HC Deb 20 February 1980 vol 979 cc589-619 10.10 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Jerry Wiggin)

I beg to move, That the Farm Capital Grant (Variation) Scheme 1980 (S.I., 1980, No. 103), a copy of which was laid before this House on 31 January, be approved. I suggest, Mr. Speaker, that it might be for the convenience of the House if we took at the same time the Horticulture Capital Grant (Variation) Scheme 1980, which was also laid before the House on 31 January.

Mr. Speaker

Is it the will of the House that the two schemes be taken together? So be it.

Mr. Wiggin

Hon. Members will recall that when we took office last year we undertook both to reduce public expenditure and to find ways of cutting out inefficiency and waste in public business. As is known, the Prime Minister invited Sir Derek Rayner, in consultation with Ministers, to identify ways in which staffing and costs of administration could be reduced in their Departments. In the case of my Department a study of the capital grant schemes was undertaken and we have accepted in principle the recommendation that the existing grant schemes should be radically simplified and rationalised.

The main proposals include the abolition of prior approval, simpler tests of eligibility and new arrangements for claiming grant. Consultations on these proposals are currently in progress with the farmers' unions and other interested organisations, including those representing the staff concerned, who can offer advice on their practical application. When these consultations have been completed, a new scheme will be presented to Parliament before the House rises for the Summer Recess. This scheme will replace both the schemes being discussed tonight and the Farm and Horticulture Development Scheme, which implements EEC directives 72/159 and 73/268.

The report also suggested a rationalisation of the various rates of grant to be paid under the schemes. This came on top of the speculation that has been evident in the farming press over the past few months about the way in which grant rates might be affected by the Government's determination to reduce public expenditure. My right hon. Friend decided that it was important for the industry to end this uncertainty and at the same time to take a step towards the rationalisation of grant rates recommended by Sir Derek Rayner. This is what the schemes before us do.

The schemes came into operation on 1 February 1980, the day after being laid before Parliament. This was considered necessary to avoid large numbers of preemptive applications being made, as happened on an earlier occasion when grant rates were varied after advance warning and about 100,000 extra applications came in during the last month before the grants went down. We were anxious to avoid a repetition, because it would have added to the cost to public funds and seriously disrupted the work of divisional offices, to the overall disadvantage of farmers. No discourtesy to the House was intended by this procedure and the continuance of the schemes is, of course, subject to their being approved this evening.

Let me now turn to the substance of the schemes. They make two main changes: they adjust certain grant rates and they introduce limits on grant-aidable investment.

Most grant rates have been increased. Under the Farm Capital Grant (Variation) Scheme, 18 rates go up and only six go down, while 11 remain the same. Under the Horticulture Capital Grant (Variation) Scheme, 15 grant rates remain the same and 15 go down. Under the Farm and Horticulture Development (Amendment) Regulations, 41 grant rates are increased, 22 are decreased, and 18 are unchanged.

What are the main changes? The basic rate of grant for buildings and works under the FCGS and the HCGS is now 22.5 per cent. Under the FHDS it will be 32.5 per cent. One effect of this will be to remove the previous discrimination against sheep housing, giving it a higher rate of grant. I am sure that this will be greatly welcomed by the industry, which has been pressing for this improvement for some time.

The rate of grant on water supplies and conservation has been increased to 22.5 per cent., which is in line with one of the recommendations of Sir Nigel Strutt and his committee in a recent report.

Assistance for dairy and cattle buildings is reduced to the 22.5 per cent. rate under the national scheme and 32.5 per cent. under the EEC scheme. They were given a higher rate in 1976 to encourage the better utilisation and conservation of grassland and economic milk production. We believe that in the present climate there is less justification for the advantage given in 1976, especially following three devaluations of the green pound and two increases in the milk price, which have benefited dairy farmers substantially.

It is for the same reasons that grants for dairy plant and equipment and equipment for the loading and unloading of silos, which were introduced in 1976, will no longer be available under the national schemes, though they will continue, at lower levels, under the FHDS.

We recognised that horticulture generally benefits less from price support arrangements than agriculture, so we have retained the grants on horticultural equipment at their present levels. Where grant on other forms of equipment has been reduced, it is worth remembering that this equipment benefits from the 100 per cent. write-off provisions in the year of purchase for income tax purposes. Farmers and growers outside the less-favoured areas will generally get 10 percentage points higher grants under the FHDS than under the FCGS. Inside the less-favoured areas they will enjoy a further five percentage points advantage on most items.

For field drainage we have not reduced grant to the basic rate for buildings and works because it would have reduced the amount of work undertaken to an unacceptable extent. Consequently, the lowland rate will be at 50 per cent. under the FHDS and 37.5 per cent. under the FCGS.

We are, of course, retaining the 70 per cent. grant for hill drainage in less-favoured areas. The 50 per cent. level of grant will also be retained on hill land improvements in recognition of the special natural handicaps with which they have to contend.

I should like to say a few words about the new limits. A substantial proportion of grant is going to a small number of applicants operating large enterprises. In the main, these applicants have benefited from the tax changes made by my right hon. and learned Friend the Chancellor of the Exchequer in his Budget, and so they will have a higher proportion of net income available for investment. We have therefore decided to impose a limit on the amount of investment that can qualify for grant.

Under the national schemes, the limit is 160,000 ECUs—about £100,000—on which grant may be paid in any six-year period. Under the EEC scheme—the FHDS—the limit is 220,000 ECUs, or about £136,000. We consider that this represents a reasonable level of investment for a family farm. There will be no retrospection. In applying the limits, no account will be taken of any expenditure on which grant has been claimed where the application for approval of that expenditure—whether under the national schemes or the FHDS—was received before 1 February 1980. These limits will apply in addition to the existing labour unit limit and applicants will no longer be eligible under the national schemes while they have a current development plan approved under the FHDS.

These limits will apply only to a relatively small number of big enterprises. Under the national schemes, only 1 in 100 applicants is likely to be affected over a six-year period. Under the FHDS we expect only about 20 per cent. of development plans to be affected, but two-thirds of the savings will come from only 5 per cent. of approved plans.

