HC Deb 14 February 1989 vol 147 cc267-88

11.9 pm

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

I beg to move,

That the draft Farm and Conservation Grant Regulations 1989, which were laid before this House on 2nd February, be approved.

With permission, Mr. Speaker, and since they form a single package, I hope it will be convenient to discuss at the same time the Second motion:

That the Farm and Conservation Grant Scheme 1989 (S.I., 1989, No. 128), a copy of which was laid before this House on 2nd February, be approved.

Mr. Speaker

I take it that that is agreeable to the House.

Mr. Ryder

It is only about a month since some of us, including the hon. Member for East Lothian (Mr. Home Robertson) debated in Standing Committee the statutory instruments which closed our previous farm capital grant scheme, the agriculture improvement scheme, to new applicants.

At that time I explained that the new grant scheme, which had been announced by my right hon. Friend the Minister of Agriculture, Fisheries and Food in November, was still subject to discussion in Brussels. I am glad to report that those consultations were successfully completed at the end of last month, thus enabling us to lay the new measures before Parliament for approval. I am also happy to confirm that we have been able to finalise our proposals in very much the form that my right hon. Friend the Minister was able to outline to the House last November.

The proposals are divided into two parts. Under the regulations, farmers will be able to submit investment plans covering all the items set out in the schedule. Under the scheme, they will be able to claim grant on a rather more restricted range of items but without the need to secure prior approval for their investments.

Mr. Bowen Wells (Hertford and Stortford)

I am deeply grateful to my hon. Friend for giving way before he has reached the substance of his speech. Is the House entitled to alter in any way the measures being put before it tonight? If so, would it not have been better for him to bring the regulations to the notice of the House before the negotiations were completed in Brussels, so that the House could express an opinion before they were agreed in the Council of Ministers?

Mr. Ryder

The preliminary negotiations in Brussels have been completed. The final details have yet to be worked out. If any of my hon. Friends wish to raise any matters of substance this evening, I shall consider them later.

Mr. Teddy Taylor (Southend, East)

Will my hon. Friend give way?

Mr. Ryder

No, I want to get on, please.

Mr. Taylor

rose—

Madame Deputy Speaker (Miss Betty Boothroyd)

Order. The Minister wants to make progress.

Mr. Ryder

Except in the case of some horticultural investments, the rates of grant available will be the same under both parts of the scheme.

The highest rates of grant will be for the installation and improvement of equipment designed to prevent pollution caused by farm operations. That will attract grant at 50 per cent. In the uplands, or less favoured areas as they have been designated, conservation work will also get grant of 50 per cent. of the total cost.

Mr. Ron Davies (Caerphilly)

Are the details of the scheme that the Minister is giving us subject to further amendment if his right hon. Friend concludes in his discussions with the EC that the existing details are unsatisfactory? Are those amendable figures or do they represent the scheme as it will be?

Mr. Ryder

They represent the scheme as it will be.

Mr. Teddy Taylor

rose—

Mr. Ryder

I shall give way to my hon. Friend in due course.

Outside the less favoured areas, the rate will be 40 per cent. The items qualifying for grant will include hedges, traditional stone walls, shelter belts, trees for shading stock, stiles and footbridges and heather and bracken control. All those qualify for grant under the agriculture improvement scheme. To them we shall be adding grants for fencing out stock from heather moors and native woodlands to encourage natural regeneration and grants for repairs to traditional buildings.

In addition, we shall be continuing grants for grassland regeneration and reseeding, with associated fencing and liming and fertiliser. Drainage grants, however, will be confined to the replacement of existing systems. All these items will attract grant at 25 per cent. in the hills and 15 per cent. in the lowlands, and will be available only under an investment plan.

We shall be continuing to offer special assistance to the horticultural sector, with grants of 40 per cent. for replacement of heated glasshouses and 35 per cent. for heating systems, and the reinstatement of grants for orchard replanting again at 35 per cent. Slightly lower rates of grant will apply to work done outside an investment plan.

Perhaps I can now explain the objectives behind our new arrangements, and the considerations which have given rise to them. They follow from an internal review which my right hon. Friend set up last year together with the Secretaries of State for Wales, for Northern Ireland and for Scotland, and the Secretary of State for the Environment, as well as the Chief Secretary to the Treasury. That review was designed to examine how far we needed to adapt capital grants to take account of the very significant changes in agricultural policy which we have seen since 1985 both in the United Kingdom and in the European Economic Community.

In the Community we have taken some important steps towards controlling surpluses and the excessive expenditure they entailed. In the United Kingdom, the ALURE package of initiatives has opened up new opportunities for many farmers and underlined our concern to do more to enhance the farming environment. In particular, we wanted a capital grants scheme which would complement these new policies, target expenditure more effictively, provide value for money and not discriminate against United Kingdom farmers. I believe that we have achieved this in the instrument before the House.

I am sure that the House will agree that in present circumstances it does not make very good sense for us to focus capital grants expenditure on the expansion of existing production capacity. Capital grants have played a very important part over the years in helping United Kingdom agriculture to achieve its current level of efficiency. But even the industry's own reaction to the agricultural improvement scheme suggests that farmers are now looking to different kinds of investment. Helped by the structure of grant rates under the AIS, there has been a very marked shift from spending on buildings, drainage and other production facilities towards conservation and pollution control work. Under the new scheme, we intend to promote that reorientation still further.

Concern to protect and enhance the beauty and wildlife variety of our countryside is growing all the time. Increasingly, too, the public look to the farmer as the guardian of the countryside. They recognise that the way he farms will materially affect the character of the landscape and the diversity of the flora and fauna within it. All of us have come to expect a certain standard of conservation management from the farming community. The land the farmers manage is not theirs only, but the heritage of the entire community.

What is less often recognised perhaps is the extra cost this can impose on the farmer. A hedge is generally much more attractive than a fence, but a fence can be put in much more cheaply and quickly. It is therefore entirely appropriate that in targeting our capital grant support we should recognise the additional expenditure which environmentally sympathetic management can require from farmers and assist them to achieve something which both they and the public at large want.

The new scheme gives very high priority to conservation. I want to make it clear, however, that this means conservation in its best sense. We are not grant-aiding things simply because they are attractive; we are also grant-aiding them because they are useful. One of the aims of the new scheme is to enable farmers to manage existing assets more profitably, as well as in ways that will enhance the attractions of our countryside.

That is the thinking behind the three new grants we are introducing for the regeneration of heather moors and woodlands and for the reinstatement of traditional buildings. A neglected or overgrazed woodland is not only a blot on the landscape but a lost opportunity for the farmer. By offering a grant for fencing out stock for a period, we hope to make it possible not only for natural regeneration to occur but for the wood in time to become much more useful as a shelter for stock.

