§ 9.5 p.m.
§ The Minister of State for Agriculture, Fisheries and Food (Mr. Anthony Stodart)
I beg to move,
That the Agriculture Act 1967 (Amendment) Regulations 1973, a draft of which was laid before this House on 11th July, be approved.
I suggest that we also discuss the following schemes:
That the Farm Amalgamations Scheme 1973, a draft of which was laid before this House on 11th July, be approved.
That the Farm Structure (Payments to Out-goers) Scheme 1973, a draft of which was laid before this House on 11th July, be approved.
When I introduced the existing farm structure schemes, which these proposals will replace, I said that they should be looked on as being interim as we should be taking a long hard look at the working of the scheme generally. We have done this and as a result we are satisfied that the basic concept of the existing schemes is sound.
I am sure that the House will be pleased to know that as a result of the changes introduced in 1970 there has been a speeding up in the rates at which approvals have been made.
The new schemes, therefore, do not depart from the concepts and aims of the present schemes, but in the light of experience there are a number of improvements which we can now make to the terms and conditions.
The new powers enable payments to be made for amalgamations which are carried out by leasing extra land as well as by buying it. In order to qualify for payment, an amalgamation by lease must involve a term of not less than 12 years.
Payments, too, will now be made to an outgoer who gives up land for afforestation or for public use as well as in cases where all the land goes for a farm amalgamation. There have in the past been cases where it was clear that the best use for all or part of the outgoer's land was not for farming but for forestry, and we shall now be able to make a payment to the outgoer in respect of that land. But, as a safeguard against undesirable planting, payment will not be made on land released for forestry unless 1531 it is more suitable for that purpose than for farming and can be released for planting without detriment to the agricultural use of neighbouring land. The reference to land released for public use, will facilitate land being used for recreation or nature reserves where appropriate.
The third amendment enables a test to be based on an outgoer's income from agriculture in general rather than just from the land that he is giving up. I think this is a useful extension which will widen the sphere of eligibility.
At present amalgamations receive a special rate of grant under the Farm Capital Grant Scheme if there is a need for new buildings, roads or other remodelling work. Instead of these special grants, however, we propose that where an outgoer's grant has also been approved all the amalgamations will receive an acreage payment of £12.50 on the additional acreage obtained from the project up to a maximum grant of £1,250. This will make for a simpler scheme and quicker payments. The new system will allow farmers to make their own decisions on capital investment and it will also make help available to more farmers.
Amalgamators will still have to maintain the amalgamated unit and not change its agricultural use without the Minister's consent for five years, but, whereas this requirement now has to be registered as a land charge, under the powers conferred in the 1972 Act administrative provision will be made for the requirement to be personally binding on the amalgamator.
We have also materially increased the incentives offered, particularly for the older age groups. We have amended the requirement on entitlement to occupation. At present, to qualify, an outgoer must have been entitled to occupy his farm on or before 5th August 1965. The new scheme provides a later date-1st January 1973. Tests on the outgoer's income have also been modified. At present, one takes account of the husband and wife's combined income. In future only an applicant's earned income will come into it, and we propose to pay grant to those whose other income does not exceed that from farming by more than £500. This will be a great help for those in areas of the United Kingdom who, while spending most of their time farming, have 1532 to take other work to secure a better family income. A further condition of grant is that to qualify for the main grant outgoers should have spent not less than half of their working hours in farming during the five years before they put in their application.
Having regard to the scales proposed for the main grant, it is fair enough that they should be restricted to bona fide farmers. We feel that we must provide for the man who has, for some good reason, temporarily had to let his land and later finds that he cannot return to farming. In such cases grant will be available if he otherwise qualifies, provided that he has met this condition in respect of one year.
The last change is not unimportant. As the objective is to release more land for amalgamation, we feel we must give some incentive to part-time farmers to give up their land. Therefore we are proposing a smaller grant for those who cannot qualify under the income and agricultural labour tests.
This will take the form of an acreage payment at the rate of £10 on each eligible acre, subject to a maximum grant of £1,000. Farms of the kind that this grant is intended to cover will, if released, make a useful contribution to the aims of the scheme and it will be of particular assistance in such areas as Northern Ireland and parts of Scotland and Wales.
Allowing for the larger number of applications expected to result from the new and improved schemes, the new incentive and modifications proposed will lead to an estimated additional cost of about £11 million for the first five years of the scheme.
