HC Deb 05 May 1988 vol 132 cc1109-18

As amended (in the Standing Committee), considered. Order for Third Reading read.

10.1 pm

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

I beg to move, That the Bill be now read the Third time.

The House will be well aware from the previous debate of the action we are taking at Community level to tackle the challenge of the surpluses and, domestically, to deal with alternative land use. I did not refer to the farm woodlands scheme earlier, because there is an opportunity to do so now, although I made a brief passing reference to the farm diversification scheme.

The two schemes that we shall introduce after the passage of the Bill are part of a coherent policy that we have been developing for the alternative use of land that is no longer needed for food production. Both the farm woodlands provisions—clause 2—and those on farm diversification—clause 1—will help to contribute to the process of adjustment that will be required. They will also assist the rural economy and help to maintain an attractive and living countryside.

I am delighted to see that there has been considerable interest in the Bill and widespread support for the principles that it contains. About 80 amendments or new clauses were tabled in Committee, mainly relating to clauses 1 and 2. Most were designed to probe the Government's intentions about the details of the schemes that we propose to introduce by secondary legislation. I am grateful to my right hon. Friend the Minister of State and my noble Friend in another place for the admirable way in which they guided the Bill through its Committee stages.

In view of the hour, I shall comment now on only one or two points of general interest. While the Bill was under consideration in Committee, my right hon. Friend the Chancellor announced in the Budget that the tax arrangements for forestry were to be changed. That brings to an end arrangements that were widely seen as unjustified, unacceptable and damaging in the long term to the forestry industry. In parallel with the tax changes, the Forestry Commission closed its existing planting grant schemes, and we have introduced a new one, called the woodland grant scheme. It was not possible, for obvious reasons, to announce the Budget changes in advance or to consult on them. However, the House will have an opportunity to debate the financial side of the changes during the passage of the Finance (No. 2) Bill. My right hon. Friend explained in Committee the implications for the farm woodlands scheme.

In brief, the Forestry Commission's new woodland grant scheme offers higher rates of planting grant than previous schemes, both for broadleaves and conifers. However, for farm woodlands, we have decided to increase the grants only for broadleaf trees. We hope that that change will ensure an adequate proportion of broadleaf planting under the scheme, especially as the new higher rates will apply to pure broadleaf planting and the broadleaved component of mixed woodland. We felt that that was a better way of encouraging more broadleaf planting than the introduction of compulsory minimum proportions of broadleaves, as favoured by some. That would have been administratively cumbersome and too inflexible, given that the appropriate mix of species will vary from area to area.

The Committee also took the opportunity during discussion of clause 1 to discuss the closely related capital grants for diversification, which we introduced on 1 January this year, and the way in which the scheme relates to the planning process. We made it clear in those discussions that we shall not be paying any capital grant on work that has not secured any necessary planning consent. So the new scheme is not in any way designed to circumvent the normal planning process.

In the case of the new grants for feasibility studies and for marketing costs which the Bill introduces, the need for planning permission will not, of course, normally arise, so the arrangements will be different. We are, however, conscious of the need to help farmers to become aware of when they need planning permission and of the need to encourage them to discuss relevant proposals with the local planning authority at an early stage. That can often be helpful in securing planning consent.

Replying to the previous debate, my right hon. Friend the Minister of State spoke about the relationship between farmers and planning authorities now that we are encouraging more actively farming diversification to alternative businesses. I am well aware of the concern among farmers about the attitudes of planning authorities. As my right hon. Friend said, it is equally important that farmers should become knowledgeable about how to approach planning authorities about their developments, and we are currently thinking about how we can assist on that.

The Bill has been widely welcomed and forms part of our coherent strategy for farm diversification and the rural areas. It is desirable for the Bill to be passed as quickly as possible so that we can move to the next stages and introduce the schemes that are involved.

10.5 pm

Mr. Richard Livsey (Brecon and Radnor)

My hon. Friend the Member for Ceredigion and Pembroke, North (Mr. Howells) cannot speak in the debate because he chaired the Standing Committee—with distinction, I understand. I was not a member of the Committee but I have taken a close interest in it. The Bill must be seen in the overal context of the Minister's policy. It is clearly part of the common agricultural policy as it applies to Britain.