The limits and the changes in rates will produce important savings for the Exchequer, starting from about £4 million in 1980–81 and rising to an estimated £33 million in 1983–84. I emphasise, however, that these are straight-line projections. We shall keep a close watch on the trends in grant applications, the costs of which will depend on the use that farmers make of the schemes.

We have made these changes taking into consideration current events in farming and horticulture and the likely pattern of demand over the next few years. They are not immutable and, if circumstances change, they may need further adjustment. We believe that the arrangements are in line with the present needs of the industry. They will ensure that the grant schemes will continue to make the important contribution to agriculture and horticulture that they have been making for over 20 years.

I commend the two statutory instruments to the House.

10.20 pm
Mr. Gavin Strang (Edinburgh, East)

In his opening remarks the Minister stated that these changes are a consequence of advice that the Government have received from Sir Derek Rayner. To the extent that they reflect increased efficiency and a reduction in administrative costs, the Opposition are able to support them. When I refer to a reduction in administrative costs, I mean that the administrative cost per £1,000 of grant paid is significantly reduced. I also assume that we shall not see a significant increase in the rate of abuse of the grant schemes as a consequence of these administrative savings. That would be counter-productive.

The Minister stated that 400 jobs will be saved as a consequence of these changes. I would be grateful if the hon. Gentleman would say whether these are the jobs of bureaucrats, if I can use that word. I do not use it in a derogatory sense. Are we talking about administrative staff who are based in Ministry offices, or does that figure include technical people, such as advisers, who go on to farms, especially where the horticultural development scheme is concerned? If that were the case, the Opposition would very much regret it.

From my experience in the Ministry, I know that agriculture is well served by its civil servants. I hope that the Parliamentary Secretary will assure us that we are not talking about redundancies there, either voluntary or compulsory, and that the savings will be achieved through natural wastage. At a time of high unemployment any other policy would be unacceptable.

The previous Labour Government laid great stress on the FHDS scheme. Although it was not supported by all sections of the agriculture industry, I believe that it was in the interests of agriculture that the concentrated effort that the Agricultural Development and Advisory Service put into the scheme and the intensive attention received by many holdings that participated in a farm plan made a contribution to efficiency on those farms, which continued long after the end of the scheme.

What is the Government's attitude to the emphasis that we attached to the FHDS following a recommendation from the Public Accounts Committee? Our share of EEC expenditure on the FHDS was 9.8 per cent. in 1977, and it increased to 19.4 per cent. in 1978. That is a measure of the success that the ADAS achieved in increasing the take-up of the scheme, for which we receive EEC support.

I hope that the Parliamentary Secretary will be able to tell us whether the cuts involve a cutback in extension work or reflect a change in emphasis in relation to the importance of the FHDS compared with our domestic farm and horticultural grant schemes.

I turn to the grant changes announced by the Minister last month and elaborated on in detail, for which we are grateful, by the Parliamentary Secretary tonight.

It seems that there has been an attempt to dress up a significant cut in the level of aid for investment in agriculture as administrative streamlining. I recognise that the Government cannot give an accurate figure for the reduction in expenditure that will be achieved—it will depend on the level of applications for grants—but some estimates must have been made and I hope that the Parliamentary Secretary will tell us in more detail how much of the savings in public expenditure will come from cuts in manpower costs and how much will result from cuts in the level of support for farm investment.

Let us not be fooled by the Parliamentary Secretary's reference to the fact that more grants have been increased than have been decreased. He will be the first to acknowledge that that is not the important point and that what counts is the level of Government support for agricultural investment and how much less investment we shall get in this important and productive industry as a result of the changes.

Given that the Government wanted to make the changes, they have not made a bad job of it, with one or two important exceptions. We support the reduction in the limit. We cannot justify the level of support given to the large investments made in the industry. The Northfield report suggested that the economies of scale did not go much beyond 300 acres. Once we reached 500 acres, we would be talking about a pretty small achievement in terms of economy of scale.

We would support the amalgamation of much smaller units, but if we really mean what we say when we talk about more farms being made available for people to farm and let we cannot at the same time say that we want more and more farms amalgamated into large units of thousands and thousands of acres operated by farm managers.

For that reason, among others, I welcome the change. I also welcome the extent to which the Government have protected the horticulture industry from the changes. They have even achieved some small increases in relation to the level of grant for horticulture. I also welcome the fact that the Government have looked favourably on the position of the hill farmers—those in the less-favoured areas—and I very much welcome the Government's announcement that they are to increase the rate of grant for sheep housing.

I hope that we will see—though it is taking rather a long time—a thriving lamb industry in due course and one in which we develop a significant and sustained trade in exports to the Continent.

I turn to the specific changes that I believe are reprehensible. First, I regret the cut in the level of support for drainage in marginal and lowland farms. Those who have had any involvement with agriculture have always taken the view that perhaps the most important and most basic investment to be made on the land is in drainage. For the Government to single out drainage for a sharp cut in support is, I believe, a mistake and is against the interests of our agriculture industry.

Secondly, I regret the reversal of the Labour Government's policy towards the dairy industry. Of course, we are opposed to the monstrous misuse of resources implicit in the surplus of milk in the European Community, but we have always argued that because of the relative efficiency of our industry it should be enabled to increase its share of the total Community production. Indeed, when we looked at the benefits to agriculture from selective expansion we found that the one commodity that emerged as the most cost-effective for expansion was milk. I remind hon. Members—though they do not like to be reminded—that we achieved our projections in relation to food and resources.

One of the great success stories is the dairy industry, where we have almost squeezed out the imports of butter from the Continent. We support New Zealand imports and we hope that the Government will continue to insist on those imports in the context of the EEC discussions taking place on that subject. The industry has significantly increased its share of British consumption of dairy products. The 1976 package announced by the Labour Government was deliberately geared to achieving that.

I think that it is regrettable, therefore, that there is now a clear reversal of that approach. We fought and fought against the EEC attempts to prevent us encouraging our own efficient dairy industry. Now the Government, in the words of the NFU, are capitulating, as it were, before the real arguments begin about the EEC's approach to this issue.

Mr. Geraint Howells (Cardigan)

I am sure that the hon. Member for Edinburgh, East (Mr. Strang) is aware that we produce only 35 per cent. of the butter required by this country. There is, therefore, a great deal of room for expansion of home production, and it is up to us to give a lead to the dairy producers.

