HC Deb 19 July 1976 vol 915 cc1463-81

12.22 a.m.

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

I beg to move, That the Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1976, a draft of which was laid before this House on 29th June, be approved. I must not stray like a sheep too far from the narrow area of this limited instrument. Hon. Members will recall that

with this scheme in the absence of anything more positive.

A further question to bear in mind is whether one would want control of what is a rather strategic sector—

It being one and a half hours after the commencement of proceedings on the motion, Mr. Deputy Speaker put the Question, pursuant to Standing Order No. 3 (Exempted business).

The House divided: Ayes 41, Noes 4.

the Hill Livestock (Compensatory Allowances) Regulations that we discussed at some length last December implement the livestock subsidy provisions of the EEC directive on the less favoured areas and provide for compensatory allowances to be paid to farmers in hill areas on breeding cows and breeding ewes.

Shortly after 1st January, when these regulations came into force, the Council of Ministers increased the maximum rates payable under the less favoured areas directive from 50 to 52.5 units of account for each livestock unit. The overall financial limit which is imposed on the total allowances payable in respect of each hectare of eligible land is set at the same level and was, therefore, similarly increased.

Following the Annual Review of Agriculture, my right hon. Friend announced that it had been decided that the United Kingdom rates of compensatory allowances should be increased by £4.50 to £29 and the overall financial limitation to 52.5 units of account—about £29.90.

Both these changes occurred too late to affect the initial 1976 payments to hill farmers, but these amendments to the principal regulations will, with the approval of Parliament, enable any supplementary payment due to farmers to be made at an early date.

In addition to these increased rates, which I am sure will be very acceptable to the farmers concerned, this amending order also makes two minor technical changes to the regulations. The first of these relates to Regulation 3(4) of the principal order and substitutes the word "in" for throughout the greater part of". The reason for this change is to remove any doubt as to payment of grant on changes of occupancy when, for example, a new occupier—perhaps a son—takes over with the eligible land the previous occupier's herd or flock in the latter part of the year preceding the qualifying day.

The second change relates to Regulation 6 and widens the powers to apportion eligible land which is available to more than one claimant for the purposes of determining payment. The need for this arises primarily from the difficulties of apportioning common land. Some claimants for compensatory allowances who have grazing rights on a common do not always take advantage of these rights. The regulation on apportionment—Regulation 6—as originally worded refers only to land being grazed, whereas under the regulation governing the financial limitation—Regulation 3(4) —it is possible, when assessing a claimant's maximum entitlement, to take into account land which he has the right to use whether or not he does so in practice. The amendment is designed to bring the two regulations into line and enable common land to be apportioned to claimants to whom such land is available as a result of their legal grazing rights whether or not they exercise those rights in any particular year.

Both these alterations stem from the experience gained in operating the new rule which imposes a limit on the payment per hectare. This has shown the need to be able to apply the rule with more flexibility.

I hope that the House will see fit to approve these amending regulations so that any supplementary payments may be made as quckly as possble.

12.26 a.m.

Mr. Michael Jopling (Westmorland)

We are grateful to the Minister of State for coming to the House at this late hour to explain the effect of these regulations.

The Minister said that we had a debate on these regulations on 17th December last when there was a good deal of discussion about them. Indeed, it will be recalled that on that occasion the Liberal Party and the Scottish National Party decided to divide the House. I have no doubt that more of their supporters will arrive during the course of the evening. I cannot believe that, having voted in considerable strength on that occasion, they do not intend to do the same tonight.

The official Opposition welcome these regulations in so far as they go. But there are a number of matters that we shall want to raise, to which I hope the Minister will respond.

We believe in the need for encouraging the prosperity of hill land in this country. Indeed, hill land is the breeding ground for a vast proportion of the meat supplies that housewives need. It goes without saying—it is known to the House—that I have a close constituency interest in this matter. I suppose that my constituency contains almost as much hill land, or land of the less-favoured-area type, as any other constituency.

Increasing the amount of grant which is available to farmers in hill areas will have an important effect which should be noted at the beginning of the debate. Whilst these new rates of grant will help farmers within hill areas, there is no question but that they will further increase the gap between the prosperity of the less-favoured-areas—broadly, the old hill areas—and what I should describe as the upper dales areas—those pieces of land which come up to the hill areas but are just slightly too good to qualify for these grants.