Similarly, we shall grant-aid the regeneration of existing pasture and the renewal of existing drainage systems, to keep the land in good heart. But in line with our approach elsewhere, we shall not grant-aid improvement work to virgin land or moorland. Nor shall we pay grant for new drainage. Assisting the creation of new production capacity at a time when we are struggling—although with increasing success—to master the problems caused by surplus production is clearly no longer appropriate. But helping farmers to manage well and sympathetically their existing farm assets is money well spent.

Another important priority under the new scheme deals with the problems of pollution from farm effluent. The pressure on farmers to clean up their act is acute, and rightly so. The farm and conservation grant scheme will offer grants of 50 per cent. in the lowlands for the installation and improvement of facilities for the storage, treatment and disposal of slurry and silage effluent. That is the highest level of grant ever offered in the lowlands. It is also the best rate of grant available anywhere in the Community.

That substantial grant increase, as well as extensions to grant coverage to include fixed disposal piping, safety fences, and more help for the intensive livestock sector, is clear evidence of the Government's commitment to dealing with the problems of pollution from farm operations. It also shows again our determination to target assistance where it can do most good, both for the farmer and for the community as a whole.

At the same time, I must make it clear that, with grants of that order available, there can be no excuse for any continuation of the high incidence of farm pollution that we have seen recently.

As to less favoured areas, right hon. and hon. Members who are familiar with the grant schemes will have noticed from the schedules to the farm and conservation grant scheme 1989 that we are narrowing the differential between grant rates in the LFAs and those outside. That will mean small reductions in grant of 5 per cent. and 10 per cent. on most items. For effluent facilities and traditional buildings, grant rates will remain the same, at 50 per cent. and 35 per cent.

Mr. Teddy Taylor

Before the Minister proceeds to tell the House about all the Government's dramatic new grants for heather reclamation, and all the rest of it, will he clarify what appeared to be a misunderstanding in his answers to my hon. Friend the Member for Hertford and Stortford (Mr. Wells) and to the hon. Member for Caerphilly (Mr. Davies)? The Minister told my hon. Friend that the proposals are subject to further review and amendment in discussions with the Commission. I can understand that, yet in answering the hon. Member for Caerphilly, the Minister gave the impression that the proposals before the House have been finalised.

Can the Minister explain why on earth the House is discussing the regulations and scheme tonight, when, under the 1987 structures plan, the Government are obliged to observe the measures now before the House, which have been approved by the Commission? It seems a total waste of time, both of right hon. and hon. Members and of the staff.

Mr. Ryder

The regulations cannot be amended, but I said that if any right hon. or hon. Members wish to make any objections or suggestions, I will be happy to consider them in the course of time. We are not looking to amend anything tonight.

Another aspect of the scheme that I draw to the attention of right hon. and hon. Members is the continuation of enhanced rates of grant for horticulture. Since 1983, we have offered that sector a good deal of special assistance, to help with modernisation to meet fierce—and not always fair—foreign competition. The industry has responded well, despite setbacks that some parts of it suffered after the great storm in 1987, and a major reinvestment programme is in train.

The Government want to keep up the momentum, by continuing to offer grants for the replacement of heated glasshouses and for the installation of heating systems. From the end of November, when the current measures under the AIS expire, we shall offer grant of 40 per cent. on glasshouses and 35 per cent. on heating systems. We shall, from the start of the farm and conservation grant scheme, reintroduce grants for orchard replanting of 35 per cent. We have taken the opportunity to simplify and clarify the arrangements for the horticulture sector, as we have tried to do in a number of small but important ways throughout the new scheme.

I said at the outset that we were determined that our new scheme should complement our existing agricultural policies, and it does just that. It removes incentives to surplus production. At the same time, it encourages farmers to make better use of existing assets, and to do so in a way which enhances the attractiveness of the countryside for us all. In so doing, it offers good value for money.

It is also closely targeted on those sectors and types of investment which are now clear priorities. Chief among these is the need to reduce pollution. For a small dairy farmer in one of the large catchment areas in the south-west, the cost of installing and maintaining an efficient slurry containment system can make heavy inroads on his income. A Government grant of 50 per cent. towards this necessary expenditure is far more appropriate in present circumstances than a grant for a new building.

By targeting our assistance in this way on essential but costly investments, we are contributing far more effectively to the present and future financial soundness of the industry than some other member states which continue to grant-aid increases in capacity irrespective of whether there are markets for the resulting surpluses. That is why this reordering of our grant priorities has been warmly welcomed as responding closely to the current needs of Britain's farming industry.

11.26 pm
Mr. Ron Davies (Caerphilly)

I wish at the outset to express to the Parliamentary Secretary our understanding of the difficulty in which he found himself in explaining to his hon. Friend the Member for Southend, East (Mr. Taylor) the precise status of the instruments before the House. In our experience, the Parliamentary Secretary is always helpful and courteous in his presentation of measures and when he tells the House that he is prepared to be flexible, that is not so much an indication that he may have got the proposals wrong as a genuine willingness to listen to what we have to say.

When we last debated agriculture, we had to convey to the Parliamentary Secretary our best wishes to his right hon. Friend the Minister who that very day had been taken ill in Brussels when negotiating the latest agreement. I am pleased to note that the right hon. Gentleman has regained his health. I am not sure that he will recover so rapidly from the St. Valentine's day present—indeed, the birthday present—delivered to him today by the National Farmers Union. At its annual conference today the NFU presented the Minister with—

Mr. John Home Robertson (East Lothian)

A brie?

Mr. Davies

No, not a brie—a unanimous vote of no confidence. Given the way in which the Ministry of Agriculture, Fisheries and Food is being run just now, it came as no surprise when that vote of no confidence was resoundingly passed.

My hon. Friends and I welcome the opportunity to debate the scheme and we welcome the instruments in broad terms because they show a Government commitment to transfer the emphasis on agricultural capital grants away from increasing production and towards improvement of the environment.

When the Minister announced the scheme in a written answer on 6 February, he said that he had consulted the Secretary of State for Northern Ireland, but I understand that the instruments relate only to Great Britain. Will the scheme be extended subsequently to Northern Ireland or will there be a separate instrument relating to Northern Ireland?

The Government's recent expenditure plans reveal a substantial reduction in spending on agricultural grants. The Minister made some play about the reduction in expenditure from 1987 to the current year. I refer the hon. Gentleman to the expenditure White Paper of January of this year. Expenditure on major capital grants in 1983–84 totalled £217 million. The current year's estimated outturn will be £89 million and next year's £86 million. The forecast for 1990–91 is as low as £78 million. When the thrust of Government support was to increase production, they managed to find more than £200 million for capital grants, but now that the emphasis has moved towards more environmentally sensitive grants the amount has been reduced from £217 million to £78 million. That reflects poorly on a Government who claim that care for the environment is the centrepiece of their policy.