Mr. Strang

I would not wish to comment on the precise figure quoted by the hon. Member for Cardigan (Mr. Howells). I think that it is probably rising, but I certainly agree with him that there is scope for expansion.

This is the first opportunity that we have had to debate the effects on agriculture of the Government's expenditure cuts. I do not want to put the problem out of perspective. Compared with other savage expenditure cuts, the agriculture cuts are small beer. The expenditure cuts on rural bus fares and school milk are more important to the farming industry. Awesome consequences are implicit in the Government's disastrous economic policies. They are going further towards a tight money policy. I hope that they will not make the mistake of cutting the agricultural advisory service and research capability, which have played an important part in the successful and expanding industry.

The right hon. Member for Lowestoft (Mr. Prior) is remembered in the industry and in the Ministry for the enormous damage that he did to the agricultural advisory service. It took many years to recover. I hope that another Conservative Government will not undermine the agriculture industry while saying that they support it. We do not intend to vote against the proposals, but we hope that the Government will not repeat their past mistakes.

10.37 pm
Mr. Peter Mills (Devon, West)

I welcome the opportunity to take part in the debate, because the grants are of immense importance to agriculture. Over the years they have served British agriculture well. Far more important, they have served the consumer well. Enormous quantities of food have been produced in Britain, and the amount is still rising.

I understand and approve of the reasons given for administration cuts and the savings that the Government are seeking to make. If the hon. Member for Edinburgh, East (Mr. Strang) were fair, he would accept that agriculture has come off lightly. At a time of crisis and difficulty, and when housekeeping has to be pruned, the Minister has helped to ensure that the cuts are minimal. In such a time of crisis each section of the community must suffer cuts. The agriculture industry should congratulate the Minister.

When there is a great surplus of milk, it is difficult to see how one can give large grants to increase milk production. One could debate that issue on its own. I understand why the Government have made a cut in that grant. I applaud the overall limit. It is wise. I applaud the Government for their decision on sheep housing. There is no doubt that many lambs can be saved by housing ewes. The profitability of sheep production depends on a high lambing rate. In present times, with the problems in the sheep industry, to make it possible to save lambs and increase profitability through better housing is a wise step forward. I am sure that that will be welcomed in the more remote and difficult climates.

Having welcomed the Government's proposals, I turn to some criticism of them, which is right and proper. While I applaud most of the new rates, I am unhappy that higher grants were not included for the marginal land areas. Before my hon. Friend the Minister shoots me down, let me say that I am asking not for a greater total sum but for an adjustment to ensure that the marginal lands can be improved.

We wish the marginal lands to receive the sort of grants received by the less-favoured areas. I am not talking about hill cow subsidies or sheep subsidies: I am talking about proper drainage, the renovation of grass, and fencing.

I am sure that my hon. Friend the Minister recognises, and that the House recognises, that if we want increased food production—we are producing about 70 per cent. of our primary needs—it must come from the poorer land. We need better drainage.

Mr. Paul Hawkins (Norfolk, South-West)

indicated dissent.

Mr. Mills

My hon. Friend the Member for Norfolk, South-West (Mr. Hawkins) represents a wealthy and prolific area. If we wish to increase production and help with the social and rural problems of the remote areas, it is important to consider the marginal land. It would benefit the nation and the balance of payments. That is why high grants are important for the better drainage of land and grass regeneration.

There are thousands of acres in Wales, the South-West of England and other areas that could be helped in that way. I hope that a little help and aid will be provided in the manner that I have suggested.

It is important that one puts ones money on a success story. British agriculture is a success story, unlike many other industries at present. The grants help to maintain that success story. In the next few years, through the world recession and all the problems that I am not allowed to discuss tonight, I ask the Government to put their money where there is success. That will increase production, to the benefit of the nation. That production will come from the marginal areas. The achievements through the grants over the years is an object lesson in how to encourage and promote agricultural production.

My hon. Friend the Minister can rest assured that I fully support the Government, but they must turn their attention to the marginal land.

10.44 pm
Mr. Stephen Ross (Isle of Wight)

I shall confine my remarks to the horticulture grant scheme. I wish to query the need to include any grants at all, at this time, for glasshouse growers. By so doing, surely the Government are encouraging growers to invest further in an industry which, to my great regret and to the country's eternal shame, is facing imminent bankruptcy. After all, generous grants and subsidies in the 1960s enticed many horticulturists to my constituency and elsewhere in the South of England. Some of them are household names for quality. I mention only Stevens and Rockford. They invested huge sums in acres of glass. They now face almost total gloom.

Things were bad enough in 1974–75, when the first of the oil price rises hit us. Most of the growers, by changing crops—unfortunately, turning from growing lovely roses and carnations to the growing, and increasing too much the growing, of tomatoes in this country—shedding labour and changing to other heating methods than oil, for which they had been given grants, managed to survive.

The situation now is almost beyond contemplation. Oil prices have risen 24p in five months. Presumably, if the announcements by Shell and BP of a day or so ago are anything to go by, more increases are on the way.

The average price of oil to a horticulturist is 46½p a gallon. In some circumstances, according to the grade of oil, it can be 57p a gallon. The Dutch equivalent in gas terms is said to be 19p. In 1978 growers in my constituency received £440 per tonne for tomatoes. In 1979 the price was down to £383 per tonne. Goodness knows what it will be this year. The Dutch dump their surpluses in this country, much to our detriment.

Bank loans in Holland are available at 9½ per cent. or 10 per cent. In other parts of the EEC, I understand that they are even cheaper. In this country they are 20 per cent. and more. It is estimated that the Dutch grower has an advantage over the British grower of £10,000 per acre. A local grower told me recently that during the past 12 months his costs per acre had risen from £13,092 to £22,912. Growers will not survive for very long in such circumstances when returns are going down.

I put this question fairly and squarely to the Minister: do we want a glasshouse industry? I believe that we do. I want our growers to survive. If so, they should be allowed to compete on equal terms with our neighbours in the EEC. That means providing greater help than is available in these schemes. If the answer is "No", would it not be honest to say so without prevarication and not to offer grants but to substitute reasonable compensation to pull down what was erected with such confidence only a few years ago?

