AGRICULTURE

HL Deb 22 June 1966 vol 275 cc326-92

3.59 p.m.

Debate resumed.

LORD HILTON OF UPTON

My Lords, like other speakers in this debate I should like to thank the noble Baroness, Lady Elliot of Harwood, for initiating this debate to-day on what I regard as the most important, the largest and the oldest industry—an industry in which the noble Lady and I, with many other Members of your Lordships' House, have for many years had a very deep interest. It is not surprising that the noble Baroness should have this keen interest in agriculture, because your Lordships will remember that in that very difficult period between the two wars, when farmers really had their problems, her late husband was a very distinguished Minister of Agriculture.

I have been reminded of that in recent days because I have just read the autobiography of my noble friend Lord Williams of Barnburgh, entitled Digging for Victory. In this book he pays a very great compliment to Walter Elliot, describing him as a very great Minister of Agriculture during a very difficult period in the history of agriculture. I am sure that we are all sorry that my noble friend Lord Williams of Barnburgh is unable to he with us these days to take part in these debates. He is still regarded very highly among all those with a real interest in agriculture. The noble Baroness, of course, always speaks with deep knowledge on agricultural subjects, and this afternoon we have had another example of it. She also has practical experience of farming, and she puts her case with such charm that I am sure that if the proceedings of this House are televised in the future the noble Lady will be somewhere in the "Top Ten".

At this juncture I should like to welcome to the Opposition Front Bench my noble friend, Lord Nugent of Guildford. I say "my noble friend" deliberately, because it seems only a short time ago that he and I were doing battle in another place on agriculture. Although we argued vigorously we were always, and still remain, friends. I am sure that we all welcome the noble Lord to this House. Like many noble Lords opposite, he has a great wealth of experience and knowledge of agriculture, and we had an example of this just a few minutes ago. I congratulate the noble Lord on his maiden speech. He said that he would try to be non-controversial. He was never known as the most controversial of speakers on the other side of the House, but I think that this afternoon he did extremely well. I know that we shall all look forward with great pleasure to hearing the noble Lord address the House on future occasions.

My Lords, since the Motion we are discussing refers to the problems arising from the selective employment tax, I intend to refer briefly to this tax at the beginning of my speech. Noble Lords will recall that just before the Whitsun Recess as a result of a Question put by the noble Earl, Lord Ferrers, we had an interesting discussion on the effects on the agricultural industry of the selective employment tax. I regret that on that occasion I was unable to be present; but I read the Report of the debate with great interest. I do not wish to take up the time of the House unnecessarily by repeating the very adequate explanation of the policies of the Government which was then given by my noble friend Lord Champion, but since that time the Bill which is to give effect to the Government proposals has been introduced in another place, and noble Lords will be aware that it gives effect to the Government proposals that the tax paid by employers in agriculture should be refunded. I am sure that this is good news for all farmers.

It is the Government's intention that the payment of these refunds should be the responsibility in England and Wales of the Minister of Agriculture and in Scotland of the Secretary of State. The detailed arrangements for making these repayments are now being discussed with the National Farmers' Union and other appropriate organisations. It is also the intention of the Government, as indicated in the White Paper, that the first repayments, which will be in respect of the period from September 5 this year to January 1, 1967, should be made early in 1967, and that thereafter the repayments should be made at quarterly intervals. In due course, that Bill will come before this House, and noble Lords will then have the opportunity of considering in detail the proposals it contains in regard to agriculture.

I myself am naturally very interested in an aspect of agriculture in which the noble Baroness, Lady Elliot of Harwood, also takes great interest, and to which she referred in her speech: the use of labour in agriculture and the methods of securing its most productive and rewarding use. Agriculture, as your Lordships know, is one of the industries with a key role in the Plan for faster economic growth. It is expected to contribute not only by increasing production to ease the pressure on our bill for food imports but also by increasing productivity more rapidly than the increase in production, so that the resources of manpower can be released from agriculture to other industries. The Plan therefore envisages that agriculture will have a smaller labour force—and I note that the noble Lady was worried about this aspect—but one that continues to become more productive. This implies, of course, a labour force that is more highly skilled and is able to understand and apply the developments which are continually being made in agricultural science and technology.

As regards the future size of the agricultural labour force, it was estimated in the Plan that the labour force would probably continue to fall about as fast as during the period 1960 to 1964. This would mean a reduction of some 140,000, in total, over the six years between 1964 and 1970, representing a decline of rather less than 25,000 a year, on average. I would point out that these estimates include not only the hired workers but also the farmers. The number of full-time farmers is estimated to have been falling at a rate of between 2,000 and 3,000 a year; but the provisions on farm amalgamations in the Agriculture Bill are designed to accelerate this trend towards fewer but larger farms. By encouraging the creation of farms which are large enough to permit the full use of the latest technological developments and which will give more scope for the abilities of farmers and staff, I believe that these incentives for amalgamations will do a great deal to accelerate the already high rate of increase in the productivity of the farm labour force.

