HILL LIVESTOCK (COMPENSATORY ALLOWANCES)

HC Deb 17 December 1975 vol 902 cc1565-95

12 midnight

The Minister of State for Agriculture, Fisheries and Food (Mr. E. S. Bishop)

I beg to move, That the Hill Livestock (Compensatory Allowances) Regulations 1975, a draft of which was laid before this House on 27th November, be approved. These Hill Livestock (Compensatory Allowances) Regulations will, with the House's approval, implement the livestock subsidy provisions of the EEC directive on less favoured areas. The Regulations will replace the old hill livestock schemes, variations of which have operated under United Kingdom hill farming legislation since 1946. Hon. Members will notice that one scheme now includes aid to both hill sheep and hill cattle producers, and that it applies throughout the United Kingdom. This is a new departure and, in some ways, it represents a rationalisation that I am sure the House will welcome.

I feel that I hardly need to remind the House of the background to this directive. Hon. Members will recall that they have considered it on more than one occasion. The most recent was on 4th February this year, when Members of all parties welcomed the Commission's proposals for the directive. The matter first came up during the United Kingdom's negotiations to enter the Community in 1970–71'The Community's attention was drawn to the special problems of our hill farmers and in the Treaty of Accession the United Kingdom obtained general recognition of the need for the Community to take special measures in such areas' The issue was complicated by the original member States' desire to confine aid to mountain areas, but they were persuaded to extend it to a much wider area of land, including the livestock-rearing areas which benefit from United Kingdom hill sheep and hill cattle subsidies' The result was a draft directive that was, in most respects, satisfactory.

However, hon.' Members will recall that when they considered the Commission's proposals last February they declined to approve the proposal to limit head age payments on livestock—or compensatory allowances, as we shall have to get used to calling them—to farmers who were not receiving a State retirement pension. I am glad to say that we were subsequently successful in getting this difference of treatment removed, although each member country has to pay the full cost of all livestock subsidies paid to pensioners. With this amendment the directive was finally approved at the end of last April and member States wishing to take advantage of its provisions have a year within which to introduce their own legislation.

Since the directive was adopted we have had extensive consultations with the farmers' unions and other interested organizations on its implications. We have also taken the opportunity to reconcile the administrative differences that have developed over the years in operating the various schemes in different parts of the United Kingdom and have produced a set of Regulations to replace the 12 Statutory Instruments previously covering our hill livestock subsidies.

I now come to the Regulations. There are one or two problems to which I shall refer shortly, but I think it is important that hon. Members should know that the draft Regulations will allow us to continue to pay about 99 per cent. of the subsidies previously paid under the old schemes without significant change. Compared with the situation three years ago, when hill farmers were concerned whether they would be able to receive support of this nature under the EEC rules, this represents a major achievement. In particular, there is virtually no change in the areas that will benefit from hill livestock subsidies. Hill areas that were fully eligible under the former schemes will qualify under the new Regulations. The farmers' unions have expressed their appreciation of these achievements.

Hon. Members

Order.

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)

I came over to the Opposition Benches only in order to wish hon. Members a happy Christmas.

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. I think that the salutations and good wishes should come a little later.

Mr. Bishop

I now turn to some of the problems that I mentioned. Hon. Members will remember that I took note of the points raised when we discussed the Hill Sheep Amendment Order on 15th October. They fall into four categories.

First, there are about 100 farms in the so-called scheduled areas in England and Wales which have enjoyed concessionary hill cow subsidies since the hill line was adjusted in 1963'These are outside the designated less-favored areas and will not be eligible for aid under the new Regulations.

Secondly, the directive restricts the payment of compensatory amounts to occupiers of at least three hectares—which is approximately 7–1- acres—of eligible land, and this means that a number of farmers who previously were able to claim will now be excluded.

Thirdly, there is no provision for acreage payments in less favored areas, and farmers in Scotland who in the past have opted for winter keep acreage grants will no longer be able to do so.

Finally, some farmers will be affected by the limitation on payment. In this respect there has always been a slight difference in approach between England, Wales and Northern Ireland on the one hand, and Scotland on the other, but throughout the United Kingdom generally it has always been thought necessary to pay attention to the carrying capacity of the land and to limit the number of animals qualifying for subsidy.

Up till now, however, claims for sheep and cows have always been treated separately, even though they were grazing the same land. This separate treatment will no longer be possible, because the directive imposes an overall financial limitation of 50 units of account—which is about £28.50—on the amount of subsidy that can be granted per hectare. I am afraid that because of this some farmers who stock fairly heavily with sheep and cows will find that the limitation on the payments they receive under the regulations will be more severe than under the old schemes. However, I believe that some Members will welcome the principle of this overall limitation on the number of animals that can receive the allowance.

I do not wish to minimise the difficulties that these differences could cause for the persons concerned, but they affect only about 5 per cent. of the farmers eligible for hill subsidies. Moreover, we have been able to find a way round most of these difficulties. We have decided that farmers in the scheduled areas shall continue to receive assistance for two more years, comparable to what they have been receiving, and we propose to make special payments over two years to farmers with less than three hectares to ease the impact of their ineligibility for aid under the new regulations. As regards winter keep acreage grants, my hon. Friend the Under-Secretary of State for Scotland, who hopes to speak in the next debate, has plans to continue to make payments to the farmers concerned, and he will have something to say about that.

Hon Members may recall that when the directive was being considered we pressed very strongly for a higher maximum rate of payment per livestock unit and also overall, but we were unable to persuade the other member States to agree to that. However, there is nothing sacred about the present limits in the directive and there will be opportunities in future to seek to have them revised.

There is one other provision that is new in this country and to which I should draw hon. Members' attention. The payment of a compensatory allowance will depend upon the claimant signing a simple undertaking that he will continue to farm at least three hectares of eligible land for the next five years State pensioners will be exempted from this requirement, and as soon as a farmer starts to receive a State pension his undertaking automatically lapses. The regulations provide other grounds for release from the undertaking, including circumstances beyond a farmer's control, and bearing this in mind I believe that it will be possible to administer this provision fairly.