10.48 pm
Sir Graham Page (Crosby)

The House will have noticed that on the Order Paper there are little rubrics under both schemes stating that the Joint Committee on Statutory Instruments has reported them to the House. The Chairman of that Committee is in his place tonight and I am sure that he will support the comments that I want to make on this subject.

I wish to comment not on the merit but on the form of the schemes. The Farm Capital Grant (Variation) Scheme 1980 amends the 1973 scheme. It is the fifth complicated amendment. There are now five new schedules to the scheme and innumerable new paragraphs and subparagraphs. Obviously the scheme is ripe for consolidation and should have been consolidated to make it easy to understand.

The Ministry's answer to the requests from the Joint Committee for consolidation was that it was not possible to consolidate with amendment because the shortness of the interval of time after the taking of decisions on the financial limits and before the making of an announcement made it necessary to keep the amending statutory instruments as simple as possible. That is the most amazing saying of the week, if anybody thinks that the wording of this instrument is simple.

The only decision that had to be made was on the financial limits. That decision was made on 24 January and the scheme was laid on 30 January. All that was involved was the insertion of a figure in blanks in the scheme. Surely the Ministry knew what was going to be required. It was recommended by Sir Derek Rayner. I appreciate that that is not a popular name to mention in the House at the present time. However, the scheme could have been drafted long before January and the blanks could have been filled in. It could have been drafted as a consolidation measure.

The failure to consolidate it is blamed on lack of time, because the decision was made at a late date. The decision was only a matter of filling in blanks. It is wrong that Parliament has to accept what I would call—with all due deference to my hon. Friend the Parliamentary Secretary—a piece of second-rate draftsmanship by his Department. It is second-rate draftsmanship. The language in the new provision in paragraph 8 (3) is incredible. It is ungrammatical, unintelligible and extremely obscure. What is the Department's answer to that? The answer is that it did not have time to draft it properly. We should not be presented with a measure that the Department has not had time to draft.

The House, in dealing with primary legislation, spends a great deal of time on the Committee and Report stages of a Bill in trying to get it right. We do not have the opportunity to do that with secondary legislation. That is all the more reason why it should be meticulously drafted. In this case there is difficulty in understanding the drafting. That is bad. It is secondary legislation, but it need not be second-rate legislation. It is a pity that this measure is so badly drafted, because it has great merits.

10.52 pm
Mr. Bob Cryer (Keighley)

I certainly endorse the remarks of the right hon. Member for Crosby (Sir G. Page), although he will not expect me to support him on the merits of the measure, because I take exception to the variation of grants. I shall detain the House only briefly, because the right hon. Gentleman has put the case succinctly.

It is totally wrong for civil servants to attempt to convince a Select Committee that haste and shortage of time are justifiable reasons for bad draftsmanship. There is great confusion in the new subparagraph (3)( a)(iii) in paragraph 9.

The Committee pointed out in its memorandum to the Department that consolidation was a desirable aim. The Department said that it would bear that in mind. There is no reason why it could not have given a clear commitment to the Committee that on the next occasion it would consolidate.

This may be secondary legislation, but people use secondary legislation. It is as binding as primary legislation. It is important that legislation of this sort, which binds our citizens and which places restrictions and opportunities upon them, should be as clear and unambiguous as other legislation. The function of the Joint Committee on Statutory Instruments is to try to draw the attention of the House to difficulties and ambiguities that arise. We have drawn the attention of the House to those points. Hon. Members should realise that this legislation goes out in the name of Parliament, and it behoves all hon. Members to put pressure on Government Departments to ensure that the Committee works effectively by producing an effective response to the reasonable requests of the Select Committee which is working for the interests of citizenry as a whole.

10.54 pm
Mr. Marcus Kimball (Gainsborough)

In introducing the scheme, my hon. Friend the Parliamentary Secretary said that we are going on with the farm capital grant scheme and the farm and horticulture development scheme with the amended rates of grant from August, and that the Government would then come before the House and bring forward an entirely new scheme.

I certainly do not agree with the praise heaped on the farm and horticulture development scheme by the hon. Member for Edinburgh, East (Mr. Strang). I hope that we shall have a new scheme arising out of the orders in August. However, certain matters should be borne in mind. The scheme has completely destroyed the market in second-hand farm machinery because of the artificial 15 per cent. grant given for buying new machinery. In exchange for a guidance premium of about £6,000 on a large scheme, the farmer ties himself up for six years. Even in the good land of Lincolnshire, people have come to me and said "We have to go to ADAS to complete our scheme. The chap who completed the scheme told us to shove every possible thing in that we might want to do, and now we cannot afford to carry it out and we want to amend the scheme." The documents that are necessary to amend the scheme are frightening.

I have never taken up a farm and horticulture development scheme because I have always felt that the farm capital grant scheme was, taken with the tax concessions—provided that one is making a profit on capital development—sufficient. Many people have rushed into the farm and horticulture development schemes and are regretting it.

One of the disasters of the countryside today is the money that has been wasted on capital grants, particularly on marginal land improvement. People have the carrot of the grant and are persuaded by estate agents—who are the biggest niggers in the woodpile—people selling fertilisers and so on to buy an estate for more than they can afford. Then, the estate agents get the commission when the estate is sold to somebody else and they go through the same racket all over again. The worst money that has been spent by the taxpayer in this area is on the improvement of marginal land. Marginal land is a long way above sea level, it is cold and it is in high rainfall areas. People believe that they will be able to turn beautiful heather into green grass. They will not, because they are not prepared to maintain it. They get the orginal grant, and six years later the land has all gone back to rushes and the chap is about to sell up to the Forestry Commission.

The best thing to do in many marginal areas is to leave the water on the land. There are many other assets apart from agricultural ones in such areas and the last thing that we want to do is to increase the run on marginal land. That is what has destroyed fishing and other amenities in the areas. I hope that, in the new scheme, the Minister will look carefully at the use of taxpayers' money. I believe that the grants in many of these marginal areas are distorting the areas to the disadvantage of the taxpayer.

10.57 pm
Mr. John Home Robertson (Berwick and East Lothian)

I am worried by some of the remarks made by the hon. Member for Gainsborough (Mr. Kimball). He appears to be suggesting that we should not be carrying out improvement schemes and that areas should return to moorland. Indeed, that will happen if we do not go ahead with the drainage of large areas of the country.

