HC Deb 17 March 1975 vol 888 cc1370-97
Mr. Deputy Speaker (Mr. George Thomas)

It will save time in the ensuing debate if I remind hon. Members who wish to speak that the effect of reduced subsidies for fuel oil upon glasshouse producers, for which there is no provision in the Estimates, is beyond the scope of our debate. A wide debate on capital grants is in order.

2.2 a.m.

Mr. Anthony Nelson (Chichester)

This is not the first time I have spoken on finance for the horticulture industry, and I suspect that it may not be the last. We had full debates both before Christmas and earlier today on the oil subsidy, which was mentioned by you, Mr. Deputy Speaker. It is a specially important subject for my constituency of Chichester as Sussex is responsible for the production of one-seventh of the total horticultural produce of the country.

Mr. Michael Jopling (Westmorland)

On a point of order, Mr. Deputy Speaker. I hesitate to interrupt my hon. Friend, but in view of your ruling may I seek your guidance? Your suggestion that comments on the fuel subsidy will be out of order has put us in some difficulty. We are told that the reason for the dramatic increase in the grants under Subhead D1 is that the number of applications has been higher than was expected. Surely it would be in order for us to discuss why the number of applications was higher and whether, in view of Government policy, it might be lower in future. Surely it would be in order to discuss trends which might alter the number of applications for grant.

Mr. Deputy Speaker

The hon. Gentleman will no doubt use his skill within the arrangement I announced, namely, that a wide debate on capital grants is in order. To devote time to the effect of reduced subsidies, which are not covered by the Vote, would be out of order. A passing reference will no doubt be acknowledged.

Mr. Jopling

I am obliged, Mr. Deputy Speaker. We are all grateful for your clarification.

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

Further to that point of order, Mr. Deputy Speaker. I think it will be of help to the House if I point out that the statement in the Estimates that the number of applications was much higher than expected is erroneous.

Hon. Members


Mr. John Wells (Maidstone)

Further to that point of order, Mr. Deputy Speaker. If the Estimates are erroneous, I think the matter should be taken away and that this debate should come to an end. If the Minister has come to the House to say that he does not know what he is talking about and that his paperwork is out of order, would it be in order for me to move to adjourn the debate, pending the Minister's finding out what he is to do, so that we may resume on another day?

Mr. Deputy Speaker

The hon. Gentleman might move such a motion but I would not accept it at this stage. I think that once the hon. Member for Chichester (Mr. Nelson) has made his speech it might be as well, in view of what the Minister said, for him to rise early in this debate.

Mr. Nelson

I shall indeed widen my comments on this subject but I hope at the same time to keep within the ambit you have set us, Mr. Deputy Speaker. I was trying to preface my remarks by indicating the size of the problem and its relevance to my constituency.

The horticulture industry is responsible for about one-tenth of the total value of agricultural produce in this country. The area along the Sussex coast, predominantly on the western side around Chichester and Arundel, is responsible for about one-seventh of the horticultural total. Since £100 million has been spent on capital investment in the industry since 1960, it is important that we should look at the financing of horticulture in a wide context—including preferential finance, capital grants, incentives to modernise production and marketing, oil subsidies or a market intervention system. All these forms of support are designed by national Governments to give a particular advantage to countries competing in Europe. Because of the competitive nature of the European market, all types of assistance must be looked at in assess- ing the extent to which they enhance production and competitiveness in the country concerned.

If we look at European examples, we see that at present Belgian growers enjoy a subsidy of 0.3 Belgian francs per litre on liquid fuel until the end of March this year. In Denmark the State Guarantee Bank gives credits to the industry totalling 100 million Danish kroner, with a subsidy on interest over 6 ½ per cent. Eire continues to operate until the middle of the year a subsidy of 2p a gallon. In France there is a similar subsidy on light oil of 38 francs and on heavy oil of 32 francs. In Holland, where 80 per cent. of consumers are on natural gas, there is a similar subsidy, plus a refund of 4 per cent. VAT, with interest-free bank loans of 50 Dutch florins per thousand litres.

In this competitive market one must compare assistance to continental growers with the overall help given to the British horticulture industry. I seek clarification from the Minister on the proportion of the figures shown in the Supply Estimates applying to horticulture. In regard to the form of the Horticultural Development Scheme outlined in Subhead D1, we know that the scheme came into operation at the beginning of 1974 and will continue until 1982 under EEC Directive 72/159, which is partly financed by the Community's Agricultural Fund. To what extent is that figure in the Supply Estimates exclusive of any finance provided by the EEC? Can the Minister apportion help from EEC funds in relation to the amount quoted in the Supply Estimates dealing with horticulture?

The scheme is designed to enable farmers and growers with businesses whose incomes per labour unit are below the average earnings in non-agricultural industry in this country to achieve a comparable income. Applicants whose development plans are approved under the scheme can receive capital grants for the investments needed to carry through the plans, a grant for keeping accounts and, where necessary, guarantees for any loan needed to carry out the plans. For horticulture in particular, grants of 30 per cent. for buildings, except traditional production buildings, 20 per cent. for most plant and equipment and 10 per cent. for minor equipment are available under the scheme. If we are to assess the value of these capital grants, we must have further information on the application of grants for these purposes.

I would also ask the Minister to take up the smaller provision of grants for keeping accounts. It seems that farm account grants payable under the Farm and Horticulture Development Scheme are not included in the figures given for the scheme in Subhead D1 and instead are included under Subhead E2. Why is the provision for 1974–75 substantially lower than that estimated? Why has the scheme been much slower to start than was expected?

