PAYMENTS TO PERSONS CEASING MILK PRODUCTION

HC Deb 05 February 1985 vol 72 cc864-85 11.48 pm

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. John MacGregor)

I beg to move amendment No. 1, in page 1, line 11, at end insert— '(1A) for the purpose of compensating persons who are or have been registered milk producers for reducing milk production, the Minister may make payments to such persons who have undertaken—

1. (a) to reduce their production of milk for sale or for the manufacture of any milk product for sale; and
2. (b) to surrender part of their milk quotas to the reserve.'.

Mr. Deputy Speaker (Sir Paul Dean)

With this it will be convenient to discuss Government amendments Nos. 2 and 10.

Mr. MacGregor

The amendments honour a commitment that I gave in Committee in response to amendments tabled by the hon. Member for East Lothian (Mr. Home Robertson) and for Ceredigion and Pembroke, North (Mr. Howells). Their amendments would have made it possible for compensation to be paid to producers who reduce production as well as those who give it up altogether. I accepted that it would be sensible to amend the Bill in this way and undertook to propose amendments on Report.

The purpose of tonight's amendments is to provide authority for payments to be made to producers who cut production and surrender a portion of their quota as well as producers who surrender all their quota.

It may be helpful for the House to know the background to the amendments. They do not apply to the present outgoers' scheme, which is non-statutory. I stress that current Community legislation does not permit payments to be made to producers in return for partial surrender of quota. Under article 4 of Council regulation 857/84, which permits the national outgoers' scheme, producers must discontinue production definitively—that is, entirely.

We have no intention of altering the existing non-statutory scheme. We do not intend to introduce a new scheme to allow partial surrender even if Community legislation allowed it.

We are introducing legislation in the Bill to give the cover of primary legislation for any future schemes of whatever type for the convenience, I hope, of the House now and in the future.

We do not have any future schemes in mind, but it makes sense to give appropriate flexibility to any future schemes. Partial surrender of quota would introduce further flexibility into the quota system. It is, therefore, sensible to provide the necessary enabling legislation. I commend the amendments to the House.

Mr. Brynmor John (Pontypridd)

We are grateful to the Minister for meeting the serious points made in Committee and for recognising a serious omission from the Bill. The partial surrender of quotas could make available milk which could help the dairy industry in its critical state.

The Minister is right that the provision will have no present benefit, but I hope that he will not dismiss out of hand the need for a scheme and will seek approval in the EEC for some partial surrender policy.

The amendment, welcome though it is, shows how ill-considered and rushed the original scheme from Brussels was. Nevertheless, a needless restriction has been removed and for that we thank the Minister.

Mr. Geraint Howells (Ceredigion and Pembroke, North)

The Minister promised in Committee to table an amendment, and I am grateful to him for keeping his word. I hope that what he has done will benefit dairy producers in the years to come.

It is a shame that part of the quotas could not have been given up before. More than 240 small farmers in Wales have gone out of dairy production. As I said in Committee, the Government have had their priorities wrong. They should have gone for the big dairy farmers first, leaving the small dairy producers as family units. Because of the policy that they have pursued, we have lost too many small dairy farmers.

Mr. James Nicholson (Newry and Armagh)

I welcome the concession that the Government are making because it will help large dairy farmers to contract and have an easier time running their farms. They will be able to sell their extra quota; or they may wish to lease it, although the Minister wants them to sell it.

I am concerned about the lack of uptake in Northern Ireland of the buyers scheme. The amendment will be of no help in that respect because the scheme has been a total disaster. Indeed, I described the Bill as a disaster in the House on 10 January, and as the amendment will be of no help to Northern Ireland, I can only continue to regard the measure as a disaster.

An effort was made to buy out 66 million litres of milk in Northern Ireland under the buyers scheme. I understand that only a little in excess of 10 million litres has been bought, or one sixth of what had been hoped for. Apparently the buyers scheme is to be renewed and producers will be informed of its continued operation. For how long will it be open? While I do not wish to seem a pessimist, I fear that the renewed scheme will be no more successful than the earlier one. However, I wish the Minister luck with it.

How much milk will be awarded to expanders in Northern Ireland? The Department said that the expanders would receive 46 per cent. of what had been awarded, as against 57 per cent. in Scotland, and the percentages for England and Wales have yet to be decided. Again, therefore, Northern Ireland has lost out. Not only did we lose the 65,000 tonnes—I will not go into detail on that tonight; the Minister is aware of the point I am making—but we are also losing out in percentage terms.

Only 25.7 million litres are available to meet the expanders in Northern Ireland, and that is not enough milk to go round. The scheme has been a total flop and something must be done to bolster the scheme in Northern Ireland. Perhaps the Minister will answer some of the suggestions I made when we last debated the subject.

Sir Peter Mills (Torridge and Devon, West)

I support the amendment as it is right that the provisions within it should be on the stocks and ready for use in future. It is obvious that we need more milk producers to surrender part or the whole of their production so that their quota can be reallocated towards other dairy farmers to make them viable.

The problems that the quotas have produced are so serious that the Community should consider the amendment carefully and that which the Government are seeking generally to do so that a part or the whole of the surrendered production can be reallocated to other dairy farmers. This problem overrides all others in farming and I should like to see further financial funds found from the Community, or possibly from the Ministry of Agriculture, Fisheries and Food, so that it can be overcome. I believe that farmers are prepared to give up some of the grants and other benefits that they are obtaining from the Ministry and the Community so that the problem can be tackled.

We have taken a small step forward, and I hope that the Minister will press strongly at Brussels to enable the surrender of part of the production of milk to become a reality. I hope also that the Community will find more money so that farmers can get out of the milk production and make other units viable. Something will have to be done, and I trust that my hon. Friend the Minister of State will take what I have said extremely seriously.

Mr. David Penhaligon (Truro)

I welcome this sensible and rational amendment, and I am pleased that it is to be incorporated in the Bill. The Government must have been ill prepared when they accepted the original proposal that lies behind the Bill in the absence of the amendment. It is inconceivable that the Commission would not have agreed with the contents of the amendment at the time when the regulations were proposed. It is interested only in reducing milk production, and it seems that it is not really interested how that is achieved.

When the deal of £650 over five years was offered to farmers, I did not think much of it. I have been surprised, to some extent, by the interest that dairy farmers within my constituency have shown in it. Enormous interest was shown initially by many dairy farmers throughout the country, but the number putting a signature on the dotted line at the bottom of the page has not been overwhelming. The hon. Member for Newry and Armagh (Mr. Nicholson) has told us of the serious position in the area which he represents.

I shall be interested to know whether the Minister believes that the outgoers scheme will adequately buy, as it were, the quota system. That is crucial and I should like to know whether the buy-out scheme is on target. It will be interesting to know the size of the farm that is now covered by the scheme as it is gradually extended. Some of those running small farms rejected it when they had had time to analyse it. We should have that information before we make judgements on the following amendments.

