to a Question yesterday which bears this out. In answer to Question No. 43, the Minister referred to the policy of the Government under which the producer would increasingly get his return from the market instead of from deficiency payments or public funds, and he said that this would provide a positive incentive for farmers individually and collectively to improve marketing.

I hope that the Government will push more money into agriculture to improve marketing, but there is no point in wasting the taxpayers' money ostensibly for the purpose of improving agricultural marketing when the groups to which the money is paid do not survive as viable units after the payments cease and when they are tempted by Government money to engage in marketing activities which are beyond their capacity. This particularly applies to livestock and pig marketing. Groups have taken livestock marketing through to the consumers, they have bought slaughterhouses, transport fleets and processing units and have had links with retail shops. At the end of the day they have gone bust because they lacked the professional expertise necessary for large-scale marketing operations.

I do not want to argue for a national approach to marketing either in the light of possible entry to the Common Market, when it will be essential for all agricultural products, or in the light of import levies, which we on this side regret. Import levies will not necessarily help to keep up market prices. I do not want to anticipate any agricultural debate we might have, although since June, 1970, we have not had a debate on agriculture, which is appalling since agriculture is our largest industry. I hope that there will soon be a debate on the implications of the Government's agricultural policy.

Mr. Deputy Speaker (Miss Harvie Anderson)

Order. I hope that the hon. Gentleman will confine his attention to the Scheme.

Mr. Deakins

I am sorry I was straying, Mr. Deputy Speaker, but one is tempted in this debate—because it is our first opportunity to debate agriculture at any length in this Parliament—to wander a little from the wording of the Statutory Instrument.

Mr. Deputy Speaker

Order. I hope that the hon. Gentleman will not wander. That is what I am trying to discourage him from doing.

Mr. Deakins

I assure you that I will bring myself quickly into order, Mr. Deputy Speaker, by returning to the question of marketing. The Government want to make grants to improve marketing. The grants will be wasted unless they are paid to bodies which will be viable entities when the grants are eventu- ally withdrawn and unless the Government bear in mind the general marketing circumstances of the sections of the industry to which the grants are paid.

It may be, for example, that in livestock marketing—the Meat and Livestock Commission does not have marketing powers—the Government would be better advised, rather than putting money into groups, to encourage the Commission or some other statutory body, perhaps a producer marketing board, to undertake the marketing of livestock. I do not press the point and I shall not argue it tonight, but the Government should consider the suggestion if they are sincere in their desire to aid the farming community to improve the marketing of agricultural products.

I am sure that everyone will agree that the marketing of agricultural produce has lagged behind improvements in production. It has tended to be neglected by our farmers, very sadly. and this Statutory Instrument is trying to provide them with money. At the same time, we have a duty to our constituents, although we approve the objective of improving marketing, to ensure that any public money paid out will not be wasted. The Government and the Central Council should think seriously about future marketing projects.

Paragraph 6(2,a) of the Scheme has the direct implication that groups are to be involved in the purpose for which the Scheme is designed. It refers to applications for grants and to co-operative associations and their definition, stating that such associations must possess and exercise, powers designed to secure such loyalty and support from the members of the association as the Council consider to be necessary". This is a most important point because one of the reasons why marketing has not progressed in this country as much as in other countries, such as Denmark and New Zealand, is that British farmers have rightly valued their independence in marketing much more highly than the exercise of co-operative projects, particularly against the many outside interests which are seeking to move into agriculture.

Paragraph 6(2,a) suggests that the Government—and, I hope, the Central Council—are aware that a group must have power to secure loyalty and support from its members. It has not been a condition so far of giving agricultural support to groups and co-operative associations that they should have enforceable legal power over their members. If a capital grant is given, there must be some means of ensuring that it is not dispersed, but there is no point, for example in setting up a suite of offices in a country be sure that the members will be loyal to the marketing officer and the project.

Groups of producers may come together with a viable project, asking for X thousand pounds for the next three years, and the Central Council and the Minister must take such projects largely on trust. What happens if, after payment of the grant, some members decide not to market their produce through the group? It undermines the group's viability.