Otherwise, such differences as one finds in the regulations are mainly of a technical and administrative nature. An example is the introduction, for the first time, of a common qualifying day for cattle and sheep of 1st January. This means that the payment of this winter's hill sheep subsidy will be deferred for about one month as, up till now, it has been paid in relation to a December qualifying date. I hope that this inevitable delay in the first year of the changeover will not cause farmers too much inconvenience. I assure the House that we are fully aware of the need to deal with farmers' claims as quickly as possible in the new year. The rates of subsidy payable under the former Order have been incorporated in the regulations, including, of course, the higher rates of hill sheep subsidy which followed the annual review earlier this year.

I am sure that hon. Members who have studied the regulations will see for themselves that, in most respects, hill farmers will continue to receive aid on much the same basis as before. We would, of course, have preferred no farmers to be adversely affected by the new scheme, but when the House considers the total absence up till now of any Community arrangement for financing this sector of farming and the reluctance of some other member States to introduce one, I am sure it will be agreed that a great deal has been achieved. I also assure hon. Members that we do not regard the matter as closed. We shall continue to take every opportunity open to us to improve the position of our hill farmers, and when it appears desirable to modify the directive we shall press for such modifications.

Finally, I draw the House's attention to two very important considerations First, the United Kingdom will receive a substantial contribution from the EEC Farm Fund of some £12 million annually, representing 25 per cent. of the cost of running this scheme in the United Kingdom We are the largest beneficiary in the Community, so there is a substantial net gain over the United Kingdom contribution to FEOGA funds in respect of this EEC measure Second, the regulations mean that aid under the provision of the directive will continue to be given to hill farmers on an indefinite basis, giving them firm grounds for confidence in their future through the United Kingdom. They are a clear indication of the Government's intention to maintain a viable hill farming industry.

I hope the House will see fit to approve these Regulations so that they come into effect on 1st January.

12.14 a.m.

Mr. Robert Hicks (Bodmin)

These are very important Regulations, as they are of great significance for our hill areas. The importance of hill farming both as an essential component part of the pattern of our agricultural production and as an important contributor to local economies in rural areas, where other forms of economic activity are often limited, cannot be over-emphasised. It is for these two reasons that the House must consider carefully the implications for our hill areas that are contained in these proposals.

As the Minister explained, the Regulations give effect to the implementation of the EEC directive on farming in less-favoured areas. The provisions of the proposals, in effect, replace our existing hill cow, hill sheep and winter keep schemes. But, as the Minister said, there is a fundamental change in the basis of aid provided for hill areas, in that under the existing United Kingdom schemes payments are made on a direct headage basis, whereas under the terms of these proposals there are certain financial limitations. These compensatory allowances must not exceed 50 units of account per hectare of eligible land, which, at present exchange rates, is £28.48 Secondly, under the terms of the directive, hill farmers must occupy at least three hectares, or 7.4 acres, of eligible land.

These proposals, in one draft form or another, have been considered by this House in the past, the most recent occasion being in February of this year when, apart from the restriction on the payment of compensatory amounts to pensioners, the draft proposals were welcomed not only by the Minister in his introduction but also by agriculture spokesmen in all parts of the House.

Farmers in my own constituency, which, after all, takes in Bodmin Moor, are most anxious to see these proposals accepted by the House, because, if we do so this evening, they will be implemented on 1st January 1976'This view, expressed to me by local farmers over the past weekend, has been confirmed by the Chairman of the Hill Farmers' Committee of the NFU Everyone concerned is very anxious to see the Regulations passed this evening. Any delay in implementation could seriously jeopardize the financial position of our hill farmers. In many instances, their present cash flow situation is precarious and they are dependent upon these payments in January and February of each year.

May I ask the Minister a number of specific questions? If this measure is accepted this evening, will he say when farmers can expect payments under the revised terms of the EEC regulation? He said that he hoped that they would be made as quickly as possible. In view of the present state of the industry in the hills, we would appreciate something more definite than he has indicated so far. In replying to that specific question, will he also confirm the position if the measure is not accepted tonight?

As for the total payments to our hill areas, the Minister said that £12 million would come from FEOGA sources, making a total approaching £50 million in all Will he assure us that this will be kept under close scrutiny, in order that it may be revised to meet changing circumstances? That is a very important consideration.

With regard to the 1,200-odd farms in the United Kingdom that will be affected by the restriction of farming to a minimum of three hectares, will the hon. Gentleman say how many are farmed by full-time farmers? Will he also confirm that at present the average payment to the 1,200 farmers who will be excluded is about £36 per year per farm, and will he expand on the phasing-out period? Will he also say a word about the purpose of eliminating these smaller units? Is it purely for administrative convenience, or is it intended to eliminate these smaller units in the overall context of the Community of Nine—to get rid of some of the smaller marginal units throughout Europe as a whole and thus take a step forward in minimising the problem of surpluses?

I now turn to the overall financial limitation of the maximum of 50 units of account per hectare of eligible land. Will the Minister say whether this limit could be revised at some stage in the future? In answer to three Parliamentary Questions that I tabled on Friday of last week, the indication was that 1,750 farms might be affected in this way, in that they might receive a lower level of hill assistance. Again will the Minister clarify the way in which this change will be implemented? What sort of time scale is involved? Above all, how will this change affect the overall pattern of production in the livestock sector, bearing in mind that the hill areas of this country are the chief source of our own stock?

I am very grateful to the Minister for explaining the position about the 100-or-so farms which, although excluded under the terms of the hill area review of 1963, still receive the headage payment, but will he confirm that, on average, this amounted to £330 per farm per year?

Finally, will the Minister briefly outline whether these changes in the method of payment will affect in any way the eligibility of hill farmers for improvement grants and other forms of financial assistance, to encourage investment in our hill areas? In particular, we would welcome clarification of the relationship between the firm proposals that the Minister has introduced tonight and the proposals outlined in the EEC Directive 72/159 on the subject of farm development and modernisation. In the past two years hill farmers have undergone some most unpleasant economic experiences. Last year's prices obtained for sheep and cattle were extraordinarily low, due to the general lack of confidence in the livestock sector. This trend was accompanied by a rapid increase in general farm costs and two successive years of poor fodder harvests. The ability, therefore, of the hill farmer to pay his way in the last two years has not been easy. I know that prices for stock have improved this year, but the overall position, taking the last two or three years into consideration, is still far from satisfactory.