I have always said—the Minister of State may have heard me say this before in the House, and I believe that at one time he agreed with this view—that, whereas hill areas are given a good deal of care and consideration by the Government, we ought to think more carefully about the effect on land which is just slightly too good to qualify. Does the Minister think that it might be sensible to have a review of the hill land areas as a whole? I think I am right in saying that the last time there was a full review was in the early 1960s, and a good deal has happened since then. It would be helpful if the Minister would consider looking at the position of less-favoured-area land and what I describe as the upper dales land which falls just below it.

I should like the review to consider the situation with regard to land that qualifies for less-favoured-area grant in England compared with land in Scotland. I say that because there is a popular feeling in my constituency and throughout the North of England that it is considerably easier to get land to qualify for this grant in Scotland than it is in England. I do not know whether that is true, but it is something that is widely believed in the North of England.

Mr. Emlyn Hooson (Montgomery)

Sheer English nationalism.

Mr. Jopling

The hon. and learned Gentleman says that, but he will recall my saying that I was not sure whether there was any truth in it. However, in view of the broad expression of view about this land, it would do no harm if the Minister were to consider looking at this matter again.

One effect of the original regulations which these regulations amend has been to create a conflict in the way in which these subsidies operate compared with the old hill area and beef cow subsidies. I have had a classic example in my constituency. I received a letter from a family called Cleasby, at Brough. I took the case up with the Minister, and he was kind enough to reply on 7th July. He accepts that there is an unsatisfactory situation in the way in which these new subsidies have affected certain farmers in the hill areas. Is it the Government's view that the situation is satisfactory in the Cleasby case which I know? There are probably many similar cases all over the country. I acknowledge the help that has been given by the Minister and by his officials in Cumbria, but it is a fact that the Cleasbys have had to reduce their beef herd from 22 to 16 cows as a result of these regulations, and I should be alarmed if I thought that that applied on a wide scale.

Mr. Cleasby wrote: We feel we were getting the best out of our holding, but won't be able to under the new regulations". That sums up a position which occurs and which the Minister acknowledges will occur. Will he look at this anomaly again to see whether something more can be done to deal with it?

The Minister referred in his opening remarks to the provisions on the back of the regulations, particularly those in paragraph 3(2), and in part in paragraph 3(1)(c)(ii) which deal with some of the anomalies that have occurred, quite apart from the one to which I referred. One deals with changes of occupation in the course of a year and the other with the apportionment of grant on common land. How many such cases have occurred? How widespread are the anomalies which have caused the Government to make this amendment? That information would help us to put into perspective how important is the amendment.

I want now to deal with the cash considerations in Regulation 3, the most important of these regulations. This raises from £24.50 to £29 the amount which can be paid in respect of cattle and the maximum amount from 50 to 52.50 units of account per hectare. I understand that these increases, certainly the latter, were announced in Brussels many months ago. I am afraid that I do not have the exact date. It has taken the House many months to get around to amending the original regulations to take advantage of that announcement.

I have had a letter on this point from the National Farmers' Union, which is very concerned about the delay in amendments of this kind. It has suggested that such amendments here should be automatic when announcements are made in Brussels. I am not sure that I agree. I would not be in favour of amendments being made automatically without our being able to debate them.

Mr. Hamish Watt (Banff)

Why should we be different from our partners in the Community? Why should not such grants be made automatically?

Mr. Jopling

My impression is that all the other countries in the Community have a similar arrangement to ours, and that we are not out of step. I believe that changes announced in Brussels do not automatically become law in the other Community countries, but perhaps the Minister of State could clarify that point.

The NFU is unhappy about the time lag. Could not a way be found through the usual channels of speeding up such regulations so that changes announced in Brussels become law here without this kind of delay? That is a mistake, and I hope that it will be looked at.