The Minister paid tribute to his debate with my hon. Friend the Member for East Lothian (Mr. Home Robertson) in Standing Committee when the old scheme was closed. The haste with which it was closed suggests a desire by the Ministry to save money, as was revealed when the Minister was challenged in Committee about its sudden termination. He gave something away when he said that it had been impossible to give any warning of the scheme's closure because it would have led to a rush of expenditure for which we have no provision."—[Official Report, Fifth Standing Committee on Statutory Instruments, &c., 18 January 1989; c. 4.] Unfortunately that was at the expense of farmers who had prepared improvement plans with considerable effort and at considerable expense and were about to submit their schemes to the Ministry for approval. Would it not have been possible to allow farmers in such circumstances to undertake the works that they had planned—at their own risk—while awaiting the Ministry's announcement about the level of grant that they would attract? A commitment could have been given that such grant would be paid retrospectively, and delays to farmers and contractors at what is usually the busiest time of year for such works could have been avoided.

The transfer of capital assistance from measures which increase production to those that enhance the environment is certainly in the spirit of the times, and is—to say the least—considerably overdue. We particularly endorse the increase in grant payable on the planting of hedgerows and shelter belts in lowland areas from 30 to 40 per cent., and the grants for the restoration of vernacular buildings are also welcome. Can we expect the new-found enthusiasm for hedgerows to extend to support for the Hedgerows Bill introduced by my hon. Friend the Member for Wentworth (Mr. Hardy)? There seems little point in giving financial support to the development of hedgerows if the Government are not prepared to take action to support their protection once they have been established.

We also welcome the changes in respect of heather burning and the enclosure of woodland and moorland. These measures themselves will increase the value of such areas as wildlife habitats and will help the conservation of wildlife as well as assisting in the better use of those areas for agricultural production. We are also pleased at the increased grant available for bracken control. Bracken is a major threat to agricultural land, and as it is increasing at a rate of 5 per cent. per year it represents a significant loss of such land.

I challenge the Minister, however, on his suggestion that enclosure of woodlands would be a major step forward. I think that there will be very little take-up. There will be precious little incentive for farmers in either uplands or lowlands merely to enclose existing woodland. The effect of the measure will be to reduce the amount of land available for grazing, and it certainly will not ensure any profitable crop from the proceeds of forestry, at least within the lifetime of the farmer or his immediate family.

I suggest a course of action that we have pressed on the Minister within the last 12 months—to look again at the provisions of the farm woodland scheme. If he is now providing grant to allow the enclosure of existing farm woodlands, is it not now appropriate to introduce amendments to the scheme so that annual payments available under it will be made available to farmers who enclose existing woodland? Otherwise there will be no financial benefit whatever. Indeed, it will be a financial disbenefit to farmers in disadvantaged areas in the uplands or the lowlands to enclose existing woodlands. We pressed the Minister's predecessor, now the Minister for Local Government, about that in Committee. At the time he said that he was not opposed in principle to such a move but thought that it would be precipitate. To show how strongly we felt, we divided the Committee on the issue and the Government felt sufficiently strongly to defeat an amendment which would have given effect to such payments.

Now that the Minister has accepted the need to provide fencing for existing woodlands, will he consider modifying the farm woodland scheme to allow the payment of annual sums to farmers who follow that course of action? Without such a payment, I suspect that the measure will come to nothing.

Having welcomed the general shift towards conservation, we have to condemn unreservedly the telescoping of differential rates between favoured and less favoured areas.

Mr. Andrew Hunter (Basingstoke)

The hon. Gentleman is rapidly moving away from a point which I had hoped that he would expand, and I invite him to do so. With reference to the grant for repairing and reinstating traditional agricultural buildings, will he explain further, so that we understand his argument fully, whether he is satisfied with the proposals in the schemes?

Mr. Davies

I shall come to that in a moment. I have been dealing with the farm woodland scheme and I shall return to the question of vernacular buildings later. I suspect that I know the point which concerns the hon. Gentleman and I hope to demonstrate where we stand, although he may not be happy with the position that we have adopted.

Turning to the diminution of differentials between favoured areas and less favoured areas, the reduction in the grants payable on hedgerows and walls, slurry handling facilities and shelter belts in the less favoured areas from 60 per cent. to 50 per cent. is regrettable, particularly as it accompanies increases in the grants and grant ceilings applicable to effluent and waste disposal and poultry manure stores which will be a charter for the intensification of lowland livestock production—an issue which concerns my hon. Friend the Member for Clwyd, South-West (Mr. Jones).

Mr. Martyn Jones (Clwyd, South-West)

I am particularly concerned because that part of the scheme means that the incomes of farmers in less favoured areas and upland areas generally will be much less. Money will be transferred from less favoured areas to more favoured areas, which is the reverse of what is intended by these measures.

Mr. Davies

My hon. Friend is right. The provision is socially unjust because it represents a transfer of Government funding from low-income farmers in less favoured areas to the high-income farmers in more favoured areas. If the Minister is not concerned about that social injustice, does he recognise that in general the less favoured areas have the most sensitive environments and care must be taken to protect the environment? I suspect that the diminution of grant will lead to the degradation of the environment in less favoured areas without corresponding benefit in the lowlands.

Mr. Ryder

I am grateful to the hon. Gentleman for raising that point. He rightly mentioned the fact that we have increased the grants for conservation of hedges, particularly in lowland areas; the worst ravages to hedgerows in Britain have been carried out in lowland areas, as the hon. Member for Wentworth (Mr. Hardy) probably knows better than any of us. Precisely because of that, we have altered the grant scheme so that more money can be spent on lowland areas, particularly on hedgerows.

Mr. Davies

At least the Minister understands why we are concerned. We acknowledge and accept that more money is being spent in the lowland areas because of the problem of hedgerow destruction. My hon. Friend the Member for Clwyd, South-West, who represents almost exclusively a less favoured area, raised the particular point that that transfer of resources is at the expense of the uplands. Surely if additional expenditure is to be given for the rejuvenation of hedgerows in the lowlands, that should not be done at the expense of a sensitive environment.

If, as the Minister said, the aim is to reduce the incidence of water course pollution by agricultural slurry, why do not the Government enforce the regulations which already exist, and increase the penalties, rather than handing out more money to intensive producers, to the detriment of farmers in less favoured areas? There was an example of this in my constituency last week. A small industrial concern had been guilty of polluting a river with slurry in the summer of last year. That resulted in the devastation of four or five miles of the river Rhymney and the loss of about 2,800 game and course fish. The firm was taken to court, fined £1,000, and made to pay more than £1,000 costs. That was derisory, given the damage done to the environment and the financial burden imposed on the water authority and the various angling clubs which had to restock the river.