We all know the difficulties and problems that these farmers have to face because of climatic and other physical reasons. It is a distinctive way of life. But I believe that, above all, the House must recognise the importance of our hill areas to the general prosperity and overall pattern of agricultural production in this country. When the hill areas are doing well, farming generally is also benefiting What is more, hill farmers derive their income from the hills alone. In a farming context, the hill farmer has nowhere else to turn. The hill farmer is an important ingredient, and forms the backbone, in social terms, of our upland areas. Hill farming must be prosperous to prevent the further depopulation of our upland districts.

I understand that this is basically one of the principal purposes of the proposal that is before us tonight. That is why I, as the spokesman for my party, say that we accept these proposals subject to the reservations that I have mentioned, in the belief that it would be totally irresponsible to divide the House tonight and in the knowledge that the hill farmers are in urgent need of these grants. They cannot wait for an indefinite period.

If we were to reject the Regulations this evening, they would have to be renegotiated, redrafted and relaid before being ultimately approved by this House. The upland farmers of this country require the money now. That is why we do not propose to divide the House. However, we reserve the right to return to these Regulations at a later stage, for the reasons I have stated.

12.25 a.m.

Mr. Caerwyn E. Roderick (Brecon and Radnor)

I cannot allow this opportunity to pass without making some comment on the situation in which we find ourselves. Some hon. Members were dubious about the benefits that we would obtain from membership of the EEC. My hon. Friend said that we had achieved something by our membership In fact, we have achieved a little less than we had previously Some of us felt that we would have struggle after struggle in our membership of the EEC. It is interesting that those who were anxious that we should become a full member of the EEC are finding cause for regret on issue after issue. This is one such issue where we have marginally less benefit than previously. People are complaining that the Government are not doing their duty. I believe that the Government have done their best in bad circumstances. The EEC does not agree with us. Therefore, those folk who were anxious that we should join the EEC should not come running to us if conditions do not suit them.

My hon. Friend said that 95 per cent. of farmers would get the same benefit as previously. We are told that help will not be made available for those farming fewer than three hectares. I am advised—I think it is very good advice—that a person can hardly be farming full-time if he has fewer than three hectares. Therefore, to form a policy to cater for that category would be very difficult.

I am more concerned with those who farm more than three hectares but are heavily stocked and will miss out under these Regulations.

If we are making a profit out of this deal by receiving more than we are contributing on this section, surely this would be a good opportunity to use some of the excess funds to ensure payments to those farmers who will miss out. I am thinking not of the part-time farmer with three hectares, but of the full-time farmer who has a heavy stock on his land.

Mr. Nicholas Winterton (Macclesfield)

Would the hon Gentleman care to comment on good husbandry? It might be bad husbandry to overstock. I believe that these Regulations will be of benefit to United Kingdom agriculture, and certainly to our hill livestock sector.

Mr. Roderick

I am advised that we are concerned not with overstocking, but with extensive or heavy stocking. I take my advice from very good people. The NFU advises me that it is in favor of these Regulations but that it would still like to see those who are heavily stocked paid a grant. The NFU is not opposed to heavy stocking. It is not necessarily bad husbandry to farm with as heavy a stock as possible.

The Press release, in paragraph 5(e), states that the effect of these Regulations will be to defer payments to hill farmers by about a month. There is a delay with regard to cattle and sheep. At this time of the year banks get a bit fussy. They are making up their books at the end of the year and if there is to be any delay, someone must persuade bank managers to hold off on the overdrafts Will the Minister advise farmers what to do in this situation? Perhaps he could pass the word down the line that the banks will get their money and that they should not be over-anxious. In England and Wales, 1st January is an important bank holiday, and bankers will be anxious that farmers should be balancing their books by that date. I hope that my hon. Friend can issue some advice and guidance on this problem.

12.31 a.m.

Mr. Geraint Howells (Cardigan)

I must first declare my interest as a practical hill farmer living on the slopes of Plynlimon, in Cardiganshire.

These Regulations are mong the most important for the hill farming community, and I wish to make a special plea for the small hill farmers of Britain Many years ago, when I was farming at home with my mother and father, we received our first cheque from the Ministry in respect of the 200 hill ewes we kept on our mountain farm that qualified us for the hill, farm subsidy. We had limited resources and a low cash flow, so the cheque was very acceptable From that day, all the farmers in my area and in other parts of Wales, due to the introduction of the hill sheep and cattle subsidy schemes, gradually transformed the hill areas of Wales and made them more productive and prosperous Trees have been planted, roads improved and social conditions improved In the last 25 years, production has increased by well over 100 per cent. and I am convinced that if we had a 10-year expansion plan from the Government of the day the production of lamb, mutton and beef could be doubled in the hills and marginal land of Wales by the end of the century.

The old scheme did a power of good in restoring confidence. At times in the past 20 years, confidence in the livestock industry has been at a low ebb.

These Regulations seek to implement part of the EEC Directive 75/268 on aids to less-favoured areas. They will replace the current hill cow and hill sheep subsidy scheme Of the 23,000 farmers currently benefiting from this scheme, 1,200 will not be eligible for the new compensatory allowance because they are farming less than three hectares. There are 500 small farms in Wales alone that will not qualify.

An additional complication is that farmers will have to sign an undertaking that they will continue to farm three hectares of eligible land for at least five years unless they are in receipt of a State retirement pension. If anything happens to such a person shortly after receiving the subsidy that prevents his complying with the undertaking, will he or his family have to pay it back to the Government?

For breeding cows, the allowance is £24.50 per head or 50 units of account, whichever is the less. For ewes, a distinction is drawn between those of an approved breed comprised in a specially qualified flock, in which case the allowance will be £3.60 or 7.5 units of account per head, whichever is less, and, secondly, all other ewes, in which case the amount per ewe will be £2.85p, or 7.50 units of account, whichever is the less.

