§ 2.48 p.m.
§ Order of the Day for the Second Reading read.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL ST. ALDWYN)
My Lords, the main provisions of this Bill were foreshadowed in two White Papers published last November. These were the White Papers on Long-Term Assurances for Agriculture and on The Pig Industry. The policies that they announced have received wide support, both inside and outside Parliament, including, in particular, support from leaders of the agricultural industry itself; and I am confident that they will be endorsed by your Lordships to-day.
I am encouraged to believe this by the acceptance of the Resolution moved on January 30 last by my noble friend Lord Amherst of Hackney. As your Lordships will remember, this approved the policy we set out in the first of these two White Papers, which is the policy now embodied in Part I and Part II of the Bill. On that occasion, the noble Viscount, Lord Alexander of Hillsborough, fully endorsed my contention that our proposals wereundoubtedly the most notable step that has been taken since the passing of the Act of 1947.And I must say that that seems to me a very proper description of the long-term assurances and the farm improvement scheme we are providing for in this Bill.
The main object of Part I is to provide for the new long-term assurances, but it deals also with certain other matters. In particular, it replaces the temporary provisions of Section 4 of the 1947 Act by similar permanent provisions for the guarantee arrangements for the various guaranteed products. It also gives us the powers necessary to support these arrangements which have previously depended upon Defence Regulations and war-time legislation. Clause 1, then, takes the place of Sections 3 and 4 of the 1947 Act, but does not have to be extended annually, as Section 4 had to be.
Clauses 2 and 3 provide for the long-term assurances on the guarantees for individual products and the total value of the guarantees. Clause 2 provides that 295 the guaranteed price for each product shall be kept each year at not less than 96 per cent. of that for the previous year. This assurance extends to all the guaranteed commodities, and for livestock and livestock products there is also a provision that in any period of three years the maximum reduction for any one commodity shall be 9 per cent. These minimum forward assurances take the place of the minimum price provisions of Section 5 of the 1947 Act, which applied to livestock and livestock products only. They represent a great improvement on those provisions, however, because they will relate year by year to the current levels of the guarantees and will thus be kept automatically up to date.
Clause 3 provides for the entirely new form of forward assurance—that on the total value of the price guarantees and production grants. Under this clause, the award following an Annual Review must keep this total value at not less than 97½ per cent. of that for the previous year, plus or minus cost increases or decreases since the last Annual Review. This should remove much of the apprehension which farmers have in the past felt about annual reviews; it will also set strict limits on the freedom of the Government to make any significant reductions in a number of guarantees at the same time. Taken together, these assurances offer a very valuable safeguard to producers, because they impose major limitations on the Government's discretion. They thus strengthen the 1947 Act at a point where experience has revealed a certain weakness.
Clauses 5, 6 and 7 also strengthen the Act in another way. These clauses provide powers that are needed to support the guarantee arrangements and to protect the interests of the Exchequer. We are now relying on Defence Regulations and other war-time legislation to do this, which is clearly an unsatisfactory state of affairs. I need make only a brief reference to two other clauses in Part I of the Bill. First, there is provision in Clause 8 for varying the percentages laid down in Clauses 2 and 3, but no such change could take effect before the year 1962–63. Secondly, now that we are making permanent provision for the guarantee arrangements, we can repeal a certain amount of earlier legislation, and Clause 10 does this. 296 I come now to Part II of the Bill. This provides for the new scheme of grants for farm improvements and amalgamations, and I will deal first with the question of improvements. On many of our farms the fixed equipment to-day is, frankly, out of date. Until it is adapted to modern farming needs and practices, the farmer will be handicapped in his efforts to achieve greater efficiency and reduced working costs. The new grants for which the main provisions are in Cause 12 and the Second Schedule, will encourage landowners and farmers to do this, and I believe that they will thus serve to reduce the industry's dependence on support through the price guarantees. Horticulture is within the definition of agriculture given in Clause 35, and many improvements to horticultural holdings will be eligible, though we shall not be assisting specialised horticultural equipment like glasshouses, heating equipment or gas and cold stores.
Subsection (3) of Clause 12 gives the Minister discretion to withhold his approval or to attach conditions, but also imposes a number of limitations on his power to approve applications. The first, in paragraph (a), requires the farm to be an equipped farm unit that is economic, or could be made so with the improvement proposed. We do not ask for grant to equip new holdings on bare land, as we feel that that would encourage the splitting up of a larger holding into smaller ones.
On the other hand, the reclamation of waste land and its incorporation in an equipped holding would not be ruled out. I think it would be wrong to perpetuate uneconomic units by providing them with new permanent improvements, and this principle is already accepted for livestock rearing land improvement schemes. I shall come later to our proposals for uneconomic units, which are contained in Clause 16.
Paragraph (b) of subsection (3) of Clause 12 requires the improvement to give a reasonable return on its cost. Paragraph (c) requires that it must be such that a prudent landlord, having regard to its cost and all other circumstances, would be willing to make it. The purpose of this test is to ensure that the improvement is of lasting value irrespective of changes in occupation. Clause 13 deals with the rate of grant. Subsection (1) fixes this at a flat rate of one-third of 297 the reasonable cost; and subsection (2) enables the Ministers to make regulations for basing payments, if the applicant wishes, on standard costs. This is a variant of the principle of the silo subsidy scheme and has the advantage to the farmer that the grant is the same whether or not he has done the work by his own labour. We do not yet know to what extent we can use this device, but I can assure your Lordships that we shall use it as much as we possibly can.
Clauses 16 and 17 offer help towards the cost of merging and regrouping uneconomic holdings into economic ones. I should like to emphasise that these grants are for voluntary amalgamation and that we certainly do not intend to compel amalgamations in any form. All that we are doing is to provide assistance in meeting the rather special onerous costs of amalgamation. They are set out in detail in subsection (2). Clause 18 is the financial clause. We estimate that the cost of the scheme will be £50 million over a period of ten years. It is, however, a very speculative figure, and we are therefore asking Parliament to give us power to raise the limit to £55 million if our estimates prove somewhat low.
lf, on the other hand, the progress of the work is slower than we now expect, Clause 12 (5) gives us power to extend the period of grant for a further two years.
Now, my Lords, I come to Part III of the Bill. This deals with the development of the pig industry and will give statutory effect to the proposals set out in the second of the White Papers that I mentioned. Clause 23 provides for the setting up of a Pig Industry Development Authority on the lines recommended by the Reorganisation Commission for Pigs and Bacon. This proposal has received widespread support, and I am sure that noble Lords on both sides of the House will also welcome it.
The composition of the Authority, as set out in Clause 24, is a matter that demanded most careful thought. If it were too large, it would be ineffective; if too small, it would not be sufficiently representative. We cannot claim to have satisfied everybody, but we think that the present provision for seventeen members is reasonable and holds the balance fairly 298 between the different interests. We estimate that the Authority will need up to half a million pounds a year to finance its activities. Under Clauses 25 and 26 it will have power to impose a levy, but any such scheme will have to be submitted to Ministers and will be subject to the approval of Parliament. Clause 30 provides for the dissolution of the Pigs and Bacon Marketing Boards and the Bacon Development Board, and for the disposal of their assets. My right honourable friend has already paid tribute in another place to the work of these Boards, but I should like to add my own word of appreciation for the services which their members have given to the pig industry.
Finally, there are two points in Part IV of the Bill which I should mention. First, Clause 32 provides for annual grants to Northern Ireland. These will replace the special grants which we have made in the last three years to help to compensate Northern Ireland producers for the disadvantage of being so far from their main market in Great Britain. Secondly, Clause 37 names September 1, 1957, as the date on which the Act generally will come into force. In another place it was suggested that a better date would be August 1, since this would enable an earlier start to be made with farm improvements. But so far we have felt, with the agreement of much responsible opinion, that the first essential was to get the scheme correctly worked out and smoothly launched, and to keep enough time to enable us to do this. We have told owners to assume that September 1 is the date, and we feel that at this late stage, even if it were practicable to do so, we should not be wise to alter the basis on which they have made their plans.
It may be that in this brief summary of the Bill I have done less than justice to so important a measure, but I feel that your Lordships will share my conviction that it is indeed the greatest single piece of agricultural legislation since the 1947 Act. It represents not a departure from the policy founded upon that Act, but a development and a strengthening of that policy. It will give to the industry assurances for the future and the means of equipping itself with modern tools and modern techniques for its future task. It is in the confidence that these aims will commend themselves on alt sides of your 299 Lordships' House that I beg to move that this Bill be read a second time.
§ Moved, That the Bill be now read 2a. (Earl St. Aldwyn.)
§ 3.5 p.m.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, if brevity is the principal merit in the introduction of a major measure, then the noble Earl has achieved a very high standard indeed. The only reason one would perhaps accept such brevity to-day is that we have had on, I think, at least two previous occasions, discussions in the matters which are relevant to the Bill, and I think they have even overlapped into one or two other discussions as well. So that, on the whole, we exonerate the noble Earl for not taking long enough in submitting this measure to-day.
I gladly repeat that, so far as the Government opposite have had any policy at all on agriculture for the last six years, this Bill is most welcome, because it is the largest and most important contribution to agricultural legislation since the 1947 Act. There are, however, one or two matters to which I should like to refer briefly. I do not, by any means, wish to bedevil your Lordships with a repetition of things I have said before on these matters. I listened to the noble Earl as he dealt briefly with Part I of the Bill, and I am bound to say that I have been waiting anxiously month after month to see something like reasonable stability in the sale of many commodities which are the subject of guarantees, and to find a substantial amount of what I call pleasurable satisfaction amongst the farming community as to what the various arrangements yield to them, both in volume of sale return or in the general position of their farm economy.
It is most interesting at the outset, when dealing with Part 1, to remember what my right honourable friend in another place, Mr. Tom Williams, said on Second Reading, which, by the way, was about three months ago—the Bill has been a long time in another place. He referred to Clause 1 of the Bill and pointed out that it was really a great tribute to the Labour Government, in that it accepted almost entirely a particular section in the 1947 Act which was rigidly resisted by the Conservative Party of the day when that Act was a Bill in Standing 300 Committee in another place. Therefore, one reason why I welcome this measure is that it is a recognition at last by the Conservative Party, and certainly by the Government, that that particular provision in the 1947 Act was well worth including, that it has worked well and that it is necessary in any kind of constructive legislation which involves State assistance. Although my right honourable friend in another place was most concerned lest there should be any catch in the fact that the Bill contains the word "may" instead of "shall" in regard to these guarantees, nevertheless I welcome the clause as it now stands.
Then the noble Earl referred to a matter which we have already discussed—namely, the future arrangements for drawing up the guaranteed prices in a given year so that they shall not fall below 96 per cent. of the previous year's figure. He dealt in general with the question of reductions in the guarantees, which in regard to livestock must not exceed 9 per cent. over three years, and with the whole farm economy in a similar period of three years—because that is the kind of period we have to visualise when dealing with a margin of, say, 7 or 7½ per cent. I have looked at the various workings of these things and I have listened to people who are in farming, and there is certainly some satisfaction to be gained from the fact that reductions in guaranteed prices are at last to have statutory blocks on their going too far in any given period. That is something. I do not know how the farm incomes of the country are assessed—I can never understand that: it is a little beyond me—but it has been pointed out that when assessing the overall income of a farmer on the basis of figures which have been used in the Price Review, it is possible for the farming industry, in spite of the increase in costs, to lose £29 million of its receipts in a year. The industry as a whole is not yet satisfied on that point, particularly when it is borne in mind that for year after year (and I promise not to repeat this) large gaps have to be made up, partly by an increase in price here and there but mainly, taking things as a whole, by increased efficiency in the industry. But that is probably achieved to an extent sufficient to meet the increased costs only where there is a very large farm organisation and no need to farm "on a shoestring," where there is plenty of money 301 for capital for improving fixed equipment and machinery, and where the farmers are able to make very rapid reduction in costs, particularly in labour costs. I think that aspect requires a good deal of looking into.