If the Minister wants to protect the environment, why does he not agree to give farmers the additional grants to tackle slurry pollution of water courses but also ensure that the penalties are severe enough to inspire adequate take-up and deal properly with the problem of slurry pollution? If the Conservative party is, as it maintains, the party of law and order, why does it not enforce that law and order in the context of protecting the environment? Why is there not a more rigid application of environmental standards?

Sir Nicholas Bonsor (Upminster)

The penalties mentioned by the hon. Gentleman sounded wholly inadequate, but I should be interested to know what maximum penalty was available to the court.

Mr. Davies

That was the subject of some discussion between the research department of the Library and myself before this debate, so I can answer with some authority. The provisions were laid down in the Control of Pollution Act 1974, which determined that grade 5 penalties would apply. Those penalties were last confirmed by order pursuant to the Criminal Justice Act 1982, which fixed the maximum penalty at £2,000. In the case that I mentioned, I could see no extenuating circumstances which might have led to the 50 per cent. reduction in the fine handed down. Nevertheless, the maximum would have been only £2,000, which is still negligible. Now that the Government have taken the first financial step to ensuring that there is no need for the pollution of water courses by slurry or farm effluent, they must rigorously apply the control of pollution regulations.

Next, there is the abolition of the 35 per cent. feed rule. The old regulations required that any applicant for assistance under one of these schemes had to provide 35 per cent. of his fodder from his own holding. That requirement is being abolished. That may encourage new entrants to farming—particularly people who start with small livestock units—but it will also encourage more intensification. Will the Government commit themselves to tackling the worst sort of intensive units, such as the beef lot owned by Frans Buitelaar Farms Limited? That unit is situated in an area of outstanding beauty in Lincolnshire and recently excited a great deal of press comment because of its pollution of the water table and defiance of local planning regulations.

I should like to quote briefly from an article in Adscene of January-February 1989, the current issue. It describes that feed lot in Lincolnshire. I am sure that hon. Members who follow these matters will be aware of the case. Adscene describes what was seen: Each feedlot contains around 100 cull cows, bought in from all over the country. In the lots they are fed a sloppy mash mix made from waste vegetable matter, poultry manure, spent brewers grains etc. and in this way they put on a little extra flesh before slaughter in Mr. Buitelaar's nearby slaughterhouse. The lots are surrounded by earth banks five metres high ‖ At the end of September Anglian Water Authority were successful in their case against Frans Buitelaar Farms Ltd. The latter were fined £1,000 with £700 costs for allowing effluent 15 times the strength of raw domestic sewage to run into tributaries of the Salmony Beck. That is, I believe, the consequence of the abolition of the 35 per cent. feed rule, and we really must press the Government to ensure by administrative means that the abolition of that 35 per cent. feed rule will not lead to an increase in the number of intensive units and will not lead to the sort of abuses of the environment that we have seen in that particular instance.

Producers in the less-favoured areas will suffer as a direct result of these changes—most directly by the reduction in the levels of grant for working the LFAs themselves. If, as the Government claim, the level of expenditure is to remain the same under the new scheme as under the old, how can the decrease in rates in the LFAs and the increase in rates elsewhere result in anything other than a decrease in the amount of grant aid to the LFAs themselves? It cannot, so we must take these changes a s a signal of declining support for agriculture in the marginal areas.

At a time of particular debate about the future of the uplands and the balance of support between the prosperous south and east and the more marginal areas of the north and west, it is a matter of real concern to us on these issues, which are not usually the subject of disagreement between us, that the Government are now signalling that they are withdrawing support from the extensive regimes in the marginal uplands and are prepared to give increasing support to the intensive regimes in the intensively farmed lowlands.

The scheme will also impact on the marginal areas in another way—through the price mechanism, the importance of which the Government never tire of reminding us. If capital grants to intensive livestock producers are increased, their costs of production will decline. This will increase the competition facing upland livestock rearers, which will drive down the prices that they receive. So livestock producers in marginal areas face the prospect of reduced capital grants and declining incomes. That is a development that we must condemn.

I ask the Minister to monitor very closely the take-up of the new grants in vernacular buildings—a point that the hon. Member for Upminster (Sir N. Bonsor) raised in his intervention to me. As I have already said, we welcome the principle of restoration using traditional materials, but we fear that the level of grant proposed will nowhere near cover the increased costs of such building methods, and I am conscious of the fact that pressure in areas such as those that the hon. Gentleman represents are particularly acute. If this turns out to be the case and those grant levels are too low, will the Minister undertake to review the situation?

While I can understand the Government's desire to limit this grant to farmers who derive most of their income from farming so as to avoid financing barn conversions, for example, by yuppy or nouveau riche landowners, if their intention is the maintenance of our rural heritage I fear that this exclusion will limit still further its efficacy. The Government must therefore monitor the take-up very carefully to ensure that not only have they got inclusions rightly balanced with exclusions but that the grant limits are set at an appropriate level.

It is not our intention to divide the House this evening because we are broadly in sympathy with the spirit of what the Government have introduced. I hope that I have been able to show, however, that although we accept it as a small step in the right direction we have considerable reservations about the practical application of these schemes, particularly on the uplands, particularly the question of woodland management, and particularly the incentive that it will give to the development and encouragement of intensive agricultural systems. That is something about which we have grave reservations. I hope that, as the Minister suggested in his opening speech, there will be amendments, improvements and modifications to the scheme in the not-too-distant future.

11.49 pm
Sir Charles Morrison (Devizes)

I go further than the hon. Member for Caerphilly (Mr. Davies). I am not broadly in favour of the scheme; I am strongly in favour of it. I congratulate the Minister and the Ministry of Agriculture, Fisheries and Food on introducing it.

The hon. Member for Caerphilly referred to his doubts about the value of enclosing woodlands by fencing to protect them from livestock. He believes that the grant will not be taken up unless an adjustment is made to the farm woodland scheme. I am not averse to favourable adjustments being made to the farm woodland scheme, but I do not think that it is necessary here. The enclosure of areas of grazed woodland can be of considerable benefit. The fencing of woodland can result in a large amount of natural regeneration. Furthermore, the development of undergrowth can be of great value to wildlife. Enclosure that results in totally bare woodlands becoming much more alive areas can be of considerable benefit. Woodlands will benefit from the grant.

Mr. Ron Davies

I accept that there will be considerable environmental improvement and that there may be other benefits, such as shelter for wildlife and natural regeneration that may lead to a timber crop in 20 to 50 years' time. My doubt is that there will be no economic incentive for the farmer for fence off areas of woodland. There will be no cash return, unless the sporting rights can be let. The amount of land that is available for grazing will be diminished. Unless provision is made to compensate the farmer for the loss of income from that land, he will not fence off his woodland.