I would not normally be here at this time of night speaking on such schemes, but when I heard that the proposal arose from something that had been put forward by Sir Derek Rayner, and knowing his ideas about streamlining and his suggestions about rural sub-post offices, I felt that I should come along and at least listen to the debate.

In opening the debate, the Minister said that he had streamlining in mind and intended to make substantial savings. Indeed, he quoted substantial savings to the taxpayer, which must be a good thing. However, I am concerned that we are not just talking about administrative streamlining. Indeed, the Minister has brought with him no fewer than nine civil servants to back him up on the occasion of this debate. I suspect that it is perfectly obvious that all these cuts and substantial savings will be at the expense of giving practical advice to farmers and at the expense of investment.

My hon. Friend the Member for Edinburgh, East (Mr. Strang) was right to emphasise drainage. The Minister is a practical farmer. Indeed, I should have declared an interest, as I am also a practical farmer and I claim these grants from time to time. The Minister therefore knows as well as I that huge acreages were drained 100 to 200 years ago. Those drainage systems are collapsing and failing all over Britain. Anyone who has travelled up and down the country by train—as I do twice a week—will have seen the amount of high-quality arable farm land that has been standing under water for most of the winter. Our drainage schemes do not function as well as they should. The only way to overcome that problem is to redrain the land. The Minister knows that the capital costs—

Mr. Wm. Ross (Londonderry)

The hon. Gentleman has missed one of the most important points relating to drainage 100 years ago. He has not pointed out that those drainage systems were built for horses. We are now a long way from cultivation by horses. That is one reason for the deterioration in drainage.

Mr. Robertson

I accept that point. However, that does not detract from the fact that many of our drainage systems fail as a result of the physical effects of machinery or from sheer old age. The Minister knows how much it costs to drain an acre of land these days. He knows also that costs are rising. In addition, interest rates on farm overdrafts have never been higher. It therefore stands to reason that the cut in the rate of grant for drainage will substantially slow down the rate of replacing old drainage systems. I hope that the Minister will reply to those points.

The Minister has told us about the new ceilings on the levels of investment qualifying for capital grant assistance. I agree with that principle. There is no point in backing up the most prosperous enterprises with taxpayers' money all the time. However, many major arterial drainage schemes involve large areas and, therefore, groups of farmers. They might exceed the ceilings mentioned. A great amount of investment may be involved, for example, in draining several square miles of land and deepening a main watercourse. Many of the schemes that now receive grant assistance might exceed the ceilings and thereby be inhibited. Perhaps the Minister will comment on that.

11.3 pm

Mr. Richard Body (Holland with Boston)

I shall add yet another discordant note. I do so with some regret as I realise that the Government's intentions are an improvement on those of their predecessors.

These measures are incomprehensible. I can only assume that they are part of the conspiracy to prevent peasants such as myself from being included in the scheme. If one is to get in on the act, one must be a substantial farmer. One must have an accountant and be on good terms with ADAS. One must be a different type of character from the man who needs Government aid.

It is most regrettable that, with every year that passes, thousands of small farmers and smallholdings disappear. In my constituency, in the fairly short time that I have represented it, not less than 3,000 small farms and smallholdings have gone out. Our structure of farming has changed considerably in the past 20 years.

Throughout most of the countryside, we see larger and larger farms. There are fewer and fewer opportunities for the small farmer, particularly if he happens to be a tenant, and, most of all, if he is the tenant of a poor landlord. We have fewer opportunities for the go-ahead farm worker to get a few acres of his own and establish himself. That is a sad fact, especially when we realise that so many of our most able and distinguished farmers today are the sons or grandsons of farm workers or small farmers.

The opportunities for the young man to enter farming become fewer and fewer with each year that passes. I am driven to the view—and perhaps one day my hon. Friend the Minister will agree—that the present system of grants, subsidies and tax allowances is actively working against the small farmer.

My hon. Friend the Member for Gainsborough (Mr. Kimball) touched upon the question of second-hand farm machines. All of us who are acquainted with agriculture know of their importance. I endorse every word that he said.

I speak with some feeling. If I may declare an interest, I have a holding that I let to a youngster who tried to get going with a limited amount of capital. He will now have to give it all up, because he cannot get going with the unfair corn-petition created by the present system—above all, by the system of tax allowance. I know that I shall be out of order if I say more about that. It is all part of the system of grants and subsidies that makes large farms still larger, makes it increasingly difficult for the small farmer to get going and makes it impossible for the youngster to get into agriculture.

It will weaken agriculture in the years to come. It may be all right for 10 or 15 years, but, if in future years agriculture is to be healthy, we need new blood. The system is acting against that. I greatly regret it.

We are making a grave mistake in continuing such schemes. Far be it from me to say that what goes on on the other side of the Channel is better. However, over there it is infinitely easier for a young man who wants to get into agriculture. He can get credit and establish himself. It is quite different over here. If we are to have a system of State-supported agriculture, I hope that the Government will look at schemes in Holland and France. They are much more advantageous for the young man and the small man and infinitely better for the future of agriculture.

11.8 pm

Mr. Wm. Ross (Londonderry)

I did not intend to speak in the debate but am prompted to do so, having listened to what has been said. My farm will be affected. I declare an interest. I am a farmer, and one who has made himself popular with the Minister in the past fortnight. I have just applied for a drainage grant and my late application has saved the Minister £1,000. I do not doubt that there will be many other farmers in that position.

It may not be a serious financial matter for me, but it should concern hon. Members who are worried about farmers, and especially smaller farmers. Such a sum on a relatively small drainage scheme is a considerable amount from the net income of a small farmer.

I have recently read articles in the farming press regarding the matter. I am sure that the Minister is aware of the concern that is being expressed.

I intervened during the speech of the hon. Member for Berwick and East Lothian (Mr. Robertson) to draw attention, in a somewhat back-handed way, to the damage that has been done to the farming structure in many parts of the country by heavy machinery. The effect is increasing and must be stopped. That will cost an enormous amount of money.