We are talking about an overall amount which is comparatively small compared to the historic financing of the industry. With the Horticulture Improvement Scheme now finished, the only reflection of the scheme we see in the Supplementary Estimates is contained in Subheads D8 and D10, providing for historic payments of £5.2 million and just over 1 million by way of supplementary grants, bringing the total paid under the HIS to over the £47 million provided originally.

I would welcome a clearer picture of the overall amount provided by way of capital grants to the industry, and I ask the Minister to confirm or deny that it is now more than was originally envisaged under the scheme. Can the Minister quantify it?

I turn to D11 concerning grants for the encouragement of co-operation in agriculture and horticulture. What proportion applies to horticulture in this country? In particular, will the Minister give an indication of the take-up of grants under D1 and D11 by the land settlement associations? They are particularly important producers of a wide variety of horticultural products and have provided many people with the ability to start their own businesses. They are particularly important in Chichester, where we have many tenant horticulturists whose families have worked on land settlement for generations.

The associations flourished during the 1930s, when they provided alternative employment for people from areas of high unemployment. They provided invaluable employment and production throughout the years. Many people who work on the land settlements have fathers and grandfathers who have worked the same land. Their future is now imperilled by the unfair competition they have to meet and by the way in which the Government refused to provide them with assistance in their hour of need.

We have been told today that the assistance given is not comparable with that provided in Europe, because it has been given over a longer period in this country. Yet it is in the past couple of years that costs in the industry have risen out of all proportion to market returns and the assistance is so badly needed. Costs increased by about 25 per cent. in 1973–74 and they are projected to be up by about 68 per cent. in the forthcoming year.

These are major problems which growers, especially those in the land settlement associations who do not have the capital resources with which to cushion the financial effects of these hard times, will not be able to solve. Growers in my constituency are desperately concerned that this will force a substantial number of young people, who have invested money and time in trying to make a go of their own tenancies, out of the business, with substantial personal losses to boot. I seek a statement and an assurance from the Minister as to what assistance he might render, or consider giving, to that section of the horticulture industry.

While it is not in order to stray directly on to the question of the oil subsidy, it would be inappropriate to let a debate such as this go by without yet again saying to the Minister that it is not too late to reconsider a subsidy. When we look at the overall finance made available by means of subsidy or capital grant to this industry, and the unfair competitive situation in which we are placed vis-à-vis Eire, which continues to enjoy a 2p per gallon subsidy, we must remember that a similar subsidy in the United Kingdom for half a year would cost slightly more than £1,500,000. I challenge hon. Members to turn up virtually any page of this large volume of Supply Estimates without seeing a figure in excess of that. When we talk about the survival of an industry, we must take that into consideration.

If capital grants are to continue to be paid, we must have assurances that the industry will survive unfair competition. I ask the Minister to say what action he intends to take. Can he give us some indication of his response to any European initiative, especially any digressive aid policy which might be introduced, whether in the form of oil subsidies or capital grants? I have the impression, which is perhaps unfounded, that the Government are stalwartly refusing to regard sympathetically any European measures to provide degressive aid to the horticulture industry. Perhaps the Minister can help us on that point and say that any policies or programmes presented will be sympathetically considered on their merits, bearing in mind the crisis which the industry now faces. Such an assurance would greatly reassure the growers in my constituency.

What action are the Government taking on a European level to curb the unfair aid made available in our neighbouring European countries? The horticulture industry is not in favour of long-term subsidies, whether for oil or capital expenditure. I do not plead for longterm subsidies. We are all in favour of freer and competitive trade. Our horticulture industry is second to none and is capable of competing more than successfully with our European neighbours on a fair basis. But this is not the situation now. On the one hand it is incumbent on us to help our industry during a unique and difficult period. On the other hand the Government must take more progressive action to ensure that our European neighbours practise stricter restraints and uniformity in the level of aid and assistance given to their industries.

The amount of hidden subsidy and the speed with which European Governments respond to inflationary increases in costs, especially of oil, mean that the position of our horticulturists in the market place becomes worse daily. The industry will not survive unless the Government are prepared to think again on this. Earlier today we heard that the horticulture industry reaped the benefit of the Agricultural Finance Corporation. However, that benefit is not comparable with the financial assistance rendered to European competitors.

I ask the Minister to indicate whether some action under the Agriculture and Horticulture Act of 1964 can be impl- mented by way of an order to control and restrain imports from countries outside the EEC and to prescribe minimum price levels for imports from those areas. I am thinking of products like Romanian tomatoes, which admittedly are a small proportion of the overall market but which nevertheless might be of importance in a price-sensitive market at certain times of the year.

It is regrettable that we have to scratch round to provide some way of ensuring that an industry and a heritage as important as this is allowed to continue.

I urge the Minister to think again on the oil subsidy and to consider in a reasonable manner any proposals put forward from the European Community on degressive aid policies.

It is not appropriate for me to comment on what the Minister said about the increase under Subhead D1 being erroneous. I hope that I shall be allowed to interject a few remarks on that later.

I am sure that the Minister will appreciate the hard feelings of many of my constituents whose lives are so closely tied to the industry, the sincerity and fear that they feel and their hope that they will receive assurance from him in the course of this debate.

Mr. Deputy Speaker

Mr. Gavin Strang.

Mr. Jopling

I hope that the Minister will respond to your invitation, Mr. Deputy Speaker, which we all heard. It must be almost unprecedented for a Minister to tell us, early in a debate on an Estimate, that what we are debating is erroneous. It is inconceivable that we should continue this debate for very much longer without some explanation from the hon. Gentleman. I appreciate that he may be in difficulty, perhaps, thinking that he would not then have an opportunity to reply to the debate. But I am sure that I speak for the whole House when I say we should be glad to give him the leave of the House so that he might reply to the debate.