Sir Charles Morrison

I take the hon. Gentleman's point. I agree with him that there will be no cash return, although I do not believe that the loss to the farmer will be very great. However, there will be an ultmate return to the farmer, in the sense that by fencing off his woodland he will improve the capital value of his land. I accept, nevertheless, that that is a long-term matter.

I note that the regulations are introduced under sections 28 and 29 of the Agriculture Act 1970. I welcome the emphasis in the schedule on the provision, replacement or improvement of hedges and shelter belts and on burning heather and bracken control. Bracken control will be of enormous benefit to the upland areas. Over the years more and more land has been taken over by bracken. The spraying and control of bracken will be of benefit to livestock, particularly sheep, and also to wildlife. The enhanced grants for bracken control are very much to be welcomed.

I want to refer in particular to paragraph 4 of schedule 1 which relates to the enclosure of areas of heather moorland or heathland with fencing protecting the areas from livestock. Again, in principle, I welcome very strongly the introduction of the grant for that purpose. There is no doubt that fencing on heather moorland will be of very considerable benefit. It will not so much protect areas from livestock all the time but will enable such areas to be rested from grazing by livestock for part of the time. In fact, there is no reason why a reasonable sheep stock should not graze heather moorland from mid-May to mid-October or perhaps a little earlier, depending on the part of the country. During that time, to a very considerable extent, the sheep live on the grasses that are growing among the heather. The damage done to the heather is done during the winter months, and it is very important, if possible, to remove the sheep or at least reduce their numbers very considerably during the winter months when the damage is done to heather.

Equally, in upland areas of Scotland—of course, the regulations cover Scotland and Wales—fencing can rest heather areas from excessive grazing by red deer. So, in general terms, I welcome that aspect of the order.

However, I have no doubt that, in drawing up the regulation my hon. Friend will have taken account of the 1970 Act and of section 17(1) of the Agriculture Act 1986. Perhaps the House will bear with me for a moment while I remind hon. Members of what that subsection says: In discharging any functions connected with agriculture in relation to any land the Minister shall, so far as is consistent with the proper and efficient discharge of those functions, have regard to and endeavour to achieve a reasonable balance between the following considerations—

  1. (a) the promotion and maintenance of a stable and efficient agricultural industry;
  2. (b) the economic and social interests of rural areas;
  3. (c) the conservation and enhancement of the natural beauty and amenity of the countryside (including its flora and fauna and geological and physiographical features) and of any features of archaeological interest there; and
  4. (d) the promotion of the enjoyment of the countryside by the public."
I was glad also to hear my hon. Friend refer to the need to enhance the beauty and wildlife variety of the countryside. I want to make a point about fauna in the 1986 Act and wildlife variety. It may well be covered by item 10 in schedule 1 to the regulations, but according to research that has been undertaken by the Game Conservancy in North Yorkshire 11 per cent. of the winter kill of the one bird that is unique to Great Britain—the red grouse—stems from birds flying into fences. That is in an area where fencing is decidedly limited, but the situation in the research areas of the Game Conservancy in Scotland is infinitely worse. The proportion of winter deaths in Scotland stemming from fencing is 26 per cent. That means that slightly more than a quarter of winter deaths in Scotland stem from birds flying into fences.

There is a solution to this: the attachment of reflective metal plates to fencing. I suspect that many hon. Gentlemen will have seen balls attached to electricity power lines. I do not know what they are called, but they look like balls. Their purpose is to enable the power lines to be seen by birds. The same is true of old telephone lines, to which corks are attached. There must be similar provision for the fencing of heather moorland if there is not to be a high death rate amongst red grouse, which is not only a bird of considerable national interest but is unique to this country. It is also of great economic importance to the upland areas of the United Kingdom.

Will the cost of attaching reflective metal plates to fencing be covered by item 10 in schedule 1 which refers to Any work, facility or transaction … incidental to the carrying out of any work, facility or transaction specified in any of paragraphs 1 to 9 above"? I hope that my hon. Friend can tell me that the cost of the plates or similar additions to fencing for the same purpose will be covered. There should be protection not only for red grouse but for other moorland birds that fly close to the ground and which can be carried away in a full gale such as there has been in the last few days. The cost must be covered if my hon. Friend is to live up to his desire to enhance the beauty and wildlife of the countryside and to the commitment in section 17 of the Agriculture Act 1986. I hope that my hon. Friend will give me a positive reply.

Madam Deputy Speaker

Mr. Roger Livsey.

12.1 am

Mr. Richard Livsey (Brecon and Radnor)

Madam Deputy Speaker, you know that in this place I am either Roger or Doctor—

Madam Deputy Speaker

The hon. Gentleman has film star good looks.

Mr. Livsey

—Doctor coming from "Treasure Island" and Roger coming from films of old.

I welcome the order concerned with the farm and conservation grant scheme 1989. It shows progress in Government policy. However, there are important points which affect the rural economy. When capital grant priorities pointed towards increased production, there was a pay-off in increased production and an improvement in farm incomes as a result. The change to farm pollution control and conservation is desirable, but unfortunately it will not have the same consequences for farm incomes. That is worrying from the point of view of keeping the rural economy and farms going, in particular in the less favoured areas.

It is against that background that the National Farmers Union has censured the Minister of Agriculture. Concurrent with these trends have emerged the lowest farm incomes in real terms since the second world war. Understandably, farmers are disturbed. There has been a great loss of capital grants which were oriented towards increased production. The hon. Member for Caerphilly (Mr. Davies) pointed out that there has been a drop from £217 million to £78 million. That is an awful lot of money to take out of the rural economy. We must remember that many of the upland areas are remote and that incomes on the farms are low. In addition, the earnings of people in the rural economies are extremely low. Many upland areas of Britain have the lowest disposable incomes in the whole country. That concerns us all.

Among the farmers in those areas are small farmers who are under intense pressure from the Government because of high interest rates. We all know that those high interest rates have been imposed by the Chancellor, because of the credit card spending spree in the high street. However, that bears no relationship to what is happening in rural Britain and the ability of farmers to achieve a realistic net income in order to stay afloat. There are tremendous problems for farmers in attempting to stay afloat. About four years ago, my area of Powys was obtaining about £30 million-worth of capital grants. Of course, it is now receiving only a shadow of that sum. Money has been taken away not only from the farming community, but also from the contractors and other support groups in the industry. That together with the loss, for example, of the tax benefits for purchasing new machinery—where there was 100 per cent. dispensation at one time—has affected machinery dealers too. We must be careful how we approach this subject. Obviously, pollution control and conservation are important, but they bring with them problems. The principles, however, are certainly to be welcomed. Perhaps part of the problem is that there is not enough money on the table.

