HC Deb 15 May 1972 vol 837 cc181-202

11.4 p.m.

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

I beg to move, That the Fertilisers (United Kingdom) Scheme 1972, a draft of which was laid before this House on 25th April, be approved.

The purpose of this Scheme is to continue for a further year the payment of claims made by farmers and growers for a contribution towards the cost of their fertilisers. The rates of contribution, which are specified in the Schedule to the Scheme, have been reduced by approximately 60 per cent, compared with those at present in force. This follows the proposals in the Annual Review White Paper that £20 million of the fertiliser subsidy should be used to provide resources in other ways. The total cost of the subsidy in 1972–73, if the House approves the Scheme, is now expected to be about £13 million. In all other respects, the Scheme is similar to the one which is due to expire on 31st May.

It may be helpful to hon. Members if I touch briefly on the history of this particular subsidy and then say something about the proposed reduction in rates.

Schemes in the present form have existed for 20 years. During this period the annual consumption of fertilisers in the United Kingdom has increased by about 1 million nutrient tons, from 830,000 to some 1,825,000 tons. There can be no doubt that the subsidy has played an important part, particularly in the early years, in encouraging this greater use of fertilisers. Since 1960 it has been customary to compensate for increases in fertiliser consumption by adjusting the rates of contribution from time to time so as to keep the annual cost of subsidy to about £32 million. Without such adjustments, the cost of the subsidy would have risen to unreasonably high levels. This year's proposals mark a radical change in the history of this Scheme.

A cut of 60 per cent, in the rates of fertiliser subsidy, equivalent on average to about £4 to £4.50 per ton, may strike the House as being severe, and some hon. Members may fear an adverse effect on the level of consumption. This is a possibility which, of course, has been care- fully considered by my right hon. Friend However, we are confident that the Annual Review determinations as a whole will encourage rather than discourage the efficient use of fertilisers. Farmers and growers are well aware of the value of fertilisers and, given the resources and the right conditions, we believe that they will use them effectively.

I do not wish to stray from the point, but it is relevant to these proposals to remind the House that under the terms of the Annual Review the amount by which the fertiliser subsidy has been reduced will be made available in other ways—that is very important indeed—mainly in the form of higher end price guarantees and also by other special measures, some of which the House has already approved, for hill farmers and horticulturists. Beyond this, the livestock production incentives provided by the Review determination will, we believe, also encourage the increased use of fertilisers, particularly on grass land where the scope for expansion in this respect is greatest.

In the light of present conditions in the farming industry and the promise for the future, we think, therefore, that it is no longer necessary or desirable specifically to encourage the use of fertilisers by means of a direct subsidy at the present high level. The farmers' unions have accepted the proposals.

I should have liked to end by giving the House some information about the future of this subsidy, but no decisions have been taken. The Scheme which I am now submitting will, if the House approves, expire at the end of May, 1973. Decisions as to the future of the Scheme beyond that date will be taken in the light of circumstances at the time and in consultation with the farming industry.

I ask the House to approve the 1972 Fertiliser Scheme now before it, so enabling the subsidy on fertilisers to be paid during the year 1972–73 at the specified rates.

11.10 p.m.

Mr. Eric Deakins (Walthamstow, West)

The hon. Member has been rather briefer than he need have been in view of the importance of the Scheme. This is, in a way, an historic occasion. It marks the beginning of the end for a well-tried and successful system of supporting agriculture which, as the hon. Gentleman said, has lasted, with minor variations, since 1952.

The cut of 60 per cent. £20 million—going on to end prices is a major policy switch which was mentioned in this year's Price Review White Paper. The Minister called it a radical change. One of my hon. Friends called it a severe change. I think that it ought to be described as a drastic change, if not a revolutionary one, particularly if the subsidy is to be phased out altogether.

There are one or two questions which I think need answering, even in the short space of the debate on this Scheme. First, does the Minister have any idea or estimate of the effect on fertiliser prices, which will obviously be of great interest to the farming community? It is obviously unlikely that prices will fall. The likelihood is that the cost of fertilisers to farmers will rise. In the last few years the gross expenditure by the farming community on fertilisers and lime has been increasing very rapidly—at about 7 per cent. a year. Are the Government confident that this rate of increase will go on even with this severe cut in the fertiliser subsidy?

Far more important than the pricing of fertilisers is the whole question of the effect of the Scheme on the amount of fertiliser that is likely to be used in future. I think that hon. Members on both sides of the House are aware of the tremendous importance of the part that fertilisers have played in improving the agricultural productivity of farming—something which we all support. The Minister gave us some indication of that when he mentioned a more than 100 per cent. increase in the use of fertilisers in the last 20 years. He could have gone on and given us other figures, which I am sure are available from farm costing schemes, of the actual increase in productivity per acre.