Then, let us take the experience of the arable farmer in the last twelve months (your Lordships will find a list of commodities in Part I of the First Schedule, with barley, oats and rye and potatoes in the first list) and see what has been his experience in regard to oats. I have not yet heard of anything which would appear to enable him to count upon any acreage payment as a part of the guarantee policy of Her Majesty's Government on these commodities. There have been payments on barley and wheat, but there has been no payment on oats, yet in many parts of the country oats was a very poor crop this year. The fact is that this acreage payment helps the farmer, whether he sells his oats or is keeping them for his general use on his farm, to build up his other products for sale. With the poorness of a large part of the national crop of oats, certainly in the first half of the financial year, a very much higher price than might have been expected was received. The man who grows oats for sale is all right, but the man who grows oats for his own consumption, and who happens to be in an area of bad weather and poor crops, has had to buy oats at very high prices, having been unable to get enough from his own production because of circumstances over which he had no control. That is a very sharp comment upon the whole principle of providing guaranteed prices on an acreage basis. I should like to hear from the noble Earl, if possible to-day, something about what is to be done in the current period of 1956 guarantees, because this is a very sore point with a large number of farmers in this country. I would also ask Her Majesty's Government to look again at this question of acreage payments, for this system often works out in the manner which I have tried, perhaps ineffectively, to describe to your Lordships this afternoon.
As to Part II of the Bill. I entirely agree with the noble Earl in his description of the condition of farms, and especially of their fixed equipment. It makes the offer to assist in the provision of improvements, and in many cases in 302 the substitution of new fixed equipment for old, after the demolition of the old equipment, in order to obtain increased efficiency, valuable. Having looked into this matter, and talked about it, I am bound to say that if the position is as the noble Earl describes—and I believe rightly describes—it would seem that in the present financial situation in the country a grant of 33⅓ per cent. is not a large one. I have seen it stated in one or two farming papers that there must be farmers who look back ruefully to the period, eight or nine years ago, when wages were little more than half the present rate on many farms, and when the costs of borrowing money were very much less than the present cost—the figure has soared so rapidly during the last four or five yea 7S. The farmer's ruefulness will be caused by his realising fiat had he carried out the improvement on his own nine years ago he would have been better off than he will be now, even with the 33⅓ per cent. grant offered. It is that kind of circumstance which should be taken into account by Her Majesty's Government and the Treasury, though I am quite sure that the Ministry of Agriculture feel much more sympathetic to farmers than the Treasury always allow them to be.
In a good many cases the small man will find considerable difficulty in effectively taking advantage of the offer made by Her Majesty's Government in this Part of the Bill. I know that it was said on a previous occasion that the Agricultural Mortgage Corporation have made it clear that on suitable classes of fixed equipment they are willing to lend a good deal of the actual cost; but unless the market drops rapidly, one cannot visualise a rate of interest anything much below 5½ per cent. or 6 per cent. In fact, I believe that the present rate is 6 per cent.; and if one has to provide two-thirds of the cost of a building, and is not a very wealthy or prosperous farmer according to acreage, it is difficult to raise money at such a rate with any degree of confidence that one will be able to meet all one's liabilities.
I should like to say a word or two about Clause 12 (3) which the noble Earl mentioned. It seems to me that the wording to which he referred does not exactly cover the point I have in mind. If I am misrepresenting the recent speech 303 of the Minister of Agriculture, I must apologise. I had intended to bring the Press Report with me but omitted to do so. From what the Minister was reported as saying, it appeared to suggest that because there has been a substantial increase in the production of milk, eggs and pigs, farmers could not look for very much help under this part of the clause. If I am not inaccurately reporting what was in the mind of the Minister, I should like that point clarified a little to-day.
Under the general powers of Clause 1, which has been adopted from the Agriculture Act, 1947—the Labour Act—it is obvious that if State funds are to be spent to assist a great industry there must be something in the Statute authorising those payments to ensure that the money is well and properly spent, and that, if necessary, it is possible to control certain classes of production. That is not unreasonable, and it is a principle by which we stood in the time of the Labour Government. But when we come to the basis on which guaranteed prices under Part II of the Bill will work—in particular with regard to the three commodities which I have mentioned, milk, eggs and pigs—I believe that farmers who are thinking about making applications for grants under this Part of the Bill will wish to know exactly what the position is.
The noble Earl very nearly went as far as I wanted him to, but not quite. I would put this to him. Suppose that a man is producing T.T. milk and attested milk under an older system than those which have gradually been developed in order to secure this healthful milk for the nation, and finds that his expenses have risen substantially owing to the great increase in wages and labour costs generally—and bear in mind that a really qualified herdsman, with an assistant to relieve him when he is away, costs, according to the size of the herd, anything from £10 a week per man upwards. These are very heavy costs, and the producer may well wish to reduce them in some way by adopting more efficient labour-saving methods for the production for this class of milk. Will he be eligible for grant, although he is already producing this sort of milk, in order that he may be able to reorganise his premises? I think that is a question upon which we 304 might well have some clarification; I feel sure it would be helpful.
It seems to me that it would be an exceedingly expensive matter for the small man who may have what is called a "T.T. attested cowshed," but one which is by no means perfect, to make the necessary changes to effect substantial savings in labour costs. If he could get a grant for a smaller amount than might be involved in other cases, this would help him to effect the necessary alterations as indicated in a recent issue of the Farmer's Weekly. He might have a bail at one end of the shed and various other things all designed gradually to reduce the number of men who are required for milking in the case of a medium-sized herd. This would enable him to meet the difficulties with which he is faced at present as the result of the wage position, which is a matter of such concern, in spite of larger production, for it has to be borne in mind that the use of more milk for manufacture means a somewhat lower price per gallon. That is the problem which these poor people at the present time have to face, and it is causing great difficulty. If they could have an assurance that they can be helped to some extent by the system of grants I am sure that it would be beneficial.
Another question I wish to put to the noble Earl is how he thinks the conditions of a reasonable return are going to be judged. What is a "reasonable return"? Are the same criteria used to determine a reasonable return on a 500-acre farm per unit of commodity to be applied to the unit of commodity on a very much smaller farm, in different circumstances? Or is a reasonably elastic yardstick going to be adopted by the people who have to report to the Ministry upon the applications? I cannot, of course, expect the Minister to define exactly what the Government have in mind, but I should like to be given some idea of how it is proposed to deal with the problem of what is a reasonable return per unit of commodity to be dealt with under Clause 12 (3) (b).
Now I wish to put a question on Clause 16, which in my view is a very useful clause. I noticed with interest the reservations which the Minister placed upon the use of this clause: they did not sound to me unreasonable. But is there 305 to be any regulation as to what kind of amalgamation will be thought to qualify for grants towards costs? Would two partners in a farming business be regarded as separate farmers and would an amalgamation in such a case be helped? Or is there to be a bar on that kind of thing? What exactly are the sort of general conditions which the Government have in mind with regard to this question of grants towards the cost of amalgamation? I think it would be very helpful to have some background in this connection.
I notice that in the noble Earl's remarks On Part III of the Bill he stated that the idea of a Pig Industry Development Authority had received widespread support from the industry in the country. I suppose that in a way that might be so, but from the controversies which I have read in agricultural journals over the last two or three years I should have thought that those associated with the old Pig Marketing Board, and some of those associated with the Bacon Marketing Board, have not been too happy about it. However, it may be that the new Authority is welcomed by the majority. When we come to deal with the actual position of the Authority, I can understand that, as the noble Earl says, it will cause difficulty if the membership is too large. Bat there are two points on which I think the Government should, if possible, think again.
I was disappointed to see that the plea of my old friend Mr. Gooch, President of the National Union of Agricultural Workers was not met. Considering the number of groups to whom two, or even four, representatives are to be allocated, and considering the great importance of retaining skilled labour in the farming industry, I should have thought that that Union would have been given at least two representatives. But it is still confined to one. I should also have thought that the plea of the co-operative societies in the country, who are very large users of agricultural products, might have been met, and that room could have been found upon what is not a commodity marketing board—please observe that the new body is not that; it is the Pig Industry Development Authority—for some persons who are representative of the consumers, the public. I know that the noble Earl can say that at the very beginning of the list there are some 306 independent people. But, to my mind, the word "independent" never gets very far away from the explanation of it given by Lord Beaconsfield, when he was Mr. Disraeli. "What is an independent?", he said. "An independent is one upon whom no dependence can be placed."
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I notice that the first comment on that is by the Government Whip. That is very good: I think that the noble Earl, Lord Onslow, rose to that very quickly.
It applies to a great many activities in life, and when one comes to give judgment upon anything it is exceedingly important to have independence. When there is a body composed of different interests—trading interests, agricultural interests, bacon and manufacturing interests, and the like—it seems to us that it would lie reasonable to have some definite consumer representatives on the Authority. So I would ask the Government, if they would, to think again on that matter.
My last point relates to the comments made by the noble Earl, Lord St. Aldwyn, on the appointed day for the coming into operation of the Statute. I have noticed with great interest—and I should like to know whether the Minister can tell us if it is the experience of his Department up to date—that the rush of inquiries and the pressure from sections of the industry to be allowed to proceed before September 1 is mostly from people who from the beginning have had no difficulty at all in finding the capital to put down in order to get the benefit of the Government grant. It is going to be much more difficult for many smaller and poorer men. Even when, with the help of the already overworked advisory officers, they have been able to get out a scheme that would be eligible for grant, and have tried to make sure that they have enough finance behind them, or promised to them, to be able to put up the two-thirds of the cost of the scheme, they may not be among the earlier of the applicants.
If it is intended that the maximum cost to the industry is to be no more than the estimated £15 million a year, including the £5 million a year Government grant, 307 I hope that the applications of the rich will not be rushed through at the beginning so that those other applications, which would bring the total up to the £5 million a year grant, are left out of account for the rest of the year. I hope that a good deal of thought and consideration will be given to the smaller man in the industry, who feels that, if he can go on long enough in his search for the rest of the capital he will need in order to qualify for a grant, he will be able to get it, so that he will not be left out of the grant to be made within the current financial year beginning September 1. I am much obliged to the noble Earl for his presentation of the Bill.
§ 3.33 p.m.
§ LORD AMHERST OF HACKNEY
My Lords, I also welcome this Bill and I should like to congratulate the Government upon bringing it in. I had an opportunity earlier this year of moving a Motion approving the White Paper, and naturally I support this Bill wholeheartedly. I feel that it makes a major contribution to meeting some of the problems which face the agricultural industry. At the moment, there are three main problems. The first is to ensure that agriculture makes its maximum contribution to the balance of payments; the second is to provide a high standard of living for those employed in the industry, comparable with the standard of the rest of the community, and the third is to produce what the consumer wants at a reasonable cost both to the consumer and to the Exchequer.