The support of native woodlands, heather moorlands and traditional buildings must be welcomed. However, the loss of grants for new farm buildings—which enabled increased production and, therefore, increased income on farms—needs to be considered further. Many of those buildings enabled farmers to increase their incomes. We must not forget that costs—especially fixed costs—are continually rising. The missing part of the jigsaw in the Government's present proposals must be the fact that the previous grants enabled higher incomes to be achieved.

I certainly agree with the hon. Member for Caerphilly (Mr. Davies) that the reduction in grant aid from 60 to 50 per cent. for certain items in less favoured areas is regrettable. By their very description, those areas have far fewer options and therefore, need as much support as possible in order for the farms to remain viable.

I understand that there will be no more assistance for new drainage. I trust, however, that there will be some assistance for the maintenance of existing drainage, because many of the areas to which I have referred are high rainfall areas and, if the drains are not maintained, there will be a rapid reversion and the land will be less able to produce properly.

I was pleased to hear about the grants for orchard replanting and horticulture, and that there is some support for energy in those areas. As in other parts of the European Community, our horticulture has suffered grievously because of lack of support. Support, therefore, is something to be welcomed.

The problem is that the return on investment in farms at present is not that good, and, of course, that has not been helped by the interest rate increases. I believe that it should be possible to design environmentally friendly systems of farming which are also profitable. The Government, however, have cut research and development by £30 million, when, in fact, it should be expanded to cover different farming systems—ones which are profitable and will maintain the people on the land, but will also maintain the conservation of the countryside.

I particularly welcome the support for hedgerows, as I come from an area where they are cherished. The hedges in my area with their crop and pleach style are the finest in the land. They are superbly maintained and I am pleased that support will be given to them.

I am disappointed about the support for liming, which is put at 25 per cent. That is nothing like the support given when the lime subsidy was in operation. Liming not only increases productivity in an environmentally friendly manner, but assists in creating a buffer against the tremendous problems of acidity that exist in upland areas. The Government should be encouraged to increase support for liming as it will have double effects and will considerably improve matters. There is no doubt that the pH levels in rivers, for example, have fallen dramatically since the mid-1970s as a result of the loss of liming subsidies.

In the final analysis we must ask whether the measures will assist the economic viability of our farms. I believe that they will not do enough. They will help to improve conservation efforts as they will support pollution control—there must be more enforcement of such policies—but they will not increase the viability of farms. The Ministry must now work hard to ensure that the farmers and their families will still be living on their farms in 20 years' time. That is what the National Farmers Union was complaining about today.

12.11 am
Mr. James Paice (Cambridgeshire, South-East)

The measures are especially welcome as they signify a change in direction. The hon. Member for Brecon and Radnor (Mr. Livsey) said that he was sad that they will do nothing to improve farm income. While I sympathise with that, it would be rather strange if, at the very time the Government are leading the fight in Europe to deal with agricultural surpluses, we produced a profligate scheme to give money to farmers to invest in their farm structures.

The measures are important because they concentrate on some of the priority areas. I welcome the grants for horticulture, especially those relevant to the bulb production industry, which is important in my constituency and throughout many parts of the Fenlands and East Anglia. It is not often recognised that the British bulb industry is far larger than the Dutch industry and that we export a large number of bulbs to Holland.

I also welcome the grant enhancement for young farmers contained in regulation 10. About 14 years ago I represented British young farmers in Brussels and I worked on what was then known as the draft young farmer directive. Even though neither "young" nor "farmer" applies to me any more, it is nice to see that that directive—even at this late stage—is beginning to see the light of day.

Regulation 10 also allows enhanced grant to partnerships. It does not apply to existing limited partnerships that were devised simply as a way round the outdated tenancy laws—they are an anachronism in our free society. The grant applies to the true partnerships that are known in Europe, particularly in France, and in some parts of the United Kingdom. Under those partnerships, individuals join their farms to improve the efficiency of the total unit.

The most important part of the measures relates to conservation. All hon. Members want to see considerable increases in conservation schemes throughout the countryside. As the population becomes more prosperous, and leisure and travel become available to more people, everyone wants to see the countryside of their dreams, the countryside that they have read about and believe to exist. Thus, these measures, alongside the farm woodland scheme that has already been referred to, are very welcome. They are particularly apposite at present because farm incomes have been diminishing and are continuing to diminish substantially, and income has become a negative factor for many farmers. The hon. Member for Brecon and Radnor (Mr. Livsey) implied that.

We cannot expect farmers to invest large sums of money in totally non-productive investments, such as conservation, however desirable and admirable an investment it might be generally for all of us. Despite what my hon. Friend the Member for Devizes (Sir C. Morrison) said about capital value, conservation does not enhance farm incomes one iota. Therefore we must recognise that, if we want farmers to carry out conservation measures such as the creation of hedgerows, it can be done only with substantial grant encouragement from the Government. I welcome that very much.

As profits disappear, farmers will look increasingly to this sort of encouragement. This encouraging set of regulations reflects the changing times in agriculture, and I am very pleased to give it my support.

12.15 am
Mr. Andrew Welsh (Angus, East)

I suppose that we should be grateful for any financial assistance to farming during a period of financial stress and change, but I must express some disappointment at these measures, especially given the major problems confronting agriculture. The proposals will do nothing to assist Scottish farmers who face bankruptcy due to bad weather, poor yields, annual price reductions and appallingly high interest rates. The regulations are designed to tease out further investment by farmers, but farmers have every right to be wary.

During the 1970s, farmers were consistently encouraged to borrow relatively large sums to invest in their businesses and become more efficient. The level of today's interest rates shows just how misguided that policy turned out to be. But what is worse is the prospect of untold damage being done to Scotland's rural economy if the Government continue to ignore the financial crisis in farming.

Unemployment and rural depopulation will inevitably increase if farms go under. Therefore, instead of paying chickenfeed subsidies for minor improvements, as in this measure, the Government should deal with the cripplingly high interest rate burden.

This small measure must be seen in the context of a commercial situation where our European farming competitors in West Germany and the Netherlands pay interest at less than half the rate facing our farmers—6 per cent. as against 13 per cent. Instead of promoting minor EEC measures such as the regulations, the Government should be encouraging more relevant and appropriate EEC action for our agriculture.

Has the Minister really looked at the index of average net farm incomes produced by the Department of Agriculture and Fisheries for Scotland? The index shows that since 1978, farm income has dropped in real terms by more than 35 per cent. Average net farm incomes outwith the dairy sector are well below the average in other sectors, and there is no sign of improvement.