The Minister earlier spoke about price restraint, stabilisers and set-aside. I shall not go into detail about that. He spoke about taking land out of production and into woodland. I gather that overall, 12,000 hectares of woodland per annum is the planting target. One hopes that there will be a proper balance—indeed, the Bill makes some effort to achieve it—between broadleaf trees and conifers. We are also dealing with diversification and rural development.

One of the critiques that one can make of Government policy as seen in the Bill is, can it be measured against declining farm income? We have heard that farm income dropped in real terms by 9 per cent. per annum throughout most of the 1980s. We also heard that 37 per cent. of farmers have incomes of less than £5,000 per annum. I should like to look at that against the Minister's policy on prices, and the reduction in output that will result from the imposition of the policy of putting more land into woodlands and against the Government's other policy, which is not in the Bill but is connected with set-aside. When one looks at those policies one cannot be over-optimistic about the effect on farm incomes.

If, by one way or another, land is taken out of production, output will go down and the profit from farming will he reduced. Another part of the Minister's policy is that farm prices will be held. That will also lead to a reduction in profits if, at the same time, the input prices that farmers have to pay continue to rise. The overall equation does not make economic sense, especially on family farms.

The Minister said that environmental grants in 1983 were 4 per cent. of total grants and that in 1987 they were 40 per cent. of the total. He failed to say that between 1983 and 1987 total grants dropped from £216 million to £95.7 million. It is easy to make up statistics in an honest endeavour to prove the case, but 4 per cent. of £216 million compared with 40 per cent. of £95.7 million represents a reduction in support of £121 million over a four-year period. That needs to be put in perspective.

From my research of the Committee proceedings, I see that there is an allocation of £1 million for diversification and a forecast for the farm woodland scheme of £10 million, plus capital grants of £3 million. That adds up to £14 million and must be set against the loss of £121 million over the past four years. There is a problem because there is less land in production and there are lower prices and rising costs. It is not surprising that farmers find that their margins are reducing substantially.

I welcome the proposals for diversification and the increase in woodlands, but I counsel the Minister that this long-term policy requires time. I refer him to an article in today's Western Mail which states: Robin and Jo Ransome have a 30-acre holding, Grieg Cottage Farm, near Grosmont, in Gwent, where they run a flock of 100 milking ewes. Clearly, those people have gone into diversification. The article continues: The milk produced by the flock is processed on the farm to make `Skirrid' cheese. Whilst at agricultural college, Jo did a business management exercise on setting up a milking sheep unit. She interpreted the available data pessimistically but still came up with a viable proposition. It is a viable proposition, but I know from personal experience that it has taken five years to get it off the ground. I was the lecturer who supervised that project at the Welsh agricultural college. I plead with the Minister to note that diversification takes time, and investment should be made over a period so that farmers can develop their business.

New clause 1 has excellent objectives—

Mr. Speaker

Order. No amendments were selected.

Mr. Livsey

I understand that, in Committee, a discussion took place about low-input farming.

Mr. Anthony Steen (South Hams)

How does the hon. Gentleman know that?

Mr. Livsey

I know that because I read a chunk of the Committee proceedings.

There is a case for low-input farming, but I wish to caution the House about that. It is an attractive ecological policy to farm all the land, rather than taking some of it out of production, but the margins on low-input farming are unknown and uncertain. I ask the Minister to consider the possibility of putting his experimental husbandry farms to work in diversification.

Mr. Speaker

Order. The hon. Gentleman must relate his remarks to what is in the Bill, rather than what might have been in the Bill.

Mr. Livsey

Diversification could be tested on the test bench of the experimental husbandry farms to find out whether adequate net incomes could be obtained from farmers with diversified farm enterprises. Much work is needed before we can go headlong into great changes of policy. However desirable, they are theories and need to be put into test bench practice before they can be brought to a conclusion.

In rural development, there is no question but that the work of the Development Commission and the Council for Small Industries in Rural Areas has been good. I understand that the two bodies are to be amalgamated under the Bill, and that is an interesting development because COSIRA has a good record in assisting small businesses and jobs in the countryside. The Bill must bring about a sustainable agriculture with adequate farm incomes, a countryside that appeals and remains ecologically and environmentally balanced, and a rural population that lives on more than a poverty wage, with a diversity of occupations.