I, too, welcome the provision of sheep shelters, but I think it draws attention to another difficulty which is very largely peculiar to the farming industry, that of providing, sometimes at very high cost, machinery and facilities on the farm which have a very short period of use. The sums which must be expended on them are, therefore, far greater in relation to their use than would be the case in any other industry in this country, where a machine is usually installed and used almost continuously. A modern combine harvester, for example, can cost well over £30,000 and be used for six or eight weeks a year; the rest of the time it sits rusting in a corner of the farmyard, because if the farmer wants to put it under cover he has to put up a large building, worth several thousand pounds, to hold it. This aspect of farming is not understood outside the industry. It is a very serious aspect and one which the capital grants system has gone some way to meet in the past; it is now less and less successful in doing so. I hope that Governments of all parties will keep this in mind in the future.

Paragraph No. 8 of the schedule says: Provision or improvement of farm flood protection works; protection or improvement of river banks. We all realise that most large watercourses and many small ones are protected by the Department of Agriculture; this is certainly so in Northern Ireland and I have no doubt that the same general situation exists over here. What I cannot understand in that particular paragraph, however, is the fact that in the more favoured areas the percentage grant is only half of what it is in the less favoured areas, because if there is a single case in all this schedule where the situation should be reversed, it is here. The further one goes downstream, the larger and more destructive it becomes. This is something that the Minister should re-examine.

The hon. Member for Gainsborough (Mr. Kimball) mentioned estate agents. I regret that he did not include bankers in his strictures, not because of their tightfistedness but rather because of their unfortunate open-handedness whenever farmers—very often neighbouring farmers —are going to bid for the same piece of property. I believe that the willingness of bankers over the last few years to provide very large sums of money will cost the farming community dear. It has already cost many individual farmers dear and may, indeed, drive them out of farming altogether before they are many years older.

11.14 pm
Mr. Cohn Shepherd (Hereford)

Whilst listening with great interest to the opening remarks of the hon. Member for Edinburgh, East (Mr. Strang), I could not help reflecting on the fact that, as an incoming Government, we were left with £3,000 million of expenditure committed but not funded. It is not surprising that this Administration have had to scratch around hard to find the ways and means of beginning to make ends meet. The fact that the cuts involved in this particular measure amount to a mere £4 million next year indicates a very successful degree of advocacy on the part of my hon. Friend the Minister and his team, to whom the industry has cause to be grateful at present. It is well recognised that pump-priming in agriculture has done well in the past. We should remember that when thinking of the future.

The package that we have before us makes clear that the Government have made the best of difficult circumstances. I am sure that the Government look forward to the time when they can be more helpful. A number of hon. Members have been destructively critical. It is easy to be critical. It is easier to be critical than constructive. I have observed that in reading the press and noting the comments by the industry.

However, I congratulate the Minister on what he has achieved. The basic decision to spread the available funds across the broadest base by placing a ceiling on investment limits is a correct one. I think that it will commend itself to my hon. Friend the Member for Holland with Boston (Mr. Body). It makes it possible for the resource to be spread across the widest possible base of applicants.

It is significant—it has been decried by some—that the Minister's decision has made it possible to increase more grant-aid rates than have been reduced. There is a fundamental restructuring of grant-aid rates which will be advantageous in the long run.

I come from an area which is much dependent upon agriculture and horticulture activity. I welcome the steps that have been taken to protect grant rates in the less favoured areas and the higher grant rates for sheep housing. These measures are especially welcome to one Shepherd in particular. In view of the rough time that horticulture has been experiencing in my area, the retention of the level of grant aid on horticultural equipment will be well received. I noted with especial pleasure the enhancement of the orchard grubbing-up rates under both the Farm Capital Grant (Variation) Scheme and the Horticulture Capital Grant (Variation) Scheme.

The decision to reduce the lowland field drainage rates has inevitably attracted its share of criticism. It is probably the most heavily criticised feature of the package. It is an easy one to go for. It is easy to argue as well that as there are about 7 million acres of food-producing land still in need of drainage it is a false economy to choke off land drainage by reducing the amount of grant aid.

I wonder how the rate of investment in land drainage has progressed over the past few years. If there are 7 million acres still to be dealt with, what progress has been made over the past five or six years? Will that progress be adversely affected by a drop-off in the rate of grant aid? Are there other considerations that have led landowners not to invest in land drainage? Bearing in mind the time that land drainage grant aid has been available, there should be substantially less than 7 million acres yet to be drained.

I reinforce the comment of my hon. Friend the Member for Devon, West (Mr. Mills), who spoke of the need to sustain the rural balance and to recognise the contribution that marginal land can make. I am not in agreement with my hon. Friend the Member for Gainsborough (Mr. Kimball). I shall be delighted at a time of his convenience to take him to certain parts of my constituency which would benefit greatly from recognition of the status of marginal land, land which would be helped along by the sort of assistance that can be given to less favoured areas.

I am perturbed about the way in which the population is leaving the land and about the way in which the land is falling back because of its nature and geography. It can, as it has in the past, contribute to the structure of the countryside.

There is one area of grant aid about which I am confused. It does not appear in the comprehensive list of changes published by the Ministry. It relates to the poultry sector. In my constituency I have many poultry enterprises producing both eggs and broiler fowl. In the poultry sector itself there appears to be an element of confusion about whether it is considered to be agricultural or industrial. The fear is that poultry farmers will be forced to drift away from agriculture and be treated as an industry. I ask the Minister to tell us where the poultry sector fits into the grant structure.

The Government are on a hiding to nothing when they make changes aimed at speeding up and simplifying the procedures for obtaining grant aid. The changes made are to be welcomed. I do not doubt that a farmer embarking on a project of investment will take advice before irrevocably committing himself to heavy expenditure. The process of taking advice will be far quicker than the cumbersome process of submitting plans and awaiting approval against a climate of increasing costs. The opportunities available to the farming industry are widened.

Once again I reinforce the remarks made by my hon. Friend the Member for Devon, West. It is a good thing if the Government will back a good industry, and British agriculture has shown itself capable of responding to this backing. We are approaching 70 per cent. self-sufficiency. We can go a lot further, and we must bear that in mind at all times.

11.21 pm
Mr. Paul Hawkins (Norfolk, South-West)

I entirely agree with the way in which my hon. Friend the Parliamentary Secretary has produced the grants. He has done the right thing with the exception possibly of drainage—though it is not an enormous cut.