Agriculture is making a great contribution—I believe over £300 million—to the balance of payments. The net production is higher than it has ever been. A great tribute is due to farmers and workers for bringing that about and also to those people who, working behind the scenes, have produced new varieties of corn, malting barley and other grain, so that what was regarded as a good crop some years ago would now be regarded almost as a crop failure. But we are still importing a very high amount of feeding-stuffs and something has to be done to increase the net production from our land. There is still the difficulty of providing a reasonable living for those employed in the industry. I think it is true to say that farmers' incomes—particularly, the 308 incomes of the smaller farmers—have not risen with the increase in production anything like so much as have the incomes of other people.
These two problems and the third, of producing at a reasonable cost both to the consumer and to the Exchequer, we have to solve against a background of world surpluses and some home surpluses. These problems remain whatever the method of implementation of the guarantees. Fixed prices would be no solution; in fact, they would increase our difficulties by insulating the producer too much from consumer demand; but to produce cheaply and efficiently we must be able to plan ahead, and to do that we must have stability. I think that Part I of the Bill gives the farmer the necessary security to enable him to plan ahead. At an} rate, it gives him far greater security than he has ever had before. Certainly the forward guarantees under the 1947 Act were always utterly unrealistic, but the farmer at least knows ahead the worst that can possibly happen to him, and he can plan ahead realistically. He knows that there cannot be any disastrous fall in prices for the commodities he produces. Some latitude is essential in any scheme which deals with guarantees in the future, and these percentages have been agreed with the industry and I am sure that they are reasonably fair.
If we are going to produce efficiently and cheaply, the other thing which is required is new capital. I believe that Part II of the Bill can make a great contribution in this regard. We have to see, however, that these grants are used to the maximum effect, and a great responsibility will fall on the members of the Agricultural Land Service and the agricultural executive committees who have to administer these grants. I am sure that they will make certain that they apply the rigid test that grants will either lower the cost of production proportionately or increase returns in proportion to the amount spent. The noble Viscount, Lord Alexander of Hillsborough, asked what the test would be. I suppose that in this scheme we have the test of the prudent landlord, who I am sure would not make an improvement unless it could be justified by some increase in the amount of the yield of a farm. I think that that, at the moment, is usually somewhere about 8 per cent.
309 But there is a real difficulty, which the noble Viscount mentioned, and that is the case of the small farmer who in many cases may find great difficulty in borrowing the two-thirds of the cost. I know that the resources of the Agricultural Mortgage Corporation are available, but the small farmer, unlike the larger farmer, is, in many cases, though not in all, having a somewhat difficult time at the moment, because the three commodities on which he most relies—namely, milk, eggs and pigs—are the three commodities for which at the moment there is difficulty in finding a market. He has, of course, been helped considerably by such things as the fertiliser subsidy, which assist him to improve his grassland, and by production grants; but I feel that he is the person who is probably in the greatest need of new equipment if he is to cut his costs of production, and he is the one who will probably find the greatest difficulty in getting it. So far as the products on which he relies are concerned, I may say that although early in the year the consumption of liquid milk fell, it now seems to be improving; there is the new Egg Marketing Board; and under this Bill the Pig Industry Development Authority will be formed, which should help to put the pig market on a sounder basis and make it more profitable.
Others who will probably find difficulty are some of the tenant farmers, because until the question of rents, which at the moment are very low, is dealt with, it is going to be difficult in some cases to persuade the landlord that it is a good investment to put more money into a business which is now showing such a low return. I welcome, too, the provision for voluntary amalgamation of uneconomic holdings. I do not think anybody wants to encourage the persistence of a low standard of living on the land, and it is quite right that help should be given to amalgamate those holdings. What we want is for the good small farmer to be able to climb the ladder and become a good large farmer. I therefore welcome this Bill, which will, I think, help to improve the stability of the industry, give people confidence, and inject the necessary extra capital into the industry. I think the taxpayer will get good value, in that agriculture will become more self-supporting; the farmer will get good value; and the nation, which must rely 310 on a prosperous agriculture, will get good value also. I have pleasure in supporting the Bill.
§ 3.45 p.m.
§ LORD ARCHIBALD
My Lords, I am sorry that I have to strike perhaps the first discordant note in what has been until now a rather harmonious situation, but I cannot say that I welcome this Bill, and, with all the good will in the world, I can summon up no enthusiasm for it. I do not regard the Bill as being adequate to the needs of British agriculture at the present time. I want to relate my comments on the Bill to what I hope to show is the current state of agriculture in this country, and, first of all, I would read a short paragraph from a leading article in the Farmer and Stock-Breeder of June 11. I would comment that the Farmer and Stock Breeder is not a journal unfriendly to the Government, and this leading article was not written in ignorance of the fact that this Bill has already passed through another place and will shortly be on the Statute Book. It obviously does not and the Bill as encouraging as some noble Lords do, because it says:Nagging at every farmer's heart is the fear that one day he will not be able to meet his incessantly rising costs. That fear is deepening, for to-day he sees that while he has to pay inure for everything he buys, he gets less from most of the things he sells.I find in my county that that is a widespread experience on the part of farmers and a widespread view of the future. What does this Bill do in relation to that situation of the farmer's fear of rising costs for what he buys and lower prices for what he sells? To my mind, the Bill gives only it negative approach to it.
Let me take the matter in some detail. Clause 1 (3) is, in my opinion, a retrograde step, in that it fixes the prices for the harvest for the year in which they are fixed, and not for the following year, as was formerly the case. That means that the farmer has sown his winter corn, and if he has not actually sown his spring corn, he is at the stage when his commitments are complete—he has his seeds and fertilisers ordered, if not already delivered—and, after he has made his investment in his winter corn and his spring corn, then, and only then, is he told what the guaranteed price is to be when it comes to harvest time. That, I should have thought, was going back on what had been 311 the much better system that was in operation in the past. I know that, as has been emphasised, Clauses 2 and 3 limit the amount by which the guaranteed prices for individual commodities may be cut and the amount by which the total of guarantees and production grants may be cut; but, as I say, that is an entirely negative approach. It is not an approach which is encouraging to the farmer; it merely gives him a little measure of protection against the worst befalling him. It may be good Treasury policy, but it seems to be rank bad agricultural psychology, and to be discouraging rather than encouraging.
What does it say to the farmer? If he was in another industry, and he worked hard (as we know he does), and availed himself of the resources of modern research and applied them in his industry—if he applied new techniques, had time-and-motion studies and all the other things that combine to make up efficiency—he could expect to see his increased efficiency reflected in higher profits. But, being a farmer, if he does all these things which in another industry would give him higher profits, what he is faced with then is that his increased efficiency will be used as an offset against increased costs over which he has no control. I think it is a discouraging situation. May I put it in broader terms? We have been hearing a great deal, particularly in the last ten years, about the evil of inflation. Noble Lords will have noticed that more recently the economists have come round to the point of view that inflation is something that they can find no means of combating; something we have to accept as being always with us; and that the best that any Government can do is to limit it, to keep it under control, and prevent it from getting out of hand. In effect, what this Bill does is to make agriculture, as it were, an island of deflation in a steadily rising flood of inflation: and the farmer wonders how long it will be before the flood of inflation rises to drown him in his deflationary position.
We are told that this Bill is the embodiment of long-term assurances. We seem to have different ideas of what constitutes "long-term", because as the Minister has indicated, under Clause 8 he may, after 1960, by Order, vary the percentages. It is true that such variations will not come into force until 1962–63, but that is only five years from now, and I 312 do not regard a five-year term as constituting a long-term assurance to agriculture which is, by its nature, an industry in which a much longer view must be taken. There is nothing to prevent the Minister by 1962–63 from making the amount by which individual commodity prices may be cut, or the total cut in production grants and guarantees, much greater than they are in the Bill which is now before us.
Before I turn to Part II of the Bill, which deals with the provision of some new capital for the industry, I should like to ask your Lordships to look with me for a moment at the capital position of British agriculture to-day, and at the return on capital in agriculture. I am indebted for some of the figures to a useful work by Messrs. Cheveley and Price on the capital position in British agriculture. On their estimate, farmland and buildings in the United Kingdom in 1953 had a capital value of £1,850 million, with tenants' capital another £1,600 million, or a total of £3,450 million—a vast sum indeed. The figure may well he higher to-day, because I think that certainly tenants' capital has gone up since 1953. In this year's Annual Review, net farm income is forecast for 1956–57 at £317 million. But, as is usual in that calculation, that is arrived at after charging rent and interest of £82 million. As I cannot break that figure down, I am going to assume that the £82 million is rent, and add it back to the £317 million in order to get the figure which represents the return on the whole capital, landlords' and tenants' capital together.
That would give us £399 million, which would not be so bad if it were really what it is described as in the Review—namely, net income. But, of course, it is not net income as I think any other industry would understand it, because in the first place it is arrived at before making any provision at all for the value of the actual labour of the farmer. Most of the farmers that I know put in a very heavy week's work, and I think it would be insulting to them to value their labour, both managerial and manual, at less than £10 a week or, say, £500 a year, which is less than they would earn in other spheres of life. For 350,000 farmers, that gives a figure of £175 million which ought to be deducted from the £399 million before we talk about any net income. We come 313 down, therefore, to a figure of £224 million, approximately, of net income, which as a return on capital is equal to 6½ per cent.
But out of that 6½ per cent. there has to come income tax, interest on borrowed monies and finance for development. When my right honourable friend Tom Williams was Minister of Agriculture, he made an estimate, which I have no doubt was a Departmental estimate, that 6s. 9d. in the £ of net farm income was required year by year for normal farm financing. That would mean another £100 million, and out of the monies available it just cannot he done, which is one reason why our buildings are getting worse year by year. Another reason why that money cannot be found is that, as in most businesses, the net income is, of course, not all in cash; some £37½ million of it is in the form of an increase in the value of stocks and work in hand. I may say in passing that I have heard in many places talk about the art and mystery of farming. I submit that here I have found a mystery that goes far beyond it, and that is the mystery of why there should still be so many people trying to get into agriculture, paying prices for farms which keep the farm prices high, despite the fact that the evidence shows that they are buying into a very unprofitable business indeed.
That, to me, is the background against which we must look at Part II of the Bill which, in providing for £50 million in grant over ten years, is seeking to ensure that £150 million will be spent in improvements over that period. The first thing I have to say about that is that I think it is completely inadequate. The agricultural economists as a whole estimate the need for new capital expenditure in the industry at anything between £400 million and £1,000 million. Even taking the lower figure, £150 million in ten years can hardly be regarded as making a substantial drive to solve the problem. It looks pitifully inadequate if we compare it with the capital schemes which are envisaged, in some cases over a less period than ten years, for the other great industries in this country, bearing in mind that in terms of employment and output I think agriculture, is the greatest of them. For nuclear power £900 million is to be spent; for conventional rower stations I think the figure is £1,200 million; for coal, £1,000 million; for gas, 314 £500 million; for railways £1,200 million; but for agriculture £150 million over ten years, which I think is not anything about which one can be very enthusiastic.