Those objectives are hard to achieve, but they should be aimed at, and the Bill is a start on that route. I encourage the Minister to go much further, because the money that is on the table is not adequate to replace some of the land that has been lost from agricultural production. More money is needed to ensure that these farm businesses survive.

10.15 pm
Mr. Quentin Davies (Stamford and Spalding)

I welcome the Bill, but it is in the nature of a minor palliative for the debilitating disease from which British agriculture is suffering. It is rather like treating a case of serious typhus or yellow fever with an aspirin. It may be welcome to the patient, but it does not go far enough.

There must be a general realisation, after our earlier debate, that agriculture is in a serious position. The general public still do not have the faintest notion of the seriousness of the problems. I can give two cases from my constituency to support much of what has been said in the Chamber today. Last weekend, I was speaking to someone who is greatly respected as a conscientious and efficient farmer in the Fens. He has been farming since 1943 and he tells me that this year, for the first time, he will be making a loss. I was also speaking to the senior partner of one of the biggest firms of chartered accountants in south Lincolnshire, most of whose clients are in agriculture, and he told me that not one would be reporting a profit this year. That is in Lincolnshire, an area which until now has been associated with prosperous agriculture.

Of all the grievous burdens that British farmers face, the most grievous and the most easily avoidable is that created by the completely bogus system of currency rates, the so-called green exchange rates. There is no reason, either in equity or in economics, why exactly the same exchange rate should not he applied to agricultural commodities as is applied to all other goods and services.

Would it not be regarded by the House as a monstrous national scandal if it were suggested that German cars, washing machines or schnapps should benefit from a 12.5 per cent. export subsidy and British motor cars should suffer a 12 per cent. levy?

Mr. Speaker

Order. Will the hon. Gentleman please return to the subject of the Bill?

Mr. Davies

I hope that I did not stray too far out of order. The subject that we are discussing forms part of a complex structure with the rest of today's proceedings and the reason is simple. It is that the object of the Bill is to address a fundamental problem, which has already been referred to by the hon. Member for Brecon and Radnor (Mr. Livsey)—the future of agriculture and the livelihood of the people who work in it. I have been much impressed by the energy and determination with which my two right hon. Friends have defended our agricultural interests in the Council of Ministers.

Dr. David Clark (South Shields)

On a point of order, Mr. Speaker. My understanding is that we are debating the Farm Land and Rural Development Bill. The House has strict procedures and I was wondering whether the Orders of the Day had been changed.

Mr. Speaker

Certainly not. The hon. Member for Stamford and Spalding (Mr. Davies) must relate his remarks to the Bill.

Mr. Davies

I trust that it will be in order, Mr. Speaker, to say that while I greatly welcome the Bill and the effort which the Government have put into it, I hope that that effort is not by one iota at the expense of the energy and determination that my right hon. Friend the Minister will continue to display in Brussels, in endeavouring to abolish green rates of exchange.

10.20 pm
Mr. D. N. Campbell-Savours (Workington)

I was not a member of the Standing Committee on the Bill, but I understand that the debates which took place there were both informed and constructive.

I come to this debate armed with words of wisdom from a member of the Royal Society for the Protection of Birds, which is most concerned about one aspect. That society approached me as a member of the Public Accounts Committee to point out that some £6 million will be allocated over the next three years to a particular area of expenditure under the farm woodlands scheme.

My understanding of that scheme is that it is intended to bring about a major change in land use in the United Kingdom by the conversion of 12,000 hectares of land each year for the next three years. Although that is only a modest measure, it represents an increase of more than 50 per cent. in the current rate of woodland planting in the United Kingdom, which is 23,500 hectares a year.

The Bill makes no provision for monitoring the impact of the scheme on the environment or the extent to which it meets the objectives of directing land away from agricultural production and assisting in reducing surpluses. There is no provision either for monitoring the enhancement of the landscape and the creation of new wildlife habitats, or the contribution made to the rural economy and to the nation's timber needs.

How will the Minister know whether the scheme has helped to reduce agricultural surpluses? How will he be able to measure that if he does not check the output from farmers who enter the scheme, or even make a sample check that could be subject to some form of multiplier with a view to making a national assessment? How will the Minister know that a farmer has not turned over to agriculture a spare piece of land which may be of high interest in terms of its wildlife? Such action by irresponsible landowners could negate the objective of the scheme.