Mr. Deputy Speaker

I am obliged to the hon. Member for Westmorland (Mr. Jopling). I have been a Member of the House long enough to know that the unexpected may always be expected. It is the first time that I have had the pleasure of hearing a Minister say before we start that his report was wrong. It may be that the Minister would like to address the House.

Mr. Strang

I am sure hon. Members will appreciate that I made my interjection earlier purely to be helpful, because it appeared to me that hon. Gentlemen were likely to hang a whole discussion about fuel oil on the basis of an observation which was untrue.

I can inform hon. Gentlemen that there has been an error—and everyone is human—in the printing of the Estimate, but only to the extent that the note on the Farm and Horticultural Development Scheme, Vote I, D.1 on page 67, should have referred to the volume of the investment which we expected and not to the number of applications. I regret this error and apologise for its misleading character.

Mr. Nelson

Are the figures the same?

Mr. Strang

The Supplementary Estimate is not affected. It is simply that that note referring to the number of applications is erroneous. What has changed is the volume and likely value of the applications.

Mr. Jopling

Let me try to clear this up. The hon. Gentleman says that the increase in the amount to be spent is as printed. Are we to take it that the number of applications was as expected in the original Estimate but that the amount that these people have applied for has doubled? That would explain the almost doubling in the suggested increase of £595,000.

It would help us if at this early stage we could know whether the number of applications has been almost exactly what the Ministry thought it would be. If that is so, will the Minister confirm that the number of applications has increased—I cannot work out the figure exactly in my head—by approximately 80 per cent. to 90 per cent.? Is that the case, or has the number of applications risen only slightly and by a smaller amount than 80 per cent. or 90 per cent.? We should know the position at the beginning of the debate in view of this unfortunate error, which I am sure we all understand.

Mr. Wellsrose

Mr. Deputy Speaker

Order. We shall get very disorderly if we have two interventions at the same time.

Mr. Strang

I think we are in danger of making too much of what is a very minor and technical error. In essence, the Supplementary Estimates are estimates. If I am being asked to give a detailed statement on the latest position and on how matters might have changed in terms of the estimates, I am being asked to enter into a fairly prolonged statement. I do not see how that can be helpful to the House.

Mr. Wells

Does the phraseology in Subhead D6(1) An unexpectedly high number of claims were submitted", mean what it says or does it mean something quite different? I remember that some years ago a young policeman was sent to prison for fiddling his expenses. He had spent so much and he said he had spent it on one thing but he had spent it on another. The sum he had spent was correct but he was sent to prison because he had told a fib. I suggest that the phrase An unexpectedly high number of claims is a fib and that if the Minister were that young policeman he might have gone to prison.

Mr. Strang

I do not want to degenerate to that sort of level. Of course the statement in D6—incidentally, it is not being debated—is accurate. All that I am referring to is an error which, given that human beings produced the book, should be understandable and should be accepted by any reasonable Member.

Mr. Jopling

This matter should be cleared up. I must ask the Minister when the error was spotted. I am sorry that he should chose to snigger. This is an important matter. A document has been put before the House containing an error. Another book has been produced since the one we are debating was produced dated 13th February. Since then another one has been produced, with which we are also concerned, dated 4th March 1975. If this error was spotted, we must have an assurance that it was spotted only, shall we say, tonight. If not, the House would like an explanation of why no warning was received when the subject of this debate was put down last Thursday.

Why was the House not informed? Why were not hon. Members who put their names to this matter informed privately? Surely that should have been one of the first things the Ministry should have done. It should have ensured that hon. Members were informed that the matter that they had raised for debate was erroneous. Are any other parts of pages 67 and 68 erroneous as well? I must ask when the matter was spotted and why it was not reported to the House, and particularly to hon. Members who raised the matter at an earlier stage.

Mr. Strang

I think that hon. Gentlemen are being a little unreasonable, but they may derive some satisfaction from this kind of exercise.

First, let me make it clear, in case it is not already clear, that what is being debated is not erroneous. The Supplementary Estimates still stand. They are not altered in any way. Secondly, I learned that there was a minor inaccuracy—that is all it is—in the note, which is not a sum of money, today. Thirdly, I intervened at the beginning to make this minor point because I thought that it would be helpful to hon. Gentlemen. I am sorry that it has not turned out that way.

2.31 a.m.

Mr. Colin Shepherd (Hereford)

I am grateful to the Minister for attempting to clarify the discrepancy in the description of applications. I hope that it will be for the best. At least, we know where we stand.

In considering the glasshouse or horticulture industry it is essential that the Government should make a competent decision whether they want to ensure a continuous industry in which planning and development can be allowed to take place when they are contemplating the problems now facing the industry.

Obviously the grant scheme under Subhead D1 is not particularly attractive as it stands because of the energy problem. I should like to illustrate this point with an example from my constituency. A glasshouse concern of five acres had a net pre-tax surplus of approximately £20,000 in both 1973 and 1974. In 1975, subject to final audit, the figure is £2,000, and the projection for 1976 at the moment is a loss of £30,000. Therefore, when it comes to capital investment, that operator will not be particularly well pleased.

For that reason, I ask the Minister to consider the policy that he will adopt towards the glasshouse sector. In that five-acre unit the investment is in the region of £200,000. Therefore, the £20,000 return before the energy crisis was reasonable. Certainly £2,000 this year will be very notional.

It is important for the Minister to appreciate some of the problems concerned with marketing when contemplating whether capital grants are necessary to sustain this industry.