This increase, particularly the overall increase to 52.50 units of account per hectare, is a sign of the Government's failure to negotiate on behalf of the hill farmers what they themselves feel is necessary. I was interested to remind myself of what the Minister said previously about the top limit: 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."—[Official Report, 17th December 1975; Vol. 902, c. 1591.] That was the Government's intention in December, yet here we are eight months later and the Government have been able to negotiate an increase from 50 ua to 52½ ua instead of to the 60 ua they felt was the right figure last autumn when the negotiations originally took place. The Government have failed to negotiate the figure they think is right for the industry.

There is an alteration in the amounts that can be claimed for some ewes, but for the majority of hill sheep there is no change. There is a major problem in the definition of livestock units. Sheep are being dealt with unfairly in comparison with cattle.

In broad terms a breeding cow is equal to one breeding unit. Accordingly to Regulation 3(2) of the regulations we are amending a cow will be entitled by the amendments to a maximum of £29 or 52½ ua. According to Regulation 3(4) the maximum payable is 52½ ua per hectare. A. breeding cow on hill land is entitled to an allowance which the Community has laid down in the less-favoured-area directive. But that does not apply to sheep.

According to Regulation 3(3)(a) of the original regulations a ewe of an approved breed can qualify only for 7½ ua or £3.60, whichever is the less. Only six ewes per hectare are eligible for these subsidies. Sheep can qualify only for 45 ua as a maximum, or £21.60 per hectare as a maximum. There is a considerable shortfall in the maximum amount that can be claimed for sheep compared with cattle.

The National Farmers' Union is concerned about that, and feels that the provision for a maximum stocking rate of six ewes per hectare should be deleted from the regulations which apply in this country. The NFU considers that the overstocking provisions in the regulations are sufficient to safeguard good husbandry practises. I hope that the Minister will comment on that matter.

The position is that sheep lose a minimum of 7½ ua per hectare, or £7.40, compared with cows. How much would it cost the Government in cash terms to allow sheep farmers to get the maximum amount of subsidy permitted under the regulations laid down from Brussels? If we were to give the sheep industry the maximum that Brussels allows in the less-favoured-area directive, how much of that money would be paid from Brussels—I understand that it is 25 per cent of the total—and how much would it cost the British Government? Will the Government consider doing what the NFU has asked—to increase the six ewes per hectare limit to bring the scheme into line with what the Community has laid down?

Another problem raised with me by the NFU is that of shearling ewes. There is some doubt whether shearling ewes can qualify for the scheme. The NFU says: The Union has indicated to Ministry Departments that they will wish to have further detailed discussions with them on the possibility of including Shearling ewes as a category of stock eligible for Compensatory Allowances. It is somewhat uncertain at the moment whether the L.F.A.D. would allow this category of stock to be included. However, it has been represented to NFU Headquarters that as Shearling ewes are in fact part of the basic flock, they should be eligible. This is an important matter on which the Minister should comment, and I hope that he will give an undertaking to negotiate with the NFU on these lines to see whether this category of sheep could be included.

We approach these increases and adjustments with a welcome, but at the same time there is a background of Government failure. The Minister would do well to comment on the latest figures of the Ministry for breeding cattle and breeding sheep. These are the March 1976 figures Perhaps he will compare them with those for breeding cattle in the previous year. They exclude lowland and non-hill cattle, but, as I have said, the hill livestock breeding industry is the basis of our livestock population of cattle and sheep.

In March 1976, compared with the previous year, cows and heifers in milk for rearing as beef were down 9 per cent. and heifers in calf for their first calf for rearing were also down 9 per cent. That is the poor background of the Government's record. With sheep, the position is not quite so bad. The latest figures I have available, for December 1975, show that, compared with the previous December, the ewes for breeding were down 2 per cent., shearling ewes were down 3 per cent., and ewe lambs for breeding were down 3 per cent.

There is here a background of Government failure to maintain our breeding herds for cattle and sheep. I do not have the figures for the hill areas, and it would be interesting to hear them from the Minister. I suspect that they will be nearly as bad, if not worse than, the overall figures for the herds and flocks.