I agree with the hon. Member for Iondonderry (Mr. Ross), who referred to grants for river banks on marginal land being at double the rate of those for land which is presumably good productive land. It seems senseless. It does not matter if washlands and old grasslands are flooded during the winter months, but it does matter if the banks alongside rich arable land are damaged. I hope that the Government will bear that in mind in future.

I totally disagree with the remarks made by the hon. Member for Edinburgh, East (Mr. Strang) about my right hon. Friend the Member for Lowestoft (Mr. Prior). I served with my right hon. Friend as his Whip and he was one of the best Ministers of Agriculture, Fisheries and Food this country has ever had. When he came to office he had to introduce, for the first time in the history of this country, a special review of agriculture. He was praised by all concerned with agriculture.

I want to say a word about what was said with such eloquence by my hon. Friend the Member for Holland with Boston (Mr. Body) regarding small farms. In my area I am losing farmer after farmer to big combines of merchant banks which run farms for merchant trusts. We want City money in agriculture— City money has always been involved in agriculture. But the amalgamation of farms and the buying of up to 60 or 70 acres means that some of the best fenland is being farmed by people who do not live in the area. Villages are dying, and we should look into this matter.

11.24 pm
Mr. Anthony Nelson (Chichester)

I wish to confine my brief remarks to the Horticulture Capital Grant (Variation) Scheme. The problem with Sir Derek Rayner's remit is that it is all very well in general but open to criticism in particular. To some extent I am no exception in this case because in my constituency I have a considerable horticulture industry, rather like the hon. Member for Isle of Wight (Mr. Ross).

As I understand it, this scheme varies the grant scheme of 1973 by reducing the amount of grant and reducing the total expenditure in the cases in which expenditure can be approved. From my hon. Friend the Minister's comments it would appear that 15 of the grants will remain the same but 15 will decrease. Thus, the position for horticulture will be rather the worse as a result of these statutory instruments.

The horticulture industry in my constituency is concerned predominantly with the growing of tomatoes, lettuces and flowers, and very serious difficulties have been faced by independent growers and the tenants of the Land Settlement Association in recent years, mainly as a result of rising costs—particularly of oil, wages and interest—and the poor returns during the last year. This has been particularly so with tomatoes, where there were an over-supply and low prices caused by late ripening and increased competition.

The severe situation in the horticulture industry is quite clear from the "Agricultural Review" which was published recently and which states that the area devoted to horticultural crops in the country has reduced from 289,000 hectares in June 1978 to about 277,000 hectares now.

Unlike the hon. Member for Isle of Wight, I do not blame for the problems faced by our horticulture industry on the setting up of these grants in the first place. The industry's problems are a result of increases in costs and current difficulties rather than the existence of this grant scheme. In my view, the grant scheme has been an important source of assistance to those entering the industry or expanding their businesses.

Finally, I should like to put a couple of quick questions. Will my hon. Friend the Minister indicate, either in his winding-up speech or in a letter, the impact of the changes proposed in the Horticulture Capital Grant (Variation) Scheme on particular sectors of horticulture? Which sectors does he feel will suffer most, and which will fare best under the proposed changes?

Secondly, what will be the impact on some of the larger and more economic units which are very important employers of my constituents and which are very much the trend in areas such as mine where the horticulture industry thrives? Although some large growers have benefited from the Chancellor's Budget measures, many horticulture businesses are owned by companies whose position was not substantially changed by the Budget and will be adversely affected by these measures. With those limited reservations I nevertheless welcome the changes proposed and the streamlining of the administration, which, I hope, will improve some of the administrative delays experienced recently.

11.27 pm
Mrs. Elaine Kellett-Bowman (Lancaster)

I could not disagree more strongly with my hon. Friend the Member for Gainsborough (Mr. Kimball). It is most certainly well worth while improving marginal land, as my hon. Friend the Member for Devon, West (Mr. Mills) said. If it reverts it is because he is under-stocked, and that is so because the income from the land is not sufficiently high.

The aspect that I wish to criticise most about this scheme is the reduction in the land drainage grant for the lower land. After all, as one marginal land farmer said to me the other day, "We have to take the blooming water from the hills and then we have our grants cut for doing so." It is these people on the in-between land—neither lowland nor the hill land—who have been greatly helped by the increase in the compensatory allowances. It is the men in between who are suffering now, and it is absolutely essential that they should have a scheme for marginal land and that the money they previously received should not be reduced.

11.29 pm
Mr. Nicholas Winterton (Macclesfield)

I shall be brief. I think that we have heard four very useful contributions to this short debate tonight. I refer particularly to that made by the hon. Member for Londonderry (Mr. Ross). I have had the pleasure of visiting his home and I know his farm very well. I think that it is rather sad that this order may well rob him of £1,000 which he might otherwise have received by way of grant aid. If there is any note that he can pass to me between now and the end of the debate which might rectify that situation, I hope he will do so, and I will try to ensure that he gets his just desserts.

I should also like to refer to the remarks that the hon. Gentleman made, taken up by hon. Friends on the Government side, about the grant aid for protection against flooding and erosion. The hon. Gentleman made an important point. I hope that my hon. Friend, in replying to the debate, will refer to that matter.

The remarks of the hon. Member for Isle of Wight (Mr. Ross) were pertinent. We have to make a decision about whether there is a future for our horticulture. The industry is being severely undermined in practically every quarter. There is scarcely a commodity produced by the industry that is not likely to disappear unless the Government take positive action. The speech of the hon. Gentleman, fully supported by my hon. Friend the Member for Chichester (Mr. Nelson), merits more comment than my hon. Friend on the Government Front Bench accorded it in his opening remarks.

My hon. Friend the Member for Holland with Boston (Mr. Body) made a useful comment. As we have heard in the debate, the name of Sir Derek Rayner is not the most popular in the House at this time. I believe that if the Government pay attention to every recommendation made by that learned gentleman, our villages will empty and our countryside, as a living area, will disappear. I hope that my hon. Friend will tread carefully in seeking to implement any of the recommendations of that particular bureaucrat, whose understanding of the countryside appears to be very limited. I am referring not merely to the recommendations now before the House but also to those discussed yesterday relating to the importance of post offices.