This is a view which the Government appear to share, because there is mention of the importance of fertilisers to the agriculture economy in paragraph 7 of the White Paper, but are the Government confident that the same amount of fertiliser is likely to be used in future? Is there not at least a danger that some farmers—although we hope not the bulk of them—will be tempted to skimp on this essential feature of good husbandry?

Such a policy could be false economy, particularly on grass land where, we all agree, there is tremendous scope for the increased and better use of fertilisers.

My third question relates to soil structure and fertility. Does this new policy—and I think that it is a new policy embodied in this Scheme—mean that the Government are leaving problems of soil structure and fertility to individual farmers to resolve? The hon. Gentleman will recall the Agricultural Advisory Committee's Report in 1971 on these problems. Several of its recommendations had a bearing on the use of fertilisers, particularly on grass land, and stressed the beneficial nature of this process in agriculture. This is not an unimportant point, because the soil is part of the fixed capital both of agriculture and of the nation, and correct fertiliser application is an essential means both of maintaining that fixed capital and of realising its full potential. This is a matter in which any Government must retain not only an interest but a measure of control.

If fertiliser prices rise, which is likely, farmers will have to become much more calculating and more precise in the use they make of fertilisers, and one wonders whether the present Government advisory service will be fully capable of assisting farmers in this context. Obviously the fertiliser manufacturers and merchants will do their best, but this is such a serious problem that it cannot be left to the trade to give the appropriate advice in individual cases.

Is this cut being made because the fertiliser subsidy is incompatible with Common Market regulations? The Minister must have expected my hon. Friends to ask this question. If so, why does not the Minister have the courage of his EEC convictions and say so, for the farmers of Britain would be interested to know the true position.

The Minister said he had not yet taken any decisions about the future. Is it not likely that if we have a 60 per cent. cut in one year, the future of this subsidy must be very uncertain? Cannot the Government clear up this uncertainty by saying one way or the other whether the subsidy will be removed completely next year? This is a vital question to which the farmers and the trade are entitled to an answer now. They should not have to wait until next March, April or May.

If the subsidy is being phased out, what is the reason? Why could it not have been done more gradually, rather than by this swingeing cut which can greatly affect a number of farmers and particularly those who have been late in ordering their fertilisers at the old rate and find that they cannot get deliveries before 31st May?

11.17 p.m.

Mr. Charles Morrison (Devizes)

The hon. Member for Walthamstow, West (Mr. Deakins) expressed concern over a number of points, and I suppose that it is likely that fertiliser prices will rise somewhat. However, he forgot to mention that my right hon. Friend is endeavouring to increase the end price and to benefit the farmer.

In any event, I do not think the hon. Gentleman's fears about farmers skimping on fertiliser application holds good nowadays because the farmer of today is a very different type of person from the farmer for whom the fertiliser subsidy was originally designed. Modern farmers are more highly skilled and scientific. They will continue to make the best use, and where necessary increasing use, of fertilisers.

In his wish to farm well with the use of fertilisers, the farmer will benefit the whole time from the increased support which the Minister has given to the industry as a whole this year. Far from the swingeing cut, as the hon. Member for Walthamstow called it, most farmers this year will obtain a double boost. Most farmers have obtained their fertilisers for the current year with the aid of the subsidy. They will benefit from the increased end price. In addition, a number of farmers will purchase fertilisers for next year before the subsidy is cut on 1st June. It is clear, if one looks at the matter that way, that the Minister is doing the industry a considerable service by his handling of the fertiliser subsidy this year. I have no doubt that farmers have appreciated this point and will take great advantage of it, and will once more have cause to thank my right hon. Friend for the magnificent job he is doing.

11.20 p.m.

Mr. John Mackie (Enfield, East)

I congratulate the hon. Member for Devizes (Mr. Charles Morrison) on his ingenious defence of the Parliamentary Secretary's point about the good he has done farmers by having them spend more money before 1st June than they would normally have to spend.

I was rather amused at the Parliamentary Secretary's opening remarks that the purpose of the Scheme was to continue the fertiliser subsidy and, in the next sentence, to reduce it by £20 million I well remember the Parliamentary Secretary and his hon. Friend the Member for Westmorland (Mr. Jopling), who we used to call the nuisance twins when the Labour Party were in office. When we cut the subsidy by about 1 million to make it £32 million, the synthetic indignation was nobody's business.