Mr. Barry Mayes of the Royal Society for the Protection of Birds, who so competently briefed me on these matters, wishes to know, on behalf of his organisation, how the Minister can satisfy himself that the objective of achieving one third broadleaves has been met if the scheme is not monitored.

Mr. Steen

The hon. Member for Workington (Mr. Campbell-Savours) has raised an important point. Like him, I am a keen enthusiast of the Royal Society for the Protection of Birds. However, is the hon. Gentleman not concerned that if farmers grow trees, which is commendable and would have his support, they may be tempted to destroy the habitat for wildlife and birds that currently exists there, in order to make good the crop output which they lost? That is one of the worries. If I can catch your eye later, Mr. Speaker, I hope to extend that point—but is it not one of the hon. Gentleman's concerns?

Mr. Campbell-Savours

The hon. Gentleman makes a good point, of which I am sure the Minister is aware. We all know that some farmers will try to compensate for that loss of production by utilising land that currently might form a habitat for wildlife, and that is worthy of concern. What I want to know—as does the RSPB—is how those habitats will be protected from the greedy farmer who wants to compensate for loss of income.

Mr. William Ross (Londonderry, East)

The hon. Gentleman has just referred to the "greedy farmer who wants to compensate for loss of income". Surely anyone whose income falls tries to increase it to its former level to maintain his standard of living and that of his family. Why should farmers be called greedy for trying to do what everyone else tries to do?

Mr. Campbell-Savours

If the hon. Gentleman had been listening to what I was saying, he would realise that I was referring to the "greedy farmer" in the context of his making use of a specific loophole. If he did not do so, I would not wish to describe him as greedy. I am sure that the hon. Gentleman would accept that if a farmer used the scheme to compensate himself for money that he might have lost, that would be a greedy move. No doubt he would not wish to condone it, and nor would the hon. Member for South Hams (Mr. Steen). I am sure that the Minister will wish to assure the House that he will not condone it either, and will introduce monitoring arrangements to ensure that it does not happen.

Can the Minister satisfy himself and Parliament that taxpayers' money—potentially £2 million a year—is being spent effectively? How can he modify the rate of grant under clause 2(3) if he is unable to measure how effectively grants are being put to use? On behalf of the RSPB, I suggest that, as a compromise, a review is conducted of perhaps 10 per cent. of the participants in each region.

That would keep the administrative burden and the cost to the state to a minimum, while providing an indicative measure of cost-effectiveness and of the extent to which the objectives of the scheme are being met.

I put that proposition as a member of the Public Accounts Committee. I remember many occasions on which the Government have introduced schemes and we have ended up evaluating the effective use of taxpayers' money. We have often found that the money has not been used properly, in that it has not met the objectives of Government. The Minister may wish to intervene to reassure me. I believe that he should consider the possibility of a Public Accounts Committee inquiry. However, if he were to give the assurances that the RSPB and I, along with other hon. Members, are seeking, that inquiry could possibly be avoided.

The Minister of State referred earlier to the groundnuts scheme. We might have a minor "groundnuts scheme" if all this went wrong. The Minister may refer with glee to the famous groundnuts scheme, but he would do well to recall that the losses on Nimrod and on Britain's torpedo programme—losses incurred under the present Government—far outstrip in real terms anything lost by a Labour Administration during that groundnuts affair.

10.27 pm
Mr. Christopher Gill (Ludlow)

The Bill has been described as a modest little Bill. However modest it may be, I welcome it: indeed, I welcome any initiative that encourages woodlands. I am sure that it is right to encourage broadleaf woodlands particularly, and right also to encourage those who are prepared to plant them and to make an inevitably long-term investment that has little or no prospect of short-term gain. If previous generations had not taken that broader view, where would all the beautiful Shropshire oak that adorns the Chamber have come from?

Farm woodlands make sense on four counts: economic, ecological, practical and environmental. Economically, it must surely make sense to try to replace 90 per cent. of our timber imports with our own production. Quite apart from the benefit that that would confer on our balance of payments, it would create employment. Environmentally, trees are an important part of the countryside and they certainly improve any landscape. Practically, we can grow trees in this country. The climate is not unfavourable and farmers have the ability and knowledge to plant and care for trees. Ecologically, at a time when the world is seeing the destruction of the rain forests, it must make sense to plant trees, on however modest a scale. Timber is the only replaceable fossil fuel.