The better incentives offered by the two schemes and the new terms and conditions should do much both to attract a larger number of small farmers to give up their land for amalgamation and to encourage others to enlarge their existing units. This will help the farmers concerned and also improve the productivity of agriculture.
It may interest the House to know that the scheme has been used successfully over a wide area of the United Kingdom. Of all the approvals for amalgamation, 49 per cent. have been 1533 granted in England, 25 per cent. in Scotland, 13 per cent. in Wales and 13 per cent. in Northern Ireland. So far as grants to outgoers are concerned there have been 40 per cent. in England, 33 per cent. in Scotland—where, particularly in the North-East this has been an immensely successful scheme-15 per cent. in Northern Ireland and 12 per cent. in Wales.
Therefore, I hope, that the House will approve these schemes and the related regulations so that we can give effect to the new arrangements in September.
§ 9.13 p.m.
§ Mr. David Clark (Colne Valley)
In discussing these regulations we are discussing not a new concept but the continuation or improvement, as the Minister says, of existing schemes. Generally in most industries throughout the world there has been an enlargement of units. The agriculture industry has been no exception. We all want the British farmer and the British farm worker to earn their true worth. If this helps in that process, we agree with it.
There are, however, one or two points about which we should elicit a little more information. There have been changing circumstances in the past few years which may cause people to quibble about certain aspects of the scheme. The first point is that this is not something confined to Britain. The problem exists throughout the world, especially in Europe. We have seen in Europe a great programme of amalgamations. Many of us feel that the amalgamations and the concentration of farming communities have not proceeded fast enough, but they have their own schemes to encourage farmers to form larger units. I wonder whether any of the common agricultural fund is used to finance this series of amalgamations in Britain as in France and other European countries.
Another worrying fact is that there have been changes in the past few years and one of them has been in the land ownership of farmland in Britain. This has caused a great deal of concern, not least amongst the farming community. One has only to read the farmers' various journals to find the letter columns therein concerned about this problem where land prices have shot up to an astronomical level. They have created farms which 1534 are at paper value very high yet when the farmer dies his son faces almost impossible and crippling estate duties. This escalation or explosion in land values does not help the farming industry.
We must try to ascertain whether these schemes, and previous schemes, help to accentuate this move. While we, on the one hand, want an efficient farming community and accept that in many cases farms must be bigger, we are concerned to ensure that those farms are not always owned by City institutions or by foreign banks. This problem is not confined to Britain. The Danes only a matter of weeks ago introduced very stringent controls on the ownership of farm land.
Will the Minister comment whether, when he was drawing up these new arrangements in this scheme, he considered the possibility of allowing encouragement only where the new farm was to be owned or managed by a farmer and not to be used to facilitate some further capital investment? It seems to us not good for the future if we find these big financial institutions buying up farmland, not primarily to farm, for at the rate of return possible from farming, in spite of welcome increases in farmers' incomes over the last few years, they cannot get the return which they would get in the cities.
It has been commented that on the present trend of farm amalgamations, and the change of ownership, by the end of the century nine-tenths of the farmers in this country will be working for city institutions. This may be an exaggerated claim but it has been made. I am sure the Minister has seen it in the farming Press.
To turn to a different aspect of the order, the Minister mentioned that these schemes affect land which is going into afforestation. This is something which we on this side of the House welcome, because there has been a great deal of concern about the lack of land going into afforestation. This problem has been made worse since June 1970. The forestry industry in this country has felt a little sterile. Having seen the Government's consultative paper, it has waited for 13 months for a statement on the Government's forestry policy. We are still waiting. As a result there has been a drying up of land being provided 1535 for afforestation. Could the Minister give us an estimate whether he feels that these schemes, which allow land to be released for afforestation, will help? The problem is very serious. The Forestry Commission throughout Britain is drawing upon its reserves. The result has been that in this year—Plant a Tree Year, ironically—the new planting by the Forestry Commission has fallen from 57,000 trees in 1971 to 51,000 in 1973. Many of us feel that that is not good for the forestry industry, or for the economy of the country as a whole. Of course, the Forestry Commission's task has been made more difficult by the increase in land prices and not least for all the reasons which I have explained.