Mr. Peter Mills

Will the hon. Member give way?

Mr. Mackie

No, he will not. The hon. Gentleman must take all that he gets from the Opposition when he cuts the subsidy by what my hon. Friend the Member for Walthamstow, West (Mr. Deakins) said was a severe cut but what I would call a savage cut.

Mr. Mills

Will the hon. Member give way?

Mr. Mackie

The hon. Gentleman is a nice chap, so I will give way.

Mr. Mills

I ask the hon. Gentleman to cast his mind back to the circumstances of that time. Production was dropping, and the Socialist Government gave no increases in the end price. My right hon. Friend has given new confidence, production is increasing, and he has added to the end price.

Mr. Mackie

I did not intend to speak for long, but I shall now tell a story about an Aberdeenshire farmer who was buying his sister's farm at Ellon from a mortgagee. In order to keep the price down he was trying to relate how much improvement he had done and how many drains he had dug, saying that he had carted 600 loads of stones for drains, and so on. The mortgagee could not be bothered with that sort of thing and he said, "If you tell me that again I shall begin to believe it." The farmer said, "If you let me tell it again I shall believe it myself." That is the position of which the Minister and the Minister of State are trying to persuade themselves.

They have told the story so often. The Minister has been tearing about the country telling farmers how enthusiastic they are, and he is beginning to believe it himself.

To return to the fertiliser subsidy, I had reached the point when I said that this was a savage cut of almost one-third. The Parliamentary Secretary says that the money will be used in other ways in agriculture. But what way could be better than this one? I am convinced that an increase in the price of fertiliser will have a psychological effect on farmers.

The Minister says that it will make us more efficient. The hon. Member for Devizes said that over the years we had looked to using fertilisers more efficiently. The profitability of farmers, even in the last two years, has made us look to all the uses to which we have to put fertilisers. We have certainly not been splashing it about, as has been suggested. The money spent on fertiliser grants goes into the land. That is so with other grants, such as building grants. It is permanent. Its importance to agriculture is the same as that for lime and drainage. This is the advantage of this type of grant, besides putting it on to the end price—which, for all we know, may be spent in Monte Carlo or a similar place.

There is something in standing on our own feet, and so on, but these grants have done a great deal for agriculture over the years. If their removal is simply to tie in with the EEC, that should be stated. Even so, why remove them now? Why not keep them until the last moment? The Minister has taken a retrograde step. The three farmers on the Government Front Bench should reconsider it.

11.25 p.m.

Mr. Robert Hicks (Bodmin)

The hon. Member for Enfield, East (Mr. Mackie) said that we on this side of the House were trying to convince ourselves that confidence was returning to the farming industry. I represent a constituency in the very critical West Country, critical in the context of people who know their agriculture and horticulture: they certainly call a spade a spade when the need arises. When my right hon. Friend the Minister visited my constituency early last year not only did he receive a good reception but he was able to leave the hall by the front door which indicates that things are improving in agriculture.

My hon. Friend the Parliamentary Secretary, who is my parliamentary and political neighbour across the water, said that consumption of fertilisers had risen by 1 million tons over the last decade. This is a welcome trend. As my hon. Friend the Member for Devizes (Mr. Charles Morrison) rightly said, conditions change. Today, unlike some years ago, farmers and growers are not only more highly skilled but they have a far greater degree of scientific knowledge at their disposal, knowledge towards which the trade has contributed. Therefore, the farmer will not discard the fertiliser simply because there has been a change in the degree of support.

I welcome the change in emphasis by putting more money into the end price. It is right that we should be more selective and give those sections of agriculture and horticulture where the need arises a greater degree of support than hitherto. One of the ways in which some of the money is available to be used because of the cut in the fertiliser subsidy is to help the horticultural improvement scheme. This is right, particularly in view of our intending move into the European Economic Community.

My growers in the Tamar Valley support this improvement and this trend. With the changing conditions it is right that we should analyse the needs of the farming community. This means not only a higher end price but also that we must be more selective in our aids and grants. Such has been the change in attitude and confidence over the past two years that farmers and growers look to the future with confidence. Those whom I represent in the West Country believe that they can meet the challenge of Europe. They realise that there are new opportunities for them. This modification of the support Scheme will not stand in the way of their progress.

11.27 p.m.