How, then, will these farm and conservation grant measures stem that tide? That is the question facing the Minister early this morning. In promoting the grant scheme, the Government clearly have no understanding of the main factors involved in the rural income multiplier. Agriculture expenditure is the mainstay of many more jobs in distribution and the ancillary sectors.

To take just one example, under the regulations the 40 and 50 per cent. grants that will be available for tree planting in enclosed areas of grazed woodlands will do very little to get rid of the massive surplus of nursery stocks. Yet these are the very producers that the Government were addressing in their farm woodland scheme. They were supposed to assist in taking surplus land out of production, and they have been actively encouraged to expand by the Government.

After substantial disruption caused by changes in the forestry taxation regime, the Government have refused point blank to meet the industry to discuss any form of compensation to meet the present problems. The so-called adjustment or market correction process used recently by various Ministers is a euphemism for Government-induced disaster. Why will not the Government face up to their responsibilities in that matter?

In a letter to the Secretary of State for Scotland, the Horticultural Trades Association says: when the Farm Woodlands Scheme was first being considered, representatives of the nursery industry met with the Ministry of Agriculture to give assurances that stock would be available to meet the expected uptake in this planting season. Having now produced the trees, we are faced with minimal uptake at present and little likelihood of applications under the scheme being processed and approved in time for this season's programme. In a letter to my hon. Friend the Member for Moray (Mrs. Ewing), a constituent says: We in the nursery trade have been led up a path to the wilderness. The Farm Woodland Scheme appears to be a total or near-total fiasco. I understand that the paper work is so complicated that it is a disincentive to anyone who may be interested and even for the keen it takes many months to have all paper work processed. It is all very disturbing. I regret that the Minister seems to have abandoned the Front Bench. I should have liked him to listen to the final sentence written on behalf of people who are dealing with the industry. It says: There is no doubt in my mind but that the government haven't much of a clue as to the damage they are doing to our industry. No wonder, when the Minister leaves the Front Bench to wander off to talk to other people. He should listen, perhaps even to his civil servants. It is in that context that the measures must be viewed and criticised. I welcome the Minister back.

On the credit side, the measure seeks to improve energy conservation in its proposal to supply wind or water pumps and generators, and investment in solar and other forms of energy saving. From an environmental angle I hope that the Government will consider giving at least 50 per cent. grants across the board for energy-saving devices instead of the paltry 15 and 25 per cent. proposed at present. That is inadequate for the task.

To ensure that the job is done properly greater incentives must surely be offered. For only a little investment substantial gains can be made in energy-saving devices, yet the proposal offers merely a token gesture in the direction of the long-term saving of energy costs which will be crucial to the industry's survival.

Similarly, the proposed field drainage and reseeding grants should be substantially increased, or an opportunity for reform will be lost. The measures are an opportunity missed and will be seen by the industry as no more than short-term palliatives which do not address the real problems facing farmers in Scotland and elsewhere in the United Kingdom during a period of change and readjustment.

In short, I am disappointed with the package. It could have been so much better and I hope that the Minister will go back to Europe and argue the case better for the needs of our farmers.

12.23 am
Sir Nicholas Bonsor (Upminster)

We are running short of time so I shall be as quick as I can. First, I join my hon. Friends in congratulating my hon. Friend the Minister on introducing these suggestions into our legal system. I have a series of questions to put to him, which I shall fire one after the other and hope that he will have an opportunity to deal with them.

The first is a technical question. I am not at all clear why draft regulations from Europe and a statutory instrument should be laid before the House when both seem to cover almost entirely the same ground. As draft regulations from Europe go straight into our legal system without any need for ratification by the Government of the day, as I understand it, why do we need both? Why, apart from regulations 6 to 10, does the statutory instrument appear merely to parrot what the European regulations say? I should be grateful if my hon. Friend could explain why we need to introduce legislation in that dual form under our new status as a full member of the European Community.

I wish also to make one or two points about some of the proposals in the two papers.

I see that the schedule 1(1)(c) of the draft regulations there is a distinction between the grants to be given in shelter belts of broad-leaved trees and other shelter belts, the former being given a 40 per cent. grant and the others only 15 per cent. While I appreciate that broad-leaved trees are much more attractive in the countryside than some of the other shelter belts, as a practical farmer I must point out that it is often much more to the advantage of the farm and the livestock shelter to plant a quicker-growing shelter belt than the rather more attractive broad-leaved one. In cereal areas, where there will clearly be a need for new shelter belts when the cereal farmer tries to diversify into other forms of farming, I hope that the Government will see the sense of giving a larger grant for quick-growing shelter belts to enable that transition to be made more effectively.

In schedule 1(2), the enclosure of areas of grazed woodland is expressly mentioned as qualifying for the 40 per cent. grant. I am not clear as to the distinction between grazed woodland and non-grazed woodland. Will this cover only woodlands which are being deliberately grazed at the moment, or will it cover woodlands into which the animals can get willy-nilly but from which fencing would enable the farmer to exclude them? I very much hope that it will be the latter. Otherwise the application of this provision will be extremely limited and therefore of very narrow value.

With regard to schedule 1(5), concerning reinstatement of vernacular buildings, I associate myself with what the hon. Member for Caerphilly (Mr. Davies) said. I believe that he is right to seek a balance between restoring agricultural buildings in the proper, old-fashioned materials and enhancing the property developer's profit when the buildings are turned over to the use of yuppies in the south-east of England. That balance must obviously be found. I congratulate the hon. Gentleman on the way in which he handled the debate. It is always refreshing when the Opposition can join the Government and welcome proposals. It is always nice for the Opposition to get congratulations from the Conservative Benches—they wonder what they have done wrong. The points that the hon. Gentleman made in criticism will also find some sympathy on this side of the House. We must work together to ensure that the draft regulations come into our law in the proper form and give the maximum benefit to our farming community.

The next point that I wish to raise in detail concerns schedule 1(9). I see that it is only in Scotland that the making, improving or alteration of banks or channels of watercourses will be eligible for grant. Perhaps the Minister can tell me why the less fortunate areas in the rest of the United Kingdom are excluded when parts of the north, of Wales and of Northern Ireland are at least as liable to damage from flooding as parts of Scotland. I welcome the provision for Scotland, but I hope that we can find ways of extending it to other parts of the country.

I have one rather important query about the draft regulations. The explanatory note to the document says, in sub-paragraph (f), that in addition to all the things that we have already discussed today regulation 18 will confer rights of entry. I was not aware that we were talking about conferring rights of entry at all today and I would view with considerable suspicion new rights of entry being brought into our laws of trespass by such means. I hope that my hon. Friend the Minister will be able to reassure me that no radical changes will be made by these regulations from Europe to the way in which the laws of England operate in relation to rights of entry and ownership.