I do not know what will happen at the end of the debate. I began by recalling what happened at the end of the debate we had in December. I see the hon. Member for Banff (Mr. Watt) is present. I hope that his hon. Friends and members of the Liberal Party will be entering the Chamber soon because it is strange to see only one Member of the Liberal and Scottish National Parties present after they made such a great show of voting against these regulations in December. I assume that they will be voting against them tonight. Again, the Official Opposition will not obstruct these regulations. We give them a welcome but we have reservations. I hope that the Minister can answer our questions.

12.52 a.m.

Mr. Emlyn Hooson (Montgomery)

The hon. Member for Westmorland (Mr. Jopling) took 25 minutes to say what could have been compressed into five minutes. He rightly recalled that the Liberals and Members of the Scottish National Party divided the House on the last occasion when these regulations were brought before us. That was because about 1,200 farmers are excluded from their provisions since they do not have the qualifying acreage. Although it is a relatively small number, we thought it important to draw attention to this point, because they are in the main farm workers. It is true that they are part-time farmers but they are a force upon whom the hill farmers are largely dependent.

The Liberals and the Scottish nationalists thought it important that the Government should be aware of our feelings. It was our hope that the Government would be able to do something to help these people. If the official Opposition had lent its weight, the position tonight might have been different.

Am I not right in thinking that the Brussels directive allows for a higher rate of subsidy than is provided for by these regulations? It would be useful to have comparable figures. Perhaps the Minister of State can tell us what the maximum figures for hill cows and hill sheep could be under the directive.

I assume that the winter keep supplement is not affected by the Brussels directive. There is a good deal of uncertainty about this in some farmers' minds. Am I right in thinking that it is possible to implement that if it became necessary?

Mr. Watt

Would not the hon. and learned Gentleman agree that the best way in which the hill farmers could be helped would be if we got the green pound nearer to parity with its European counterpart?

Mr. Hooson

I entirely agree. The answer that the Minister may give me about the maximum figure laid down by the directive must be dependent upon the value of the green pound. The maximum figure that the Minister is able to give in his reply will still not be the maximum if the green pound were to be re-adjusted.

Despite the sedentary intervention of the hon. Member for Westmorland, am I not right in thinking that the directive does not prevent the Government, if it became necessary, from having a winter keep supplement? Am I wrong in my assumption?

Finally, I refer to shearling ewes. My understanding is that they qualify and that payments have been made on them. It was a matter of surprise to me that the hon. Member for Westmorland should have raised the matter.

Mr. Jopling

I can do no better than quote again what the National Farmers' Union headquarters said—namely: It is somewhat uncertain at the moment whether the L.F.A.D. would allow this category of stock to be included. It was on that basis that I raised the matter.

Mr. Hooson

I appreciated that the matter had been raised with the hon. Gentleman by the NFU, but it has not been raised in my area. That is because it has been the practice to put shearling ewes under the directive. After all, they came within the sheep subsidy this year.

My next query concerns a matter that would have been raised by my hon. Friend the Member for Cardigan (Mr. Howells) had he attended the debate. In fact, he has gone to the Royal Welsh Show. In my hon. Friend's area there have been many complaints of delay in payment. I realise that there was expeditious payment of the subsidy last year because of the difficult conditions in agriculture, but as a result of the change in the forms this year it has been necessary to have much more checking. I understand that a number of the forms had to be returned to those who had completed them because they had not been completed correctly.

Will the Minister tell us how many farmers have not been paid? Is there a variation from area to area? What action does the hon. Gentleman intend to take?

12.58 p.m.

Mr. Marcus Kimball (Gainsborough)

I shall deal briefly with four matters arising from the regulations. First, I declare an interest. I have been paid for all my shearling ewes under the scheme this year.

In dealing with these matters I suggest that we might clear our minds if we use the designations in the agricultural return form. In completing the less-favoured-area grant scheme form it is necessary to state the ages of one's flock in the regular ages. There is a column for the shearling ewes not put to the ram, for example. In many areas and on a great many hill farms the gimmers are not put to the ram. In my area we have definitely been paid for that category of sheep this year.

The expensive animal on a hill sheep farm is the ewe lamb that has been sent away to winter because it will not grow if it is left at home. That involves expensive winter food. Is it possible to extend the scheme so that the capitation payment is made on ewe lambs sent away to winter and not on the farm at 12th December prior to the payment of the subsidy in the New Year? These are expensive beasts on any hill farm. It is the exclusion from the previous hill sheep subsidy and now from the less-favoured-area scheme that causes great hardship. We want payment on the hogs that are away at wintering.