Mr. Mark Hughes (Durham)

The OECD Report on Low Incomes in Agriculture, published in 1964—I quote it with approval even though it is now eight years out of date—says on page 40: As compared with price supports, input subsidies have some advantage for the small farm, in that they are paid on the whole amount of the item used on the farm, and not only on that part which eventually leads to production for the market. Although the Parliamentary Secretary may well argue that there is an aliquot correlation between the amount of diminution of the fertiliser subsidy and the proportionate increase in end price, he cannot argue that those who benefit from an increase in the end price are the same people who would have benefited from the maintenance of the fertiliser subsidy. That he is robbing Peter to pay Paul is inevitable. It may be desirable, and that is for the Government to argue, but it cannot conceivably be argued that those who benefit from higher end prices are precisely the same as those who benefited from the fertiliser subsidy at its previous level. The Government might argue that it is desirable that there should be a shift in this way, but we have had no such argument from them.

In the year 1970–71 expenditure prior to subsidy on fertilisers subject to grant was about £163 million. The subsidy amounted to about £42 million. The disturbing fact is that over the decade 1960–70 consumption of non-nitrogenous fertiliisers remained depressingly constant. Home deliveries of phosphates in 1960 were 459,000 tons. In 1970 they dropped to 424,000 tons. The figures are taken from the Annual Abstract of Statistics provided by the Ministry. There was a relatively small increase in deliveries of potash from 426,000 tons to 436,000. In compound fertilisers, which make up by far the largest element, there was a decrease from 2,757,000 tons to 2,604,000 tons. Only in nitrogenous fertilisers was there a significant—and I expect a very welcome—increase in home deliveries to the British farmer. Of the others, in spite of the level of subsidy, there was no real increase in the net consumption of fertilisers.

Unless the figures published in the Annual Abstract of Statistics for 1971 are totally erroneous, or my transcription of them is in error, there can be no question that with the one exception the decade saw deplorable stagnation in the consumption of fertilisers. Whether under Socialist or Tory Government, the policy on fertiliser subsidy remained the same. I am not arguing that it was desirable to remove the subsidy.

The Schedule that is annexed to the Statutory Instrument suggests that there is a specific contribution for water-soluble phosphate which is reduced from its previous level. There is a specific contribution for nitrogen and there is a specific contribution for phosphoric acid, P2O5, insoluble in water other than basic slag or potassic basic slag.

It cannot be argued that the presence of the fertiliser subsidy has increased the consumption of fertiliser in this country. However much we on this side may wish to defend the continuance of this subsidy, we cannot argue that its presence has increased the consumption. To pretend otherwise is to deny the reality of the situation. Only between 1960–70 and with nitrogenous fertilisers has there been a real increase. If one then turns——

Mr. Deakins

Could the explanation be that the consumption of certain fertilisers has fallen over the past few years because these were fertilisers mainly used for cereal production, whereas there are a number of limits which farmers have discovered to the amount of fertiliser that can be put in and the amount of cereal that can be got out through the constant growing of cereal on the same land? The attention of farmers has therefore switched from the use of fertilisers for cereals to the use of fertilisers on grass land, which has much the biggest potential for increasing the agricultural output.

Mr. Hughes

Clearly the increase in the use of nitrogenous fertilisers suggests that the use of grass land fertilisers, with rotational grass in particular has played a considerable part in any change in the aggregate pattern of fertiliser consumption.

The hon. Member for Devizes (Mr. Charles Morrison) and the hon. Member for Bodmin (Mr. Hicks) will accept that there is one important element which this change carries with it. A farmer who in the past has been in the habit of applying a fertiliser to a winter wheat crop in the back end, as we call it in the North-East, would receive a payment on the subsidy in the early months of the following year. He would put the fertiliser down in September, October, November and would receive the payment in the following January, February or, if the Minister were particularly slow, by March.

In general he would have to carry that proportion of his fertiliser costs which were covered by subsidy for a matter of 10 weeks. Under the new Scheme he has to carry those costs for 13 months. There is a significant difference between a bank overdraft for six weeks and a bank overdraft for 13 months. He may well recoup his additional costs 13 months later, with an increased price for his wheat but who will pay the interest charges on his overdraft? The housewife. It is upon her that the £13 million-plus interest charges will rest. There is a time lag between when the subsidy was payable and when the farmer receives it. Under the new Scheme he may well recoup his costs on the end price but he has to carry those costs for a twelvemonth. He will not carry them for love. He will not say, "It is my benign duty to the Conservative Party to carry these costs". He will pass them on. That is what the Government are encouraging him to do.

That is precisely what this Scheme is about. The Government are encouraging the farmer to pass on to the consumer not only increased production costs on prime cost but the cost of the bank loans and the servicing of them. The Parliamentary Secretary says that it is much cheaper. It is much cheaper for some. For my constituents in Durham, where one good row of pit cottages represents more voters than all the farmers put together, that row of pit cottagers will not get an immediate benefit from this 60 per cent. diminution of the fertiliser grant. They will be called upon to nay this increase through the cost of their food.