Mr. Anthony Nelson (Chichester)

I intervene briefly to support the amendment. It is welcome, albeit to the extent that it is jam tomorrow.

I have received some allegations from dairy farmers in my constituency about which I have written to my hon. Friend the Minister of State. It seems that under the outgoers scheme the funds available will account for only about a third of the applications that are received. Unless further funding is made available, possibly at the expense of the capital grant scheme elsewhere, for the outgoers scheme, there will not be sufficient money to pay the applicants. If that is the case, a great many dissatisfied customers will be queueing at the door of the outgoers scheme. If that happens, there will presumably be even greater pressure for the type of scheme proposed by my hon. Friend the Minister from those who apply but are rejected because funds are not available from the outgoers scheme. Even though that scheme will not be implemented immediately, I suspect that there will be an increased demand for this measure — I presume that my hon. Friend will press for it in the Community — because there will not be sufficient funds under the outgoers scheme, which, as my hon. Friend said, is a separate scheme.

12 midnight I hope that my hon. Friend the Minister will fight his corner and go in battling to press for funding for such a scheme and for it to be sanctioned by the Community. I have written to my hon. Friend about one priority that should come first—interchangeability. Although that is separate to the proposed amendment, it is important. To a large extent, it should be afforded a relatively nil cost to the Community in that there is an offset between the increased quotas for production for direct sales and the decreased quotas for production for wholesales. As I understand it, this cannot be permitted under Community rules, although the Government are sympathetic to the idea. They propose that this measure should be allowed by the Community.

I hope that interchangeability will be given immediate priority, because I believe that it will immediately end injustice to those who had the foresight years ago to shift out of wholesales and into direct sales. Those people are prejudicially affected compared with farmers on the next form producing similar amounts with the same type of dairy herd. This problem needs to be tackled first, and I hope that, in pressing the Community for funds for the scheme, my hon. Friend the Minister will not forget the need to press for interchangeability.

Mr. John David Taylor (Strangford)

The Minister is well aware that milk production in Northern Ireland makes a greater contribution to that region than milk production does in many other parts of the United Kingdom. The Minister, therefore, understands that the controversy during the past 12 months about milk quotas has had a greater political impact in Northern Ireland than it perhaps has had elsewhere in the United Kingdom. As the Minister is aware, Northern Ireland is the one part of the United Kingdom that is liable to milk quotas and superlevies.

We shall need greater assurances from the Government if my right hon. and hon. Friends are to find it possible to support the Government on this measure. Can the Minister assure us that quotas within the United Kingdom will be transferable on a regional basis? Will the hon. Gentleman assure us that next year Northern Ireland will receive the 65,000 tonnes which seemed to disappear last year?

Mr. MacGregor

I think that it is right to remind the House that this is a comparatively narrow amendment and does not relate at all to the existing scheme. Nearly all the points have been about the existing scheme. For the sake of good order, it would be more appropriate for me to reply on Third Reading to a number of the points that were made about the existing scheme. I believe that that would be the correct way in which to tackle this matter, because I have no doubt that other general points will be made. This approach will enable me to deal with them all at once.

If I had not listened to the debate in Committee, the hon. Member for Truro (Mr. Penhaligon) would have accused me of having had a closed mind and not being open to reasoned argument. As I did listen to the debate, he has accused me of not having thought of the point before and of not having brought forward the Bill in a form so complete that there would be no point in discussing the Bill in Committee. I cannot win with the hon. Gentleman. I hope that on this occasion he will be graceful and allow that the way I did it was right, and support the amendment.

Amendment agreed to.

Amendment made: No. 2, in page 1, line 13, leave out 'such payments may be made' and insert 'payments under subsections (1) and (1A) above may be made; and such a scheme may make provision as to payments under one or both of those subsections'.—[Mr. MacGregor.]

Mr. John Home Robertson (East Lothian)

I beg to move amendment No. 3, in page 1, line 16, leave out 'may' and insert 'shall'.

Mr. Deputy Speaker

With this it will be convenient to consider amendment No. 4, in page 1, line 17, leave out 'or instalments'.

Mr. Home Robertson

This is about the scheme which is operating at present. I do not want to encourage people to have a wide-ranging debate, but it would be relevant on this group of amendments.

The first purpose of these amendments is to make it obligatory for cash payments to be made under the scheme. The second purpose is to provide for the payments to be made as a lump sum instead of by instalments. It is envisaged by the scheme and the legislation that cash payments by the Government will be mandatory and therefore I shall not dwell on that point. Our main objective is to require the Government to pay the outgoers' payments in a lump sum instead of in dribs and drabs as is happening at present.

Throughout our proceedings, the Minister and his right hon. Friend the Minister of Agriculture, Fisheries and Food have made much of the horrors of negotiating with the Chancellor of the Exchequer. We sympathise. It must be distasteful to have to be within spitting distance of him, but it is one of the hazards of being a member of the Tory party.

The Minister of Agriculture, Fisheries and Food went along to the Chancellor of the Exchequer and he made great play of the fact that he obtained £50 million for the scheme. There is considerable doubt about whether that £50 million is worth £50 million, for reasons that I shall develop later. There is a difference between £50 million cash down and £10 million a year for five years. To be precise, in real terms there is a difference of approximately £10 million if we allow for interest at 10 per cent. on those deferred payments. The difference might be substantially more if we allow for higher interest rates such as those we are experiencing at the moment, and continuing inflation.

The value to the outgoers of the final £10 million instalment could be wiped out as a result of inflation and interest rates. The Opposition have already said that the funding for the scheme is pathetic and far from adequate. There is widespread support for that view from all parts of the House and throughout farming. The national farmers unions in England, Scotland, Wales and practically everywhere else agree that the scheme does not go as far as it should if we are to release the amount of quota required for a number of essential purposes.

The Minister said that he had £50 million for the outgoers' scheme, but, as I have sought to argue, the real value to farmers will be closer to £40 million.

A small dairy farmer with 40 cows who takes part in the outgoers' scheme and who received the full payment all at once would have a lump sum of £26,000. It is a substantial sum of money and it would probably be sufficient to enable him to invest in building a different type of livestock enterprise or to buy machinery to change his system from grass to arable cropping. He would also be eligible for capital relief for tax purposes on the money, if he used it in that way.

However, as the Government are at present operating the scheme, that will not be possible. The hypothetical farmer with 40 cows will be given £5,200 a year for five years. Because of the nature of those payments, they are likely to be taxed as income. With £5,200, at current prices, one could pay for about half a tractor. If, in order to restructure his farm, the farmer borrowed enough money to realise, say, £26,000 — which is what the gross figure would be if he received the full value of the compensation—the effect of interest and inflation, with the five yearly payments, would reduce the value to the farmer of the total compensation by at least £5,200 in real terms. By the time the fifth payment was made, it would already have been swallowed up in bank interest alone.