Not only do I think it is inadequate but I think that, as planned, there is a grave danger that the grants will, in some measure at least, go into the wrong hands. When the till was in another place the Minister was pressed very strongly to make the provisions of Part II retrospective in their operation. What was the reason for that pressure? It was urged that, unless he did that, work which ought to be proceeded with during this summer would be held up, the country builders would be in difficulty and the work would either have to wait until next summer or be done under the mere difficult building conditions of winter. What does that mean? It means that there were schedules of work prepared on farms for which the farmers had made provision to find the money and get on with the work this summer, and these schemes are going to be postponed so that they can get the 33⅓ per cent. grant. I am quite sure that there is not a farmer in your Lordships' House who does not in his own area know of cases where a farmer was going to spend, say, £1,500 on a new dutch barn this summer. He has put it back and he will apply under the grant; and, if he is successful, he will get his new dutch barn for £1,000, despite the fact that he was prepared, willing and able, to find the £1,500 himself.
As has already been said, that will be paralleled by the small men who cannot do the work because they themselves cannot borrow or find the two-thirds. The operation of these two factors seems to me to some extent to defeat the purpose of Part II Those who can afford to do the work will get the grant, and in many cases those who need it most will not be able to avail themselves of it. I suggest that in this situation some proof ought to be produced, not only that the work in itself will be valuable but that it could not proceed without a grant: in other words, to put it quite bluntly, that there should he something in the nature of a means test. We have a means test for university scholarships and many other things—it is no new factor in the application of public money. Why should it not be applied here? No one who is unprepared to undergo the test need apply for the 315 grant. In fact, if I may borrow the words of the noble Lord, Lord Mancroft, on another occasion, it would be "No ledgers, no 'lolly'". Unless there is some sort of means test, then I am afraid we shall have the situation of—I will not say public money being misused, but certainly public money being misdirected.
I want to say only a brief word on Part III of the Bill because I have too often in the past taken up the time of your Lordships with the problems of the pig producers. I regret very much that the Government did not see fit to introduce into this Part of the Bill provision for a marketing board for all pigs, but I appreciate that that is a policy decision about which there is no need to argue further now. The second point is apparently a small one, but it is an important one to the pig producers. The Government are rushing up the standards rather faster than they are getting on with their own side of the job. In effect, the pig producer to-day is being asked to match standards of quality which took the Danes forty or fifty years of research to achieve, and we have not yet in effect started the research in this country.
The more I look at this Bill and study the state of agriculture in this country today, the more convinced I am that my noble friend Lord Listowel was right when in April of last year and on an earlier occasion he urged the Government to appoint a Royal Commission to look into the whole of the agricultural problems. It was then said that the operation of and the necessary time involved with a Royal Commission would create a state of uncertainty. If the Government really have faith in this Bill—their argument is that this Bill produces (though I do not accept it) a state of confidence—that would be a good background against which a Royal Commission might conduct its work.
To my mind, there are many things which need examination and rethinking. They may not all be affected by this Bill. Are ploughing-up grants still justified? Do fertiliser subsidies benefit the farmer as much as they benefit the manufacturers of the fertilisers? Is our agricultural research in anything like an adequate condition? Above all, can anyone say that an industry is in a healthy condition when it can neither pay an adequate wage to its 316 workers nor provide an adequate return on the capital which is involved in it? As I said, I do not believe that this Bill meets the needs of agriculture. A Royal Commission would be the means of establishing what its needs are, and probably of suggesting the means of dealing with them. We might on that find common ground and be able to take agriculture and its problems out of the cockpit of Party politics.
§ 4.8 p.m.
§ LORD FORBES
My Lords, I want to confine my remarks to Part II of this Bill and that part dealing with farm improvement grants. I do so because, being a farmer in the North-East of Scotland, I think I can speak from some experience on this matter, as we in the North-East probably have to house our cattle for a longer period during the year than do people in any other part of the country. Because of that, we have to pay particular attention to our buildings. It is therefore not surprising to find that the North of Scotland College of Agriculture and the farmers in that area have made what I would call a rather special study of farm buildings We all know by now that the majority of our farm buildings are hopelessly out of date. They were built at the time when farms were worked with horses and when labour was cheap. So to-day there is a very real need for this farm improvement grant—in fact, it is lone overdue. I would go so far as to say that to-day, with farming being so technical and scientific, the margin of profit left to the farmer is to a large extent dependent on the adequacy or otherwise of the farm buildings.
Before going any further I should like to make one observation. The reason why this grant has become necessary, is, in the main, due to two facts; first of all, on the landlord's side, rents have utterly failed to keep pace with rising costs, while many a mortal blow has been struck by death duties. Then, on the tenant's or owner-occupier's side, one finds that, even if the farmer is able to make a reasonable profit, it is extremely difficult for him to put aside anything for future farm improvements. Had this monstrous state of affairs never been allowed to raise its ugly head, I humbly submit that there would have been no need for this farm improvement 317 grant to-day. However, as things stand now, there is no alternative, and I would give my wholehearted support to this grant for improving our farm buildings and fixed equipment.
Having said that, let me quickly qualify that statement by saying that I see insufficient evidence in this Bill to convince me that the £50 million put up by the Government is, of necessity, going to be spent for the good of the nation. The Government must ensure, first of all, that public money is not wasted; and secondly, they must ensure that the taxpayer, as well as the farmer, gets a good return for the money that is expended. Make no mistake: public money must not be spent just to enable the farmer to do to-morrow what he is doing to-day, but to do it with more ease and greater comfort. Instead, these grants must be used to lower the cost of production, to bring down the cost of food, and to bring an improvement in the cost of living. I am quite certain that, given the chance, our agricultural industry could play an enormous part by improving our balance of payments position.
There is another matter which must receive more attention. If the Government are going to spend £50 million, and the farmers a further £100 million, we must be satisfied that the right type of improvements are carried out, and that they will be really good improvements. I have stated previously in this House that not only the farmers but also the Advisory Services have much to learn about farm buildings and their construction. Most regrettably, this country is one of the few European countries dependent on agriculture without any farm buildings research Units. Due to this lack of knowledge in the past, a substantial amount of precious capital has been wasted on buildings that have not' proved their worth.
I suppose the most glaring example of this has been the so-called Danish piggery. To begin with, these modern piggeries received much praise, but later, when farmers began to cost their pigs, they found that the results were extremely poor. It was only comparatively recently that the reason for this result was discovered. It was found that the Danish piggery had been copied in practically every respect except two—ventilation and insulation, both extremely important in connection with pig-keeping.
318 To substantiate what I have been saying, perhaps I might read just a few lines from the Ministry of Agriculture and Fisheries Bulletin No. 160, dated 1953, dealing with the housing of pigs. It says:There is indeed no easy answer to the general problem of housing the pig. It is only in comparatively recent years that its needs in this respect have been scientifically studied. Thus we are to some extent working in the dark when we try to provide suitable accommodation for it.What an admission! Of course it is absolutely true, and I must congratulate the Ministry on not attempting to hide the unpalatable truth.
But surely the burning question is why, in 1957, the position regarding farm buildings is the same as it was in 1953. Why have we still no farm buildings research units? I have said before in this Chamber that it seems quite extraordinary that we have research into practically every aspect of farming except the very heart of the farm itself, the farm buildings. If we are to spend £150 million on improving our farm buildings, surely it would be prudent to spent at least the first million pounds on research work to find out exactly what we want. The total yearly sum spent on agricultural research is. I believe, about £9 million—that is for a yearly output of some £1,300 million. I believe that that sum could well be stepped up, especially when one finds that a firm like Imperial Chemical Industries are spending £9½ million on research for an output of some £411 million. From that, one can see that, by comparison, I.C.I. are spending three times as much on research work as is the agricultural industry; and I have little doubt that I.C.I. are obtaining value for their money. Owing to the great climatic difference between the North of Scotland and the South of England it is absolutely essential that we should have at least two farm buildings research units. Without research units our Advisory Services have not the technical data that they require to fall back on. This means that they have to learn mainly from their bitter mistakes, and it means also that the farmer has to suffer by these costly mistakes. I submit that this situation cannot be tolerated any longer, and I implore Her Majesty's Government to agree to the setting up of farm buildings research units.
319 There are some other considerations that I should like to put before Her Majesty's Government in connection with the proposed grants for farm buildings improvements. I know that there are some who think that these grants should be used by the Government to encourage certain types of farming, while at the same time discouraging other types of farming by withholding the grant. In my view, this is utterly wrong; there should be no discrimination whatsoever. The present surpluses in farming are short-term. We hope that the improvements to buildings will be of longer duration. For instance, in my view there should be nothing to prevent the dairy farmer who intends modernising his holding from constructing a milking parlour, provided that he can prove that by so doing he will lower his cost of production. I also believe that priority of acceptance might be given to any scheme designed to further the use of home grown feeding-stuffs. This would materially help our balance of payments position.
There is another point. In the past, our picturesque farmhouses have dominated the rural scene. Now these delightful little farmhouses will tend to become dwarfed by massive farm buildings. Large these buildings must be, so as to house modern machinery and to work like factories, but are we right to spoil our cherished countryside for future generations by large ugly buildings of concrete and suchlike? I raise this matter in the full knowledge that to do anything will cost money, but once the countryside is spoilt, what then? A few years of un-thoughtful building may mean blots on the landscape for many years to come. Our countryside is our heritage, and that being so, I believe that it is up to Her Majesty's Government to give serious consideration to this matter if future generations are still to sing and talk about "England's green and pleasant land" and "Bonnie Scotland."
At a time when we are constantly being reminded that Government and personal spending must be kept down, Her Majesty's Government have taken a bold and imaginative step in introducing this grant for farm buildings, because, now that world supplies of cheap food are on the increase, this injection of capital into British farming comes at the right 320 moment. We must ensure, however, that those who are to administer this grant keep their eye on one object: that the grants should go to the farmer who is prepared to lower his cost of production by carrying out the right type of improvements to his buildings. Then, and then only, will the housewife rightfully be able to go about singing, "Oh, what a beautiful morning, everything's going my way," because, at last, food will cost her less. The stage will then be set for a reduction in the cost of living. Then, too, agricultural products selling overseas will become highly competitive and will give a shove in the right direction to our balance of payments problem. Finally, I have little doubt that, given the chance, our agricultural industry will prove itself better fitted than any other industry to play a captain's innings by leading us towards that real prosperity which we have heard so much about, but which always seems to be just over the next horizon. My Lords, I wish to support this Bill.
§ 4.25 p.m.
My Lords, I do not propose to take up much of your Lordships' time this afternoon because most of the subject matter of this Bill has been discussed several times before in your Lordships' House. I feel, however, that this is an opportunity to make one or two observations. This Bill has been virtually universally acclaimed as being a great step forward for agriculture, and it has given confidence to agriculture, which I feel is a great thing. There are two points in connection with this Bill that I feel are most important. The first is the fact that although now the price of any individual commodity cannot drop by more than 4 per cent. in any one year, the total guarantee cannot drop by more than 2½ per cent. To my mind, it is a very courageous step for any Government to give that undertaking at a time when the world price of food is relatively low and the quantity of food is relatively abundant.
I should like to add, however, that I noticed that, before setting off from Ottawa, the new Canadian Prime Minister said he had a whole quantity of wheat of which he wished to dispose, and that he anticipated that at the end of this harvest there would be a lot more. I trust that Her Majesty's Government will not find themselves the recipients of 321 a large quantity of cheap wheat, because I believe that that not only would depress the market but would be a bad thing, most of all for the taxpayer. The second most important item in this Bill is the provision for long-term improvements and the fact that Her Majesty's Government are prepared to contribute 33⅓per cent. of the cost of any substantial improvements to buildings. To my mind—and this I wish to stress—that is by far the best way of spending the taxpayer's money, for the simple reason that the money is paid by the Government in one year but the effect is felt for the next five, ten or even fifteen years. In my opinion, that is far better than paying out annually for deficiency payments on various commodities, and therefore I should like most heartily to associate myself with the remarks made by noble Lords in favour of the long-term improvements provisions.