The hon. Members for Devizes and Bodmin argued that we now have a new race of farmers, intelligent beyond measure, capable of distinguishing at a glance——

Mr. Gwynoro Jones (Carmarthen)

At a stroke.

Mr. Hughes

—at a stroke, the requirements of their soil. No farmer is in any doubt as to the precise proportions of phosphate, potash and nitrogen his soil requires. Farmers do not need such services as the diminished National Agricultural Advisory Service or the new advisory service—or such bits of it as will be left after the cutting by the Minister. This breed of farmer will make better use of the fertiliser which is un-subsidised than farmers did two years previously with the subsidised fertiliser.

So long as the Government do not realise that fertiliser is the only substitute for land, and that that is the scarcest commodity in these islands, so long will their agricultural policy be based on a total fallacy. The input fertiliser subsidy increases the effective acreage of this country and as such it benefits equally the large farmer and the small farmer. High prices do not provide anything like so equal a benefit to the agricultural community or to the consumer.

This Scheme, apparently innocuous, reduces in one year whereas it should on all grounds of equity have been phased over three years. As the Minister well knows, the trade is adamant that a longer period would have been more suitable. This reduction represents once more a shift from the poor farmer to the rich farmer, from the taxpayer to the consumer. If that is why the Government want this Scheme, they should be ashamed.

11.44 p.m.

Mr. Gwynoro Jones (Carmarthen)

The Ministers from the Ministry of Agriculture always say that the farmers and the unions are with them and that is why they do these great acts of mercy and kindness for the farming community. I therefore felt compelled to obtain the memorandum of the National Farmers Union of Wales to the Ministry on the 1972 Price Review. No doubt the Parliamentary Secretary has heard of the National Farmers Union of Wales, a considerable body in the Principality. Among major recommendations it made about various forms of grants for the Price Review was one that the rates for lime and fertilisers should be substantially increased. The Parliamentary Secretary always talks of the farmers being with his party. He will have to be careful that his statements are more accurate than hitherto.

There is no doubt about the problem confronting us. Despite the very lavish increase in grants over the years the expected increase in consumption of fertilisers has just not happened. The figures, mentioned by my hon. Friend the Member for Durham (Mr. Mark Hughes), show that in Wales in 1969–70 the consumption of fertilisers containing nitrogen and phosphate dropped considerably. In March, 1971, there was a considerable increase in the grant of 15 per cent. to 20 per cent. and in the ensuing 12 months there were considerable increases in consumption of fertiliser. There is, therefore, a direct correlation between the size of the grant and the consumption of fertilisers. Whoever is to wind up the debate must tell us first of all whether the grant system as it operates is effective, and whether it has been wasteful. Secondly, does he consider that there is no longer any point in switching grant to the poorer—the hill—regions? The Minister has these great expansion programmes, and I am sure that those are the areas from which he expects the increased consumption of fertilisers, and thereafter of production, to come. If this is the case he must tell us why he is doing away with grants of this nature, as they are the essence of the major production boost which he is to bring forward.

11.47 p.m.

Mr. Norman Buchan (Renfrew, West)

My hon. Friends have outlined the background to this Scheme, and especially has my hon. Friend the Member for Durham (Mr. Mark Hughes)—the doom watch; but, of course, there was more substantial truth in his prophecies than in the rather superficial approach made to the subject by the Parliamentary Secretary tonight. I do not blame that Minister in particular because, of course, it is his right hon. Friend who must bear the responsibility. I am glad he is here with us tonight——

Mr. Gwynoro Jones

For a change.

Mr. Buchan

Certainly a change from the last time we discussed the whole agricultural policy in relation to the EEC. I still think that that was one of the most disgraceful episodes of agricultural debates in this House.

However, be that as it may, the right hon. Gentleman, in his statement on the Price Review, said: We have also decided to switch about 60 per cent. of the fertiliser subsidy to end prices. This will give the industry greater flexibility in the application of resources. In the case of horticulture, the fertiliser change will be offset by increasing the combined grant rate under the Horticulture Improvement Scheme from 35 to 40 per cent. Hill farmers will be helped by increasing the winter keep subsidies.—[OFFICIAL REPORT, 1st March. 1972; Vol. 832, c. 413.] The words are repeated in the White Paper. Not that there will be a 60 per cent. cut in fertiliser—nothing as obvious as that—but a switch of about 60 per cent. of the fertiliser subsidy. As my hon. Friend the Member for Enfield, East (Mr. Mackie) said, it is an extremely savage cut, a cut of about two-thirds.