In earlier debates we have emphasised the need for adequate funds to create new enterprises in place of the dairy units being shut down under the quota scheme. We have also said that we doubt the wisdom of winding up only the smaller dairy farms, as is happening under the scheme. The phased scheme is of very limited value as an incentive to restructure farms. Indeed, a farmer will only be able to invest in alternative enterprises if he borrows money and adds the risks attached to substantial borrowings to the trauma caused by breaking with his traditional livelihood in the dairy industry.

A single lump sum payment could be much more effective. Such an approach to the scheme would make it possible for people to restructure their farms, remain in some kind of production and continue to provide employment. Its virtues are self-evident. I invite the Minister of State to accept the amendment. I invite him to ask the Chancellor to honour in real terms his undertaking to pay £50 million for the outgoers' scheme. It would be in the Chancellor's interests to do so. He is reaping the benefit of the reduction in the cost of intervention and of the rest of the CAP so far as it involves the dairy industry.

Like myself, the Minister of Agriculture, Fisheries and Food, is a farmer. I am sure that when the right hon. Gentleman sells a tonne of grain after the harvest, he does not offer the merchant extended credit terms. He expects money on the nail. Perhaps the Chancellor of the Exchequer should not be allowed to get away with extended credit terms. There is ample justification for making capital payments to enable people to restructure their farms and for providing full capital compensation at the start rather than paying out the money in dribs and drabs.

Sir Peter Mills

I cannot agree with the hon. Member for East Lothian (Mr. Home Robertson). To give a capital lump sum in compensation would be most unwise. It would create enormous practical problems. I do not wish to be rude to the Opposition, but the suggestion simply shows their lack of experience of what happens in a market when a large sum of money suddenly descends on it. There would be an enormous distortion in the prices of store sheep and store cattle, as every farmer taking advantage of the scheme suddenly tried to buy store cattle, beef cattle or sheep.

There would also be a serious effect on other agricultural production. My experience as a practical farmer is that other sections of production are worried about a sudden and large influx of money. Opposition Members have obviously not thought of that. If 10 or 15 farmers near a market town had a large lump sum with which to buy store cattle or sheep, prices would rise dramatically. That would not benefit the buyer or, in the longer term, the seller. My hon. Friend the Minister is right to phase the payments so that the money is fed in gradually.

I am not a tax expert, but I believe that, over a five-year period, there will probably not be any tax deductions on the compensation. I am happy to be corrected on that. The money should be phased in, or there will be terrible distortion for everyone.

12.15 am

Mr. Penhaligon

I always give the most careful consideration to arguments advanced by the hon. Member for Torridge and Devon, West (Sir P. Mills). I wonder, however, whether farmers in his area all agree with what he said about a sudden injection of money. I have not addressed a meeting of farmers who, given the choice between money today and money tomorrow, think that they will be better off if they get the money tomorrow. Substantial sums of money will be released anyway because many cattle will be sold. In either case, I suspect that a good proportion of the money will go to the bank.

The best solution is to enable farmers to choose. Many farmers in my area are interested in the scheme, not because they want to restructure their holdings but because they are under some pressure from bank managers as the dairy industry is suffering cash flow problems, not least because of interest rates.

My experience of farmers is that they are sensible people who make rational decisions. The flexibility for which I am arguing would therefore be advantageous. I am sure that the Minister would not have much difficulty in persuading another place that such provision should be made.

The best solution is a choice, the second best is a lump sum and the third best is instalments. The lump sum would be better, not least because, despite what the hon. Member for Torridge and Devon West (Sir P. Mills) says, a considerable amount of the money will not go straight back into the market to buy sheep or whatever, but to the local bank manager to keep him quiet. The hon. Gentleman represents an agricultural seat and will know that a great deal of pressure is being placed on many farmers about their present cash flow position.

Sir Peter Mills

I thank the hon. Gentleman for his kind remarks. However, if that is the attitude of local bank managers, the matter is serious, because farmers who are leaving milk production will not be able to start production in another area. I hope that bank managers, or at least their agricultural advisers at the main banks who read Hansard, will assist farmers to change their production and not to follow the road suggested by the hon. Gentleman.

Mr. Penhaligon

The implication of the hon. Gentleman's remarks surprises me. He is suggesting that he is not aware of the current pressure from banks on farmers. I know of it because my farmers tell me about it when I meet them. It is an extremely serious matter. My hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells) is looking for an opportunity to draw some cases to the attention of the House.

My point is that such schemes work best with the maximum flexibility possible. Flexibility on this point would be advantageous to the dairy community, even if there was a fiscal adjustment in the capital sum to prevent taking it as a lump sum from being an obvious financial gain. Flexibility would assist some farmers who find themselves in difficulties when making sensible and rational decisions relative to their positions.

Mr. MacGregor

The hon. Member for East Lothian (Mr. Home Robertson) tabled the amendments on two false bases, as I understood his opening remarks. First, he said that they would apply to the existing and future schemes. I must disabuse him of that notion. As the amendments are drafted, they could apply only to future schemes, as the existing scheme is non-statutory. Secondly, if I heard him correctly — I am not sure that this is what he meant — he said that he sought to give the possibility of a lump sum, presumably for future schemes, although obviously he was talking about the existing one. His amendments would provide exactly the opposite. They would remove the possibility of flexibility, which already exists in the clause. He seeks to remove "may" and to insert "shall". Therefore, he would do the opposite of what the hon. Member for Truro (Mr. Penhaligon) advocates, that is, to keep flexibility for future schemes, if there ever are any. The Bill as drafted does precisely that. It gives the possibility of either a lump sum payment scheme or instalments.

Mr. Paddy Ashdown (Yeovil)

My hon. Friend the Member for Truro (Mr. Penhaligon) said that flexibility should be in the hands not of the Minister but of the farmer. If the Minister admires and would like to encourage flexibility in the scheme, will he assure the House that that flexibility will be in the hands of the farmer, who can choose between the two when the scheme is in operation?

Mr. MacGregor

The existing non-statutory scheme is already in operation, and we have debated it on many occasions. The Bill gives further statutory authorisation for future payments under the existing scheme. At present we are using the appropriation procedure, but the sums are so large that it is not appropriate for all the payments under the existing scheme. If there is a scheme in future, the Bill as drafted will not pre-empt choice in the way that the hon. Gentleman's amendment would do.

The amendment is unwise for three reasons. First, it would tie the hands of any future Government to an unreasonable extent, because such a Government would have to be able—I repeat "would have to be able"—to find the money for the scheme in one financial year. In practice, that would mean either that the total amount available might be less than it would otherwise be—the hon. Gentleman said that it would have to be paid in one financial year rather than over a period—or it might act as a great disincentive to a future Government to introduce a similar scheme. If we accepted the amendment, we should be binding the hands of a future Government to one method that may be inappropriate in the financial year in question. The clause as drafted gives a future Government the option to introduce a lump sum scheme, or a scheme spread over a period, as with the present scheme. It is right to retain that flexibility. After all, that is what the hon. Gentleman sought to achieve with his amendment that I accepted in Committee.