12.29 am
Mr. John Home Robertson (East Lothian)

I am sorry if the hon. Member for Upminster (Sir N. Bonsor) is alarmed by any aspect of the measures, which, as he pointed out, have been acknowledged by right hon. and hon. Members in all parts of the House as being at least a half-step in the right direction. It is a matter of some joy whenever the Government produce intervention or direct assistance; we keep asking them to do so in respect of other industries. We should be thankful for small mercies, and that the Government are still prepared to invest in rural areas through agriculture.

It is important to recognise the direct impact that such an investment incentive has on the rural economy, because the money is not going into farmers' pockets but must be spent immediately on employing people to carry out works in the rural economy—which, given the new thrust that the Minister outlined, will be completed in an environmentally sensitive manner.

I take the point of the hon. Member for Brecon and Radnor (Mr. Livsey) concerning drainage. The old under-drainage systems in the principal arable areas of the country are collapsing or silting up considerably more rapidly than they are being replaced. Further incentives are important to ensure that Britain's arable land is kept in a reasonable state and fit for cultivation. I wonder whether the grants will go far enough.

As to the repair and reinstatement of vernacular buildings, will the Minister confirm that grants can be extended to cover adaptations? It is no use restoring a cart shed that was designed 100 years ago for use by horses and carts, when it is impossible to get modern equipment into it. I hope that that measure can be interpreted reasonably flexibly.

The hon. Member for Cambridgeshire, South-East (Mr. Paice) put his finger on a relevant point when he said that pure conservation investment is, ipso facto, unlikely to create any increase in the farmer's income. Grant regulation 6(1) states: An improvement plan shall not be approved under these Regulations unless the appropriate Minister is satisfied that the investments to be made under the plan are justified from the point of view of the situation of the agricultural business and its economy and that completion of the plan will bring about a lasting and substantial improvement of that situation, and in particular of the income per labour unit reasonably required in the carrying on of the business. I do not see how it is possible to square that circle. I fear that a certain amount of fiction may have to be written in preparing investment plans, to make programmes eligible for the scheme. Nevertheless, I hope that the measures work—but I wish that they were rather more generous.

12.32 am
Mr. Ryder

We have had, as I expected, a well-informed debate on the scheme, and I am grateful for the generally warm welcome that it received. Right hon. and hon. Members raised a host of specific points, to which I shall endeavour to respond. If I do not cover them all in the short time remaining to me, I shall write to the right hon. and hon. Members concerned.

The Government recognise the special difficulties of hill farming and the important part that it plays in the economy and environment of the areas in question. That is why we are retaining an LFA differential across the board, apart from waste treatment and traditional buildings. It is also why we are careful to retain grants that are particularly important in LFAs—especially those for reseeding, regeneration, liming and fertilising. We are also introducing some new grants for heather moors, native woodlands, and repairs to vernacular buildings that should prove particularly helpful in the uplands.

Farmers in LFAs have had the benefit of 60 per cent. grants for three years since 1985. Over that period, we have contributed a great deal to the cost of conserving the uplands environment. The greatest pollution problems are associated with dairy farms, which are concentrated in the lowlands. The prime concerns for environmentalists have been the removal and neglect of lowland hedgerows, to which I referred, so, in my view, it makes sense to shift the balance of support in the way that I described.

The regulations cannot be amended. The scheme will be put through the formal EC approval procedures after the United Kingdom Parliament has approved it. But, as I have said previously, I am always ready to take up the views of hon. Members to take them into account for future purposes. We have had extensive discussions with the European Commission, which has indicated informally that the scheme conforms with Community rules.

It is recognised that the United Kingdom is breaking new ground in Europe, and we have probably set a lead which others will wish to follow. We shall still need to submit the scheme through the formal clearance procedures, but we have been grateful for the informal guidance that the Commission has been able to offer and for its confirmation that it conforms with the necessary regulations.

The hon. Member for Caerphilly (Mr. Davies) made an interesting speech. He was right to say that the scheme will be extended to Northern Ireland under a separate instrument. He asked whether there could be any help for farmers who had prepared but not submitted improvement plans. The closure regulation of necessity had to operate from a set date and it was inevitable that some would fall on the wrong side. We have accepted that where prior notification was required—as in, for example, national parks—notification can count as a plan submitted.

The hon. Member for Caerphilly raised the problem of pollution, and I, too, am concerned about that. I re-emphasise that our anti-pollution grants are running at about £50 million over three years, and I strongly support appropriate prosecutions against farmers causing pollution; legislation permits a maximum fine of £2,000 for each offence, plus clean-up costs.

The hon. Gentleman cast some doubt on the enclosure of native woodlands. There is a need for the new grant. Indeed, the RSPB pressed strongly for a fencing grant. The farm woodland scheme to which he referred is about planting trees for commercial timber production. The new grant that we have been discussing is about the better management of existing woodlands, irrespective of their value as timber.

The hon. Member for Caerphilly referred to the Bill introduced by the hon. Member for Wentworth (Mr. Hardy). I recognise the value of hedges as wildlife habitats and landscape features and their value for agricultural purposes, and I had discussions with the hon. Member for Wentworth as I said in a previous Question Time that I would.

The hon. Member for Brecon and Radnor (Mr. Livsey) alluded to farm incomes. I remind him that the latest economic forecasts show for the second year running an increase in incomes of livestock producers generally across less-favoured areas. Net farm incomes in the United Kingdom LFAs are forecast to be 7 per cent. higher in real terms in 1988–89, following an increase of 48 per cent. in 1987–88.

My hon. Friend the Member for Devizes (Sir C. Morrison) asked about fencing to encourage the regeneration of heather moors and the possibility of reflective plates, and I shall consider that idea.

My hon. Friend the Member for Upminster (Sir N. Bonsor) spoke of the relationship between the regulations and the scheme. They are United Kingdom regulations; they are our detailed implementation of the more general rules in EC regulation 797/85. The scheme is similar because this is the other part of the farm and conservation grant scheme. He also questioned me about rights of entry. This is not a new right. It is a continuation of a right which was in the agriculture improvement scheme.

My hon. Friend the Member for Upminster asked about the exclusion of livestock from grazed woodland. The grant will cover woods used as shelter for livestock or for grazing. There is no specific requirement that this use shall be at a particular level before the grant will be paid. It is open to the farmer to decide whether stock are inhibiting regrowth and therefore whether fencing is necessary—

It being one and a half hours after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 ( Exempted Business).

Question agreed to.

Resolved, That the draft Farm and Conservation Grant Regulations 1989, which were laid before this House on 2nd February, be approved.

Resolved, That the Farm and Conservation Grant Scheme 1989 (S.I., 1989, No. 128), a copy of which was laid before this House on 2nd February, be approved.—[Mr. Ryder.]