Reference has been made to the cash flow problem of the hill farmer. The way in which the subsidy was not paid out this year was scandalous. I think that I received mine on 9th June. In the normal way we used to receive the hill cattle subsidy in November and the hill sheep subsidy in February. They provided useful cash flow in the most difficult and expensive months. This year the hill cattle subsidy and hill sheep subsidy were lumped together under the new scheme and were paid to most farmers by the end of May and to the balance during the first two weeks in June. I think that in Scotland there was trouble with the computer.

We should like an assurance from the Minister tonight that at least the new payment will be pushed through for all farms by the middle of March next year. Hill farmers are normally at their lowest ebb when the sheep come back from wintering. I have not even received my brucellosis payments for this year. Perhaps the Minister will be able to say when we may expect to receive the brucellosis supplement.

1.00 a.m.

Mr. Hector Munro (Dumfries)

I wish to ask the Minister of State one or two questions about these regulations. I think that he should try to put the record straight on the subject of payments. In the debate on 17th December 1975, the Minister announced, no doubt in the Christmas spirit, that we should be paid … by mid-January, and certainly as early as possible in the new year."—[Official Report, 17th December 1975; Vol. 902, c. 1593.] I, too, like my hon. Friend the Member for Gainsborough (Mr. Kimball) wish to declare an interest. I must point out to the Minister that we were receiving payments in May and June, which seems a long time to wait bearing in mind the Minister's promise at Christmas.

In terms of cash flow, this will be a severe blow to the farmer who will have to carry those payments on paper for so many months when they would be far better reposing in one's bank balance. I hope that the Minister will give an assurance on behalf of the Scottish Office—and I am disappointed to see no Scottish Minister present—that this will not happen again. I appreciate that there were 7,000 applications to process and £8 million to be paid out, I also appreciate that the computer breaks down with great regularity. However, despite a visit by the Scottish NFU to the subsidies branch of the Department of Agriculture in Scotland, farmers in the Scottish hill areas did not receive payments in accordance with the Minister's December promise. I should like to know why those payments have not been made.

I wish to ask whether the Minister has resolved the problems of the farmer who wishes to retire, say, in the May term. If such a person has given up his lease, he then has the problem that he will receive the new compensatory allowance only if he is prepared to go on farming three or four hectares for a number of years. This produces an unreasonable degree of difficulty. I hope that the Department has now resolved this matter so that farmers can retire in the normal course of their lease without facing difficulties over compensatory payments.

Furthermore, has the Minister made any firm arrangements on compensatory allowances and restocking after brucellosis slaughterings? This is a major problem, and I appreciate that the Department has looked at it sympathetically. There is no doubt that if a farmer has his herd slaughtered on account of brucellosis at a certain time of the year and cannot restock for six months, or sometimes longer, the difficulty arises whether he is eligible for compensatory payment, although the herd is lost compulsorily, so to speak. Is the Minister making progress in resolving this difficulty?

I congratulate my hon. Friend the Member for Gainsborough on his suggestion about the wintering of ewe lambs or hoggs each year and whether they could be included. I was under the impression that we could include gimmers for these payments. If this arrangement can be extended, it will be a help in the wintering of ewe lambs. This has become a very expensive item in the annual budget of the hill farmer and any extensions to include this class of stock would be extremely beneficial.

One must look at this amending provision in relation to what it is trying to do—that is, strengthen the economy of the hill areas. Unless we can make hill farming profitable, the whole operation becomes pointless.

Whether the calf subsidy will be continued is a matter which is complementary to this Order. I hope that the Minister will tell us what will happen next year and the year after. What will happen to the beef cow subsidy, because this covers the stock halfway down the hill and is complementary to the hill cow subsidy? Will this subsidy continue in 1977 and 1978?

There are a number of answers we want from the Minister tonight so that we can go back to our hill farming areas and give our farmers confidence about the future. There are many question marks and difficulties in their way. For example, the new dipping regulations should have been the subject of much greater consultation before being introduced this year.