Fifty units of account is the maximum, and equals £28.42p, and 7.50 units of account equals £4.26p. There is an overall ceiling on the total payments which can be given at 50 units of account per hectare. Why penalise the progressive hill farmer if he has improved the land to the extent that he can keep more sheep and cattle to the acre than other farmers? Is it not possible to increase the 50 units of account to 60 or even 70 next year if the farmers are allowed to increase production from the land?

In my opinion the Government have the right to increase the hill sheep subsidy, if they wish, from £3.60p to well over £4.20p per ewe, and the hill cow subsidy from £24.56 to £29 per cow. If, during the next 10 years, the Government are keen to expand food production, as envisaged in the White Paper "Food From Our Own Resources", why this unfair competition for British farmers, who must produce food and carry the extra cost of production while their counterparts in the Community get better treatment?

Due to the stop-go policies by Governments of the last few years, production has decreased in this country Less beef and lamb will be produced in 1976, compared with 1975, and imports are unlikely to increase, according to the hopes of the Meat and Livestock Commission market survey. The result will be higher retail meat prices, and the Minister will never please our consumers if the price of meat increases again, due to lack of Government foresight and incentives to the farmers curtailed.

The survey forecast that domestic beef production next year will total about 1 million tons—17 per cent. below the estimated 1975 level of 1,200,000 tons. In 1974, beef production was 1,100,000 tons and in 1973 it was 840,000. According to the survey, a sharp decline in beef production next year will be the result of the higher-than-expected level of cattle slaughterings this autumn. Let us look ahead to 1977.

Beef production is unlikely then to exceed 950,000 tons, assuming that the beef herd is expanding again, and live animal imports will be less. Mutton and lamb production in 1976 is forecast to be about 7 per cent. less than in 1975. Lamb slaughterings this autumn have been higher than expected, and as a result it is likely that about 5 per cent. more of this year's lambs will be slaughtered during the first three months of next year compared with the same period of 1975. The higher level of ewe cullings this year indicates a decline of 42 per cent. in the breeding flock.

Unless we move to a common agricultural policy that is fair to the farmer in every country we shall find it difficult to pay our farm workers a decent wage in Britain—and they are entitled to a decent wage like their counterparts in other countries of the Community. Farm workers move into the £50-a-week wage bracket in the new year, when they get a £6 increase in basic pay.

The latest Ministry figures show that average earnings before September had reached £46.78 for a 48.6-hour week. Foreman averaged just over £53, dairy cowmen £53.68, tractor drivers £49.33 and general farm workers £4341, plus a tied cottage, in many districts. They deserve every penny they get. I only wish the industry could pay them more.

Why did the Minister accept the draft Regulations in the present form? They will jeopardise the future of between 1,000 and 1,500 small hill farmers in Britain, 500 of whom are in Wales Is the hon Member aware that he is penalising men and their families who are the backbone of community and rural life in Wales—small farmers who intend one day to become farmers in their own right, given the necessary incentives? Why penalise part-time farm workers—forestry workers railwaymen, postmen and others'?

Is the Minister aware that the EEC has a social policy and is doing everything in its power to stop rural depopulation, yet we are tonight discussing a draft Statutory Instrument that will deny small farmers the right to qualify for grants and subsidies—the right that they are not denied under the present United Kingdom scheme? Why should we accept such a directive from the EEC? I take it that it was agreed by the Minister.

If we accept the principle of turning a blind eye to the plight of the small man who farms seven or eight acres, will the Minister agree to eliminate thousands of hill farmers from the scheme if more draft Regulations come before the House within the next five years suggesting that "eligible land" means land of not less than 20 hectares? The principle is very important.

Why is the Minister not willing to do everything in his power to help the small farmers, instead of looking on and seeing them being led to the altar of injustice and crucified because of our political whims and the unproven theories current in Europe?

I am convinced that in the near future many changes must be made in the common agricultural policy if it is not to spell disaster to many producers and consummers. I am in favour of the CAP, but we must make sure that British Ministers have a right to negotiate the best terms for British farmers. Tonight we are experiencing an injustice to a great many small hill farmers, and many of us are not willing to tolerate such treatment I beg and plead with all right hon. and hon. Members on both sides of the House to come to the aid of the small hill farmers who, over the years, have given of their best in their precious spare time and contributed enormously to the social life of the community. There are many aspects of the directive that I welcome, but because more than 1,500 small hill farmers are being denied the right to qualify for the subsidy, my colleagues and I will divide the House.

Several Hon Members

rose—

Mr. Deputy Speaker (Mr. George Thomas)

I appeal to hon. Members to be brief. The debate ends in three-quarters of an hour, including the winding-up speeches.

12.45 a.m.

Mr. Norman Buchan (Renfrewshire West)

In that case, I shall be extremely brief, Mr. Deputy Speaker I shall not mention all the points that I wanted to raise but will take up only two that have been mentioned already.

The hon. Member for Bodmin (Mr. Hicks) said that if the hill land was in a poor state, the livestock industry in general would not flourish. I think that it is the other way round—that the prosperity of the hills depends on the health of the general livestock industry. That is precisely the problem we face.

I was pleased to hear the conversion to the common agricultural policy expressed by the hon Member for Cardigan (Mr. Howells)'The Liberals are now seeing their pronouncements about hill cattle coming home to roost. According to recent newspaper reports, Lardinois and the Commission are saying flatly that we are not expected to be allowed to continue with the one thing on which we could claim a victory in the CAP—the retention of the headage payment for cattle. That was the one effective achievement for our internal agricultural policy that we got from the renegotiation.

The Liberals accepted the CAP during the referendum, yet now, only a few short months later, even before the end of the year, we are told that they will resist it. We shall look with interest to see whether, on the major question affecting the hill farmers—even more than the Regulations—the Liberal Party will lead the House into opposition if our Ministers fail in their discussions.

The main complaint is that a large number of farmers—I was surprised to hear that there are 500 in Wales alone—will lose under these arrangements. Even in minor Regulations of this kind—we had to fight hard enough to extend certain aspects of our most favoured areas policy—this many people will be affected.

We were told that one of the reasons for the CAP was that social policy would be written in to protect the large-scale rural community in Europe—that this would eventually benefit the development of our rural community and social wellbeing there Hence the plea of the hon. Member for Cardigan for the small farmer with three hectares One hectare was enough for Troy, but three are now necessary before people in this situation can gain in Britain.