United Kingdom production is in the region of £100 million, which is a substantial amount of money. Imports into this country are about 124,000 tons, making a total United Kingdom consumption of about 240,000 tons.

The problem comes with the flexibility of the Dutch market where there is almost a spot market for tomatoes and the wholesaler is able to call up tomatoes at short order for the United Kingdom market. If conditions are right and if the Germans are not calling for these tomatoes, they can come in, but the wholesaler has paid for them. The United Kingdom grower supplies his tomatoes to the wholesaler on a certain basis and therefore is vulnerable to the input of tomatoes from the Continent. For this reason it is vitally important that tomatoes from the Continent are not priced unfairly through a competitive advantage of assistance such as a subsidy on interest or on oil or energy prices.

In considering the glasshouse picture it is necessary also to consider briefly the remainder of the cycle, because it is larger than merely tomatoes. A typical cycle is tomatoes in the summer, chrysanthemums in the autumn—

Mr. Deputy Speaker

Order. I want to help the hon. Member and the House. It the hon. Member will relate his tomatoes to capital grant, which is what we are discussing, it will be a great help.

Mr. Shepherd

I am grateful to you, Mr. Deputy Speaker, for your help. The position I am trying to establish is that the capital grant should be used by the Government to create circumstances in which there can be fair competition throughout.

I suggest that capital grant can be used to enable the United Kingdom industry to take advantage of indigenous energy. I am referring not to oil but to natural gas. It seems to me that there is a case for assisting the industry to change to using natural gas as a means of heating. This fuel has substantial advantages for the glasshouse industry. It is more automatic, it needs fewer people to operate it, it has technical advantages in terms of maintenance of plant and lack of fallout on roof surfaces—factors which should be considered—and its use would assist the balance of payments problem. The oil bill for glasshouse heating last year was £23 million, and I suggest that any means of reducing that figure would be valuable to the country.

It is essential to ensure that the glasshouse industry stays in existence, and I ask the Government to provide assistance until 1st July when the next EEC scheme comes in. I ask the Government to give favourable consideration to the Capital Grant Scheme which could come up under proposals agreed by the Common Market.

A shift to gas as a means of heating glasshouses would assist the industry, and further capital assistance should be provided to encourage research and development of strains of plants which will call for the use of less energy and give a heavier yield. The provision of capital grants in those areas would be of great help to the industry.

2.40 a.m.

Mr. John Wells (Maidstone)

I am sorry that the Minister thinks we are niggling in pursuing the question of the wording of Subhead D1. Although the mathematics may be right, if the verbiage is wrong it is wrong and that is the end of the matter. The Minister shows a lamentable arrogance in saying that we are not debating the other matter. We are discussing the whole issue and can debate anything we wish provided it is in the book. When he has been here a little longer, he will know that. It is simply convenient to lump certain matters together for debate. We are lucky that we have come on early rather than at 10 o'clock tomorrow morning.

I should declare an interest as a grower and a member of an agricultural co-operative. I want to speak partly about the grants to co-operatives under Subhead D11. I hope that the verbiage is right here since it refers to the increased uptake in the grants for buildings and fixed equipment. We are glad that there has been this increase, just as we are glad about the increase to which the Minister referred when we quibbled about his words just now, but all this increased uptake will totally waste taxpayers' money unless the Government arc willing to ease the industry over its current difficulties for the present four short months.

Totalling all the increases in this section which refer only to horticulture, unless the Government are prepared to offer parity with Holland we shall be in difficulty. My hon. Friend the Member for Hereford (Mr. Shepherd) hoped that there would be a transfer to gas from oil. In Holland the glasshouse area is adjacent to the natural gas field, and gas can be piped in very cheaply. That is not the case here, so we must continue on our more traditional lines.

As regards the uptake for the grubbing-up of old apples, what view do the Government take of the proposed EEC grants for future grubbing-up? Shall we take any real steps to get rid of the structural surpluses of apples? In the last two years we have made great strides in modernising our orchards. The Estimates partly reflect those grubbing-up grants. But the grants paid to British growers are much lower than comparable grants in Europe.

I hope that the Minister can deal with the points I have raised.

2.45 a.m.

Mr. Stephen Ross (Isle of Wight)

Many of the points that I wished to make have been raised already. I congratulate the hon. Member for Chichester (Mr. Nelson) on putting some very pertinent questions. I am looking forward to the Minister's answers.

I feel strongly, as do probably most hon. Members who have spoken, that this debate is about the wrong subject and that we should be able to talk about oil. That is the burning question in the mind of every horticulturist at present. Nevertheless, as a taxpayer, as we probably all are and like the hon. Member for Maidstone (Mr. Wells), I feel that all this grant money—the one grant is from the EEC, we know, but the others are national schemes—is money down the drain, and taxpayers are entitled to put these questions too if the industry is not to be given immediate assistance.

The story of the horticulture industry over the last decade has been one of remarkable success. I think most people would agree that it is now one of the most efficient industries in this country, if not in the world, even though we are not exactly blessed with the climate that some other parts of the world happen to have.

I should like to refer to the report of the National Glasshouse Energy Conference on 10th October of last year. One firm, Van Heyningen, one of whose directors I met recently, has a very new enterprise here, in part of the constituency of the hon. Member for Chichester. One of the directors relates that the firm operates some 45 acres of glass and that by the end of this year it will be 55 acres—although I doubt whether it will continue with that last expansion in view of the latest developments. All of this is devoted exclusively to the production of the long-season tomato crop. Of the 55 acres, 37½ acres have been built since 1970, the remainder having been built between 1964 and 1969. No doubt all of this was built with the aid of substantial grants of public money. In other words, some of it has already been committed in the figures before us.