I found the speech of the noble Lord, Lord Archibald, extremely interesting, but I am afraid that not being an economist, I found myself a little at a loss when he was adding and substracting his hundreds of millions and putting them into percentages. I do feel, however, that what he said is to a very large extent true. If I understood him rightly, he said that the farmers, although they have spent time and money in order to lower their costs of production, have, in fact, been receiving less for their products and getting a lower profit than would have been the case had they been in industry. I believe that is perfectly true, but that is why I have felt some measure of pride in having been associated with the farming industry, for I do not believe it is an exaggeration to say that the farming industry is the only industry that is prepared—whether by its own intentions or by the intentions of the Government, forced upon it—not to press inflation.
I presume that if the noble Lord, Lord Archibald, had had what he wanted, the £150 million which has been absorbed by the agricultural industry, over, I believe, the last five years, would have been recouped to the industry in the form of larger Review grants. That, surely, is nothing but pressing inflation, because that £150 million would have to come out of the taxpayer. Whilst I 322 sympathise with a great deal of what the noble Lord said, I do not see that he provided any alternative whatever to the system now in force.
As I have said, I feel glad to be associated with an industry which is not perpetually thinking solely and entirely of its own prosperity. There is one continuous cry, with which I must say I feel in sympathy—that is, that the small farmer is in a situation in which he finds it difficult to borrow money. I think it probable that there is hardly a farmer in these islands to-day who is not farming with someone else's money, and the facilities for finding credit are of great importance, especially to the small man. I understand that Her Majesty's Government have been having consultations with the National Farmers' Union with regard to the possibility of providing some form of cheap credit, particularly for the small farmer. I should like to ask the noble Earl, Lord St. Aldwyn, whether he would be good enough to state in his reply how far these consultations have gone, whether they are nearing completion; and, if so, whether the result is likely to be favourable to the small farmer.
Another point upon which I should like clarification from the noble Earl relates to Part III of the Bill. This, as your Lordships know, deals with the development of the pig industry and, in particular, with the establishment of a Pig Industry Development Authority. I am afraid that I am a little at a loss to understand from the Bill precisely what the Pig Industry Development Authority is to do and how it is to do it. I should be very glad if the noble Earl would give us some information as to how this authority is going to work. Clause 23 says:…there shall be constituted a body to be called the Pig Industry Development Authority.And it is explained that this is to be done:with a view to improving efficiency in the production, marketing and distribution of pigs and the production, processing, manufacture, marketing and distribution of pig products, and improving the quality of pigs and pig products.It seems to me that the Authority is told to do just about everything other than consume pigs and pig products.
323 What I do not understand is how this body is going to work. On what kind of footing is the Authority going to be? Whereas it is told to improve efficiency in the production, marketing and distribution of pigs, we find it stated in subsection (3) of the same clause that:Nothing in this section or any order there-under shall be construed as authorising the Authority to engage in the business of buying or selling pigs or pig products…".At the same time, the Pig Development Board, and the Bacon and Pig Marketing Boards are all dissolved. Who is to have the responsibility of marketing pigs? The Pig Development Authority is apparently not to be allowed to indulge in it. What I assume is to be the case is that this Authority is to be virtually a research unit. If that is so, to whom will it give its information? Having carried out its research and made its findings, is it going to have any authority to put those findings into practice? Or is it just going to issue a journal saying, in effect, "This is what we have found," and leave it to the manufacturers or the bacon curers to put the findings into practice?
Is the Authority, for instance, to be allowed to advertise, or is it prevented from doing so by the rather curious sentence at the end of subsection (3), which says that the Authority is not to be allowed—here I quote and I ask your Lordships to note these words for they are rather remarkable:to undertake or promote the establishment of arrangements for marketing pigs or pig productsWill the noble Earl be good enough to tell me what that passage means? I do not see what it means. I can only assume that it bears a slight relation to that remarkable statement, which was made several years ago, to the effect that "This war, like the next war, is a war to end all other wars". I should be grateful to know what the last sentence in that subsection means. If the Authority is not to be allowed to advertise pigs, bacon or pork who is? Frankly, while I find this Bill of great value, I find Part III confusing. I am sure that there is an admirable reason for it, and that an admirable explanation can be given. I shall be grateful if the noble Earl will give me some form of illumination upon the passage which I have just mentioned.
§ 4.37 p.m.
§ LORD WISE
My Lords, I do not want to follow the noble Earl who has just sat down into discussions of pig troubles; I will leave those to the noble Earl, Lord St. Aldwyn, to deal with when he replies. For that reason, I do not propose to ask the noble Earl many further questions which might embarrass him—though, of course, that one will probably not do so. This is a very small Bill, and, as the noble Earl, Lord Ferrers, has just said, during the last few months we in your Lordships' House have discussed the agricultural policy of the Government very fully. But although it is small, the Bill certainly deserves attention. In my view it is not a very good Bill nor is it a conclusive Bill. But I hope, and indeed I expect, that we are not to look upon it as the last word in long-term policy as regards agriculture so far as the Government is concerned. As I say, the Bill deserves the attention of us all. It had a long innings in another place. It was well considered and discussed, and in one or two places it was amended by the Minister. We, on this side, hope to establish further Amendments to improve the Bill. For that reason, I hope that when we come to the Committee stage we shall have a satisfactory response by the Government to our representations.
My noble Leader has spoken about commodities as they are affected by Part I of the Bill. He said that, so far as he was concerned, he thought that there was no stability at all in the Bill. And it is in this connection that I find difficulty. On many occasions I have spoken to your Lordships on the subject of marketing. I may be wrong in my views with regard to marketing, but I think that I am right, because the marketing system (which is not at all improved by this Bill) is still chaotic. It certainly requires some amendment. In a moment I shall come to a reference in the Bill which I hope may be taken as favourable in relation to what may happen in the future, but first I would say this. During the last few weeks it has been my fortune to attend one or two markets. Whatever my views were previously on the present system of marketing in this country, they were endorsed by what I saw in those markets.
I am going to ask noble Lords opposite who are in the agricultural industry if they have ever stood in a British cattle 325 market, as I am sure they have often done, and watched pigs and cattle being sold, and seen one dealer nudge another and the second dealer not hid, or animals being "knocked done" (the expression will be known to noble Lords opposite) at the first bid. That is absolute lunacy, and this Bill does not remedy that in any shape or form. Agriculture is the victim of the Government "free-for-all". We on this side of the House hope that in the future we shall be able to establish a far better system of marketing, as we did on a previous occasion.
I have referred previously to the question of deficiency payments and I want to refer to it again. How can any Government favour a system whereby home produced wheat is sold to merchants at 19s. a cwt. and the British taxpayer is forced to pay, in addition to that amount, another 9s. a cwt.? That is more or less what the deficiency payment was during the last period and no doubt the same will apply in the present period. Cannot the Government, by some kind of stabilising action, raise the price of wheat to British farmers so that fair payment for our cereal crops is thrown upon the millers and merchants rather than upon the taxpayer by way of deficiency payments? The system as it prevails at the moment seems io me to be radically wrong.
I see that wheat and barley of next year's crop will be at a higher price. I am informed that although the price of barley has been fixed by the Government, the forward buying price at the present time is 70s. a quarter, which, as noble Lords will know, is nothing near the price obtained for barley at the beginning of the last selling year. The Government state the standard price, but the price paid to the British farmer is fixed by the agents of the brewers and merchants who gather together and decide what the price shall be. I hope that a better system of marketing is envisaged for the future. That hope is increased by the fact that under Clause 1 (2) (c) of the Bill an order may provide…for the purchase by or on behalf of the Minister…of any of the produce tendered by the producers,…To my mind, that raises the hope for the future that there will be direct purchase of our products by the Minister. The noble Earl, Lord St. Aldwyn shakes his head, but I ant hoping that if this Bill 326 lives long enough, another Government may operate that clause in the Bill in that direction, and I am certain that if we do that, it will be all to the advantage of British farming.
My noble friends who have spoken on this side of the House have brought to bear their great experience in agriculture and in legislation, and I want only to touch on one or two other points upon which the Minister may be able to give me further information, either at this stage or on Committee. Before I deal with Part II of the Bill, perhaps I had better refer to another paint I wish to make with regard to Part I. There are repeated references throughout the Bill to decreases in prices and guarantees. There is one reference where perhaps the noble Earl may be able to tell me what is actually in the minds of the Government. Under Clause 2 (6), the Minister has no power to reduce amounts payable under various sections of the Bill unless(a) the reduction is made in pursuance of the conclusions of the Ministers from the annual review last held before the commencement of that period;"—that is not the point I want to raise, but the one which follows—or(b) the Ministers are satisfied, in consequence of a special review, that the reduction is expedient in the public interest.I should like to know what is the Government's interpretation of these words. If it is "expedient in the public interest," there may be a decrease, yet there is no provision in the Bill for an increase, if that is expedient in the public interest, as it might possibly be if the prices of agricultural products got so very low that it became necessary to increase them.
I come to Part II of the Bill, which deals with grants for improvements and amalgamations. In Clause 12 (2) there is a reference toany person intending to acquire such an interest if the improvement is approved.Clause 13 (4) says:The grant shall be payable to the person or persons by whom or on whose behalf the work required for making the improvement is done…Do I understand that the Government are prepared to make the grant to somebody who anticipates purchasing a farm or land, or to pay the solicitors' costs and other costs of such a person? Surely, this Bill is intended only for the actual 327 owners or tenants of agricultural property, and cannot be intended to cover somebody who may acquire the interest in the property, carry out the work, and then possibly sell it. Is there any safeguard in the Bill for the stopping of the sale of property when an improvement grant has been paid? Or is there any likelihood of any provision whereby part of the improvement grant can be repaid to the Government over a period of years if the property changes hands by reason of that particular grant?
Clause 16 refers to amalgamations. I was glad to hear from the noble Earl, Lord St. Aldwyn, that there would be no compulsory amalgamations. I am entirely against amalgamations, particularly where they are likely to affect small farmers, although I observed that the noble Lord, Lord Amherst of Hackney, who also comes from Norfolk, takes the reverse view. In Norfolk at the present time we have nearly 400 applications for smallholdings; and throughout the country there are at present on the books of the county councils no fewer than 8,710 applications for smallholdings. If we are going to amalgamate holdings and increase the area of holdings, we shall make it much more difficult for those requiring smallholdings to obtain them. Therefore, I hope that there will not be many of these amalgamations.
I cannot conceive how the Government can bring into an Act of Parliament that they are prepared to pay part of the costs—solicitors' costs, surveyors' costs, stamp duty and the rest—of the amalgamation of agricultural holdings. Surely if we do that in regard to agriculture, we are opening the door wide to other people who make amalgamations to request the Government to pay part of their costs. I suggest that those people in London who operate in the take-over of various businesses and concerns incur heavy legal costs and the rest, and if we do this in regard to one industry, surely other industries may come to the Government and say that they are entitled to the same consideration. I am all in favour of helping the agricultural industry, but so far as this clause is concerned I must look upon it with perhaps different eyes from those with which I look at agriculture generally. And I must disagree with the Government if by this clause they 328 are prepared to pay part of the legal and other costs in regard to amalgamations.