Without a long-term, profitable industry in the hills, the rural economy of the uplands areas will not survive. I hope that the Minister will give helpful and encouraging answers.

1.8 a.m.

Mr. Bishop

The hon. Member for Westmorland (Mr. Jopling) raised the Cleasby case. The situation is that a farmer with beef cows in the hills is not eligible for more than the permitted payments. The House may recall that under the old scheme, the hill cow subsidy was paid on the maximum number carried and the beef cow subsidy paid on the excess. Under the new regulations the farmer gets a compensatory allowance up to the maximum allowed in the directive, but nothing on the excess. This farmer, with six cows affected, may not be much worse off. This increase will help to alleviate the problem as a higher stocking rate is paid, and more is paid per cow.

The figure of six ewes per hectare would mean an extra £8 million gross if all sheep were paid at the maximum rate permitted under the directive. This is an Annual Review matter. The present rate was announced by my right hon. Friend on 8th March in his statement to the House.

I was asked why our payments are not up to the level of the directive. The levels are the maximum the member States are permitted to pay. Within those limits the allowances to be paid to United Kingdom producers in less-favoured areas remain to be considered following the Annual Review. After the Annual Review earlier this year, the fat sheep guarantee was raised by 18 per cent. to 42p per lb. and the wool guarantee by 23 per cent. to 83.7p per kilogramme. It was also decided that the cattle rate should be raised this year since it had remained the same since 1972. We are moving to the maximum limit which determines the overall financial payment permitted per hectare.

I was asked about hill farmers receiving less subsidy under the directive than they would have received before it was implemented. The increase in the overall financial limit will reduce the problem, but the extent to which the limit will bite will depend on the stocking policies of farmers who graze both cattle and sheep on the same land. At a rough estimate, there may be 1,550 farmers—600 in Wales—who will be affected, although in many cases the sum involved will be small. The Government would like to see the overall limit raised further, and we shall watch for a suitable opportunity to reopen the issue with our European colleagues.

A number of hon. Members asked about the delay in payment of the amounts. The delay this year under the new regulations has been partly due to the farmer's unfamiliarity with the new scheme. That led to about 40 per cent. of claims in many areas having to be returned to farmers for correction.

Mr. Monro

If 40 per cent of farmers completed the form incorrectly surely the Minister should be considering what to do about the form. It is far too complicated. Can he not ensure that it is simplified next year?

Mr. Bishop

I can assure the hon. Member that we are looking into that matter. On 17th December I mentioned that we were replacing about 12 Orders or regulations. In addition, 1976 is the first year in which hill cattle and sheep have been dealt with together, and that has created an unusually heavy load for the staff concerned. We expect that experience gained this year by both farmers and staff will in general enable payments to be made earlier next year when there will be one claim form covering both sheep and cattle.

Over 50,000 claims to a value of about £47.5 million have been paid so far in the United Kingdom, and I understand that fewer than 500 are outstanding in England and Wales. I stated in December that we hoped to commence payments in January.

The hon. Member for Westmorland asked about the cost to the Exchequer. It is estimated that the increases will mean an additional cost of £4.3 million, increasing total United Kingdom expenditure on compensatory allowances to about £55 million. There is, of course, the 25 per cent, contribution from FEOGA towards eligible expenditure. Expenditure which does not attract the contribution is that paid to pensioners, which is expected to be of the order of 10 per cent.

Several hon. Members mentioned the criteria for determining eligible land for the purposes of paying hill livestock compensatory allowances. I recognise the concern about this matter, expressed last time as well as today. The House may ask what are the criteria for determining eligible land. They remain as in the former hill subsidy schemes.

There are two tests relating to location and quality. The land has to be in an area of mountains, hills or heath and be suitable for use for the breeding, rearing and maintenance of sheep and cattle, but not, to any material extent, of fat sheep or fat cattle, or the production of crops in quantity materially greater than that necessary to feed the number of sheep or cattle capable of being maintained on that land. Such land also has to be in an area adopted by the Council of Ministers as less favoured under the terms of the EEC directive on less-favoured areas. At present there are no plans to extend the less-favoured areas outside the hills in the United Kingdom, but clearly this is a matter that will have to be looked at in conjunction with our Community partners.