The White Paper says exactly the same thing. We are glad we eventually got the White Paper. We did not get it on the day we should have got it, but we are glad we have it now. After a number of words of general introduction we come to paragraph 5: These are the general considerations which the Government have had in mind in making the determinations after this Review. They have decided to put the chief emphasis on the livestock sector and particularly on cattle… 6.The agricultural industry will need increased resources and improved cash flow…These can be obtained partly from the recent increase in farm income and partly from rising productivity… 7.The Government's view is that the provision of these extra resources is best made through the guarantees on end prices. The whole emphasis is on increasing production, with a special emphasis on livestock and therefore grass, and it is said that this will be done by switching to end prices. But it is not a switch to the end price by an increase in the end price; it is done by cutting the fertiliser subsidy.

In the same set of paragraphs in which emphasis is laid on the need for production, particularly of livestock and therefore of grass, we are told that we are getting a good exchange by a cut of two-thirds in the fertiliser subsidy. My hon. Friend the Member for Durham is right in saying that it is a switch to the consumer. It is his constituents in the miners' rows in Durham who will bear the cost. The end price means our end price.

Will the Scheme be effective? One of the most worrying aspects of the Scheme which is exemplified in the Government's entire agricultural policy is the mad concept that somehow market forces will feed through and solve every problem. I know the Government are keen on going into Europe, but they need not be keen on ruining the agricultural industry in the process. One would have thought that the right hon. Member for Wolverhampton, South-West (Mr. Powell) had become Minister of Agriculture. Everything is to be left to the market price.

I will quote from Professor George Houston: To begin with the present Minister of Agriculture seemed determined to expose the hills and uplands to those lovable and respectable market forces we all know so well. With the emphasis on end price, direct help to hill men seemed at risk. Almost overnight, the rural development boards were told to pack their bags; many landowners no doubt slept more soundly in their beds, though some waited expectantly for a letter from the Forestry Commission. There is clear recognition from an academic and from farmers that the direct support given to sectors of the industry is being ignored and a portmanteau approach is being used dependent entirely on the end price and the market forces.

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

Mr. Buchan

The Minister of Agriculture is going to comment!

Mr. Prior

It will be a pretty lively comment from the Minister of Agriculture, too. I suggest that the hon. Member for Renfrew, West (Mr. Buchan) and his hon. Friends consult the hill farmers and ask them whether they prefer the policy we have adopted in the last two years to the policy the Labour Government adopted in the previous five years. I have no doubt what answer they would give. Furthermore, under the present Government's policy, the hill farmers have had high increases in hill cow and hill sheep subsidies, apart from higher returns from produce they sell than they had under the policy of the Labour Government. What the Opposition are saying shows a total ignorance of what is happening in the agricultural industry.

Mr. Gwynoro Jones

Before my hon. Friend the Member for Renfrew, West (Mr. Buchan) continues, will he ask the Minister to recall letters I sent to him from both unions in my constituency asking him and his colleagues not to be so bland in their statements that the state of the agricultural industry has never been so good as it is at present?

Mr. Prior

I shall be going to Wales before long, and I shall have great pleasure in telling the farmers of Wales what we have achieved and what the Opposition failed to achieve.

Mr. Buchan

I hope the right hon. Gentleman and my hon. Friend do not mind if I come back into the debate. The proof of the pudding will be in the eating. The question of increased cost also arises. There is no guarantee in certain sectors of the industry that the end price policy will necessarily work through, and work through equitably. This is the point. There are cuts in the fertiliser subsidies across the board and at the same time a replacement with a special agricultural grant or winter keep without any scientific effort to see whether this is the right kind of substitution and support. There is no reason to suggest that the plus and the minus are in any way compatible.

The kind of argument we have been getting in defence of this step proves the case. There was a young man of Devizes. He comes forward tonight, and suddenly, somehow, a cut becomes a positive virtue. A cut by us was a damn' cut, but a cut by the Government is a means of increasing efficiency. The Parliamentary Secretary said that the purpose was not to make a cut—oh, no; the purpose of a 60 per cent. slash was to encourage efficient use rather than to discourage use. The Government cannot have it both ways. They cannot on the one hand take credit for the kind of increase they claim to have been making in certain sectors and, on the other hand, claim credit for all the slashing and the cuts. They must rethink their whole policy, including the whole question of the fertiliser subsidy.

