HC Deb 11 December 1975 vol 902 cc642-3
13. Mr. Mawby

asked the Minister of Agriculture, Fisheries and Food how much was borrowed from the Agricultural Mortgage Corporation last year.

Mr. Bishop

During the year ending 31st March 1975 loans amounting to £37.9 million were made to the industry by the Agricultural Mortgage Corporation Limited.

Mr. Mawby

I am grateful to the Minister for his reply. However, as I understand it, this is less than that borrowed in the previous year. Taking into account inflation, capital costs must be higher. Is the hon. Gentleman happy with this situation? Does he believe that there is sufficient confidence in the industry and that people are not laying off borrowing money for capital development—which is needed to attain the target specified in the White Paper—because of threats of additional capital taxation?

Mr. Bishop

As the hon. Gentleman has implied, there has been a decline in lending during the past year. That has happened for a number of reasons, including reduction in land values, cash flow problems and high interest rates. There are already indications, which have evidently even trickled through to the Opposition Front Bench, that there is greater confidence in the industry now. We expect that, with the working out of the White Paper and with the forthcoming Price Review, this confidence will accelerate.

Mr. Scott-Hopkins

Does the hon. Gentleman agree that the levels of interest paid on loans from the Agricultural Mortgage Corporation are very high? Is it not time to look at the rates of interest—rarely above 5 per cent.—paid by European farmers on loans from the various organisations in the European farming industry?

Mr. Bishop

The hon. Gentleman will appreciate that the rates charged by the AMC are governed by the cost of the money which the Corporation raises from time to time by debenture issues on the money market and which reflect the long-term nature of its borrowings. However, the rates are competitive with those that farmers would have to pay elsewhere. In the long run, the real answer is to tackle the problem of inflation, because that will help to resolve some of these difficult issues.