Paragraph 6(c) and (f) refer to what the Central Council shall take into consideration. One such matter, the scale and general merits of the proposal, is acceptable. Then there is the practicability and suitability for the particular applicant. When there is an offer, people tend to bite off more than they can chew, provided that they do not have to pay in any fixed capital. If the project fails, they think, they will not lose very much. But this is of interest to the House, because Government and taxpayers' money is involved. If sub-paragraph (c) represents a change of heart by the Government, and they are going to be more cautious in paying out money, I welcome it, but I hope that it ensures that the Central Council remembers what has been said in this debate. I am not sure that it knows of the feeling that grants have been paid out high, wide and handsome, with the result that neither agriculture nor the nation is better off.

Under sub-paragraph (f) the Council must take into account such matters as may be appropriate. This should include the sort of things which I have mentioned and a survey of the long-term viability of the project, and should bear some relationship to the situation in that segment of the industry, to ensure that groups do not bite off more than they can chew.

Mr. James Wellbeloved (Erith and Crayford)

Again, this is a very wide and all-embracing Schedule suggesting something but not spelling out in detail what the Government require, as my hon. Friend has so well illustrated in respect of the powers designed to secure loyalty and support. It is because of the looseness of the drafting and the matters which are not spelled out that it will be very difficult for many of us on this side of the House to support the Scheme.

Mr. Deakins

I agree. But the point which my hon. Friend was making and which I had not yet mentioned comes in Schedules 9 and 10. With permission, I will draw attention to Schedule 9(2) and Schedule 10(c). Paragraph 2 requires the Council to make a report to the appropriate Minister on the state of progress on projects, and paragraph (c)(i) also requires the applicant for a grant to submit to the Council a report on the progress made in carrying out the approved proposal.

Nothing that I have said is a condemnation of the existing machinery for vetting proposals while they continue. My point is that once the grant has been withdrawn, there seems to be no further obligation on the applicant to report on future progress, no further obligation on the Council to report back to the Minister, and no further obligation on the Minister to report to this House. In paragraph (e) there is a mandatory requirement to keep books, records or other documents until after the expiration of two years from 31st March next following the date on which payment of grant was completed. That suggests that there could be very simple machinery designed to ensure that, after grants have been withdrawn at the end of the statutory three-year period, individuals and groupings of producers are still vetted.

I am afraid that I have spoken for longer than I intended, and I must apologise to those of my hon. Friends who were hoping to speak in this debate. However, this is a matter which is near and dear to my heart and one on which, in recent years outside this House, I have often wanted to express an opinion. The definition of "co-operative association" in the 1967 Act was a disgrace, and I am prepared to say that to the face of the author of the Measure. I hope that the Government will take what I have said about the weakness of this Statutory Instrument, and draw the attention of the Central Council to the points which have been made in the debate.

2.48 a.m.

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

This has been a full and interesting debate. I am sorry that hon. Gentlemen opposite have complained about the lateness of the hour at which this Scheme has come before the House. Over the past six years, there have been many occasions when I have had to debate agricultural Orders late into the night, but I regarded it as part of my duty as an hon. Member representing an agricultural constituency, and I did not find it onerous to represent my constituents' interests. The depth of the discussion does not exactly indicate that the lateness of the hour has hindered hon. Members in putting forward their points. For those reasons, therefore, I must reject their synthetic indignation.

Mr. Gwynoro Jones

May I ask the hon. Gentleman whether his strictures on the urgency or the need for us to attend apply to the Secretary of State for Wales as well?

Mr. Buchanan-Smith

I do not see the point of that intervention. I am here to answer the debate. My hon. Friend the Parliamentary Secretary was here to open it.

I shall endeavour to answer as many of the points which have been put as is possible in the short time left to me.

I should like, first, to deal with the statistical aspect which was raised by the hon. Member for Derbyshire, North-East (Mr. Swain) about the saving to be made by withdrawing grants for working capital. This was, I thought, answered in part by the hon. Member for Brent-ford and Chiswick (Mr. Barnes), whose figures were correct. In 1970–71 the estimated amount being spent on working capital grants is £450,000 out of a total expenditure under the Scheme of £850,000.

I was asked certain questions about the number of applications and the amount of grants which have been approved in different parts of the United Kingdom. I apologise for wearying the House with statistics, but I have been asked for them.

In England there have been 676 applications with grants approved of £2,126,000. In Wales there were 68 applications with grants approved of £130,000. In Scotland there were 96 applications with grants approved of £275,000. For Northern Ireland the figures are 190 applications and grants approved of £262,000. I am sure that my hon. Friends from Northern Ireland will be very interested to know those figures. There has been a total of 1,030 applications with grants approved of £2,793,000.