Secondly, the amendment would mean that when a producer was assessed for tax the full payment in the first year would be treated either as income for the whole of the first year or, if we follow the present tax arrangements, as capital gains tax. That would lock many producers into a much less favourable choice than they have under the existing scheme, where, if they choose the income tax option, they can spread their income assessments, and hence their tax bills, over five years. The hon. Gentleman's proposal could lead to an increased income tax liability compared with the present arrangement. That would prevent the use of the flexible and favourable tax arrangements in the present scheme.

The hon. Member for East Lothian commented on the income position of producers who take up the scheme. He ignored the considerable cash sum that can come from the sale of the herd and the consequent tax advantages. The Finance Act 1984 extends the possibility of choosing that option. If farmers choose that option, the proceeds of the sale are tax-free.

Thirdly, the amendment is unwise because of the effect on the markets to which my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) referred. It is significant to note that the schemes which are often quoted in debates about outgoers — the French and German schemes—also phase out the payments. I am sure that those Governments had in mind the point that the Government and my hon. Friend the Member for Torridge and Devon, West make.

For all those reasons, I cannot commend the amendments to the House.

Mr. Home Robertson

I take the Minister's point about the drafting of the amendment. We made the rash assumption that the Government intended to introduce a scheme under the statutory provision which they are bringing forward. In tabling the amendment, we intended to provide that lump sums only should be made available. If the purpose of the scheme is to provide sufficient funds to farmers to enable them to restructure their businesses, they would need lump sums to cover the capital costs of new stock and machinery — [Interruption.] The hon. Member for Torridge and Devon, West (Sir P. Mills) can shake his head and say that farmers can sell their cows, but he knows as well as I do that, in many cases, the dairy units about which we are talking are mortgaged up to the hilt. Therefore, the sale of the cows will go to pay off existing debts and will leave little, if anything, to pay for new stock or machinery.

The Minister made great play of the fact that he did not wish to tie the hands of an incoming Government. I can say only that the present Chancellor of the Exchequer will not be Chancellor for ever; indeed, the way he is going, he might not be the Chancellor of the Exchequer for much longer. There is nothing to demonstrate that we will be hampered for ever with the kind of prejudices with which we are stuck at present.

12.30 am

I was interested in what the hon. Member for Torridge and Devon, West said. He gave an interesting insight into the conduct of agricultural marketing in the west country. He seemed to be admitting that profiteering was likely to take place on a massive scale. I do not know about farmers in Devon. I can tell him from my own experience of observing people in the farming industry buy and sell stock that in my part of the world it is difficult to profiteer when dealing with hard-nosed farmers. I did not find his argument very convincing.

The Minister and the hon. Member for Torridge and Devon, West have let the cat out of the bag. These funds are not intended to provide sufficient capital sums to allow units to redevelop and recreate new employment to replace the jobs lost in the rural areas. This is a glorified agricultural supplementary benefit scheme. A relatively mean pension is being offered in an attempt to pay these people. Frankly, I am not impressed by the arguments that have been advanced from the Government Benches.

Amendment negatived.

Mr. John

I beg to move amendment No. 6, in page 1, line 17, at end insert— `(4) A scheme under this section shall make provision for the surrender of a tenant farmer's milk quota without the necessity for the consent of his landlord to be obtained.'. I suspect that the Minister will take the point that he took on the previous amendment, namely, that it refers to a future scheme. My response is that it is the only mechanism by which we can secure discussion of the arguments and problems which will have arisen under the present scheme and which will arise under any future scheme causing a considerable amount of hardship and vexation. This hardship will occur because of the crucial decision to attach the quotas to land rather than to a person.

This central decision has led to the necessity for a landlord to express his consent and, according to the farming press, to a number of disagreeable occurrences. At such a time the tenant is faced with a maximum period of pressure. After all, he will have decided to get out of an industry to which he may have devoted his life. In such a situation, the landlord sometimes — and this has happened regrettably in a minority of cases — seeks to attach conditions, one of which is that there should be an increase in rent. In the farming press one case was reported in which a condition was made not only that the rent shall be increased but that the period for which the rent obtained should be shorter then the legal minimum of three years. That takes advantage of a situation created, to put it neutrally, through no fault of the tenant farmer, and attempts to turn matters to the advantage of the landlord. In a third case described in the farming press, the landlord had invested very little in the original dairy undertaking. These cases evidence what has happened.

Need this happen? In Scotland there is no such condition for a landlord to give his consent. I cannot understand why the tenant in Scotland is so much more trustworthy or why the tenant in England and Wales is so much less trustworthy. The Scots system — although I would not want my hon. Friend the Member for East Lothian (Mr. Home Robertson) to take this as a precedent — is far superior to the system currently obtaining in England and Wales.

There is an argument for saying that the types of tenure should be treated separately, attaching conditions to the land in the case of an owner-occupier or to the person in the case of a tenant.

The amendment makes it obligatory on the Secretary of State to make provision for such surrender but does not specify the manner in which to leave the maximum flexibility. One way in which this could be done is for the tenant to be asked to notify the landlord of any application to take advantage of the outgoers scheme and to give the landlord the opportunity to make representations to the Ministry when it was considering whether the tenant's tenant should be allowed to take advantage of the outgoers scheme. That makes the opportunity for pressure to be applied directly by landlord on tenant far less. It is a more indirect process. Therefore, the leverage is less hard on the tenant.

We have heard of hard cases under the present scheme. We do not want them to be repeated. We hope that the Minister will take account of the representations and try to devise a scheme, by accepting the amendment, in which the landlord is not compelled to give his consent, but some other safeguard for his just and natural interest is devised.

Mr. MacGregor

I recognise what the hon. Member for Pontypridd (Mr. John) is trying to do. We have had long debates in the House about the position of tenants in relation to the outgoers scheme. I recognise that some tenants have not been able to obtain their landlord's consent to their becoming outgoers.

As the House knows, when drawing up the existing non-statutory scheme — the non-statutory element is important—we tried hard to get both sides, landlord and tenant, to agree on procedures giving tenants more freedom of action. However, that agreement was not forthcoming in England and Wales. As a result, we felt that we had no choice but to require the landlord's consent in all cases.

It might be helpful if I explained the significance of my remark about the scheme being non-statutory. Since the agreement was not forthcoming, there would have been legal risks if we had not insisted on landlord's consent, as well as some problems of equity. Obviously, the problems of equity relate to cases where the landlord has made a considerable investment. However, there were also legal problems which we had to face. If a tenant joined the outgoers scheme and surrendered his quota without the landlord's consent, it might be possible, depending on the terms of his lease, for his landlord to sue him for breach of contract. Moreover, the landlord might be able to claim that the Minister had incited the tenant to break his contract because the scheme is based on a contract between the Minister and the producer, and is therefore based on contract law and not on statute.