The noble Earl referred to the fact that, so far as grants are concerned, this Bill had reference only to equipped farm units. I am hoping that in Committee we may be able to persuade the Government to broaden Clause 12 (3), which says that the Ministershall not approve any improvement unless he is satisfied—(a) that the land for the benefit of which the improvement is proposed is agricultural land occupied together with buildings…".I can envisage that there may be many areas of land which could be put to far better use than they are at the present time if they had buildings, or the like, on them. Therefore, I think it is too narrow to limit the grants only to those farm units which already have buildings.
For instance, if your Lordships look at the Second Schedule you find that improvements which are eligible for grants relate not only to properly equipped units, but also to units which are land only. The first is:Erection…of permanent farm buildings (other than dwelling houses)…If you want an economic farm unit, but have no buildings, surely, you have to erect buildings; but under this Bill the man who erects those buildings will not benefit at all. You may get an area of land that you want to develop for farm purposes; and you may make an improvement on roads, or on theprovision of pens and other fixed equipment for use in connection with sheltering, gathering, marketing, dipping, spraying…and the rest of the treatment and feeding of cattle. To my mind, that obviously refers to land which at the moment, for the purposes of grazing or for other purposes, may be bare agricultural land. When we come to discuss the Bill further, if we can put a reasonable case from this side of the House for doing it I think it would be advisable for the Bill to be widened in that respect, so that it is not confined merely to farm units which are already in existence. I hope that the Government may be right (I use the word "may," because I heard my noble Leader discuss the words "may" and "shall" earlier on) in their thoughts that this Bill will inspire confidence in the agricultural industry, but I will con, elude by saying that I seriously doubt it.
§ 4.59 p.m.
§ THE EARL OF LONSDALE
My Lords, unlike the last speaker, who thinks that this is a small Bill. I regard it as the most important agricultural measure that has been produced since the Agriculture Act, 1947. It is, in fact, as important as that Act. It is a Bill that one would have thought would have generated a great deal of feeling if it were not basically a sound Bill. In the country, by and large, it has had a general measure of approval and no condemnation to speak of. It has, of course, had its fair measure of criticism, but most of that criticism has been directed not so much to the principles behind the Bill as to the extent to which it goes, in that it does not, perhaps, go quite far enough. It is considered that the possible percentage reductions allowed for in Part I are too large; that the £50 million allocated to the farm improvements scheme in Part II is not enough, and that in Part III there are no proposals for the continuation of the Pig Marketing Board, or something similar.
The Agriculture Act, 1947, assured a reasonable standard of living by a general guarantee of prices, which was to be reviewed year by year for those involved in the industry. It also gave much greater security of tenure, which was necessary if the industry was to become stable. As a quid pro quo, increasing efficiency and good husbandry were called for from the industry. In the ten years since the 1947 Act was passed, less and less use has been made of the good husbandry provisions—to my mind, regrettably so. There is still too much land little or improperly used in the country, when there is such a demand for farms by energetic, young, modern-trained people.
During the ten years since the passing of the 1947 Act, there has also developed a general awareness that the provisions of the Act give only a general assurance that the Government in power will not drastically reduce prices to a hopelessly uneconomic level. That gave rise to a fear that economic conditions might change with Governments. Part I of this Bill allays once and for all that fear, in that it fixes percentages for the maximum reductions in prices in any one year—4 per cent. for any one commodity and 9 per cent. over three years for livestock 330 products. Naturally, the agricultural industry does not want any reductions at all. It wants is increasing efficiency rewarded somewhat. However, the Bill is a general move in the right direction, putting on to the Statue Book, in effect, the general assurances contained in the 1947 Act that prices will be maintained so as to give those involved in the industry a reasonable standard of living.
It is disappointing that Part I makes no concrete provision to deal with the recurrent problem of surpluses, which agriculture always has had, and, presumably, always will have. At the moment, milk is causing the most anxious thinking. Milk is one of the basic products of the industry, the others being arable land and meat farming. There is too much milk for the present demand, though sales and advertising, which many people talked about, should help to some degree. I believe, however—and I hope I am not an alarmist—that the output of milk will continue to increase in the future. Milk production, by and large, is the mainstay of the small family farmer—in fact, I believe that half of all the liquid milk produced comes from small family farms. They cannot change to alternative production, even if they desire to do so, often because of the size of their farm, bat more usually because they have not the liquid assets to accept biannual or annual cheques for their products, instead of a monthly cheque.
A small price drop, as can occur under Part I, and the farm improvement grants in Part II—which, after all, it will be impossible or undesirable to deny to milk producers if they are at the moment reasonably economic and likely to continue to be so—will, to my mind, encourage output to increase. Small farmers, when they see that it is not so profitable to produce milk and find that they have not such a big monthly milk cheque, will go and buy another cow to get the milk cheque up. And that is bound to result in more surplus milk unless there is an undesirable enormous price reduction. It is the size of the farms, and the limited extent of their resources, that will prevent so many farmers from changing from milk production. The time will come, to my mind, when the Milk Marketing Board must have powers to limit the production from individual farms by initiating a quota 331 scheme. But we shall see what happens. I hope that milk production will not increase further, and that the general public will drink more milk.
Part of course, is the real "meat" of this Bill. The sum of £50 million to £55 million is to be provided towards rehabilitating the dilapidated and inadequate fixed assets. The economists have said that at least £350 million was required; and one noble Lord opposite who spoke put it at £400 million to £1,000 million. Some economists have said that if £350 million were spent in the industry in capial improvements in the next ten years, the industry might well be able to stand on its own feet without subsidy support at all. This Bill, with its £50 million, and the Livestock Rearing and Hill Farming Acts, will go a long way to providing this £350 million which has been estimated as being required to make agriculture free of subsidy. The improvement scheme deals exclusively with land improvements, land reclamation, farm buildings, buildings for stock and implements, and crops, et cetera. It does not touch the problem of housing and cottages at all. To my mind, good housing is more important even than adequate or good buildings. Good housing will attract the best and most skilful type of man, and will hold the hardworking and skilled man on the land. Especially is it high time that these beautiful rose-covered cottages had the fungus removed from behind the roses and had bathrooms and lavatories put in.
The Second Schedule to the Bill provides for grants for sewerage, but not for farm houses. It provides grants for the supply of electricity to farms, but not to farm houses or cottages. I appreciate that under various Housing Acts grants are available for this sort of work, for reconstruction and modernisation of farm houses and cottages, up to £400 maximum. But the total reconstruction of even a moderate-sized farm cottage can cost anything up to £2,000 or more, so that £400 represents only 20 per cent. Apart from that, it is difficult in many cases to obtain a grant. Some local authorities do not give grants for agricultural housing. New building of houses and cottages is treated rather differently. No initial grant is given when the building is built, but a repayment of £10 per annum for forty years is made. In effect, 332 it does not help to finance the original building of the new cottage or farm house. Yet, side by side, we have the Livestock Rearing Act scheme, under which 50 per cent. grants are available for reconstruction of houses and cottages, and the building of new houses and cottages. The Second Schedule includes grants, if not for reconstruction (perhaps that was considered to be going too far), if not for new farm houses (perhaps that was considered unnecessary), at least for new cottages, for workpeople, so as to get and hold better and more skilled men on the land.
Lastly, on Part II, I should like to make some mention of the cost of administering the scheme. It has been stated in another place that the cost of administering the farm improvement scheme is expected to be of the order of 8 per cent.; or up to £400,000 a year if grants of £5 million a year are to be distributed. This seems to me unnecessarily high. It may be due in part to the whole process, whereby receipts for all work done have to be collected, inspected, summarised, audited and all the rest of it. I hope, therefore, that the standard cost system will be used as extensively as possible, even to the extent of adaptations and alterations. Ministry staff with adequate architectural know-ledge are available to give advice on levels and to put a cost figure on work, even of adaptation and alteration, and that can go a long way to cut down the administrative cost of the ultimate checking of receipts, et cetera.
The standard cost system should, and would, take into account the use of the farmer's own labour. At present, particularly on small family farms, on any land improvement or reclamation work the farmer himself often does much of the work, and he cannot claim a grant for the work that he himself does, often in the evening after a long day at his normal farm work. I appreciate that the Treasury cannot, perhaps, accept accounts for a man's own labour, because it could lead to abuses, but, if this standard cost scheme could be made as widespread as possible, in the same way as the silo scheme, which is worked totally on standard cost and is operating very successfully, that should go a long way to take account of the farmer's own labour and keep the administrative costs down. It would be interesting to 333 know in this respect how the cost of this scheme is expected to compare with similar livestock rearing and marginal land schemes which were worked in the same way and which have been in operation for some considerable time.
Part III charges the pig producers to set their house in order and to turn out, at long last, a standard product. I myself keep pigs, along with many other forms of livestock. I know there is an enormous variety of pigs passing through the markets. It defeats me how the markets can cope with the immense variety in shape and size that is given to them. I hope that, as a result of the operation of Part III, the day will not be far distant when the pig producers will at last match up to, if not excel, the standards of the best pig producers. Finally, I want wholeheartedly to support this Bill as a reinforcement of the 1947 Act, as a genuine step forward in increasing the efficiency of our agricultural industry, and as genuine progress towards the day when this once pre-war depressed industry will he able to stand entirely on its own feet.
§ 5.15 p.m.
§ VISCOUNT MASSEREENE AND FERRARD
My Lords, nearly everything that could have been said for and against this Agriculture Bill in this House has already been said. I therefore find myself in some dilemma as to how to avoid boring the House with repetition. I am sure that most of your Lordships, with perhaps the exception of the noble Lord, Lord Archibald, will agree that on the whole this is a sound Bill and, in fact, that the agricultural policy of Her Majesty's Government since the Agriculture Act, 1947, has been highly beneficial to agriculture. Several noble Lords have shown concern over the fact that milk, eggs and pig-meat are shown at a disadvantage in the price guarantees for 1957; but surely we should study the price guarantees in relation to the benefit to be derived by the agricultural industry as a whole and, therefore, by the nation. I agree it may be disappointing to those who have dairy cows, pigs or poultry—I myself am among the throng. But if the nation has a surplus of milk, eggs and pig-meat, it would be entirely incorrect for the Government to encourage an even greater surplus by giving increased guarantees for these products.
334 The same, of course, applies to the decreased guarantee on wheat. There is a vast surplus of wheat in the world, and not only in the hard currency areas. It is, therefore, surely pointless to encourage the growing of this crop, especially in areas where the land can so much better grow oats and fodder crops generally, than it can wheat. Our temperate climate is particularly suited to grasses and clovers, and we should make the best use of it to do exactly as the Government desire to do in the production of beef and mutton. I understand that we produce about three-quarters of our mutton in this country, but we could, I believe, produce all of it. Many farmers are scared of keeping sheep owing to the problem of finding shepherds to-day, because shepherds are rather a dying race. It is not, however, necessary to-day to have a skilled shepherd if you intend keeping two or three hundred sheep, because with all the excellent types of movable fencing, improved sheep dips, dipping machines and all the other gadgets that there are on the market, the labour of keeping sheep is much reduced.