Concerning the point raised by the hon. Member for Carmarthen (Mr. Gwynoro Jones), the detailed figure relating to working capital for Wales is not available.

Before coming to what I regard as the central issues, it might be helpful to deal with two points raised by the hon. Member for Cardigan (Mr. Elystan Morgan), who takes a great interest in matters of co-operation.

The first point related to what the hon. Gentleman called a schizophrenia on the part of the Government, on the one hand, approving, through the Farm Capital Grant Scheme, of which co-operative organisations can make use to clear scrubland of rabbits, and, on the other hand, withdrawing support for rabbit clearance societies. There is a difference. The Capital Grant Scheme deals with capital grants of one kind and another. There is no schizophrenia in at the same time withdrawing assistance towards current expenditure for a particular aspect of this work in dealing with these pests. I agree that it is a fair debating point to make in this Chamber, but it does not demonstrate any inconsistency.

The second point raised by the hon. Gentleman, and also by the hon. Member for Carmarthen, related to roads. I appreciate the problem in rural areas concerning unclassified roads and access. not only to milk tankers, but to other vehicles. I represent a rural constituency—North Angus and Mearns—and I was horn and brought up in a country area, so I know about these difficulties. I agree with one hon. Gentleman who, in an intervention, said that the problem went much further than milk tankers, and so on. All I can say is that, so far as unclassified roads are concerned, this is a matter which has to be taken up with the local authority. If the hon. Gentleman wants to pursue it, he should pursue it with the Department of the Environment. But as regards farm roads, the capital grants scheme applies to these, and if there is a co-operative which chooses to put forward an application on a cooperative basis to improve access roads to farms themselves—not unclassified public roads—then such a case will be examined on its merits and will, in principle, be one on which grant can apply. I hope that answers the point which the hon. Gentleman raised.

Mr. Elystan Morgan

Will the Minister pay attention to the fact that the grant in this case is a grant of 40 per cent., whereas the grant in 1955 was 80 per cent? Is he willing to consider the possibility of raising the grant so far as that expenditure is concerned?

Mr. Buchanan-Smith

This comes under the parent Order which we debated before Christmas, and I could not give any assurance on those grounds. The point I would make is that there is a higher rate of grant so far as hill areas are concerned, so that with the more difficult type of farm there would be a possibility, depending on the eligibility of the farm, of a higher rate of grant.

I should now like to come to what I believe were the two main points in the debate: namely, first, the withdrawal of assistance for working capital; and, secondly, the question of helping smaller co-operatives. As regards working capital, I would, I am afraid, merely refer to what my hon. Friend the Member for Edinburgh, West (Mr. Stodart) said in opening this debate. What we are particularly concerned to do is to see that the money which we are spending under these Schemes is cost effective. It is taxpayers' money, and it is the wish of the farming community that the money is applied in the best possible manner to give the best return. That is why, in principle, we believe it is right to support co-operatives. If we did not believe we were getting a proper return, we would not be putting forward the Scheme this evening.

We believe that the money that has been invested in these working capital grants has not been as effective as we should have liked. There has been evidence—and this has been said to me by individual producers who have formed co-operatives—that farmers have been encouraged to co-operate merely for the sake of the grant. This is not what we want them to do. We want them to co-operate for the sake of the benefits which they believe co-operation will bring, and the purpose of a Scheme such as this is to oil the wheels and give promotional help. As my hon. Friend said in opening, that has been accepted by the Central Council. While I accept that there has been a certain amount of criticism in certain quarters in the agricultural community, there are many individual farmers who have had experience of co-operation who believe that we are right in wanting the money to be effective, in restricting help in this way, and in concentrating much more on the promotional aspect.

The second main point with which I should like to deal before I am beaten by the clock concerns the smaller co-operatives. The hon. Member for Cardigan and the hon. Member for Carmarthen both raised this question. I must confess that I felt the hon. Member for Cardigan —with whom I always enjoy debating, and who always contributes very constructively to these debates—was using rather extravagent language when he said that we were set to destroy rural communities and so on. I felt he was slightly misquoting what I said before Christmas, in saying that we were trying to further the cause of the big farmer and so on. That is not at all what I said. I said that what we wanted to do was to help the small farmer to increase the size of his business and to make him more viable, which is quite different. It is important to get that on the record tonight.

The hon. Member for Carmarthen said that if, having examined the position of small producers, there were administrative difficulties standing in the way, we should do something about those difficulties. I could not agree more. If it were merely a question of administrative difficulties we would, of course, be prepared to consider the administrative arrangements to see if they could be improved. But I assure him that we have made this alteration for reasons other than administrative difficulties.