The hon. and learned Member for Montgomery (Mr. Hooson) asked about winter feed. This is no longer paid, as it is covered by the compensatory allowance. Payment at the old rate was £18.75 for a hill cow plus £5.75 for winter keep, giving a total of £24.50. The same amount will be paid as a compensatory allowance and is now increased by £4.50. Similarly, winter keep rates for sheep are also consolidated into the compensatory allowance

The hon. and learned Member also raised the subject of how many farmers in Wales were outside the eligible hill areas but have been able to claim concessionary payments in respect of the hill cow subsidy. Some 70 farmers in Wales occupying land outside the hill areas but receiving hill cow subsidy under the special concessionary arrangements made at the time of the 1963 hill land review are ineligible for the compensatory allowances. Arrangements were made to make payments to the farmers concerned for 1976 and 1977 comparable with those they received under the former hill cow subsidy scheme.

The hon. Member for Gainsborough (Mr. Kimball) commented on cash flow. I hope that my comments about that explain the situation, even though they have not satisfied him.

The hon. Member for Westmorland said that there was a feeling in his constituency that it was easier to obtain compensatory allowances in Scotland than in England. I remind him that this scheme applies to all areas equally and the rules for eligibility are common throughout the United Kingdom. I have no reason to believe that the way in which they are operated in Scotland varies from how they are operated in this country.

The hon. Member pointed out that the National Farmers' Union wanted changes in the directive to be implemented automatically. There are two points here. The implementation of the EEC directive and any amendments to it requires regulations to be made in the United Kingdom. It is for the United Kingdom to decide whether we should raise the limits. The directive simply sets the maximum and minimum rates, and we are free to fix rates within the limits according to our assessment of the situation of our own industry. This is again a matter for the Annual Review, and I have commented already on the increase which was announced in the review statement this year.

Mr. Hooson

The hon. Gentleman has not answered my question about the maximum rate permitted by the directive for hill cows and hill sheep.

Mr. Bishop

I was about to come to that. The maximum for cattle is £29.90 and that for sheep about £4.50.

The hon. Member for Westmorland referred to the case of Cleasby of Brough and asked how many other cases there were. I understand that only two cases are known, but there may be others, of course. They seem to be very few in number. But I take the hon. Gentleman's point, and he has had a communication from my right hon. Friend on this matter.

The hon. Member for Gainsborough asked why brucellosis incentive payments were not paid along with the compensatory allowances. I understand that in general the brucellosis payments were made along with the allowances. If the hon. Gentleman can give me any further particulars, I shall be very pleased to look into them.

The hon. Member for Dumfries (Mr. Monro) asked about the payments being made in mid-January. What I said on 17th December last was that I hoped that we should begin payments in mid-January. He also asked about the position affecting pensioners. A farmer in receipt of a State retirement pension is not required to sign the five-year undertaking to remain in farming. A farmer who has signed the undertaking will be released from it when he starts to receive his State pension, and the allowance will continue to be paid to State pensioners.

Mr. Jopling

I hope that the Minister will be good enough to answer the question which I raised with him during the debate and, indeed, privately before the debate began. It follows on from the question asked by the hon. and learned Member for Montgomery (Mr. Hooson) about the maximum which could be paid out on sheep. I wanted to know how much more in cash it would cost if we paid out the full subsidy that Brussels permits on sheep and how much that would cost from British sources and how much from Community sources. It would be interesting to know the extent to which the sheep industry misses out on what is permitted in terms of payments by the Community in Brussels.

Mr. Bishop

I have said already that, at a rough estimate, it would cost another £8 million gross if all sheep were paid for at the maximum rate permitted by the directive. This is an Annual Review matter where the Government have freedom within the maximum and minimum limits to decide their own policy. I also said that 25 per cent. of the payments would come from FEOGA grant, so the hon. Gentleman can work it out for himself.

I think that I have answered most of the questions put to me. With those comments, I hope that the House will approve the regulations.

Question put and agreed to.

Resolved,

That the Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1976, a draft of which was laid before this House on 29th June, be approved.