I hope that the Minister will understand the general dissatisfaction that has been expressed. I shall not vote with the Liberals tonight. Goodness knows, worse may yet come from Brussels.

Mr. Stephen Ross (Isle of Wight)

Does the hon. Gentleman think that he has given sufficient reason for not supporting the small man tonight? He comes from a crofting area. Does he not agree that it is these people whom we should be supporting—that this is one of the main areas to which we look for our cattle-raising?

Mr. Buchan

The hon. Member is the last hon. Member, on the last Bench, to be involved in this altercation Some of us have tried to say this for a long time.

Farmers need their money, and quickly. Therefore, I shall support the Regulations, but I hope that the Minister will pay attention to the points that have been made tonight I hope that he will understand the obverse of the comments of the hon. Member for Bodmin—that what the hill land really needs is a thriving livestock industry.

Mr. Nicholas Winterton

I respect the hon. Gentleman's knowledge of the European situation Will he comment on what effect these Regulations are likely to have on the Common Market as a whole, because many of our farmers believe that there are too many small farmers on the Continent and that our farmers are subsidising the continental farmers?

Mr. Buchan

Hon Gentlemen are not only content to smash up our motor car industry; they are trying to use the position here to smash up the small farmer in Europe. I agree that theirs is an inefficient way of farming, but there is no reason why we should take the blunderbuss of bureaucratic measures to smash a form of rural communities that enjoy life in this way. I prefer the carrot to the stick. The hon. Gentleman wants to crash them out of business. I do not go along with that. I want to help people I used to wonder why Dr. Mansholt was so keen on some of his measures if the common agricultural policy was so good.

I do not agree with hon. Gentlemen. I hope that Liberal Members will remember that when it comes to a real crunch situation and my right hon. Friend the Minister does not succeed in achieving what we want him to achieve.

12.51 a.m.

Mr. Hamish Watt (Banff)

In adopting the stance that it has against the Common Market over the past five years, my party was particularly conscious of the effect that the common agricultural policy would have on the hill and upland farmers of Scotland. We always stressed that. Now time is proving us right. The third scheme, which has always worked perfectly well in the British context, is now being dismantled. First, the Beef Premium Scheme was dismantled—and we all know the disruption caused to the beef industry because of that. Now the Winter Keep Scheme and the Hill Sheep Scheme are being dismantled and once again disruption is caused to the hill farmer.

The Minister has said that only 5 per cent. of the farmers of Britain would be affected. A dashed lot of that 5 per cent. happen to be in my constituency Up and down Speyside there are many small but extremely efficient farmers who will be adversely affected by this hectarage quota. It was bad enough having to deal with acreage quotas and headage quotas, but now we have to cope with hectarage quotas. Many of the farmers of Speyside have a long tradition of buying the draft from distilleries and their farms are heavily stocked. These small but efficient men, with the help of the draft and the heavy crops of silage that they were prepared to go out and gather in the summer, were able to stock their farms heavily. Now they are the very people who will be penalised.

How daft can the Government in London get? During the past two nights we have been spending public money like confetti, trying to keep an ailing industry alive. Tonight, for the sake of £12 million, which the Minister says he will get from the EEC funds, he has put at risk the livelihoods of many of those who are doing so much to keep this country's economic head above water.

The fantastically high bill for food imports—over £2,000 million a year—will go even higher because of this measure. This really seems crazy when we have a food industry that has a ready market for every product that it can produce. We could move to a position of putting this country near enough to self-sufficiency with the foodstuffs that these farms produce. Moreover, there is a ready market all over the world for any surpluses that our farmers care to create.

However, under the present Government—and previous Governments ; hon. Members on both sides of the House are equally guilty—we are intent on keeping going industries which will never be viable while clobbering the industry that does its level best throughout the year to provide food for the vast millions of our population.

I had not intended to divide the House tonight but, like the hon. Member for Cardigan (Mr. Howells), I am very concerned about the position of the small farmer in Scotland I have one great ambition in life When my useful days are done I hope to retire to a small croft in the north-west of Sutherland. Whether that croft will comprise three hectares I am not very sure, but I know that I shall be among many of my friends there, because for a long time I have had a close association with many of the people of that area who have come year after year to the various hill sheep sales to sell their lambs.

I am concerned about these people. Although they may not add a great deal to the business of the country, they have a very enjoyable and very special way of life'1, for one, do not want to see it destroyed That is but one of the reasons why my hon. Friends and I will be joining Liberal Members in the Lobby.

12.58 a.m.

Mr. Wm. Ross (Londonderry)

In view of the seriousness of these Regulations, I very much regret that the debate is limited to one and a half hours. They certainly deserve much closer scrutiny than the House can give in that period.

A certain amount of nonsense has arisen in the debate, and I should like to draw attention to one or two points that have been raised with which I cannot agree.

First, the Minister referred to E24–50 as being 99 per cent. of the moneys previously paid. He seems completely to have forgotten that inflation is running at over 20 per cent. Whether or not he knows that, it affects the farmer in the same way as it affects everyone else.

We have had a long and bitter cry about three hectares being the limiting factor. I am speaking principally from the Northern Ireland point of view tonight. Perhaps the Minister will confirm that in Northern Ireland, at any rate, there is a lower limit of 20 acres for certain farm subsidies—at least there was for help in the past, and possibly the same limits continue now.

Everyone in farming knows that the beef cow situation is a mess after last year's disastrous calf prices. There has been a recovery, this year, to the money levels of 1973. However, I have calculated that in real terms the average price of calves in Northern Ireland markets this year is at the level that it was in 1970'Hon. 'Members should keep that in the forefront of their minds.

In considering the problems of hill farmers in Northern Ireland, I ask the Minister to recall the visit of his right hon. Friend the Minister of Agriculture to Northern Ireland on 10th March this year. He said then, during a television interview, conducted at a Ballymena farm, that he would review the position of suckler producers after the autumn sales. The autumn sales have come and gone, and in view of the prices received it is time the review was carried out. When it is, we should like to know the Ministry's conclusions.