The effect is to push the whole question of support back on to the consumer, but the Government must understand that the resistance of 50 million consumers can be every bit as tough as the toughest Treasury official when approached for money. The Government cannot go helter-skelter into Europe without first having ensured that they have built up production here as much as possible. That means a very selective and careful expansion drive for our grass production and, above all, for the hill cattle, sheep, and so on.

I accept the general points laid out in the White Paper, but this Scheme is not the way to assist. It is time we had a little more selective application and thought given to the whole of our agricultural industry instead of this continual looking to the consumer to help the Government out of their difficulties. We want to know the kind of estimated equivalency; what will come back into the industry in total on, for example, the winter keep side. On the first day of the Annual Price Review we got the £1 million referred to—is that still the estimate? What is the position to be in the hill areas, in respect of which the Scottish Office should already have worked out the relative plus and minus in the cut in fertiliser and the increase in winter keep.

We shall not oppose this Scheme tonight—it is, in any case, always difficult to oppose such things at this time of night—but we deplore it, and we think that the industry also deplores it. Before the Government talk too soon about getting support from the farmers' unions they should remember that the main argument put up by their officials to achieve acceptance of this cut was the money required for the price schedules. I cannot think of any who defended the cut in itself for the spurious reason advanced by the Parliamentary Secretary that it was in order to try to create efficiency in the industry by cutting the fertiliser subsidy.

We all know the problem of occasional use, but there is no cause to think that we have reached the optimum need in the marginal and hill lands. It is there that a good deal of concentration should be directed, because along with fertilisers land is the one continuing resource we must preserve.

12 midnight.

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

We have come to know in many debates on agriculture how the Opposition have to toil, and this debate has demonstrated more clearly than ever just how much they do have to toil in dealing with some of the most important agricultural matters. The hon. Member for Renfrew, West (Mr. Buchan) was literally playing with words and figures in some of the things he said. He talked of this proposal as being a switch to the consumer. He knows that the cut in subsidy is met in part by an increase in deficiency payments. Does he imagine that the consumer as consumer pays for an increase in deficiency payments. One would hardly think that he had been Minister in an agricultural Department, for he shows so little understanding of how the subsidy system works.

The hon. Gentleman also talked of market prices, but, as my right hon. Friend said, let him ask the hill farmers whether they want higher or lower market prices. He would not dare to go to the farmers, certainly in my constituency in the North, and ask them what they would prefer. They did not benefit under the Labour Government. The subsidies are higher in the last year than they have been for many years. The farmers know where they stand, and it is not to the Opposition that they will listen.

I thought that the hon. Member for Durham (Mr. Mark Hughes) understood agriculture. But what both he and the hon. Member for Renfrew, West forget is that it is only through a strong home agriculture that we can provide much longer-lasting protection for the consumer. This is where the Opposition, with their rather spurious, superficial championship of the consumer, forget the real economic benefits of a strong agriculture in the way the consumer can be benefited. We have seen the Opposition toiling tonight in a way we have not seen before.

But what matters in the debate is the fertiliser subsidy. I note the views of the hon. Member for Walthamstow, West (Mr. Deakins) and the hon. Member for Enfield, East (Mr. Mackie) on the importance of proper fertiliser usage and the very good value this subsidy has given to the industry. There is no question about that. I do not dissent from this view of the value of proper fertiliser usage to the industry as a whole. But what has been totally disregarded by the Opposition is that the reduction in subsidy has been made good by an increase in deficiency payments. We have never disguised that fact. I did not see any hidden meaning in what the hon. Member for Renfew, West read out. The case is obvious and I am sorry that it is not clear to him.

The hon. Member for Walthamstow, West asked what effect there would be on prices. The simple answer is that it will mean an increase in the price of fertiliser by the amount of the reduction in subsidy. However, I think he was seeking to find out what information we have of any changes which the manufacturers might be making. The fertiliser manufacturers subscribed to the CBI agreement. They hope to maintain the 1972 price level as long as they can—one can see that in the present pricing. Obviously, it will depend on the cost position they have to face.

The hon. Gentleman also referred to farmers being perhaps tempted to skimp. My hon. Friend the Member for Devizes (Mr. Charles Morrison) answered that. It does a disservice to farmers to think that, with the extra resources we are giving them through the deficiency system, they will put the money in their own pockets and will not use it in the interests of good crop and grass land husbandry. My hon. Friend the Member for Devizes was right to say that the money that we are putting into the pockets of farmers will be used in the best interests of the agriculture industry. I am confident that it will.

Mr. Buchan

I approve of what the hon. Member for Devizes (Mr. Charles Morrison) said about the more skilful use of the subsidy, and the cut helping towards that more skilful use. But what does the Minister make of the hon. Member's point, in defending the cut, that in any case the farmer can get double? He can come in before 31st May and get the subsidy anyway.