There are in England large areas of downland which used to support flocks where now a sheep is a rarity. Lambourn Downs in Berkshire is one of those areas. Surely, instead of giving the ploughing-up of grasslands subsidy to such areas of light soil, would it not be more practicable to give a small subsidy for sheep re-introduced to such land, for a period of three years after their introduction? I feel sure that some slight encouragement, if combined with publicity to explain that shepherding is not some ancient and mysterious art handed down from father to son, would bring in many newcomers to sheep farming.
When we come to the question of increasing our beef production the problem is not so easy, but it is more urgent. We produce in this country one-third of our beef; but the trouble is that the exportable surplus of beef from beef-producing countries throughout the world is slowly but surely drying up. The time is not far distant when, owing to their growing populations, these countries will have to consume all their beef. The grants under this Bill for farm improvements will, of course, help the production of beef over a long period, but the question is, how to step up production in the meantime. I 335 believe it has been calculated that if 3¼ million acres of our upland and marginal lands could he improved to support 39 instead of 25 mature beasts per 100 acres, we could dispense with one-third of our imports of beef.
Apart from the grant for farm improvements which, as I say, will help over a certain number of years, could not the Government devise some scheme for transporting in the summer months the cattle from the lowland areas to the upland grazing areas where thousands of acres of hill grass are virtually left ungrazed? I myself have extensive hill grazings, and owing to the problem of winter keep I can graze those grazings only in the summer, with about one-tenth of the stock that they would otherwise hold. The average area of arable ground of these hill farms, especially in the Western Highlands, is sometimes as low as 1 per cent. It is quite impossible to provide the necessary winter keep to keep the number of cattle on the land in the summer. This scheme will enable the lowland farmers to use more of their ground in the summer for growing hay and other crops, and will therefore indirectly help to increase the stock of cattle by providing further winter keep.
My Lords, before I sit down I should like to point out, with reference to these improvement grants, that, as the noble Viscount, Lord Alexander of Hillsborough, said, it will not be easy, especially for some small farmers and landlords on the poorer land, to find the two-thirds of the capital for these improvements. I wonder whether it would not be possible for the Government in certain cases to lend a portion of the farmer's two-thirds share, interest free, to be repaid over a period of years out of the increased productivity of the farm. I am extremely glad to see that under Clause 12 in Part II of the Bill, the Government are not going to pass improvements for grants unless the benefit to be derived justifies the capital cost. It is so easy to pour money into elaborate improvements, on marginal land especially, without any adequate return resulting.
The noble Lord, Lord Archibald, appeared to be disappointed that the Government were going to spend only £150 million on agriculture in the next few years. He compared that capital expenditure with the capital being used 336 in providing nuclear power stations. I personally cannot see how you can compare nuclear power stations and the capital required for those stations with agriculture. Nuclear power stations are virtually a new invention and a completely new industry. Agriculture has been going in this country for a thousand years, and it has great capital resources of its own in its buildings and equipment, whereas atomic energy stations have none and have to be helped. There is one question on which I am not quite clear. How are the grants for amalgamations to come about? The human element would appear to be the stumbling block here, for although we are told, "Love thy neighbour as thyself," we very seldom do so.
I can only hope that the help now given to agricultural capital development by Her Majesty's Government will manage to slow down the drift of farm workers from the land. This exodus, which I believe averages about 18,000 to 19,000 each year in the United Kingdom, has so far, owing to the great advances made in machinery, not decreased agricultural production; but if the exodus continues it is bound to affect agricultural production. Perhaps the whole answer does not lie in better amenities and wages, although of course those factors will always help. It may well be that many young people born on the land to-day prefer the comparative comfort and protection from the elements to be had in urban life to the more vigorous life in agriculture; but if this is so the problem appears insoluble. To conclude, I consider that in introducing these capital grants Her Majesty's Government have done the greatest service to agriculture since the passing of the Agriculture Act, 1947. It is now up to the landowners and farmers to make intelligent use of this assistance. I fully support the Bill.
§ 5.33 p.m.
§ THE EARL OF BUCKINGHAMSHIRE
My Lords, in his opening remarks the noble Lord, Lord Wise, referred to this Bill as a small and not very important one, but he went on to discuss the Bill in a way that struck me as suggesting that he thought it was important. I regret that the noble Lord is not in his place at the moment—perhaps I should have warned him that I was going to mention his speech. Though the Bill may 337 be a small one, it is, I believe, a very important one; and for that reason I, too, welcome it. We are coming to the end of a debate which has been important and useful, and because I do not want to keep your Lordships long I will make only one or two points. With regard to Clause 8, it is interesting to note that the Minister cannot now change the percentages under Clauses 2 and 3 until after the Price Review of 1960. I am sure that this will be encouraging to farmers, and I was somewhat surprised that the noble Lord, Lord Archibald, should criticise this. I could not possibly agree with him.
In my speech on January 30 last, when your Lordships were approving this general policy in the White Paper, I referred to the availability of grants under the farm improvements scheme. I said [OFFICAL REPORT, Vol. 201 (No. 26), col. 309]:I think we can understand that it is difficult to make those grants more retrospective than they are likely to be.Since then, my right honourable friend the Minister of Agriculture has done me the honour to appoint me a member of the Buckinghamshire County Executive Committee and at my first meeting a point was raised on one of the papers received for discussion, which I should like to raise here. May I quote from the important note under Appendix B of what is officially known as Preliminary Instruction to the Agricultural Land Service, 1st May—1st September, 1957, but which one might call their "bible". It says:This leaflet outlines the Ministry's arrangements, and explains how to apply, for inspecting proposals beforehand in order to speed up consideration of applications if and when the necessary authority is given by Parliament—probably ham 1st September, 1957. If you have your proposals ready and would like them examined beforehand without commitment, read this leaflet and send in the application form. As there will be many urgent applications, please do not do this unless you expect to complete the work before 31st March, 1958. You must remember that you will not be able to start work without the Minister's formal written approval which cannot be given before the Scheme comes into operation, probably on 1st September, 1957.My Executive Committee were very exercised about this date—March 31. They fell that from September 1, or even from now, to March 31 is a very short 338 time to elapse between an application and completion of work, especially for farm buildings. I have here a pamphlet with which I will not weary your Lordships. It was issued by the Joint Consultative Committee of Architects, Quantity Surveyors and Builders and is called, Plan Before you Build. I believe that many noble Lords will agree with what is said in the opening remarks in that pamphlet, that:Failure to plan building jobs completely before work starts delays the completion of contracts and involves heavy additional costs.Under the Farm Improvement Scheme, we cannot start planning seriously until it is known whether the Scheme is likely to be approved. The noble Viscount, Lord Alexander of Hillsborough, referred to the small man, and several other noble Lords have also referred to him in different ways. Apparently the small man has only six months between putting in his application and the completion of the work; otherwise it has to be put off. The farm building industry is likely to be fully occupied, and I would ask that the Minister has this instruction looked at again in regard to that particular point.
One or two noble Lords have referred to Clause 16 (2). While I welcome this, in view of the grants towards cost of amalgamation, it is not clear, as the last speaker also mentioned, just how one can work this amalgamation in view of the fact that one cannot get a farm tenant out. In his opening speech, the noble Earl, Lord St. Aldwyn, referred to these amalgamations as "voluntary". I should be grateful if, in his reply, he could tell us whether such amalgamations have to be entirely voluntary and whether the 1947 Act will still apply in regard to getting tenants out. Finally, I would just refer to the Second Schedule and bring out a point which I am afraid I have brought up before—it concerns grain stores and grain dryers. Do these come under this Schedule? I raised the matter of grain stores in my speech in January. I did not mention grain dryers, but the Minister, I believe, did refer to them in his reply. Can we have the matter clarified? Can it be stated whether or not, in certain circumstances or in certain parts, these grain dryers and grain stores will come under the Second Schedule and be available for grants? I beg to support the Bill.
§ 5.40 p.m.
EARL ST. ALDWYN
My Lords, we have had a most interesting debate this afternoon, and I think that the Bill has received a very reasonable measure of support. I do not say that it has not been criticised here and there, but we rather expected certain criticisms from certain quarters. A large number of your Lordships have asked me a large number of questions, and I will deal with as many of them as I can. The noble Viscount, Lord Alexander of Hillsborough, was the first to put a series of questions to me. He raised the question of application for grants, and asked if applicants were getting the two-thirds without too much trouble. I can only tell him what has happened up to now under the Scheme, which, admittedly, is in the early stages and not in its final form. At the moment, only one in twenty is asking for any form of loan, and every applicant is being asked if he wants a loan from the Agricultural Mortgage Corporation or the Land Improvement Company. That means that either farmers are providing the money themselves or they are getting it without trouble from other sources.
EARL ST. ALDWYN
I am afraid that I have not the figures broken down at the moment. As I understand, they are fairly well distributed. There are a certain number of large ones and a certain proportion of small ones from owner-occupiers. But I cannot give the noble Lord the proportions.
The noble Viscount, Lord Alexander of Hillsborough, also asked whether grants would be available where existing buildings continued to be used for existing purposes and the object was to improve working facilities, cut down labour costs and generally to assist in the production of the same article. The answer is definitely, Yes. Any alteration to a building which will increase the efficiency of the holding will be eligible for grant. The noble Viscount also asked me how we should judge a reasonable return. The improvement, I think, will have to show an increase in the rental value and will also have to add materially to the occupier's earning power. I am not suggesting that that principle can be broken 340 down into fixed rules. But it has been used very successfully in the Livestock Rearing Scheme, and the officials of the Agricultural Land Service have familiarised themselves with it and have succeeded in working it very well under that Scheme. I hope that the Advisory Committee of which I have the honour to be chairman will be dealing with this, as a particular item, in due course and will be giving advice on it.
The noble Viscount also raised questions about amalgamation. Really, the answer to him on that matter, I think, is that any reasonable proposal will be considered if it will serve to create an economic holding out of an uneconomic one, and if the land affected by it will be increased in value and productivity as a result of the amalgamation. With regard to the detailed working out of Clause 16, I am afraid that my Committee has not quite reached that yet, but we shall be getting to it at our next meeting. In the circumstances, I am afraid that I cannot at the moment enlarge on the details. But I can assure the noble Viscount that that will be very carefully considered at our next meeting.
The noble Viscount also asked me about oats. He wanted to know whether there was going to be a deficiency payment this year. I am sure that he appreciates that the cereal year does not finish until the 30th of this month. Until we have been able to collect all the figures and average out the prices for the cereal year we shall not be able to say categorically whether there will be a deficiency payment or whether there will not. But I can say that it appears likely that there will be. Upon its magnitude I should not like to speculate, but, frankly, I do not anticipate that it will be very large.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, would the noble Earl undertake to ask the Government to have another look at the method which is followed? The experience of some parts of the country in the production of oats this year clearly shows that the result of the present method is unfair. If, for reasons which are not within the power of the producer to control, he gets a poor crop, and he was going to use his own oats upon his own farm but he has to buy at higher prices than would be normal, he then gets no acreage payment at 341 all. In that respect the system does not seem to work fairly. I hope that that matter will be very carefully examined.