The farmers are voting with their sales. In the figrst eight months of 1973 30,000 fat cows and bulls went to slaughter in Northern Ireland. In the same period of 1974 the figure was 51,000, and this year it was 63,000. This all adds up to a clear demonstration of a lack of confidence, and points to a shortage of beef in the very near future.

We are confronted for the first time in legislation with the term "less-favoured area". This is qualified by Regulation 2(1)(a), which says that a less-favoured area consists predominantly of mountains, hills or heath". [An HON. MEMBER: "What about bog?"] There is not a word about bog. Yet the Official Journal of the European Communities says that the term includes areas in which the maintenance of a minimum population is not assured. It includes mountain areas and areas at a lower altitude where the land is very steep and all sorts of other qualifications What is the Minister doing about those areas at lower altitudes? Apparently he is doing very little. What is he doing about the areas of infertile land, such as bogs, which confront me every day? With the exception of some such marginal land in County Fermanagh, which was included, nothing appears to have been done. Yet in Eire, large tracts of some of the most fertile land in Ireland—specifically in East Donegal—are included. I know that area well. It is land of the highest quality, recognised throughout Ireland as such. The Minister appears to let the Eire Government get away with nearly everything in this respect.

Another matter that concerns the people of Northern Ireland is the five-year qualifying period. That must be modified. In Regulation 3(5) we read that the farmer has to enter into a written undertaking … that he will, for a period of five years from the qualifying day … continue to use eligible land for agricultural purposes. If the farmer dies he will obviously not have to repay the money, but what happens if he decides to sell and move to a larger farm or another area, or if he retires in favour of a son before reaching the age at which he can draw a pension? What happens if the land is sold? Those matters are not covered by Regulation 9(a), the other regulation which apparently deals with the problems that will arise in such cases. I should like clarification of what is intended.

I welcome the better stocking rate that will be allowed. I understand that under the old scheme the stocking rate was one cow to four acres. It is now one for 2.4 acres, a considerable improvement, but poor land, mountain land, stocked with cattle at that level can suffer damage in wet weather. The matter needs to be kept under review. On the higher quality upland farms, where the land is capable of much higher production than that, will the farmers concerned still be able to draw the beef cow subsidy for cattle in excess of the permitted stocking rate, as under the hill cow subsidy scheme? Will farmers be allowed to apply for the beef cow subsidy for the extra cattle that they manage to run on their land?

These matters worry the people who live and work in the hill areas, and they require clarification, especially on the subject of sheep. Perhaps we may be told the position. Perhaps the Minister in his reply will clarify the situation.

In Northern Ireland we have a system of conacre leases of one year and short leases of less than five years. What will happen to a farmer on such land? Will he have to repay any moneys he has received?

Special subsidies were paid in Northern Ireland in respect of fencing and other things in hill land areas. Are we to assume that those subsidies will continue under this legislation, or are they to be withdrawn?

1.6 a.m.

Mr. Richard Body (Holland with Boston)

I feel almost like an intruder in this debate, because if there is one single factor about these Regulations it is that no constituent of mine could ever benefit from them. My area of Holland is known as the "hollow land" of England, in which every acre is as flat as the Floor of this House.

I bring a discordant note into the debate, because I regret the complacent way in which we allow money to go to certain parts of our farming industry. I appreciate that it is not our taxpayers' money but that it comes from FEOGA, and that that, in turn, comes from the taxing of food in this country and in the rest of the Community. Therefore, by the use of levies, and so on, we are excluding meat from the Argentine, Australia and elsewhere, and with the proceeds we are subsidising certain farmers in this country.

I was worried about some of the language used by the hon. Member for Cardigan (Mr. Howells), who spoke as a protectionist advocating still more protection for certain farmers in this country. But what do he and others mean when they say that this money is urgently needed? The hon. Gentleman said that this money was most important for the hill farmer. What he meant to say was that unless this money is forthcoming some people will be put out of business.

Mr. Geraint Howells

Not some of them; all of them.

Mr. Body

That must be clearly understood, and I hope that it will be understood by the farmers in my constituency and by my neighbours. As a farmer, I do not wish to see these subsidies, and would rather carry on without them.

We are dealing here with a compensatory allowance. It is a new piece of jargon. The word "compensation" applies to those on the land who cannot earn a living without subsidy. This means to say that we are inducing marginal producers—in the economic as well as in the farming sense—to engage in increasing production when the market is under considerable strain.

Mr. Gwynfor Evans (Carmarthen)

Is the hon. Gentleman aware that we are not solely concerned with the market or just with pounds, shillings and pence; we are concerned also with society and the quality of the community. We are concerned with keeping the farming and agricultural community in existence. Is that not justified by this kind of assistance?

Mr. Body

That is an honest argument that one can respect. The less respectable argument comes from the Liberal Bench. One thinks of what used to be said from the Liberal Benches. The Liberal spokesman tonight spoke of expanding meat production by 50 per cent.

Mr. Geraint Howells

By 100 per cent.

Mr. Body

Very well, by 100 per cent. But it is to be done through the use of subsidies. The hon. Member said that this increase was most important and could not be achieved without subsidies. He said that he would vote against the Regulations because they do not go far enough—that there is not enough money for these marginal producers. By all means enter the social argument and make the point that the hills of England, Wales and Scotland provide amenities for the holidaymaker and for the country as a whole and therefore those who live there are guardians of the countryside who need some supplement to their income. That may be a respectable argument, but I discount it.

What is not respectable is to seek taxpayers' money to subsidise production that is at the same time forcing producers in other parts of the world to go destitute. When the hon. Member talks of a 100 per cent. increase I wonder whether he realises that at the moment beef in Australia and the Argentine is a poor man's food. Last week it was possible to buy a steak in a town in the Argentine for the equivalent of 10p. That is an absolutely derisory price, which we have not seen for many years. This has come about because we are preventing meat from entering this country by a system of tariff and non-tariff barriers—

Mr. Geraint Howells

I wonder whether—

Mr. Deputy Speaker

Order. It is not fair for hon. Members to intervene in this way when other hon. Members want to take part in the debate. There are only a few minutes left.