In my constituency a similar thing has happened. It has been all in the last 10 years that new firms have come in, mainly from the Lea Valley, and some have expended about £500,000, perhaps up to £1 million, in new developments. All this is at risk. I was in a small nursery in my constituency only on Saturday. It is small compared with the enterprise that I have been talking about, but it has grown from half an acre to three acres. It was a thriving business until last year. This year it faces disaster.

We are trying to get from the Government some form of assistance. If it is not to be by way of an oil subsidy, it must be capital grant aid to enable these people to change over their systems. I agree entirely with the hon. Member for Maidstone. I gather that gas will not be available until 1977. Some growers are turning to coal. They want guidance from the Ministry. Will some of this money be available for them to change over to different forms of heating? What is the policy? Is it the policy to let the horticulture industry go to the wall? If so, taxpayers' money has been thrown right down the drain.

Mr. Wells

I did not intend to say that gas was not available. I intended to say that gas in this country can never be as cheap as it is in Holland.

Mr. Ross

To compete.

Mr. Wells

Yes, because of the proximity of the Dutch glass industry to the supply of gas.

Mr. Ross

I take the hon. Gentleman's point. The fact is, however, that we now have North Sea gas. I accept that it will not be as cheap as gas is in Holland, but my inquiries indicate that in any case, even if it were to be made available to the horticulture industry, certainly in my constituency it would not be available until 1977, so that we have two or three years to go if growers are not to continue heating with oil.

Some growers in my constituency have changed over to coal, but there is a need for guidance as to whether boilers that have been installed with the help of substantial grants, some of which are undoubtedly covered by the sums in the Estimates, are now wasted. Those boilers are of no use because they are using the wrong sort of fuel.

We want the Minister to give an assurance that the Government have this matter in mind and that they are prepared to look at some of the figures and see whether grants which have not been taken up in full cannot be transferred to enable growers to change to some other form of heating.

2.50 a.m.

Mr. Stephen Hastings (Mid Bedfordshire)

I should like to add my congratulations to my hon. Friend the Member for Chichester (Mr. Nelson) on raising this matter so fully and succinctly. Happily his speech has left little for other hon. Members to say.

The message from the horticultural areas about the decision to do away with the fuel subsidy is always the same. My own area, particularly East Bedfordshire where there are a large number of glasshouse growers, is a case in point. There are four months to the end of June, and the Government have put at risk virtually a whole industry. It is a question of growers going broke. We are told that this was a Cabinet decision. The mind boggles at a Cabinet, at a stage where this country is in a balance of payments crisis such as we currently have, deliberately bringing in an order to do away with a subsidy of this kind which must be a direct and wilful discouragement to the production of food.

Mr. Deputy Speaker

Order. I have allowed the hon. Member his passing reference to the subsidy. We must keep the debate in order and come to capital grants.

Mr. Hastings

It is my understanding that the capital grant is at stake over this question, and I am sure that that is the general impression within the horticulture industry, Mr. Deputy Speaker. This has been the first point that hon. Members have made in the debate. We want to know what is to be done for the next four months, and secondly, we want to hear the Government's view about digressive aid.

There is then the question of an alternative fuel. There has perhaps been some disagreement between my hon. Friend the Member for Hereford (Mr. Shepherd) and my hon. Friend the Member for Maidstone (Mr. Wells) about this matter. That only goes to show that this is a matter to which the Government and everyone else need to pay the closest attention in view of the appalling disadvantages and difficulties about the present fuel, which is overwhelmingly oil. I strongly believe after many months of correspondence with the gas board that gas is the best alternative and the only long-term encouragement under capital grant that the Government can effectively give to this industry. The Government must make clear what fuel policy they have, if any.

There is no question that the Dutch have an advantage of supplies of natural gas. I entirely agree with my hon. Friend the Member for Maidstone that gas there will always tend to be cheaper. But there is no doubt either about the immense advantage that the Dutch industry derives from this source of fuel. About 80 per cent. of Dutch growers are using natural gas. The Minister does not need me to tell him of the technical advantages of it to the grower—for instance, cleanliness, preheating efficiency and general efficiency are greater than for fuel oil.

I have a report to the National Farmers' Union from a successful British grower which demonstrates that given level costs natural gas is more effective than oil. If that is the case and if we can get gas at level costs before very long—and I think that we can when the Frigg and Brent gas fields begin to bear, which is expected in 1976–77 according to the gas board—this is the best future fuel. What plans do the Government have to deal with capital grants to provide the necessary pipelines and to make sure that burner conversion is generously granted? Can we hear something about that tonight?

In spite of the many questions I have put to the gas board—and I have had a number of courteous and helpful replies—the letters I have received have been shot through with phrases like "in due course" "some time ahead" and unwise to encourage the industry to anticipate relief from the present energy problem through natural gas. On the information I have, I must ask "Why not?"

I hope that the Minister will deal with this tonight. Unless he says something positive about the short term, until the end of June, unless he deals with the plans in the Common Market after that time and unless he has something constructive and positive to say about the long-term energy policy for horticulture, this Government will stand condemned in this matter as in so many others.

2.57 a.m.

Mr. Michael Jopling (Westmorland)

We have had a most helpful debate. The tragedy is that it has come on so late when there have not been more hon. Members present to hear it and not so many representatives of the media to report it. That is perhaps inevitable at this hour.