The answer to the questions that were asked about grants to small producers' associations is that in the period of the Scheme, there have been only two applications. Special machinery has, of course, been available to deal with these, but, in view of the obviously very limited problem, we did not feel that it would be sensible to carry on with this administrative machinery.

The important point to bear in mind is that small producers are not excluded from the Scheme. We are giving them

Division No. 222.]	AYES	[3.1 a.m.
Alison, Michael (Barkston Ash)	Gummer, Selwyn	Parkinson, Cecil (Enfield, W.)
Allason, James (Hemel Hempstead)	Haselhurst, Alan	Pink, R. Bonner
Atkins, Humphrey	Havers, Michael	Pounder, Rafton
Baker, Kenneth (St. Marylebone)	Hawkins, Paul	Pym, Rt. Hn. Francis
Boardman, Tom (Leicester, S.W.)	Hornby, Richard	Redmond, Robert
Boscawen, Robert	Howe, Hn. Sir Geoffrey (Reigate)	Reed, Laurance (Bolton, E.)
Bray, Ronald	Howell, Ralph (Norfolk, N.)	Rees, Peter (Dover)
Brewis, John	Hunt, John	Ridley, Hn. Nicholas
Brocklebank-Fowler, Christopher	Hutchison, Michael Clark	Roberts, Michael (Cardiff, N.)
Brown, Sir Edward (Bath)	Jenkin, Patrick (Woodford)	Roberts, Wyn (Conway)
Bruce-Gardyne, J.	Jennings, J. C. (Burton)	Rossi, Hugh (Hornsey)
Buchanan-Smith, Alick(Angus,N&M)	Jopling, Michael	Scott-Hopkins, James
Chapman, Sydney	King, Tom (Bridgwater)	Sharples, Richard
Chataway, Rt. Hn. Christopher	Kinsey, J. R.	Shaw, Michael (Sc'b'gh & Whitby)
Chichester-Clark, R.	Kitson, Timothy	Shelton, William (Clapham)
Clarke, Kenneth (Rushcliffe)	Knight, Mrs. Jill	Soref, Harold
Cockeram, Eric	Knox, David	Speed, Keith
Cormack, Patrick	Legge-Bourke, Sir Harry	Spence, John
Dalkeith, Earl of	Longden, Gilbert	Sproat, Iain
Dixon, Piers	MacArthur, Ian	Stanbrook, Ivor
du Cann, Rt. Hn. Edward	Mather, Carol	Stodart, Anthony (Edinburgh, W.)
Eden, Sir John	Maxwell-Hyslop, R. J.	Stuttaford, Dr. Tom
Eyre, Reginald	Meyer, Sir Anthony	Sutcliffe, John
Fenner, Mrs. Peggy	Mitchell,Lt.Col.C.(Aberdeenshire,W)	Taylor,Edward M.(G'gow,Cathcart)
Fidler, Michael	Moate, Roger	Taylor, Robert (Croydon, N.W.)
Finsberg, Geoffrey (Hampstead)	Molyneaux, James	Tebbit, Norman
Fortescue, Tim	Money, Ernle	Thomas, John Stradling (Monmouth)
Fowler, Norman	Monks, Mrs. Connie	van Straubenzee, W. R.
Gibson-Watt, David	Monro, Hector	Whitelaw, Rt. Hn. William
Gilmour, Sir John (Fife, E.)	More, Jasper	Worsley, Marcus
Goodhart, Philip	Neave, Airey	Younger, Hn. George
Goodhew, Victor	Normanton, Tom
Gower, Raymond	Osborn, John	TELLERS FOR THE AYES:
Gray, Hamish	Owen, Idris (Stockport, N.)	Mr. Bernard Weatherill and
Green, Alan	Page, Graham (Crosby)	Mr. Walter Clegg.

NOES
Cocks, Michael (Bristol, S.)	Morgan, Elystan (Cardiganshire)	TELLERS FOR THE NOES:
English, Michael	Roderick, Caerwyn E.(Br'c'n&R'dnor)	Mr. James Wellbeloved and
Jones, Gwynoro (Carmarthen)		Mr. Eric Deakins.

Resolved, That the Agricultural and Horticultural Co-operation Scheme 1971, a draft of which was laid before this House on 28th January, be approved.