Mr. Body

I am sorry that I have been diverted, Mr. Deputy Speaker. From all the accounts of those who are dealing with the wholesale trade—and I have to deal with it regularly—demand for beef is weak and likely to remain so for a long time. This is serious for those efficient producers in the United Kingdom who are perfectly capable of producing meat without a subsidy. The effect of the subsidy, or compensatory allowance, will be to induce marginal producers to produce more than they would otherwise produce. That will have the effect of weakening the market and making it more difficult for the efficient producers to operate. At the same time, it will have the effect of forcing up the price of meat to the public.

1.13 a.m.

Mr. Hector Monro (Dumfries)

I do not think that we have sufficiently highlighted the impact of inflation on hill farmers and those who are existing on winter keep in this current year. They have faced dramatic increases in costs—particularly because of transport difficulties and the problems inherent in being far from centres of distribution. On that basis alone I would have expected the assistance proposed tonight to be at a marginally higher level than that which is being put forward.

I want to deal with the more practical implications of the designation of the less-favoured farming areas and ask how the Government have reached the conclusions set out in Document 128/260, which details the parishes that are eligible and those areas that are to be partly favoured. How has the list been compiled. Will all farmers be reclassified, so that some are eligible and some are not?

I have to ask the Minister to reply to a constituency point on this debate because it will be too late to raise it on the next debate, concerning the Scottish winter keep, and anyway it would be out of order to do so. Will the hon. Gentleman say which are the two parishes in my constituency that are missing from these provisions? Each Scottish parish has a number, and the parishes in question are numbered 298 and 323. This is vital in an area in which winter keep has been an important part of the income of hill farmers. If my question could be answered I should feel much happier and more in agreement with the Government over these Regulations.

We should be told how the classification has been drawn up. It is far from obvious which parishes are in and which are out. What is the basis upon which the Government have reached their decision?

1.16 a.m.

Mr. Bishop

I welcome the support of the hon. Member for Bodmin (Mr. Hicks) on these Regulations. It is helpful for the House to know that he and his party support them. The hon. Member asked whether the limit of 50 units of account could be revised. There will be opportunities in the future to try to get it raised. He asked how many farms below three hectares were run on the basis of full-time units. It is extremely unlikely that any of the farmers concerned are full-time farmers.

He asked how much subsidy was paid to small farmers. The average figure is £36 a year. The total is £42,000 out of about £50 million. He asked why farms of less than three hectares were excluded. The decision is in accordance with Community policy of improving farm structure. He wanted confirmation that the average payment to farms in scheduled areas was about £330, and I think that is the right figure. He also asked about relationships with Directive 72/159. The Regulations deal only with compensatory allowances and revision of the capital grant scheme will follow in due course.

The hon. Member for Cardigan (Mr. Howells), who, like the hon. Member for Bodmin, has a deep interest in this measure, asked whether it was right to exclude farms of less than three hectares. I can only refer him to the reply I gave to the hon. Member for Bodmin. This point was taken up by my hon. Friend the Member for Renfrewshire, West (Mr. Buchan). We must get this aspect of the matter into perspective. The people who operate these small units are not farmers in the true sense of the word. It is not even a significant part-time occupation for them. The average amount of subsidy is £36 a year. We are making arrangements to continue to provide aid to these farmers at about the current level for another two years, as I explained in my opening remarks.

The hon. Member for Londonderry (Mr. Ross) asked about the Northern Ireland limits and the need for more aid for the suckler herd. The limits and rates applied by the regulations are precisely the same for Northern Ireland as they are in the remainder of the United Kingdom. As regards the hon. Gentleman's point about the suckler herd, the prices at autumn store sales have improved since last year. I appreciate that there is some pressure for aid, but this is a matter that is under consideration in the Annual Review.

The hon. Member for Banff (Mr. Watt) said that most of the farms affected by the hectare limit are in his constituency. The total number of farms in Scotland affected by the overall limit is about 250, of which I would have thought only a handful were in the hon. Gentleman's constituency. There will be few crofters who will be affected by the three hectare qualification because of their share of common grazings. That is a matter that will be taken into account.

My hon. Friend the Member for Brecon and Radnor (Mr. Roderick) asked whether we could not use some of the FEOGA money to supplement the subsidy to heavily stocked farms. Several other hon. Members referred to the payment limits. We have to comply with the limits in the directive. We cannot pay more than 50 units of account per hectare on any eligible farm. We have tried to persuade other member States to agree to a limit of 60 UAs but we were unable to do so on the last occasion. There will be further opportunities to press this case and I note the views that have been expressed.

The hon. Member for Londonderry asked about the five-year undertaking for those who are eligible and whether farmers would be eligible for beef cow subsidies on cattle in excess of the limits. The answer is "No" to the hon. Gentleman's latter question. As the hon. Gentleman said, the stocking limits are more generous under the new regulations. His question about the five-year undertaking is of considerable importance. I know that the requirement in the Regulations is worrying some farmers. I can assure the House that we intend to interpret this provision as flexibly as possible.

The undertaking to continue farming three hectares of eligible land for five years should not be unduly onerous for most hill farmers. Moreover, there are a number of escape clauses in the Regulations if a farmer has to move away from the hills because of circumstances beyond his control. If that is the position the farmer can be released from his undertaking. In my experience most hill farmers are still fit enough to continue until pensionable age. I believe it unlikely that they will wish to refuse to take a State retirement pension. It is an important point that we intend to operate the regulations with a great deal of flexibility.

The hon. Member for Cardigan asked about the increase in the hill sheep subsidy. The appropriate level of the subsidy is under discussion in the Annual Review.

Reference has been made to the eligibility of land. The less-favoured areas will virtually coincide with the areas determined in the hill livestock subsidy schemes. Determination of land eligibility for compensatory allowances within those areas will follow the same rules as have been applied to the determination of land eligible for the hill livestock subsidies. Farmers who qualify for the full range of the hill farm subsidies will normally be eligible for the new allowances, and the areas of hill farmers' land will remain unchanged.

Eligible land in Scotland will coincide with the areas of livestock rearing land determined in the recently revoked hill livestock subsidy schemes. This means that land which was eligible for the hill cattle or hill and upland sheep subsidy will be eligible under the new schemes with the exception of a small number of holdings of less than three hectares. As hon. Members know, three hectares is about seven and a half acres. They are ineligible in the EEC directive.