One of the reasons why we introduced a non-statutory scheme, and one of the advantages of doing it in this way, was that it enabled us to get the scheme off the ground more quickly, and we are a long way down the road of completing the outgoers scheme this year. This will enable us to reallocate the quota much earlier. I am sure the House will agree that that is an advantage. Considerable legal and other problems were involved, and in the end we could not do as the hon. Member for Pontypridd urged us to do.

In many respects it was unfortunate that we could not get the agreement, but in practice tenants account for a significant proportion of outgoers. I pay tribute to the president of the Country Landowners Association, who has genuinely urged his members to listen carefully to every tenant who wishes to take advantage of the outgoers scheme and be as forthcoming as possible. We are seeing the evidence of that in practice.

The hon. Member for East Lothian (Mr. Home Robertson) referred to Scotland, where the legal system is different.

Mr. Home Robertson

Thank God for that.

Mr. MacGregor

Not always. Also, the procedures that allow some tenants to become outgoers without necessarily obtaining their landlord's consent are fairly limited there. They are limited to situations in which there is no reference to dairying in the lease, and also to situations in which the landlord provides no facilities. There are one or two other details, but those are the two crucial ones. Although the scheme has operated in a slightly different way in Scotland, it is not carte blanche. It is fairly limited. The results are interesting to compare. Some 36 per cent. of payments made in Scotland so far have been to tenants, and about 30 per cent. of those who received payment as outgoers by 25 January in England and Wales were tenants. Therefore, there is not a great deal of difference. That demonstrates both that the urgings made by the president of the CLA have had an effect and that many landlords are trying to meet their tenants' wishes. Although we tried hard to get an agreement along the Scottish lines, in practice many tenants can take advantage of the outgoers scheme.

In England and Wales, of the 40 per cent. who initially expressed an interest in the outgoers scheme, 30 per cent. are getting payments. We know from the way that the outgoers scheme has operated that it is not just the fact that they cannot get the landlord's consent that has prevented some of the others from taking advantage of the scheme. It is also that, in many cases, as with owner-occupiers, when they are faced with a firm offer, they decide not to take it up. It is difficult to be exact, but a considerable number of tenants are taking advantage of the scheme.

Mr. Geraint Howells

I am interested in what the Minister has said, but I cannot understand why so many landlords in this country are willing for the tenants to go for the outgoers scheme. I am sure the Minister will agree that the property is worth much less once the quota has been taken away.

Mr. MacGregor

Obviously, it will vary. In each case people will be making voluntary choices, and they will look at their situation and make their decisions. The evidence is that so far 30 per cent. of the payments have gone to tenants.

Mr. Dafydd Wigley (Caernarfon)

I have been listening carefully to the figures which the Minister has quoted. They are interesting, but they do not substantiate his argument. The fact that 36 per cent. of farm tenants in Scotland and 30 per cent. in England and Wales have gone into the scheme must be related to the proportion of Scottish holdings which have tenants, in relation to the number in England and Wales. Even more important, we do not know what proportion of the tenants in England and Wales may have wanted to go into the scheme but have not made an approach because they knew the attitude of the landlord. That is the critical thing, and, given what the hon. Member for Ceredigion and Pembroke, North (Mr. Howells) said a moment ago, the experience is that large numbers would like to go into the scheme but cannot do so for the reasons that I have set out.

Mr. MacGregor

We can go on endlessly debating this matter, but we do not have the precise market research that will give us the answer. I can tell the hon. Gentleman that 39 per cent. of the applicants for the outgoers scheme in Scotland were tenants, and 40 per cent. in England and Wales. The figures are not far different. Despite the fact that we have not been able to get an agreement, it is still the case that a considerable number of tenants have been able to take advantage of the outgoers scheme. Beyond that we are speculating, because we do not have the information to come to conclusions.

Mr. Penhaligon

The Minister has twice said that he tried to get agreement on the Scottish lines and failed. Who has the veto on this agreement?

Mr. MacGregor

If we were to get this through a non-statutory scheme — I have already referred to the legal difficulties — it was necessary to get an agreement to which both sides, the landlords and the tenants, were able to agree. We ran into difficulties and it was not possible to reach agreement because of the many legal complications that might arise. Nevertheless, it is worth re-emphasising that the president of the Country Landowners Association urged landlords to be as sympathetic as possible to tenants requests. That must have had some impact.

Having dealt with the position to date, I should now deal with the amendment. In moving the amendment, the hon. Member for Pontypridd spoke about the problem that the quotas are attached to the land. This connects with the point made by my hon. Friend the Member for Chichester (Mr. Nelson). At the moment the quotas are, in effect, attached to the land, and that is in the Community regulations. That was done for a variety of reasons, in particular because the Commission felt that that was the best way to make a scheme which was not open to anomilies and abuses in the various member states, and about which there would be more certainty of application.

12.45 am

In due course we shall be seeking to put more flexibility on this aspect into the quota system, but the first priority was to get the quota system applied, and to get on with the outgoers scheme and the allocation of quotas. The second priority was to get changes in mixed business. The third priority was to start discussing ideas of greater flexibility. I refer both hon. Gentlemen and my hon. Friend to the paper produced by my Department on the mobility of quotas, where all of these matters are discussed. It is will worth studying. In case there is an opportunity to discuss these matters in the Council of Ministers, we asked the industry to respond by the end of last month, and this it has done. We are assessing all the reactions that we have received to the ideas we put forward for introducing greater flexibility and greater transferability into the quota system. Some producers detach the quotas from the land.

Once we have made up our minds about what we wish to obtain, agreement has to be reached in Brussels. We have to ensure that the Commission is interested in our proposals, and the Council of Ministers then has to agree them. A number of member states are still wedded to the idea of the quotas being attached to land. Therefore, I do not underestimate the difficulty of obtaining greater flexibility. However, it is clear from our paper that we should like there to be greater flexibility.

I referred earlier to the legal difficulties surrounding the existing scheme. I should make it clear to the House that the amendment would not remove the risk that, in certain circumstances, a landlord whose tenant surrendered the quota without consent might be able to take action against the tenant for breach of contract. The obligation of a tenant to a landlord is contractual. If a tenant surrendered the quota without the landlord's consent, he might be in breach of contract, though not necessarily. It depends upon the terms of the contract. The secondary legislation which could be involved if the Bill were used on a later occasion could not change contractual rights unless the enabling primary legislation says that it can. That is the problem about the amendment. I do not want to make too much of that point because I recognise the difficulties surrounding the drafting of amendments. However, I have to make the point that the risk could still be there.

The more important point in relation to the amendment is that it is worded in such a way that it would apply only to future statutory schemes, not to the existing scheme. If at anytime we were to introduce a new scheme — I repeat that we have no such plans — I hope that we should be able to make more satisfactory arrangements for tenants. The statutory nature of the scheme would make that easier, but the amendment is not necessary to enable us to do this. Even without the amendment, we should be able, if we were able to overcome the problems, to operate a statutory scheme which did not insist upon the landlord's consent. Therefore, I believe that the amendment is unnecessary and unsatisfactory for the reasons that I have given and I am afraid I cannot commend it to the House.

