HC Deb 04 June 1998 vol 313 cc486-8
2. Mr. Desmond Swayne (New Forest, West)

If he will make a statement on his policy in respect of the level of farming incomes. [42721]

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

The Government are working to create the conditions that will enable farmers to develop their businesses and maximise their income by pressing for market-oriented reform of the common agricultural policy.

Mr. Swayne

I should be very interested to know precisely what those conditions are. The fact is that farming incomes have fallen by well over 40 per cent. Farmers have been hit again today, by a sixth rise in interest rates. Those who can no longer afford farming and want to get out have been devastated by the abolition of retirement relief on capital gains. Meanwhile—all this time—the Chancellor of the Exchequer is building up a war chest for the next general election. Will the Minister ask for some of that money now, while we still have a farming industry?

Mr. Morley

The Government have helped the hardest-hit sections of the industry with £85 million of aid for the sheep and suckler sector and by absorbing £70 million of start-up costs. Perhaps the hon. Gentleman might ponder the enormous overspend on BSE aid to renderers by the previous Conservative Administration. Some of that money could have gone to farmers.

Mr. Eric Martlew (Carlisle)

May I bring my hon. Friend back to a point that I made in a recent debate about the damage done on the hills by overstocking? The only way for hill farmers to increase their income is by increasing the number of sheep and cattle on the land, which is doing serious damage. Is my hon. Friend considering ways of compensating those farmers to reduce the number of animals on the hills?

Mr. Morley

My hon. Friend is right that overstocking and overgrazing are serious problems in some hill areas. We need to address that as part of the structural changes and negotiations for Agenda 2000 and potential reform of hill livestock compensatory allowances.

Mr. Charles Kennedy (Ross, Skye and Inverness, West)

Has the Minister seen the well-researched and well-documented evidence that appeared recently in Farmers' Weekly of the number of farming households that have to claim family credit, income support and other social security benefits? Is that not a sad indictment of the present plight of many in the farming community? Given that the Government have obstinately refused since last May to access the European funds that could be available, will the Minister take the opportunity to promise to set up an interdepartmental analysis of whether withholding that money, when set against the money being claimed from the Department of Social Security, will cost the British taxpayer—as well as the farmers, their families and their communities—more in the long term than help is received in the short term?

Mr. Morley

We are not withholding compensation. We have accessed nearly all the available resources for the beef and sheep sector. Farming incomes have been under pressure in the past year, but that agrimonetary compensation would not benefit the pig, horticultural or poultry sector. Some sections of the industry have had a difficult time, but others have successfully targeted their customers, broadened their customer base and diversified.

Mr. Huw Edwards (Monmouth)

Does my hon. Friend appreciate the dismay of farmers in my constituency, who have seen farming incomes decline while a supermarket chain such as Tesco claims that it makes no money on selling meat? Will he join me in commending the investigation by the Welsh Affairs Committee and its recommendation that the matter should be referred to the Office of Fair Trading?

Mr. Morley

I accept that there is concern in the agricultural sector about certain aspects of the role of retailers. However, retailers have also played a positive role in developing markets and driving up standards.

Mr. Michael Jack (Fylde)

The answers that the Minister has given so far on this serious issue of falling farm incomes—particularly in the light of the Government's failed inflation policy, which has now led to a sixth increase in interest rates—are nothing short of complacent. Does he accept that today's announcement on interest rates will increase borrowing costs for farmers and lead to further reductions in farm incomes? Will he come clean on whether he has sorted out the level of arable area payments and livestock payments in the agrimonetary arrangements—or is he content for another £400 million disappear from farming at the end of the year?

Mr. Morley

Surveys show that, because of three exceptionally good years of farm income, almost 50 per cent. of farmers have no borrowing with the banks. The right hon. Gentleman should also be aware that the UK taxpayer has to find 71p of every pound of agrimonetary compensation. I presume that that is why the Conservative Government voted against the setting up of the agrimonetary scheme.