While congratulating my right hon. Friend the Minister on the Bill, I should like to put the proposed measures in perspective. It would be wrong to believe that this is more than a small step forward. It would be wrong and dangerous for Parliament to suggest to the nation that it is anything more than a small step forward.

In my county of Shropshire, which is a reasonably green and pleasant land, woodland occupies only 7 per cent. of the total land area. That is 7 per cent. after considerable arboreal activity in the years since the war. In fact it represents only a mere 0.5 per cent. increase in the 40 years since the war.

In the context of agricultural surpluses, estimates of the land that we need to take out of production vary according to which expert one consults: some say as little as 5 per cent. and some say as much as 20 per cent. If we accept the smaller of the figures, we are talking about taking out of agriculture the equivalent of what is currently planted with trees in the British countryside.

The purpose of my remarks is not in any way to denigrate the efforts of my right hon. Friend the Minister. Indeed, all concerned—the farmers, the public and my right hon. and hon. Friends—recognize—

Mr. William Cash (Stratford)

Will my hon. Friend give way?

Mr. Gill

I will give way to a neighbour.

Mr. Cash

I am a constituent of my hon. Friend and I thought that it would be appropriate for me to say how much I agree with everything that he has said. I am not only a constituent but a neighbour, and my hon. Friend has touched on a point that is of great interest to his other constituents in Shropshire and to my constituents in Staffordshire. I endorse everything that he has said.

Mr. Gill

That was a generous intervention and it was much appreciated, even though my hon. Friend interrupted me in mid-flow when I was trying to pay tribute to my right hon. Friend the Minister for his efforts. Hon. Members recognise and respect him as a sincere and concerned man who is doing what he can under extremely difficult circumstances. I should not like my right hon. Friend to interpret my remarks in any way as critical of his efforts. The purpose of my remarks is to put those efforts into perspective. However, the scale of the problem defies any one man's efforts. Indeed, it defies the best endeavours of this nation and all other nations. But, Minister, every little helps.

10.33 pm
Mr. William Ross (Londonderry, East)

There is much in the Bill that I welcome and much that will be welcomed in Northern Ireland. However, Madam Deputy Speaker, you will not be surprised to hear that I begin with the same little quibble, to put it mildly, that we always have. When I turn to page five, line 10 I see that Sections 1 to 3 above do not extend to Northern Ireland. There is a little more above that, which is the usual junk that we see in Bills. It says that there will be An Order in Council under paragraph I (1)(b) of Schedule 1 to the Northern Ireland Act 1974. All the same old nonsense that we see time and again appears in the Bill.

My hon. Friend the Member for Antrim, South (Mr. Forsythe) would have been carrying out this task tonight, had it not been for a family death. He raised that point in Committee and said that there is no good reason why he Bill, and so many others, should not be extended to Northern Ireland. Then we would not have to go through all the other nonsense of introducing something similar for Northern Ireland when we are not offered any possibility of real debate and certainly no possibility of amendment. The introduction of something similar for Northern Ireland may be during the next few weeks or perhaps as far away as two years. However, I do not think that it will be as long as that in this case.

It is that point about Northern Ireland which concerns me, my party and those whom I represent. I wish that the Government would get away from it and start treating Northern Ireland as if it really was part of this kingdom, rather than something that some of them appear to wish to push away, off into the blue yonder. Northern Ireland is not going to go away; it will be part of the United Kingdom for a very long time. Since I came to this place 14 years ago, I have existed in that limbo. I liked it little then and I like it less now. The sooner that we are done with that nonsense, the better for all concerned.

When I was here in 1974, the House was full of sound and fury and weeping and wailing about a universal food shortage. We are now bemoaning a massive surplus across the world. When one reads the papers and sees the horrifying pictures of famine in some lands, one sometimes wonders where the surpluses are, although one can understand the difficulties of dealing with localised famine in the world.

How have we gone from one extreme to the other in those 14 years? I recall that in my first speech on agriculture all those years ago I asked what we would do when European production created surpluses. Some hon. Members giggled, but the Government of the day did not giggle as loudly as the rest. They clearly saw it coming.