I begin by referring to the difficulty under which we discuss this subject and to the Minister's helpful remarks at the beginning of the debate about the error in the Estimates. I hope that he will set the record straight, as I am sure he would wish to do. We must ask for an assurance that there are no other errors in the horticulture section of the Estimates. If there are, I would be happy to give way to the hon. Gentleman so that he might tell us.

At what stage was the error discovered? I understand that it is the practice when these Estimates are published and an error is discovered for an erratum slip to be printed and included with the Estimates. We must ask the Minister for an assurance that this error has been discovered only today and that there was no time to print such an erratum slip.

The error puts an entirely new light on the D1 section of the Estimates. The Minister said that we were not talking about the matter involving the error. With respect, I say that we are. I hope that the hon. Gentleman will accept that we are perfectly entitled to talk about these things. It would make the debate ludicrous if we were not to know the reasons for increases or decreases in the Estimates. I hope that the Minister will set aside the sort of remarks he made earlier and will not brush us aside and accuse us of raising trivialities.

These are matters about which the House has been extremely jealous. It is important that Ministers should correct errors of this sort. I am sure that the hon. Gentleman, when he found out that an error had been made, instituted inquiries about the extent of the error, when it was found and whether it had been reported to Members. The hon. Gentleman was frank when we started this debate, and I hope that he will tell us all when he replies.

There can be no question that the theme behind this debate is the question of the impact of the oil crisis on the grants we are considering. I know that there are difficulties about raising these matters, and I shall do my utmost to keep within the rules of order, but it does no harm in the context of grants to the horticulture industry to point out what the President of the NFU said on the day of the announcement of the decision to end the oil subsidy. I quote from an NFU Press handout: …it will mean that the financial positions of thousands of glasshouse growers will be placed in jeopardy and many will be forced out of business altogether". That is the background to this debate.

The decision which the Minister announced in the House on 20th February was made public a week after these Estimates were published. Therefore, we are entitled to ask the Minister what the impact of that decision to discontinue the oil subsidy will be on these grants. The announcement was made after the Estimates were published and, therefore, it will have an effect on the uptake of the grants. I hope that the Minister will deal with this point and will not hide behind bogus points of procedure. It is important that he does not evade the issue. This is the first opportunity we have had to debate horticulture since the announcement of the decision and I hope that the hon. Gentleman will not avoid the issue.

I am particularly concerned about the impact of the end of the subsidy on Subhead D11 on page 68 of the Estimates covering grants for the encouragement of co-operation in agriculture and horticulture. I have with me a Press statement issued on 26th February by Agricultural Co-operation and Marketing Services Limited, which is intimately concerned with the subject matter of Subhead D11. Mr. Jack Garcia, a director of that organisation and managing director of Farmers and Growers Industries Limited, said on that date: This means that growers are unable to make long-term production and marketing plans and thus it undermines the whole concept of orderly marketing which the Government is supposed to be encouraging. Mr. Garcia makes it absolutely clear that the Government's decision on the oil subsidy will have a shattering effect on the grants covered by Subhead D11. We must therefore have answers concerning the impact which the Government's decision has made and will make on the horticulture industry.

If the Government are totally unrepentant about the decision on oil subsidies, the Minister may be good enough to tell us how he thinks that the EEC will be able to help us in future. I know and he knows that at the moment the EEC is actively considering what can be done after 1st July to help the horticulture industry because of the difficulties arising out of the oil crisis. It is likely that the EEC will shortly produce a report suggesting how it might help the industry. I hope that the Minister will give us this information, because it will make a big impact on the take-up of the grants. I also hope that the hon. Gentleman will tell us when he thinks that the EEC report on what will happen after 1st July will be published.

The Minister will also know that COPA —the European farmers' union—has proposed that over the next four years there should be a series of degressive subsidies with regard to oil costs. Here again, if this subsidy were to be introduced, as COPA has suggested, it would mean a huge difference in the take-up of grants in this country. It is very important that the Minister should tell us, and through us, the industry, what the Government's attitude is to COPA's proposal for degressive subsidies.

Because of the impact of the energy crisis it is also important that as soon as possible the horticulture industry should take advantage of any research that may be carried out in terms of new energy-saving techniques, and particularly new materials, in the glasshouse industry. As again I am sure the Minister knows, a good deal of research is going on on this topic in Europe. It is a matter about which I know the Commission in Brussels is particularly concerned. I hope that the Minister will tell us whether he is satisfied that the maximum amount of research in energy-saving techniques for horticultural production is being pursued in this country.

Is the Minister satisfied that with these grants we are not running into the danger that the European Commission may be contemplating grants which may have the object of inducing farmers in the glasshouse industry to go out of production? It would be strange if our Government were to pay out these grants and then, before long, the European Commission were to suggest grants to encourage people in the horticulture industry to go out of production.

In the European context I should like to end on a matter which concerns me. Recently I have been reading a document headed "Stocktaking of the Common Agricultural Policy", produced in Brussels on 26th February. I am sure the Minister will have read it, because it is one of the most vital current documents in the agricultural sector—which includes the horticultural sector.

In paragraph 26 on page 11, under the heading Expansion of the Common Market to Agriculture, I was a little alarmed to read these words: More than this, it means that production must be located according to the principles of the optimum allocation of resources and the need for specialisation foreseen in Article 43 of the Treaty. Accordingly, it implies that in the context of the creation of a large market including, for example, northern regions and Mediterranean regions, there should be a division of labour reflecting the comparative advantage of such widely differing areas. The proposals which the Commission sets out in that and other paragraphs seem to imply that various forms of agricultural production should be concentrated in areas in which the environment, climate and other factors give particular advantage to that type of production. It might be held to imply that the Commission's policy would be that tomatoes should be grown only where there is sunshine, which would cut out the need to grow them under glass.