The Minister said that land would not be eligible for a grant if it was to be used for afforestation unless the Minister judged that it was more suitable for afforestation than it was for agriculture. That is a fairly sensible rule. It has been a rule which has been applied de facto if not dejure to the Forestry Commission's acquisitions over the past few years, but it has not been applied to private forestry. That has been one of the reasons for the outcry against afforestation. There has been much public concern about the afforestation of good private agricultural land about which the Minister had no say. Does the new scheme apply to the private sector as well as to the State sector?
The next point which the Minister raised was land which is released for public use. That is something which we very much welcome. I query one point —namely, if land in a national park is to be released to the national park authority for recreational purposes, does the farmer as well as the national park authority purchasing the land get a grant out of the public purse for that purpose?
The Opposition welcome public access and the general development of amenities and recreational facilities. But while we all want more efficient farming communities, We are concerned that in certain parts of the country the landscape of which we are all fond—I am thinking of the upland areas in the national parks—is dependent on the living farming community. No one should be unaware of that point. The Opposition are worried that it may well be that with increased 1536 aids there will be a change in the farming community and in the landscape that will not always be desirable.
I query one or two technical points. As I understand it, the idea is to get amalgamation to aim at 600 standard man days. That is a sensible, useful and viable farming organisation. I am trying to ascertain whether a grant is payable if a new unit is formed which comprises less than 600 standard man days. If that is the case, difficulties might arise in certain parts of the country. I have tried to get some random statistics for North Westmorland and parts of the Lake District. The statistics show that no less than 68 per cent. of the farms in North Westmorland are classified as having less than 600 standard man days.
If the figures are broken down, no less than 35 per cent. of the farms have less than 450 man days. That is when there are taken into account all farms over 250 standard man days and there are ignored the smaller farms which would be included under the scheme and which complicate the matter further. That means that in many parts of the upland areas there are a considerable percentage of farms of less than 300 standard man days. Therefore, one might get a situation where two farms of less than 300 standard man days are to be merged. In that instance, would the farms be eligible for the grant?
Generally we welcome these proposals, but we are worried about the changing situation of farm ownership and the possible effect on the environment. We dope that the Minister will keep under continuous review the effect of the scheme, because if there is any danger urgent action would be needed to remedy it.
§ 9.25 p.m.
§ Mr. Marcus Worsley (Chelsea)
I start by declaring an interest as an owner of agricultural and forestry land.
I think that the instruments will help the amalgamation scheme forward, and that is desirable. But the Government are pursuing two diametrically opposed policies. The instruments are designed to make amalgamations easier. However, my right hon. Friend the Chancellor of the Exchequer is pursuing a taxation policy on capital which will have the opposite effect.
1537 The hon. Member for Colne Valley (Mr. David Clark) was right to make the point that the effect of the explosion in land values is to drive the traditional owner, whether he be farmer or land owner, away from the ownership of land and, too often, to put the ownership in the hands of bodies which have little sympathy with the land or interest in the social life that goes on in the area.
I am not suggesting that new money should not come into agriculture. That is not my point. However, a tragic process seems to be going on as a result of the explosion in land values and the combination of estate duty and capital gains tax—above all, the latter—which is reversing a situation whereby the ownership and occupation of land, which should be united, are increasingly being forced apart.
If current taxation policies continue, all the good that the scheme can bring about will be undone—indeed, more than undone—by capital taxation, which will mean that the current economic farm will have astronomic capital taxation liabilities to meet. Inevitably the result will be a splitting of holdings, which is the exact opposite of the policy embodied in the scheme. The Government must get their right and left hands working together and evolve a capital taxation policy that works with, not against, the scheme.
My second point, again in response to the hon. Member for Colne Valley, is on forestry. It is over a year now since we had one of the most ill-thought out of Government White Paper's for many a year on this subject. It is sad that 12 months later we still have no statement from the Government about their policy on this subject. Forestry is not a large industry, but it matters very much in terms of amenity and employment in upland areas. There has at last been the working through of what has been obvious to anyone who has studied forestry on a world scale—an impending shortage of timber of fantastic dimension. The result has been a tremendous rise in world prices of timber reflected in an equally tremendous rise in prices in this country. It must be obvious, even to the members of the Treasury, who always fail to understand the nature of forestry, what it is about and what its purposes and problems are, 1538 that a native timber industry matters in a time of increasing shortage.