The procedure for determining whether land within the less favoured areas is eligible for the payment of compensatory allowances is unchanged from the system that applied in the case of the livestock subsidies.

I want to deal briefly with the matters raised about farmers in the so-called scheduled areas. The point is that some 100 farms which lay outside the hill line under the old Hill Livestock Subsidy Scheme were allowed to continue receiving hill cow subsidy, but no other hill farming subsidy or grant, after the 1963 review of the hill line. It was never the intention that the arrangement should be permanent. This concession has led to anomalies in respect of adjacent land outside the hill areas. But farmers in this category will be able to claim the beef cow subsidy on their cattle. We intend to carry on aid to this area, as in the case of those in areas of less than three hectares, for another two years. This will phase out any difficulty, and it is always subject to review from time to time.

With regard to the FEOGA contribution, I should say that the expenditure by member States in pursuance of this directive will attract reimbursement from FEOGA currently at the rate of 25 per cent. This means that FEOGA will contribute £12 million to the United Kingdom's annual expenditure on the new allowances, which is estimated at just under £50 million. The United Kingdom expects to be a net beneficiary under this directive.

The hon. Member for Bodmin asked about the payment. The answer is that we hope to start to make payments by mid-January, and certainly as early as possible in the new year.

I was asked how many farmers eligible for the old subsidies will not qualify for the new compensatory allowances. The figure is about 1,300. But 1,200 of these farms are less than 3 hectares, and most of the farmers are part—time. About 100 farms in the scheduled areas will not qualify, but they will be helped by the measures which will be applied for the next two years.

The hon. Member for Bodmin asked what would happen if these Regulations were not passed. The position is that the existing legislation has been suspended and put into cold storage. It is no longer applicable. Until these Regulations are passed, we have no authority to pay the new allowances. We want to pay them from 1st January. This is a very important factor which the House should bear in mind.

In these Regulations, the Government have achieved by far the majority of the aims that we set out to achieve and which were mentioned in our debates in February and October of this year. I

notice that on 4th February the hon. Member for Cardigan, who has been so critical tonight and talked about dividing the House, began his remarks by saying: Liberal Members welcome the draft directive, which will do a power of good to the sheep industry."—[Official Report, 4th February 1975; Vol. 885, c. 1291.] Yet tonight this directive is being opposed by the Liberal Party. If the Regulations are not passed, hill farmers up and down the country will know where to place the responsibility.

The hon. Member for Cardigan asked why this measure should be supported. There are a number of reasons. We have to make the best use of the directive, which has achieved most of our aims. Only 1,870 farmers in the United Kingdom out of 63,000 beneficiaries will receive less. But these are early days, and the directive does not rule out the possibility of review. The United Kingdom will receive £12 million, representing 25 per cent. of the cost of the scheme. The United Kingdom is the largest beneficiary in the EEC, and there is a substantial gain over our contribution to FEOGA funds in respect of this measure.

Those are factors which we cannot ignore. In the interests of the small farmer and the industry generally, the House will be well advised to give its full support to the Regulations. If it does not, we are not empowered to pay the benefits which the small farmer expects from these Regulations.

Question put:—

The House divided: Ayes 66, Noes 19

Division No. 21.]	AYES	[1.30 a.m.
Bagier, Gordon A. T.	Harrison, Walter (Wakefield)	Roderick, Caerwyn
Bishop, E. S.	Hart, Rt Hon Judith	Rodgers, George (Chorley)
Boardman, H.	Jackson, Miss Margaret (Lincoln)	Ross, William (Londonderry)
Bray, Dr Jeremy	Jones, Alec (Rhondda)	Rowlands, Ted
Brown, Hugh D. (Provan)	Jones, Barry (East Flint)	Sandelson, Neville
Buchan, Norman	Kerr, Russell	Small, William
Cocks, Michael (Bristol S)	Leadbitter, Ted	Snaps, Peter
Cohen, Stanley	Lyons, Edward (Bradford W)	Stoddart, David
Coleman, Donald	McCusker, H.	Stott, Roger
Concannon, J. D.	McElhone, Frank	Strang, Gavin
Conlan, Bernard	McNamara, Kevin	Tomlinson, John
Cox, Thomas (Tooting)	Mahon, Simon	Urwin, T. W.
Craigen, J. M. (Maryhill)	Mellish, Rt Hon Robert	Wainwright, Edwin (Dearne V)
Cryer, Bob	Molyneaux, James	Williams, Alan (Swansea W)
Cunningham, Dr J. (Whiteh)	Monro, Hector	Winterton, Nicholas
Dean, Joseph (Leeds W)	Noble, Mike	Woodall, Alec
Dormand, J. D.	O'Halloran, Michael	Wrigglesworth, Ian
Ellis, John (Brigg & Scun)	Ovenden, John	Young, David (Bolton E)
English, Michael	Parry, Robert
Fletcher, Ted (Darlington)	Pavitt, Laurie	TELLERS FOR THE AYES:
Golding, John	Pendry, Tom	Mr. Joseph Harper and
Grant, George (Morpeth)	Powell, Rt Hon J. Enoch	Mr. James A. Dunn.
Gray, Hamish	Richardson, Miss Jo
Hamilton, James (Bothwell)	Rippon, Rt Hon Geoffrey
NOES
Bain, Mrs Margaret	MacCormick, Iain	Welsh, Andrew
Body, Richard	Pardoe, John	Wigley, Dafydd
Crawford, Douglas	Penhaligon, David	Wilson, Gordon (Dundee E)
Evans, Gwynfor (Carmarthen)	Reid, George
Freud, Clement	Ross, Stephen (Isle of Wight)	TELLERS FOR THE NOES
Henderson, Douglas	Steel, David (Roxburgh)	Mr. Cyril Smith and
Hooson, Emlyn	Temple-Morris, Peter	Mr. Russell Johnston.
Howells, Geraint (Cardigan)	Watt, Hamish

Question accordingly agreed to.

Resolved, That the Hill Livestock (Compensatory Allowances) Regulations 1975, a draft of which was laid before this House on 27th November, be approved.