Mr. John

The Minister has unduly relied upon technicalities which I had already conceded. These amendments are vehicles for debating important subjects. The Minister has not dealt, except in the most general way, with the position as between landlord and tenant. The point I raised was that, having attached the quota to the land, the landlord's consent was necessary, although he has played no real part in building up the dairy industry upon that land. Therefore, I urged the Minister to ensure that a system would be adopted under which at best the landlord's legitimate concerns can be expressed only indirectly.

The fact that the legal advice, which the Minister has received has been fairly weightily placed in his brief will not, I hope, prevent him from looking at the very real problems that exist in a minority of cases under the present scheme. I hope he will make sure that they do not happen again, by ensuring that the part the landord has to play is more indirect than it is at the moment. The present system is far too direct.

In view of what the Minister has said about the inapposite nature of the amendment I shall not press it, but I hope that he will not forget its underlying sentiment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Home Robertson

I beg to move amendment No. 7, in page 1, line 17, at end insert: `(4) A scheme under this section shall fix the amount of surrendered quota to be accepted at such level as will enable milk producers making development claims to produce in full such secondary wholesale quotas as have been allocated to them'. The purpose of the amendment is to extend the objective of the outgoers scheme in order to take account of the acknowledged needs of producers who have good reason to expand their production above their primary quota. That may not be only in the interests of the individual producers, but many feel that such expansion is in many instances in the interests of the dairy industry.

At present the Minister has said that his objective is relatively limited. He is seeking to buy in sufficient quota through the outgoers scheme in order to redistribute that quota to those smaller producers who want to try to stay in business in order to allow them to come back up to their 1983 production level. The Minister has said that he needs 289 million litres for that objective in England and Wales.

In reply to his hon. Friend the Member for Devon, North (Mr. Speller), on 28 January the Minister said that he could possibly obtain up to 400 million litres if he accepted all the applications under the outgoers scheme. We appreciate that by no means all of those options could be realised. It is likely that that some of those who expressed an interest might not want to go through with it. Nevertheless, that sort of figure could give the Minister sufficient quota to top up all the small producers and to release an additional 100 million litres of quota for producers with special needs.

That is on the basis of current offers under the present scheme which some hon. Members have described as cheap and nasty in the past, and I stick to that description. We are inviting the Minister to recognise the need to make more quota available for redistribution and to increase the scale and scope of the outgoers scheme accordingly, especially in line with the possibility which has now been opened up under the amendments moved by the Minister earlier for partial cessation of production under some future scheme.

It is worth looking briefly at the background to the situation. The Ministry has set up an empire of tribunals and committees to assess the special needs cases, including those who want to extend production. Those tribunals have reached their conclusion in Scotland and will soon publish their recommendation for England, Wales and Northern Ireland.

We know that the recommendations made by the tribunals in Scotland will have to be cut back by 42.5 per cent. Because there is not enough secondary quota available for redistribution. Those figures have been tallied up in Scotland. We do not yet know the story in England and Wales. The inspired rumours that we see in the farming press seem to show that for England and Wales the cutbacks could be as much as 35 per cent. and for Northern Ireland as much as 55 per cent.

That makes a farce of the rigmarole of trying to work out how much additional quota should be distributed to people with special needs. We have a system of quasi judicial tribunals, assessing need and having to observe extremely harsh criteria in doing so. They are going on to make recommendations of the rock-bottom needs of farmers in those special circumstances and then the Minister will only be able to allocate perhaps two thirds of those recommendations at the end of the day. All that performance and still there is no way of satisfying that proven need.

We for our part want the scheme to work. We want it to enable those who remain in dairying to thrive. We also want it to provide enough cash to enable those who come out of dairying to set up new enterprises on their farms and to sustain the local rural economy. The scope of the scheme is patently hopelessly inadequate. We urge the House to consider whether the amendment would make the scheme match up to the need.

Mr. Penhaligon

This is the key amendment. Unless the Minister makes a move, the farmers who have produced their accounts and books, have taken days off from the farm and travelled miles to the tribunals will be outraged. These farmers have worked and worried for months to find out whether they will receive extra quota, but after the great day arrives and they are given their quota, they will be told that there is not enough quota to go round.

This amendment would help the Government. I am sure that the Minister wants to help, if only he is given the opportunity. If we approved the amendment, he could go to the Chancellor and explain the enormous pressure and outrage amongst those who know about farming communities. He could then produce the few extra million pounds needed to square the circle. If the matter is not given serious attention, the whole quota scheme will come into disrepute.

Shortfall has been referred to. Scottish farmers give more substance to the case. Government Members representing Scottish constituencies have argued that the matter needs attention. Rumours suggest that there is a 30 per cent. shortfall. If that figure is not correct, we shall cease to worry, but I fear that it is correct.

We have an opportunity tonight to save a great deal of outrage and anger among local and national farmers' unions. Without the amendment, the final lunacy of quotas will arise. Quotas will be given, but they will be snatched away again. Farmers in Devon, Cornwall, East Anglia, mid-Wales and Scotland will not understand the logic of that, no matter how the Minister tries to explain it.

Sir Peter Mills

I was not planning to speak, but I feel that I must after what the hon. Member for Truro (Mr. Penhaligon) said. He is not being fair. On each of the quotas a warning was given. That must be said. Only a certain amount of cake — a certain total of quota — is available to be divided as fairly as possible among all the dairy producers. It is a difficult task, and I pay tribute to the panels and tribunals. They have conducted themselves to the best of their ability.

I have always said that a quota scheme can never be fair. It never will be fair. It is the wrong way. I am an end price man—and always have been.

Can we get an extension of the outgoers scheme? I want that, but where does the money come from? I am certain that we shall not get it from the Treasury. It was hard enough to get the £50 million out of the Treasury.

The farming community accepts that there should be more savings within the Minister of Agriculture's budget. This is the major problem in agriculture. It is more important than anything to provide more money for the outgoers' scheme.

Savings of between £7 million and £8 million within the Ministry of Agriculture, Fisheries and Food would be enough to make the position much happier. Alternatively, another method, one which I favour, would be to persuade the Community to pay. It is important for the Minister to fight hard in Brussels to see if money can be obtained from that quarter for an extension of the outgoers scheme.

I agree with the hon. Member for Truro that there will be great disappointment when the final figures come out and farmers see the amount of quota that they will be allowed. Many dairy farms will not be viable, and the only answer is an extension of the outgoers scheme. Finding the money is the problem. I suggest either savings within the Department or more money from the Community.