We are in this difficult situation today because agriculture has existed in highly artificial market conditions for the past 50 years. Those artificial conditions have caused many of the difficulties that we now face. Our problems will remain. I cannot envisage those artificial market conditions—either the former or the present measures of support—disappearing. They will stay with us for many a long day, and we must live with them. We must accept the restrictions that they place on us, but we hope to see the day when agriculture can stand on its own two feet.

The Bill deals not only with woodlands but with grant-aided ancillary farm business activities. Just to lift the Minister's heart, let me tell him of a wonderful story that appeared in the Belfast Telegraph on Good Friday this year about a new farm industry in Ballymena in Northern Ireland. A farmer there had started a brand new farm industry. He was producing donkey's cheese for sale. Those who care to look up the date of Good Friday will realise that we were being had. I am afraid that that particular bird never flew very far. I see one or two hon. Members having a look at their diaries. For the benefit of those who cannot remember, Good Friday fell on 1 April. I confess that I thought that that was a wonderful story and showed a great deal of initiative on the paper's part. Sadly, the donkey's cheese is still in the making, and will remain in the making for many a day.

Earlier today, the Minister spoke of people with small farms going out of agriculture. He implied that that would reduce production. Shortly afterwards, the Liberal spokesman, who will forgive me if I do not try to pronounce his constituency—I am not sure that he would do all that well with some of our Irish place names—drew attention to the fact that he was a small poor hill farmer from Wales who did not apparently earn much money out of his farm. That is precisely the position in most of Europe, which is full of small part-time farmers like the hon. Gentleman, who has taken on another part-time job in the House.

We shall continue to have in much of continental Europe people who are not really dependent on farming nevertheless farming at a fairly high level of efficiency and producing an enormous amount of food. I do not believe the happy story that the small farmer on the continent will disappear, thereby reducing total food production. People will remain, because they like living that way.

The Minister said that we had to keep up with modern farming methods. I got the impression that, if we did not, farming would quickly be in serious trouble. Over the past 40 or 50 years, we have been engaged in steadily reducing the number of human hands in farming, increasing the number of machines, improving our methods and increasing production as a result. Every time we moved another step down the road of more machines and fewer people, we took another step towards our present surpluses.

There is a limit to how much one pair of hands can do, how many sheep and cattle they can look after. Every stockman in the House knows what I mean. A farmer needs to look at the animals every day and to look after the machinery, crops, hedges, ditches and fences to ensure that everything is in proper shape for farming.

If we continue taking land out of production and pursue farm diversification and ancillary farm businesses, inevitably, regardless of set-aside, there will be a transfer of food production from the marginal worse land to the better land. That will follow as surely as day follows night. The smaller farmer in the hills will suffer. The squeeze will be slow, but steady, and continued.

We face the problem with which the United States, Australia, Canada, New Zealand, Argentina and many other countries have had to live throughout their existence —the ability to produce far more food than our people can consume. We are going down the same road that the United States went down, of trying to reduce food production to provide a reasonable standard of living on farms or farming enterprises.

Whenever I come to the House, I drive over Glenshane pass, which is not far from where I live. I always look out across the river Roe and I see a large chunk of the hill which, a few years ago, was heather but which was dug up at great public expense. It is one of the areas in the United Kingdom which was dug up and sown with grass to increase hill production. One wonders now how wise that expenditure was. Although it was useful to the farmer concerned and allowed him to remain in business and to look after his family for a few more years—it is not quite the loophole to which reference has been made—in the long run it will be money lost. Sadly, a good proportion of the farming community will come under increasing financial pressure. Over a long period, it will mean that fewer people will live on the land.

A new clause was tabled but not selected, which was a pity. If we had considered it, we would have started to discuss the nitty-gritty of what the Bill says to the farming community. The Bill is an admission that, for many farmers in a large part of the United Kingdom, farming no longer provides a satisfactory standard of living. There are transitional movements to keep people on the land.

To some extent, the Bill is a bit of social engineering. It is an attempt to keep a living viable community in the rural areas. We would be far more honest if we spelt out our long-term regional objectives to the farmers, but I fear that, as usual, they will never be told how much or what food they will be expected to produce. We shall continue down that road and cause more problems than ever before.