I should also like to refer to the useful comments of my hon. Frend the Member for Devon, West (Mr. Mills). His reference to marginal land was pertinent. We produce only 70 per cent. of what could be produced. Our farming industry, by using and draining marginal land and being given every possible assistance, would be aiding this country, its people and its food requirements, and the industry itself. I hope that the Minister will pay full attention to the comments of my hon. Friend and give credit to the remarks of a farmer who has great experience in what is perhaps a marginal area of the United Kingdom.

11.32 pm
Mr. Wiggin

I think I should start by dispelling a misapprehension among some hon. Members. This is the first leg of a double. These measures refer specifically to changes in certain grant rates and introduce limits on grant-aidable invest- ment. It was essential to mention the Rayner exercise in my opening remarks. We shall be coming again to the House before the Summer Recess with a new scheme—I am not allowed to use the word "consolidated" as it is altogether new—which will take account of the representations that have been made on the Rayner proposals and take account of this debate and some of the criticisms directed at the Government.

The hon. Member for Edinburgh, East (Mr. Strang) asked about economies in relation to staff savings. These changes tonight will not achieve any staff savings. When the new scheme is introduced, it is estimated that up to 400 staff will be saved between 1980–81 and 1983–84. These will comprise 250 administrators and 150 professional ADAS officers. It is not possible to apportion the savings to individual measures or to say how any particular function will he affected since consultations on procedures under the new scheme have still to take place. We are hoping, however, that over the three-year period natural wastage will deal with the problem.

The hon. Gentleman also asked whether the figures for savings include manpower. They do not. As a rough guide, about half of the savings come from the new limits and the other half from adjusting the grant rates.

The hon. Members for Edinburgh, East and Berwick and East Lothian (Mr. Home Robertson) and my hon. Friends the Members for Hereford (Mr. Shepherd), Norfolk, South-West (Mr. Hawkins), Macclesfield (Mr. Winterton) and Lancaster (Mrs. Kellett-Bowman) all spoke about drainage. It is reasonable to say that that aspect of the alteration has attracted a certain amount of comment from the farming community, but it is worth remembering that we have retained the 70 per cent. rate of grant for the hills and have made only modest reductions in the lowland rates, from 60 per cent. to 50 per cent. in the EEC scheme and from 50 per cent. to 37½ per cent. in the national scheme.

The reductions were made in the interests of rationalisation, but we felt that it would be unacceptable to reduce the rates to the basic levels of 32½ per cent. and 22½ per cent. respectively, because it would probably have reduced the amount of work undertaken to a more serious and, in my view, unacceptable extent. The rates remain well above average and we believe that they are still sufficient, given the great advantages of drainage, to continue to encourage that important improvement.

It is also worth bearing in mind that drainage grants have been available to the farming community for many years and it is not unreasonable to assume that, given the length of time that they last, a good deal of worthwhile drainage has already been effected, though opinions on that may differ.

The higher rates of grant for dairy buildings and equipment were introduced in 1976 to promote the better use of grassland, but we consider that after three years the measures have had time to accomplish the desired improvement and in the present economic climate there is, as my hon. Friend the Member for Devon, West (Mr. Mills) and others mentioned, less justification for that advantage.

Dairy buildings have therefore been given the standard rate of grant that applies to buildings for other purposes. The standard rate has been increased from 20 per cent. to 22½ per cent. Dairy equipment has been excluded for the same reason.

I thank the hon. Member for Edinburgh, East for his general welcome. We appreciate that, but I dispute his comments on Government expenditure. At the time of the election, the previous Government's expenditure plans were unacceptable to the then Treasury and would certainly have had to be modified. The hon. Gentleman knows that if there is one overriding complaint in the farming community it is the effect of rising costs and inflation on incomes. It must remain the Government's prime objective to deal with that problem. The changes are the agriculture industry's small contribution.

My hon. Friend the Member for Devon, West welcomed the modesty of the cuts. I shall not over-emphasise that, for fear that my hon. Friend from the Treasury may be listening. We do not believe that the cuts will be damaging. They are skilfully applied to different aspects of the industry in a way that will do the least harm—and in some cases, such as sheep housing, considerable good.

A number of hon. Members have mentioned marginal land. The Government have declared their intention of defining marginal land under the EEC basis. It is a complicated subject and not wholly in order in this debate, but I intend to make a public statement in the not too distant future to expand on the Government's difficulties and hopes in the matter. I shall see that it is drawn to the attention of the hon. Member for Edinburgh, East.

On horticulture, I am deeply sympathetic to the problems of our growers faced with a relative difference in the natural resources available to them. The president of the National Farmers' Union is meeting my right hon. Friend the Minister on the subject within the next few days and my right hon. Friend the Secretary of State for Energy is to attend a conference of growers to talk about the problems.

The Government take the matter seriously. We have made clear that we shall listen to genuine complaints of unfair competition and we are naturally concerned to find out the facts, but it is not easy to find a practical solution to the problem.

I am contrite following the speeches of my right hon. Friend the Member for Crosby (Sir G. Page) and the hon. Member for Keighley (Mr. Cryer). We accept that it is difficult to understand the clause that we have included. It has not been drafted as well as it could be. We had to move quickly at a difficult time of the year and, therefore, although hon. Gentlemen did not accept the excuse, I can honestly say that it was genuine.

However, we believe that the point is still clear and that, no matter how hard it may be to understand, it will stand up in law. That, though, is not the point. We accept the criticism and the point will be dealt with in the new orders when they are laid in the summer. In view of the fact that it is temporary, I hope that hon. Gentlemen will accept that view from my Department.

I shall not get into the arguments deployed by my hon. Friend the Member for Gainsborough (Mr. Kimball), but I believe that if our grant had included the removal of barbed wire and the construction of wooden fences and a little for laying hedges he would have been more welcoming.

The hon. Member for Berwick and East Lothian asked about arterial drainage. The expenditure does not count in Scotland towards the investment limit and in England and Wales it is grant-aided under different legislation.

The hon. Member for Londonderry (Mr. Ross) is right. I am afraid. He may well find himself not able to claim quite so much grant under these orders which apply to Northern Ireland, but I shall not join in his debate about credit tonight.

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).

Question agreed to.

Resolved, That the Farm Capital Grant (Variation) Scheme 1980 (S.I., 1980, No. 103), a copy of which was laid before this House on 31 January, be approved.

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