1 am

Mr. Stephen Ross (Isle of Wight)

I had not intended to speak, but the remarks of the hon. Member for Torridge and Devon, West (Sir P. Mills) drew me to my feet. The hon. Gentleman has visited my constituency and met members of my local NFU. If he comes again, he will have a chilly reception, following his comments tonight about the fairness of the tribunals.

The former president of the NFU called me to his house last Saturday and told me how he had suffered an outbreak of summer mastitis in 1981 and 1982. He took his case to a tribunal, before which, in 15 minutes, he got what he did not regard as natural justice. He is a member of the magistrates' bench in my constituency and is suffering —[Interruption.]

Conservative Members can giggle at that if they wish, but if one has an overdraft of £100,000 and bank managers at the front door, if one is losing quota and if one has no hope of making a living in the coming years, it is a serious matter. That state of affairs faces far too many farmers in my constituency and elsewhere. The system of appeal before tribunals has been grossly unfair and it should never have been allowed in the first place.

Mr. Ashdown

The hon. Member for Torridge and Devon, West (Sir P. Mills) says that there will be disappointment when it is known that the quota to be distributed may be 35 per cent. less than farmers now believe they have. If one speaks to the farmers in my constituency — I am sure that the same applies to farmers generally—one hears that they believe that the quota that they have received is the figure for the secondary quota.

My hon. Friend the Member for Truro (Mr. Penhaligon) is right to say that after the performance through which they have been — he described it as a quasi-judicial process, and that is what it is—there will be outrage. They had to produce facts and figures and present their cases in detail.

The Minister said that he had looked for a process that would produce a sense of justice, albeit — because the scheme had to be produced more quickly than he would have wished—a sense of rough justice. Many farmers in my constituency are complaining about the roughness of the justice. There is wide disparity between the decisions of the various tribunals. However, that will be nothing when the farmers realise that the quotas that they thought they had are no longer theirs.

It may be, as the hon. Member for Torridge and Devon, West said, that we have been forced into a position which produces that unhappy result. Perhaps, as he suggested, the Minister will be able to get some more money from Brussels. He will not get any from the Treasury, that is for certain.

But that is not what we are discussing. The Bill is related not to the current situation but to what we shall be producing in four or five years' time.

Thus, the measure is concerned with a system which, because of the time factor, we should be able to get it right. Surely we do not want to perpetuate the present injustices. Surely we want to construct a scheme in which the quota which is surrendered matches the quota which is dished out. If we cannot provide justice now, we should be constructing a scheme that will provide it in future. I saw the Minister nod. Surely he must want that element of stability and justice. I do not understand why he feels that he must reject a system that is fairer than the one in the Bill.

Mr. MacGregor

I shall explain again to the hon. Member for Yeovil (Mr. Ashdown) what we are talking about. We are discussing the provision of more permanent statutory approval for future payments under the existing scheme. Secondly, we are taking the opportunity to give proper statutory backing, if ever there should be a further scheme, although I have made it clear that we have no intention of introducing a further scheme. The amendment applies to future schemes.

There is a dilemma and a problem over secondary quotas. It is important to start with the understanding that both base year revision claimants and expanders are involved. The provision for their secondary quota comes from the reserve for special cases which we created when we gave a primary quota to everyone of 9 per cent. As the national cut was just over 6.1 per cent., there was a reserve of just over 2.9 per cent. The reserve is being used for base year revision claimants and expanders. I am talking about wholesale producers and not direct sellers. The provision will not come from the quota that we are taking in under the outgoers' scheme because we are using that to help small producers and exceptional hardship cases. It is the special reserve that enables us to meet the special cases.

There are many producers who have expanded considerably since 1981 and they have caused the national cut to be 6.1 per cent. There are also many producers who have heeded the warnings about excess dairy production in the Community for many years and restrained their production. Many measures, which proved ineffective, were taken over the years to try to restrain milk production, and the producers who have shown restraint do not see why their production should be cut even more to make provision for the expanders. It is a difficult balance to strike, but I believe that we have managed to do so. That is the way in which we are dealing with the development cases this year.

Mr. Geraint Howells

Can the Minister explain why so many dairy producers expanded their production between 1981 and 1983? The answer is Government policies to produce more and more milk.

Mr. MacGregor

Many producers took advantage of the various developments, the main ones being Community schemes, during that period. They did so in the knowledge that we were producing a surplus of milk production in the Community of substantial proportions, the cost of disposing of which was getting greater year by year. I have talked to many producers who have said, "We could see that there would have to be further restraining measures and so we did not increase our production." We had to pay heed to the problems of those producers as well as the others. It is in that way that I think that we struck the right balance.

We have made every effort to enable the panels and the tribunal to implement the process that has been established. I hope that the tribunal will soon—certainly before the end of the month — have finished its work. We shall then be in a position to tell the producers who have had provisional allocations from the tribunals what the final allocation is.

Mr. Andy Stewart (Sherwood)

Will my hon. Friend give way?

Mr. MacGregor

I know that hon. Members are anxious to proceed. I just want to develop this point. We have made it clear from the outset of the secondary quota process—as a number of my hon. Friends including my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills) have said—that, if there were not enough quota available at the end of the day for all the allocations that the panels and tribunals gave, we would have to scale them down. We have never pretended about that and have made it clear from the start that it was probable that the scaling down would be substantial.

Mr. Stewart

I am sorry to intervene. I did not catch Mr. Deputy Speaker's eye. We have heard about how the panels arrived at their decisions. What profession made up the panels?

Mr. MacGregor

We endeavoured to have on the panels people with a wide range of experience. The panels included a considerable number of people who had been dairy producers, solicitors, land agents and accountants — a range of people who had the expertise and judgment combined between them to make the decisions based on the case made by the applicants. That operation had to be conducted quickly because we were anxious for every producer to know as quickly as possible where he stood. A splendid job was done by my Department in finding the people for the panels. It was not an easy task to increase the number of tribunal members from 12 to 90 over the Christmas period and expect them to work full time. We did as well as could be expected in obtaining that range of experience.

We have never made any secret of the fact that there will be a scaling down. In England and Wales that will depend on the final allocations by the tribunal for secondary quota — they are not all in yet — and on the final figures from the Milk Marketing Board. We are dependent on the board to ascertain what it has allocated for primary quota. It looks as though the scaling down will be at least 35 per cent. We have previously made it clear that that would be the case. We do not yet have the final figures from the Milk Marketing Board or the tribunals to enable us to be absolutely firm. We hope to be firm as quickly as possible.

A number of hon. Members have made the point that they want extra funding for the existing scheme, and that was the theme on Second Reading. I repeat what my right hon. Friend the Minister said to the House on 10 January. Given the Government's desire to reduce Government expenditure and the fact that there is substantial support for the dairy sector in other ways through the common agricultural policy, we can give no promise of an extension of the existing scheme.