Mr. Stephen Ross

There have been reports in the Press that Mr. Lardinois is not necessarily adopting that policy.

Mr. Jopling

I am always a little wary of what is reported in the Press as coming from some of the great and good men of the EEC. The extract I read is from a document which was produced within the last three weeks. I should like to know the Government's attitude to that proposal. It could be held that the Commission's policy might result in the total disruption of the British glasshouse industry.

This has been a helpful debate which has given us our first chance to discuss horticulture since the Government's shattering and disgraceful decision to end the oil subsidy four months before it was necessary to do so when other countries within the Community are still paying it. That is one of the most deplorable decisions that even this deplorable Government have made in the last miserable year.

3.13 a.m.

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

Your predecessor in the Chair, Mr. Deputy Speaker, was kind enough to point out at the beginning of the debate that we could not discuss the Government's decision not to continue with the temporary oil subsidy. Notwithstanding that, hon. Gentlemen have in their usual ingenious way succeeded in referring to the decision. I hope that by way of introduction, Mr. Deputy Speaker, and by linking my remarks closely to the capital grant schemes which are before us, I shall be allowed to make one or two brief comments on that subject.

The hon. Member for Isle of Wight (Mr. Ross) asked, reasonably, whether the capital grants would be available for alternative fuel systems. I am able to reassure him that that is so. The capital grants are also available for energy conservation investment, for example in double glazing.

Some hon. Gentlemen speak as though the glasshouse industry equalled the whole of the horticulture industry. I do not want to underestimate the problems of the glasshouse industry, but it must be pointed out that that industry is a fraction, albeit an important fraction, of the total horticulture industry.

The hon. Member for Westmorland (Mr. Jopling) asked me to estimate the effect of the fuel oil subsidy decision on the future uptake of capital grants. I am glad he referred to the future uptake of capital grants, because there can be no question of the Estimates which are before us having been affected by this decision since they were compiled too early to be influenced by the Government's announcement. The effect in future will depend on whether hon. Gentlemen are correct in their sweeping assertions of the way in which the industry will be wiped out. If it is to be wiped out, there will be a reduction in applications for grant, but I do not think that that is the case. The increase in energy prices makes it more advantageous and important that growers invest in equipment and in systems which reduce energy costs. For that reason there may be an increase in the uptake of grant.

Hon. Gentlemen succeeded in alluding to a number of matters which are not strictly related to the question of capital grants but perhaps with your indulgence, Mr Deputy Speaker—

Mr. Hastings

On a point of order, Mr. Deputy Speaker. Surely it is not up to the Minister to tell the House what is and what is not in order in relation to capital grants. That is a matter for the Chair and for the Chair alone.

Mr. Deputy Speaker (Mr. Oscar Murton)

The Minister was referring to a ruling given by my predecessor on this subject. Personally I must wait to hear how the debate develops.

Mr. Strang

Thank you, Mr. Deputy Speaker.

The hon. Member for Chichester (Mr. Nelson)—or perhaps it was another hon. Gentleman—mentioned Romanian apples. For some months in the year these apples are subject to quotas. It is also the Case—

Mr. Wells

It was I who raised the matter and I was not talking about quotas. The Minister must begin to learn about his Department. I spoke of the grubbing-up grants. I used that phrase more than once. I am not talking about quotas. Quotas have nothing to do with capital grants. Grubbing-up grants have everything to do with capital grants.

Mr. Strang

I was referring not to the hon. Member for Maidstone (Mr. Wells) but to the hon. Member for Chichester, and I thought I said so.

The hon. Member for Maidstone asked about our attitude to grubbing grants for apples. No such proposals are currently under consideration. If proposals are put forward, our attitude will depend on how they are financed. If all or most of the cost is to be borne by FEOGA, and not by the national Exchequer, the efficacy of the grants will need careful consideration.

The Commission has not yet pronounced on a long-term Community policy for horticulture. Any reports in the Press are speculation. The hon. Gentleman will not expect the Government to comment on Commission proposals before they are put before us. We expect them to be put forward very soon. We hope that they will be, because if we are to stay in the Community—and we must plan on the basis that we might—we must examine the proposals as soon as possible.

We are still maintaining quota restrictions on Romanian tomatoes between May and October. In the other months they are subjected to the normal duties which we apply to imports of this nature.

I come to the actual subject under debate, the Supplementary Estimates for the Horticulture Capital Grant Scheme. I should like to make clear the matter of the error to which. I referred at the beginning of the debate. My attention was drawn this afternoon to the error in the explanation—not the figures—of Subhead D1. I have no reason to believe that there are any other errors in the document. We must all be very conscious that the capital grant schemes are all new schemes which started only at the beginning of last year. If we are to understand the level of uptake, the level of applications for the grants, we must look at what happened under the previous Horticulture Capital Grant Scheme. Under that scheme, when the Conservatives were in power, the money ran out and no applications for grant were entertained after July 1973.

Mr. Nelson

I believe that when that grant was introduced the amount was set, and that the announcement in July 1973 was to the effect that applications which had been granted and others which were in the pipeline were sufficient to use up that amount. Therefore the Government —I do not care what their political colour was—were doing no more than was proper by saying "At this point we must take no more applications for the moneys allotted by Parliament." Is not that correct?

Mr. Strang

The hon. Gentleman may put it as he likes, but what mattered to the industry was that after July 1973 horticulturists could not apply for the grants. One of the factors which has influenced the rate of uptake of the grants starting at the beginning of January 1974 is that there was a period immediately before that when the industry was not able to apply for capital grants.