I realise that my hon. Friend cannot say anything about this matter tonight, and I am not asking him to do so. But I ask that the Government put a forestry policy higher in their order of priorities and realise that even since the publication of the White Paper the whole economy of forestry has changed radically. The increasing world shortage of timber has shown that we must use the forestry resources of this country as best we can.
We can grow trees as well as anywhere on earth. It is up to the Government to encourage tree-growing.
I do not oppose the new scheme but to have an effective policy of amalgamation without a policy of capital taxation, which is related to it, is to condemn our agriculture to a gradual lessening of the size of holdings when we should be encouraging an increase.
§ 9.32 p.m.
§ Mr. Anthony Stodart
The hon. Member for Colne Valley (Mr. David Clark) said that the average size of farm was increasing and that the whole structure of farming was changing. Some 20 years ago the average size of farm in Britain was about 60 acres. It is now 162 acres. It is interesting to note that the average size of farms which have been subject to amalgamation is now 228 acres, a little above the average. That is a good sign.
The hon. Member referred to institutions buying land. There is no sign of any great tendency, and it would be wrong to exaggerate the extent of land purchased by institutions and companies. Indeed, only a small proportion of our land—and that is outside the scope of the scheme—is being bought by such bodies.
The disadvantage of any restriction is that it would make things more difficult for the would-be outgoer who wants to retire. It would lower the price that he could get. This would discourage amalgamations in one way. One has to retain a balance. I agree that the more we can maintain and increase owner-occupation, the better.
Another question concerned land sold into public use and whether there would be additional payments. The answer is that no compensation for releasing land 1539 for public use would be made where it would merely duplicate the provisions under Acts of land compensation. It is not a case of getting it both ways.
The hon. Gentleman also asked about the 600 standard man-day farms. If the formation of a 600 standard man-day farm is not possible in one step, we can approve what we term an intermediate amalgamation if there are prospects of a commercial unit being formed ultimately. In other words, it does not have to be done in one jump. If there is a good prospect, one can get the land grant.
Land values are a very considerable problem. I agree with what my hon. Friend the Member for Chelsea (Mr. Worsley) said about them. I would remind my hon. Friend that taxation is not a matter within my immediate purview, but I do not think that anyone has done more to reform the tax system than my right hon. Friend the Chancellor of the Exchequer. My hon. Friend will be aware that my right hon. Friend is at the moment engaged in a review of problems of the kind my hon. Friend mentioned.
A certain amount was said about afforestation and land use. It is a subject which is very dear to my heart and I must not make a long speech about it now. But I accept what was said by both my hon. Friend the Member for Chelsea and the hon. Member for Colne Valley. The review of forestry has been going on for a very long time. It is in fact the first major look at the industry to have taken place for 30 years.
The problems have not been made easier by the fact that land for forestry has become extremely scarce. That is largely due to the increase in the returns which people are getting from farming on hill land. There was a time not so long ago when very large acreages of land were planted wholesale with trees. I do not believe that to be good land use. I want to see trees planted where they will grow best and where they will integrate and play a useful part with agriculture. I have always opposed those who talk about farming or forestry. I have always been a strong advocate of forestry helping farming in making the best use of land in a very densely populated island whose land is decreasing remorselessly at 1540 the rate of 60,000 acres every year. I hope that before long we shall be able to make an announcement about the future forestry programme.
The hon. Member for Colne Valley asked about FEOGA. These schemes will in certain cases attract FEOGA money. They have been designed to take account of the Community's provisions for encouraging amalgamations. Therefore, in certain cases they will attract FEOGA grants. But we shall of course be laying the appropriate order before the House in due course—we hope in the autumn—when we shall be able to discuss these matters.
§ Mr. David Clark
May I press the hon. Gentleman on the subject of his approval for land use for forestry? Does what he said apply to private as well as to State forestry in order for it to receive the benefit of this money?
§ Mr. Stodart
In terms of the regulations it can be private land going into private amalgamations. Where private interests are involved, as they will be in this case, ministerial approval will be required.
§ Question put and agreed to.
§ That the Farm Amalgamations Scheme 1973, a draft of which was laid before this House on 11th July, be approved.—[Mr. Anthony Stodart.]
§ That the Farm Structure (Payments to Out-goers) Scheme 1973, a draft of which was laid before this House on 11th July, be approved.—[Mr. Anthony Stodart.]