§ 3.28 p.m.
§ LORD HASTINGS
My Lords, I beg to move that the Silo Subsidies (England and Wales and Northern Ireland) Scheme, 1962, be approved. The Scheme is made under the authority of the enabling Act, the Agriculture (Silo Subsidies) Act, 1956, and it provides for the payment of silo subsidies for a further three years from August 1, 1962. A similar Scheme approved by your Lordships in 1959 will expire on July 31 this year and a new Scheme is therefore necessary if the subsidies are to continue after that date.
The Government believe that these silo subsidies, although modest, are a really useful contribution towards the preservation of home grown food. The maximum subsidy which each separate farm can receive towards the cost of constructing a silo is £250, but this is a material consideration, especially for the smaller farmer, and it affords an opportunity for a member of the National Agricultural Advisory Service to discuss with each farmer the methods of grassland management he is employing and to offer such advice as seems appropriate in the circumstances. The total annual expenditure on these silo subsidies is taken into account during the Annual Review and Determination of Guarantees. Last year the total of farming grants and subsidies shown in the White Paper on the Annual Review came to £107.5 million, of which the silo subsidies accounted for only £800,000.
1014 As I have said, the maximum subsidy payable is £250, and that is for a silo with a roof. If, however, a silo is built without a roof or in an existing building, the maximum subsidy payable is only £125. The draft Scheme before your Lordships prescribes the rate of subsidy payable on those items of construction eligible for subsidy and the rates are based on certain standards of construction relating to the volume of earth excavated, the area and type of floor and walling, the superficial area of the roof and the kind of roof support used. In a few cases the rates in the Scheme before the House show an increase on the rates laid down in the old scheme about to expire. This has been done after discussion with the Farmers' Unions, in order to meet the increase in building costs. As a result the rates now more closely approximate to one half the current cost of carrying out the work concerned.
Your Lordships will have noticed that for the first time there is a Second Schedule attached to this Silo Subsidies Scheme. This Second Schedule sets out in detail the constructional requirements to be fulfilled before any silo can become eligible for grant. These requirements conform to standards of workmanship and materials, which have, in fact, always been insisted upon, although they had no statutory backing. Her Majesty's Government think that it would be fairer for both applicants and officials if these requirements are embodied in the Scheme. The only difference in the new Scheme before the House, compared to the one in force at present, is that the use of second-hand materials, other than those specified as eligible for subsidy, will not be admissible in the construction of silos at all. Previously, certain second-hand materials might be used although subsidy was not paid on them, but now all second-hand materials specified in the Scheme will be eligible for grant and only those materials may be used. I should perhaps add that there is an exemption under Clause 8 (b), which allows the Minister to approve other second-hand materials in exceptional circumstances. The new Scheme will be of advantage to applicants; under the old scheme they did not get grants on some materials even if approved for use but now they will receive grants on those other materials as well.
1015 At the present time, Government expenditure on the Silo Subsidies Schemes is, as I have said, approximately £800,000 a year in the United Kingdom, of which nearly £70,000 relates to Scotland. In the first three full years of the Schemes, subsidy payments averaged £1¼ million—about £80,000 a year in Scotland—so your Lordships will see that the total amount of subsidy payable in the future is likely to decline. Nevertheless, Her Majesty's Government firmly believe that this Scheme, under which during the last financial year assistance was given in some 5,000 cases, still makes a useful contribution to the standard of grassland husbandry, especially on small farms. Therefore, they think it most desirable to continue the silo subsidies for a further three years. I hope your Lordships will now approve this Scheme. I beg to move.
§ Moved, That the Silo Subsidies (England and Wales and Northern Ireland) Scheme, 1962, be approved.—(Lord Hastings.)
§ LORD STRATHCLYDE
My Lords, I rise, not to oppose the approval of this Scheme, but to call attention to one of its results. On previous occasions your Lordships have approved schemes of a similar nature, and I am sure you will approve of this Scheme to-day, for it is in the interests of farmers and of the country that silage should be produced in the largest possible quantities. I understand, however, that there are certain circumstances where this subsidy acts, not as an incentive but as a disincentive, at least to modern economical farming methods.
To encourage the modernisation of farm buildings, Her Majesty's Government give a grant of 33⅓ per cent. on new approved buildings, and both in their own interests and those of the country the farmers must economise in such buildings as they need to lessen the cost for both labour and feeding stuff. It is also prudent for the farmer to go in for general purpose building. As I understand it, to obtain the greatest economy in the production of milk, it is held that a large covered court divided into three separate divisions is advantageous, cows being accommodated in the two wing compartments and silage in the centre division, access to which is available at all times to the 1016 animals so that they can feed themselves. Your Lordships will appreciate that that centre portion of the building can be used for any purpose whatsoever—storage of hay, straw, implements, potatoes, or any other purpose at all. If it were used for that purpose, the building would qualify for the 33⅓ per cent. grant. But if the farmer happens to admit that he is going to use that centre portion for silage, then the silo subsidy comes into operation and instead of receiving one-third of the cost he receives the subsidy of £250.