As regards the Supplementary Estimates, the increase in the co-operative grants mentioned under Class III, Vote 1, Subhead D11, is accounted for by increased payments to co-operatives in the horticultural sector. The increase is partly the result of higher costs of works and facilities but in the main it follows a considerable increase in the number of applications submitted. This upsurge was directly linked to the uncertainty in the industry about the future of co-operative grants in horticulture following the demise of the Horticulture Improvement Scheme.

The Farm and Horticulture Development Scheme is important in the sense that it covers capital grants. We have implemented this scheme to comply with the requirements of the EEC farm modernisation directive. That directive lays down that any national schemes must not pay a rate of grant on capital projects higher than the FHDS, which is the farm modernisation directive scheme. Under the rules of the directive we have had to make available special rates of grant to farmers and growers who undertook to carry out plans to improve their businesses so that they would be capable, after improvement, of providing an income per man employed equal to average incomes outside agriculture.

The scheme contained a number of features which were new to our grant arrangements. We were thus in the dark regarding the response that the new scheme would attract. Hon. Members with experience of the scheme, or of making applications for grants under the scheme, will appreciate that as things stand it is complicated. Many producers will welcome the Government's efforts to try to simplify it. The complexity arises because of the criteria which the Community lays down must apply to the scheme.

The original provision of £100,000 was made not as a firm estimate or as a token but to indicate that we expected a certain number of payments to be made during the financial year 1974–75. A paradoxical situation arose. For a number of reasons our estimate of interest in the scheme was exaggerated. We think that the novelty of the scheme and the need to undertake a plan of investment, coupled with uncertainty in the industry, were the main reasons why some farmers and growers held back.

Although by last autumn few development plans had been approved, an untypically high proportion involved horticultural or partly horticultural businesses, sometimes with large acreages and a very high level of expenditure.

Nearly half of the planned expenditure was for horticulture, against a more usual proportion of one-seventh. This was no doubt attributable to the winding-up through lack of funds of the Horticulture Improvement Scheme in July 1973. It was because of this that we foresaw the need for a Supplementary Estimate. Hon. Members may be interested to know that, in the event, the amount of investment which will qualify for grant in 1974–75 is less than we expected last autumn. Our grant payments are likely to be in the region of the £100,000 originally estimated. We hope that when the new scheme has settled in and the pattern of the way work under the farm development plans proceeds, closer estimating will be possible.

I have to tell the hon. Member for Chichester that these estimates of public expenditure represent the total Exchequer commitment. The system operates by our then claiming our entitlement under FEOGA. In the case of the FHDS this runs at 25 per cent., so that in effect these figures are inclusive of the FEOGA contribution.

Mr. Hastings

I sense that the hon. Gentleman is coming to the end of his remarks. I apologise for taking him back, but three if not four of my hon. Friends specifically raised the possibility of using natural gas as an alternative fuel and asked about the Government's view or policy on it. The hon. Gentleman said that grant would be available for alternative fuels. That is not quite good enough. What will be done by the Government to ensure that supplies of natural gas are available quickly? What emphasis will be placed on this with the gas board? What is the view of the Government on natural gas as an alternative? There is a crisis in energy, and we need an answer to this.

Mr. Strang

The hon. Gentleman will agree, I am sure, that the decision as to what source of energy a producer uses must in the last analysis be his individual decision. Circumstances vary throughout the country, and these are bound to influence individual producers.

The hon. Gentleman asks whether the gas will be available. Natural gas is not available on the scale that we all want to see. It is not just a matter of supplying the horticulture industry. The whole of British industry wants to see more natural gas coming on stream.

The hon. Gentleman also asks what the Government are doing to bring pressure to bear on the gas board to make more natural gas available. I can assure him that, just as it is in the Government's interest to get North Sea oil on stream at a rate equivalent to our consumption as quickly as possible, it is in our overall national interest to increase the supply of natural gas coming into the national grid, and every effort is being made to bring Frig, which is the major field involved, into production as soon as possible. But I should be straying too far out of order if I digressed at length on the wider energy issues raised by the question. Technically this debate is about the capital grant schemes, but hon. Gentlemen have taken this opportunity to raise wider points about the horticultural industry—

Mr. Stephen Ross

The question asked by the hon. Member for Mid-Bedfordshire (Mr. Hastings) is very important. It was on the advice of the Ministry's own technical advisers that the expansion in horticulture with the use of oil burners took place. We want to know what the same technical people advise now. In my constituency growers with many acres of glass were driven to use oil. That is the point I want to make.

Mr. Strang

It is a fact that the advice given by previous Governments on the use of oil has turned out to be mistaken. By and large it is the arguments deployed by my right hon. and hon. Friends and by the National Union of Mineworkers that have turned out to be valid rather than those of the pundits writing in the capitalist Press.

The advisory services attach the highest priority—I am sure hon. Members will find that this is so if they talk to the field officers and the producers—to advising producers on how they can save energy and how they can use energy more effectively. We cannot tell the producers what the price of oil will be in four years' time. It would be misleading to try to do so. The fact is that we can give them the best advice available. We can advise them on current energy prices and we can advise them of all the research into energy-saving devices and techniques, but at the end of the day these decisions must be taken by the producer himself on the basis of his assessment of what is likely to be in his best interests.

Finally I assure hon. Members—this should not be necessary, but in view of some of the comments that were made by at least one hon. Member I must make the position clear—that the Government see a continuing and important future for the horticulture industry. We need its production. We cannot allow a situation to arise where the British horticulture industry disappears. There is no possibility of the Government standing by and allowing that to happen.