Obviously, in a future scheme it will be open to any Government to cover any milk matter in whatever way they wish and with whatever funds they feel that they can make available. Therefore, it will be up to any Government, if they wish to consider a future scheme, to decide the amount of the funds available as well as the methods — a lump sum or payment over a period of years. There probably will not be development claims or secondary quotas in any future scheme, because the secondary quota process will be finished by the end of the month. It is a mistake, therefore, to tie down any future scheme in this way. It inhibits flexibility and is unnecessary. Therefore, again, I cannot commend the amendment to the House.

Mr. Home Robertson

The Minister does not have a terribly good story to tell, and I think he knows it. There is a serious shortage of quota for redistribution to people with urgent needs. That point has been made abundantly clear by hon. Members from both sides of the House.

The hon. Member for Torridge and Devon, West (Sir P. Mills) was a lone voice coming to the support of the Minister. He said that the people had had a warning and should have known that scaling down would be necessary. That is not much help to those who are involved and who are trying to keep their businesses alive. They cannot milk warnings, although I suspect that the Minister and his hon. Friend the Member for Torridge and Devon, West were trying to do that this evening.

1.15 am

The Minister said that the people who were expanding their herds until the last minute should have known that there was trouble on the horizon. He cannot have it both ways. Right up to the eve of the sell-out by the Minister of Agriculture, Fisheries and Food last March, I think, his Department was paying incentives to people to expand. The Minister is saying that people should have seen the smoke signals. The danger signals were there right enough but within weeks of introducing the quota system the Minister's Department was paying cash grants to people to expand their herds and invest in new equipment.

The story is not a happy one for the Government, and it is disastrous for many dairy farmers. They are faced with a "Catch-22" situation. When the quota system was introduced it was dressed up and it was to be as fair as possible. That is right. The Minister set up the tribunals and all concerned went along to present their cases. The House might have gained the impression from that that it was intended to satisfy proven need. That is not so. We have heard the figures. The scale-down from the proven need as assessed by the tribunals in Scotland is 42.5 per cent. The Minister has now admitted that it will be at least 35 per cent. in England and Wales. We understand that the figure could be substantially higher in Northern Ireland.

There is a way to obtain additional quota to satisfy that need. [HON. MEMBERS: "How?"] Through the outgoers scheme. That is what we are debating. It would be necessary to expand the scheme to buy in sufficient quota from people who are willing to leave or partially reduce their dairy herd, as will be possible through the new scheme under the amendments which the Minister has moved. That is how additional quota could be made available to try to introduce some fairness into the shambles which the Minister has managed to create.

We need an expanded outgoers scheme. If there was an ounce of fairness in the Minister he would accept the spirit of the amendment.

Question put, That the amendment be made:-

The House divided: Ayes 30, Noes 117.

Division No. 92]	[1.17 am
AYES
Alton, David	McKay, Allen (Penistone)
Ashdown, Paddy	Maginnis, Ken
Banks, Tony (Newham NW)	Maxton, John
Boyes, Roland	Nellist, David
Bruce, Malcolm	Nicholson, J.
Clark, Dr David (S Shields)	Parry, Robert
Cook, Frank (Stockton North)	Penhaligon, David
Davies, Ronald (Caerphilly)	Pike, Peter
Fatchett, Derek	Ross, Stephen (Isle of Wight)
Foulkes, George	Steel, Rt Hon David
Harrison, Rt Hon Walter	Taylor, Rt Hon John David
Home Robertson, John	Wigley, Dafydd
Howells, Geraint	Winnick, David
Hughes, Simon (Southwark)
John, Brynmor	Tellers for the Ayes:
Kennedy, Charles	Mr. Alan Beith and
Lloyd, Tony (Stretford)	Mr. Michael Meadowcroft.
NOES
Amess, David	Lord, Michael
Ancram, Michael	Macfarlane, Neil
Ashby, David	MacGregor, John
Baker, Nicholas (N Dorset)	Maclean, David John
Beaumont-Dark, Anthony	Major, John
Bellingham, Henry	Malins, Humfrey
Bevan, David Gilroy	Marland, Paul
Biggs-Davison, Sir John	Mather, Carol
Bottomley, Peter	Mayhew, Sir Patrick
Bottomley, Mrs Virginia	Merchant, Piers
Bowden, Gerald (Dulwich)	Meyer, Sir Anthony
Brandon-Bravo, Martin	Miller, Hal (B'grove)
Bright, Graham	Mills, Iain (Meriden)
Brinton, Tim	Mills, Sir Peter (West Devon)
Brooke, Hon Peter	Moate, Roger
Bruinvels, Peter	Morris, M. (N'hampton, S)
Buck, Sir Antony	Moynihan, Hon C.
Budgen, Nick	Murphy, Christopher
Burt, Alistair	Nelson, Anthony
Cash, William	Neubert, Michael
Chapman, Sydney	Nicholls, Patrick
Chope, Christopher	Norris, Steven
Clarke, Rt Hon K. (Rushcliffe)	Page, Sir John (Harrow W)
Colvin, Michael	Page, Richard (Herts SW)
Coombs, Simon	Pawsey, James
Cope, John	Portillo, Michael
Couchman, James	Rhys Williams, Sir Brandon
Dorrell, Stephen	Roberts, Wyn (Conwy)
Dover, Den	Roe, Mrs Marion
Dunn, Robert	Rowe, Andrew
Durant, Tony	Sackville, Hon Thomas
Edwards, Rt Hon N. (P'broke)	Sainsbury, Hon Timothy
Fallon, Michael	Shepherd, Colin (Hereford)
Favell, Anthony	Skeet, T. H. H.
Finsberg, Sir Geoffrey	Smith, Tim (Beaconsfield)
Gale, Roger	Soames, Hon Nicholas
Garel-Jones, Tristan	Speed, Keith
Gregory, Conal	Spencer, Derek
Gummer, John Selwyn	Spicer, Jim (W Dorset)
Harris, David	Stanbrook, Ivor
Hawkins, C. (High Peak)	Stern, Michael
Hayes, J.	Stevens, Lewis (Nuneaton)
Hind, Kenneth	Stewart, Andrew (Sherwood)
Holt, Richard	Stradling Thomas, J.
Key, Robert	Sumberg, David
King, Roger (B'ham N'field)	Taylor, John (Solihull)
Lawler, Geoffrey	Terlezki, Stefan
Lennox-Boyd, Hon Mark	Thomas, Rt Hon Peter
Lightbown, David	Thompson, Patrick (N'ich N)
Lilley, Peter	Thorne, Neil (Ilford S)
Lloyd, Peter, (Fareham)	Thurnham, Peter

Tracey, Richard	Wilkinson, John
Trippier, David	Wolfson, Mark
Twinn, Dr Ian	Wood, Timothy
Waddington, David	Yeo, Tim
Wardle, C. (Bexhill)	Young, Sir George (Acton)
Watts, John
Wells, Bowen (Hertford)	Tellers for the Noes:
Wheeler, John	Mr. Ian Lang and
Whitfield, John	Mr. Archie Hamilton.
Whitney, Raymond

Question accordingly negatived.