EARL ST. ALDWYN
I do not think that I follow the last part of the noble Viscount's remarks. I do not see why the producer of whom he speaks could not get any deficiency payment because he has had to go and buy oats outside.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
Because he is not a seller. Acreage payment, as I understand, is made to producers of oats whether selling oats or not—even if they keep them to use them on their own farm. The whole idea was that if the general situation of the oat production of the year justified a deficiency payment, then those people using oats themselves would also get the acreage payment. But in many cases they were going to grow oats for their own use, but because of the very bad season and very poor crop they have not enough oats for their own farm. The prices at which oats are available goes up on the market and therefore the Treasury, or the Minister of Agriculture or someone, says that no payment is due to those people who have gone out to buy expensive oats, and they get no acreage payment. It seems to me to be unfair.
EARL ST. ALDWYN
I appreciate the noble Viscount's point. The whole object of having it in the form of acreage payment is that the producer can consume oats grown on his own farm and still get deficiency payment if there is one available. The noble Viscount was also disturbed about the Pig Industry Development Authority. He said that he thought we had not given specific representation to the Co-operative Movement. Actually, the Co-operative Union, which I think could be said to represent the Co-operative Movement, have been asked to nominate members to serve under no fewer than four different headings—producers of bacon, distributors of bacon, distributors of pig-meat and manufacturers of pig products. I do not say that every nomination by the Co-operative Union will be accepted, but it seems to me that that is very fair compared with any other single section of the industry.
The noble Viscount was also concerned about the representation of agricultural workers, and said that he would like their representation increased from one to 342 two. As the Reorganisation Commission said, it will be necessary to limit the number on the Authority if it is to act as an effective working body, and they recommended a total membership of sixteen. This has already been increased to seventeen, and any further increase would have to be justified up to the hilt. The membership of the Authority at present is pretty well balanced, in that it has three independent members, seven members representing production interests and seven representing the processing and distributive side. An extra seat for an agricultural worker would put the balance out. We should have three, eight and seven. Probably that would be followed by demands from the processing and distributing side for a further representation, and we should be faced with a further increase. We have considered this matter carefully and I think that one representative for the producers-labour side and one for the processing employees' side is really fair.
The noble Lord, Lord Archibald, criticised the provisions under which prices for crops will be fixed for the harvest following the Annual Review. I think that the farmer is in a much better position under this arrangement than he was under the last. He will know with absolute certainty that the price of the cereal which he is planting cannot be less than 4 per cent. of the price he received last year, and he has the satisfaction of knowing that all relevant factors, including increasing costs, have been taken into consideration practically at the time he is planting. Consequently, he will be in a much stronger position than he would be in having to forecast eighteen months ahead, because, as the noble Lord is fully aware, up to now we have had considerable fluctuation in the amount of costs the industry has had to bear.
The noble Lord was rather critical of our £50 million, as compared to the £400 million, which I think he quoted from the paper by Mr. Cheveley and Mr. Price. We must remember that that £400 million represents till the capital expenditure and not just the expenditure under the Bill, which deals with the requirements of industry which are not already grant-aided, as things like housing and water supplies are. When the amount proposed for this section is put into the whole picture, I think that it is adequate.
343 The noble Lord, Lord Archibald, also followed up the line taken by the noble Earl, Lord Listowel, in an earlier debate, that we should appoint a Royal Commission to consider the needs of agriculture as a whole, agricultural subsidies and the methods of giving them. For many years it has been the policy of successive Governments to assure to the agricultural industry a reasonable measure of stability. The means employed have been guarantees, for which the 1947 Act provided, and numerous production grants for which provisions have been made in a succession of other Statutes. The Bill before the House to-day reinforces and develops that policy, both by strengthening the guarantee provisions of earlier Acts and by providing new guarantees under the farm improvements scheme. It is the result of long and careful consideration by the Government, in close consultation with the representatives of the Farmers' Union. As for the levels of guarantees and production grants and the balance between them, these are matters which are considered every year, again in consultation with representatives of the producers, and every Annual Review is made in the light of any changes that have taken place. As for the method of giving guarantees, a great deal of thought has always been devoted to that, as circumstances change or as further experience is gained. Once more, such consideration includes discussion with the farmers' leaders. I must say that I think that the case for a Royal Commission, which, after all, could not determine policy—that must be the responsibility of the Government in power—has not been made out.
The noble Lord, Lord Forbes, asked me a number of questions. He pointed out that these grants would probably have been unnecessary if rents had kept pace with rising costs. I think that that is true, but we must bear in mind that the rise in rents has taken a considerable time, and although there is a steady movement now in a forward direction, for a long number of years the industry had to content itself with at most a level, if not a decreasing, return in the form of rents. Obviously, to switch that round to a steady increase must take time. The noble Lord also criticised the level of taxation in recent years, saying that that had made considerable inroads into the amount 344 landlords would otherwise have spent in maintaining and improving their property. To a certain extent he is right; but, on the other hand, the noble Lord has to bear in mind that the tax code provides a number of valuable concessions which benefit landowners—for example, the preferential capital allowance on agricultural building and improvements and the 45 per cent. rebate on agricultural property for death duties.
The noble Lord, Lord Forbes, asked whether we were certain that grants for improvements would he used for schemes that really would be improvements. The Agricultural Research Council, in consultation with the Ministry of Agriculture, Fisheries and Food and the Department of Agriculture for Scotland, has set up a Committee to co-ordinate the work which is already in progress at various centres throughout the country. They will also recommend new lines to the Government. We attach so much importance to this Committee that we asked for, and were successful in obtaining, the services of my noble friend Lord Rothschild as its Chairman. I am glad to say that, even when he retires from the chairmanship of the Agricultural Research Council next year, he will continue to serve as Chairman of this Committee. I myself think it would be premature, until there has been further consideration, to judge whether more research stations are desirable or not.
My noble friend Lord Forbes and, I think I am right in saying, the noble Viscount, Lord Alexander of Hillsborough, too, were concerned that we should not use these grants to encourage or discourage any particular line of product. Noble Lords will be glad to know that it is the view of the Government that we should consider these cases on their merits from the point of view of the farms. We feel that the production grants are the right medium for influencing increased production and that it would be wrong to consider short-term increases or surpluses in various commodities, which may, after all, only be temporary, when considering long-term improvements to farm buildings.
My noble friend Lord Ferrers quoted several passages from Clause 23 of the Bill, which deals with the functions of the Pig Industry Development Authority. So far as I can see, he seems to have overlooked Part I of the Third Schedule, 345 which appears to me to set out in considerable detail the functions of that authority. For instance, they may take over national pig records, supervise progeny testing, introduce an accredited herd scheme, develop an artificial insemination service, introduce a British bacon mark, advertise pig products, and so on. My noble friend asked why they would not be involved in marketing. The answer there is that we believe that this market should be left free both for pigs and for pig-meat, and, therefore, we have not given the authority any specific marketing powers, although they will be able to investigate any particular distribution problem.
My Lords, I should like to ask the noble Earl one question. As I understand it, part of the purpose of the Pig Industry Development Authority is to carry out some research into the efficiency of marketing, processing and so forth. How are they going to "put over" the information that they gain? Have they any authority to do that, or do they just give the information that they find to the bacon curers, and so on, and let them use it to the best of their ability?
EARL ST. ALDWYN
My Lords, they are empowered to advertise and to indulge it propaganda, and they will be obviously a body of such sufficient standing that all sides of the industry will pay considerable attention to any recommendations that they make. They will not be in a position to compel, but obviously they will carry considerable weight. The noble Earl also asked me about consultations that have been going on between the National Farmers' Union and my Department about loans. I am afraid that I cannot at the moment give him any further information on that point. I dare say that an announcement will be made before long, but all I can say now is that the consultations have been extremely co-operative on both sides and I trust that something useful will come from them in the end.
The noble Lord, Lord Wise, was concerned about the costs of amalgamation. I would quote to him an example of what those costs are likely to be on a smallholding. On a 40 acre holding, which is worth, say, £1,200, the solicitors' fees would be of the order of £67 10s., and stamp duty an additional £6, making a 346 total of £73 10s., or nearly £2 an acre; and if there is any compensation for disturbance, that might easily range from sonic £200 to £250. Therefore, it is a considerable item.
EARL ST. ALDWYN
I think it is quite impossible to make anything approaching an accurate estimate, because, although we have a fair idea of the number of holdings that are strictly uneconomic, there is no reason for thinking that all, or even necessarily a high proportion, will come up for amalgamation the next year or two, or even within the period of this Bill. The noble Lord also raised the question of hare land receiving grants. As my right honourable friend said in another place, he is strongly resisting the idea of paying grants on bare land, because if he did that there would be considerable danger of encouraging the splitting up of existing holdings and so increasing, rather than decreasing, the problem of uneconomic holdings, I think we shall have to stick to that view.
My noble friend Lord Lonsdale suggested that we ought to put housing grants on a national basis and include them in the Schedule of eligible improvements in Part II of the Bill, instead of, as at present, leaving them to the discretion of the local housing authorities. I appreciate that by no means all local authorities are paying the grant which they could, but it seems to me that if we were to bring farm houses, or even cottages, into this we should get two aspects of rural life rather muddled. First, we have the housing side, which surely must be the responsibility of the housing authority; and I think it would be an error for my Department to be involved in that.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, I hope that it will not be outside the realms of possibility that the noble Earl can make representations in the matter. I think I the point was an important one. I have mentioned before my personal experience. If you get an island like Mersea, with an urban district of 4,000 people at one 347 end, and a rural district at the other end which refuses to come into the urban district and comes under a rural district council outside, the rural district council in all cases adopts the Government's permissive powers for assisting farm housing. The urban district, covering farms on the other side of the island, refuses to adopt it at all. So there is completely different treatment of housing policy within eight square miles. That seems to me to be utter nonsense.
EARL ST. ALDWYN
My Lords, I agree that it is not entirely consistent, but it is one of those inconsistencies which are inevitable if we are to have the system of local government in this country by which I think most of us swear.
My noble friend Lord Buckinghamshire questioned the bar on applications for an early inspection for work which was expected to be completed after March 31 next. This is no more than a request not to apply in these cases, because there will be many applications which will be considerably more urgent. It is not in any sense of the word the Law of the Medes and Persians: it is merely a guide. We want to get the most urgent work done as soon as possible, and we do not want that to be delayed because work of less urgency is being considered merely because the application has come in first. My noble friend also criticised some of our instructions. Those frankly are purely for official use, and I can assure him—and I hope it will relieve him—that ordinary members of the committee are not expected to be entirely familiar with them.
§ THE EARL OF BUCKINGHAMSHIRE
My Lords, I regret if I gave my noble friend the impression that I was criticising the instructions, because that was not intended. What I wanted to get clarified was the point about March 31.
EARL ST. ALDWYN
My Lords, several noble Lords raised the question of builders' prices possibly going up as a result of this scheme. I think my noble friend raised that point.
EARL ST. ALDWYN
I thought one noble Lord did. Frankly, I think most local builders are sufficiently anxious to 348 retain the goodwill of their regular clients not to take advantage of a scheme of this sort and raise their prices unduly.
§ THE EARL OF BUCKINGHAMSHIRE
My Lords, may I again interrupt my noble friend, and I very much regret doing so. He has, however, mentioned this point. It is strongly the feeling in my part of the world, including the feeling on the agricultural executive committee, that these prices may go up.
EARL ST. ALDWYN
That is the noble Earl's forecast. My forecast is that I do not think they will go up very much. We shall see who is right. I have answered as many as I can of the questions that have been put to me, and if I have not covered all the points I have no doubt that noble Lords will raise them on the next stage of the Bill.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.