Mr. Buchanan-Smith

I shall deal with the general question of the subsidy cut later.

If the farmer chooses to buy in advance he is able to do so and he can help his cost position if he so chooses. That is a simple matter of fact.

Mr. Mark Hughes

Can the Minister remind me whether there is any market price currently below the guaranteed subsidy price?

Mr. Buchanan-Smith

The hon. Member is well aware that we have a considerable cereal deficiency payments bill at present. We are also paying deficiency payments on lamb. The hon. Member is entirely wrong in trying to maintain otherwise.

Mr. Hughes

I have asked a question.

Mr. Buchanan-Smith

The hon. Member was hoping for the answer that deficiency payments were not operating, whereas they are. The farmers benefit directly from the policies of this Government.

The other point was on the question of soil structure. This is an important matter, and was dealt with by the Strutt Committee. In paragraph 243 of its report that committee said: So far as we can tell, no damage to structure and fertility of arable land is caused by intelligent use of fertilisers which takes account of soil analysis, acidity, balance of nutrients. responses of crops and the weather and so on. That is a point that we have to take into account in trying to widen it, in addition to the question of the effect on soil structure.

I want to deal with some points raised by the hon. Member for Durham. I was disappointed with some aspects of his speech. He was not his brightest self. As for his reference to aliquot correlations, as someone whose language I listen to with respect—language I could not have emulated in Committee—I can only say that to start using such phrases in the House was calculated merely to confuse the House and to cover up the barrenness of his argument. I was encouraged to hear him quote from the OECD reports of 1964 in attempting to use them against the Government's policy. At this late stage I am delighted to see his conversion to the cause of Europe, and what it can teach us. I hope that we can benefit from this in future debates.

The hon. Member asked specifically about the consumption of fertilisers. I gather that he quoted from the Abstract of Statistics. The figures that he gave are, I think, figures of fertiliser production, but I should like to look into them in more detail.

Mr. Mark Hughes

These are figures of home deliveries provided in the Annual Abstract of Statistics.

Mr. Buchanan-Smith

The information which the hon. Gentleman has given does not bear with the information in the Department. I imagine that there must be an explanation for the basis of those figures. I should like to look at them more closely.

Concerning usage in the United Kingdom, the hon. Gentleman took the decade 1960–61 to 1970–71. I use the figure of nutrient tons. This may be the difference between us. The hon. Gentleman may have used tonnage figures which do not take account of the increased concentration of fertiliser, and so on. This is why I am suspicious of the basis of his figures.

Taking nutrient tons, which is the effective figure of the quantity of fertilisers used, it is significant, taking 1960–61 compared with 1970–71, that the usage increased from 1,292,000 nutrient tons to 1,851,000 nutrient tons. There has in fact been a dramatic increase in the use of fertilisers. What the hon. Gentleman said about stagnating consumption is not right.

It is also interesting that a big increase has taken place between 1969–70 and 1970–71, from 1,620,000 nutrient tons to 1,851,000 nutrient tons. That demonstrates that the advent of a Conservative Government has increased confidence in the industry which has led to an increased uptake for fertiliser. The debate has demonstrated how mixed up the Opposition are in some of their views on this matter.

My hon. Friend the Member for Bodmin (Mr. Hicks), with his obvious practical knowledge of what farmers in his constituency are saying and feeling, showed that over the last two years there has been an enormous improvement in confidence in the industry. This will help us to ensure proper husbandry practices and use of fertiliser in future.

I should emphasise that in the last price review award we increased guarantees by a total of £92 million, a net total of £72 million once this cut in the fertiliser subsidy is taken into account. This demonstrates the faith that we have in British agriculture. I believe that it is a faith to which the industry will respond.

The difference in philosophy between the two sides of the House is that while we have not reduced the amount of resources available to the farmer, we have left it to the farmer to choose how he uses those resources. We have given the British farmer greater flexibility over the way he uses those resources. The Oppo- sition wish to dictate to the farmer how he uses the resources, whereas we believe in providing the resources and leaving the farmer with the choice of how they are used. That is what we are doing and what hon. Gentlemen opposite are ignoring.

The last matter which they have ignored—they have been careful to glide over it tonight—is that what we have done has been accepted by the NFU.

The opposition to the Scheme has been spurious. Therefore, I have no hesitation in commending the Scheme to the House.

Question put and agreed to.

Resolved, That the Fertilisers (United Kingdom) Scheme 1972, a draft of which was laid before this House on 25th April, be approved.