These buildings can cost as much as £6,000 to £9,000. The subsidy on the whole building, therefore, would range between £2,000 and £3,000. If we take it that each portion costs the same amount, the subsidy on the centre portion would be £1,000. But again, if it is known that that portion is going to be used for silage, instead of receiving £1,000 grant the farmer receives only £250. That would seem to me to be an illogical result of this subsidy, which is of such great benefit in other directions. It is obviously the wish of Her Majesty's Government to encourage modernisation of farm buildings, and also to encourage the making of silage. But in the case I have given the subsidy acts as a disincentive.
On the other hand, may I call the attention of the House to the fact that it is an incentive to dishonesty, because if anyone likes to go to the extent of saying: "No, I am not going to use that for silage; I am going to use it for hay, straw or implements" then undoubtedly he qualifies for the 33⅓ per cent. grant. I rise merely to call the attention of my noble friend to this particular matter, and I should be glad for it to have his consideration.
§ LORD FORBES
My Lords, I am grateful to the noble Lord for raising these difficulties, and I should like to add my support to what he has said. I think that the officials who have to administer this scheme are themselves often in great difficulties. The sort of thing that can happen is that a farmer can say he wants to erect a silage pit within some buildings, and he will be told that he will not get the silage grant if he does so. On the other hand, if he says he wants to use a portion of his buildings as a barn, he will be told that 1017 he will get farm improvement grant for that. The other thing is that at present a farmer can get a silo subsidy only on one silo for each farm. Now it is quite possible that, in the interests of efficient farming, a farmer may want to erect two or even three silos on a particular farm. If, for instance, a farmer wants to put up two, three or four dutch barns, he will qualify for a farm improvement grant. I think the trouble has been that these silo subsidy schemes came in before the Farm Improvements Scheme. I would suggest that the Government might consider now whether the whole thing could come under the farm improvements scheme.
§ LORD WISE
My Lords, while approving what was said by the two noble Lords who have just spoken, we on this side of the House support this Order in general. But there is one question I should like to ask the noble Lord who moved it. He referred to the cost of the scheme as being £800,000 per annum and £1¼ million for three years. If you take £250 as the maximum cost of a silo, that means that a tremendous number of silos were put up each year in comparison with the number of farms in the United Kingdom. I just want to ask him if these figures which he used are correct figures in regard to the numbers of silos which were put up and their cost. Also, I should like to ask the noble Lord if there is any other charge, except in regard to second-hand materials, in the second schedule which now appears in this Order in comparison with what the instructions were to the Minister's officers when operating the previous Order which is now on the point of expiring. I am informed in regard to the Farm Improvements Scheme that it is more difficult now to get these improvements passed by reason of the fact that the Ministry are making harder terms in regard to the construction of the various buildings which come under the Farm Improvements Scheme. Will that apply in the future in regard to silos?
My Lords, I want merely to draw attention to two points. One is that if you roof a silo and you utilise home-grown timber you are not allowed a full grant for the value of the timber; you are allowed only 85 per cent. I think this is a disincentive to Scottish forestry and the use 1018 of home-grown timber and an encouragement to buy imported timber and not to use your own. I should really like that to be given thought. In point of fact no one can make a profit by using his own timber and I maintain the full cost should be allowed.
The other point I should like just to mention is that by increasing the rates for the units of work you are not really increasing the grant to the farmer, because you have a ceiling. You are admitting that the job is costing him more and you are saying that you are going to give him more. In point of fact you are not; you are really saying the farmer can have only a small silo.
§ LORD HASTINGS
My Lords, I am glad of the general welcome to this Scheme and there just remain one or two specific points to deal with. The noble Lord, Lord Wise, if I may take his point first, questioned the accuracy of the figures. Of course he can read for himself the cost of these subsidies in Appendix V of the White Paper on the Annual Price Review, which is published every year. There is no doubt about the cost of them; £1¼ million for each of the first three years—not over the whole three years; £800,000 in the last year; and it is likely to remain at that figure for this year. I can give the noble Lord some figures here of the number of silo schemes which have been approved up to March 1962, which is a very recent date. The number of approvals in England and Wales was 28,593 and the total cost of them £4,275,000. I think that answers his question on the matter of figures.
In regard to second-hand materials, I think he wanted to know what the difference was in the new Scheme compared with the old. There were some secondhand materials eligible for grant under the existing Scheme and they have been retained for the new Scheme, with the addition of steel railway lines. As I said when I introduced this Scheme a moment ago, in certain circumstances the Minister can give approval to the use of other materials, for example, secondhand bricks. If the farmer happened to have them in really good condition they could be approved. Whereas before those second-hand bricks would not have received any grant, now if they are approved under the new Scheme they 1019 will be eligible for grant; and so there really is an advantage in respect of second-hand materials. But the Minister feels that definite standards of building construction must be maintained and, in fact, they have been brought into line with the standards required under the Farm Improvements Scheme.
There was a particular point which the noble Viscount, Lord Stonehaven, raised about the type of timber. I am afraid that I am not in a position to give a detailed answer on that and I do not know whether my noble friend might be able to answer when in a moment he moves the Scottish Scheme. I do not know about the 85 per cent., but certainly under the new Scheme, which, of course, is the same for Scotland as for England, Wales and Northern Ireland, the rates are laid down. In Schedule 1 the rates have gone up in the case of roofing made with stanchions of new round wood or other approved material, from 18s. per square yard of superficial area to 26s., a considerable rise. For second-hand wooden telegraph poles there is a rise from 18s. to 23s. 6d. But I am afraid I am not aware at the moment if there are any limitations on the type of timber. Perhaps I might be able to give the noble Lord a further answer if my noble friend cannot oblige in a moment.
The main point was brought up by the noble Lords, Lord Strathclyde and Lord Forbes. This was the problem of a grant if a silo was going to be built on a large scale—I gather, under a dutch barn. I do not think the noble Lord can be quite accurately informed in this case. I think I must first of all point out that the main aim of this Scheme is not to subsidise all aspects of silage making; it is to introduce farmers to silage making, especially small farmers, and to get them started on it. But, of course, it is in the interests of the country that silage should be made and I want just to read out the gist of the speech made by the Parliamentary Secretary to the Ministry of Agriculture on July 2, 1959 when the 1959 Scheme was brought in. He explained then that silos were not mentioned in the statutory schedule of items which may be grant-aided through the Farm Improvements Scheme but—and this is the point the noble Lords brought up—when a build- 1020 ing incorporating a silage pit is proposed under that Scheme, anda building can be said to satisfy fully the tests of the Farm Improvements Scheme and can be regarded as a long-term improvement irrespective of its use in connection with silage making",it will be eligible for grant under that Scheme, excluding only the work special to the silo. In some cases only the floor and any works specifically required to contain the silage can be considered for grant under the Silo Subsidy Scheme and this will remain the practice under the new scheme.
The noble Lord gave an example of a large dutch barn with a central portion where silage, hay, or anything else could be stored, with cattle in the other parts feeding themselves. That definitely comes under the Farm Improvements Scheme, and the criterion for the Farm Improvements Scheme is really what a prudent landlord would carry out in the interests of production and economy on that farm. There is no doubt at all that if part of a dutch barn is used for silo and the rest for something else the whole of that building, apart from the pit in which the silage is made, can come in for the full one-third grant under the Farm Improvements Scheme. There may be some doubt, possibly, in the case of a covered barn where the whole thing is going to be used for silage. I understand that happens in the case of the larger farms, for which this Scheme was not originally devised; it was really more for the small farm. But in that case I understand it would be right to say that the application should be made under the Farm Improvements Scheme and not purely as a silo scheme.
I think that this is a question of internal administration. My noble friend is sitting here on my right, and I have no doubt that the matter will be gone into more thoroughly at the Ministry of Agriculture, to see whether it is necessary to send out any new instructions to the divisional officers in charge of the administration of this Scheme. I understand that it is the intention to run the Silo Subsidy Scheme in conjunction with the Farm Improvements Scheme. One cannot, of course, receive double grant, but it is not the aim to prevent people from getting grants under the Farm Improvements Scheme. If there is any further elucidation that can be given in due course I will inform the noble Lord.
§ LORD FORBES
My Lords, am I to understand the noble Lord to say that a farmer can opt to take the Farm Improvements Scheme or the Silo Subsidies Scheme?
§ LORD HASTINGS
It is not quite as simple as that. I think it is a matter for administration. There may be some need for clarification. But there is no doubt that you can get farm improvement grant on a dual-purpose building. The difficulty probably arises in the case of the exceptionally large silo which is going to be purely for silage, and that is a matter that will have to be gone into.
§ LORD STRATHCLYDE
My Lords, I should like to thank the Minister for the reply, which clears away a considerable amount of doubt. Indeed, it goes further than that, because it proves that information which has come to me, at first hand, I may say, is not correct, and that the interpretation of the Government's intention at least has perhaps not been carried out as fully as the noble Lord has indicated to-day. I am most grateful for the noble Lord's answer to the point I put to him and also for having said that he will have the matter looked into further.
§ On Question, Motion agreed to.