So far, the release of manpower has proceeded rather faster than the rate envisaged in the Plan. In the first year, for instance, up to June, 1965, the agricultural census showed a decline of 33,000 in the number of workers, and the agricultural census returns for March, 1966, show a further outflow. It would, however, be wrong to draw any conclusions from the figures for this relatively short period. The rate of outflow has fluctuated very considerably in the past. For instance, the census in June, 1956, showed a reduction of 34,000 in the number of workers over the previous twelve months; but in the next twelve months the decline was only 4,000. The rate of outflow depends on a variety of factors, such as the speed at which farmers reorganise their businesses and the availability and attractiveness of jobs outside agriculture. The rate of decline will probably continue to fluctuate in the future as it has done in the past.

This outflow of manpower from agriculture will help the economy generally, but nobody will deny that it brings with it problems of management and reorganisation for the agricultural industry. Various Government measures are in hand directed towards improving productivity. There are various matters to be considered from the point of view of the worker. Here I should like fully to endorse the tributes which have been paid by previous speakers to the efforts of the farm workers in the country over recent years. We are all very proud of the way in which they have worked and the efforts which they have made. The Agriculture Bill, for example, enlarges the extent and scope of grants for improvements to equipment and contains new incentives for investment in machinery. On many farms labour is, till wasted because of out-of-date buildings. Compared with the standards of our best farms, there is still a great deal of scope on others for securing a more productive and more economical use of labour by a carefully planned modernisation of the buildings and the installation of labour-saving equipment. And, with the continuing advance of science and technology, what is at present the most labour-saving and productive type of equipment on our best farms will no doubt before long be superseded by something that is even better.

Last October I remember that the noble Lady said that labour could be saved by improved equipment and mechanisation on cereal farms, pig farms and dairy farms, but that on hill farms it was impos- sible to mechanise the shepherds. I think, however, that the noble Lady will agree that by improving the land through draining, fencing and ditching, and by amalgamations and boundary adjustments, all of which are covered by the grant provisions in the Agriculture Bill, it is possible to increase the stock which can be carried on a given area of land and managed by a given number of shepherds. Although I make no forecasts, I think it not beyond the bounds of possibility that science and technology will surprise us in the field of hill farming, as in other aspects of farming.

We read in the newspapers about new methods of travelling across country. Will any of them eventually be applied to hill farming? We read about the housing of sheep. How far is this an economic and practical proposition? We know that new techniques have made possible a remarkable increase in productivity in the recent past. I think it not unreasonable to believe that in the future techniques still undeveloped will contribute to the more productive and economic use of manpower in agriculture.

I should like now to say a word about the position of the agricultural worker. Meanwhile the industry has to see that it has enough workers under present conditions. This means that the industry must look to its attractiveness to potential recruits in the face of competition, often acute competition, from other industries. Rates of wages are, of course, a question for the Agricultural Wages Board, but it must be a matter for satisfaction that the two sides, the farmers' and workers' representatives, are coming to grips with the subject of a wages structure in agriculture. This is a difficult problem, but it is very much to be hoped that the Agricultural Wages Board will be able to work out a practicable and acceptable scheme. I am sure that other conditions of employment are being studied by the industry. So far as the Government are concerned, we have given attention to the question of sick pay, and the Agriculture Bill before Parliament includes a provision empowering the Agricultural Wages Board to fix minimum rates of sick pay. This I am sure is long overdue and represents a move in the right direction.

Training and education must play a key role in the situation in which the agricultural industry is now placed. The keenness which both farmers and farm workers have shown to get an Agricultural Training Board established is very much to be praised, and the Ministry of Labour are of course very ready to play their part in setting up the machinery. They are now doing the preparatory work for the setting up of the Board. It is hardly necessary to say that the Board's task will be a big one, and it is bound to take some time to survey the industry's needs and work out suitable training arrangements. But the will to make progress is undoubtedly there. Training cannot be divorced from education, and it is increasingly recognised that the two must be integrated. It is very opportune, therefore, that the Report of the Pilkington Committee on Agricultural Education has come to hand. This Report is of considerable assistance in defining the needs of the industry at different levels and proposing a progressive system of courses of instruction linked with practical training. The Report will need careful study by the industry and the educational bodies acting together.

My Lords, I have concentrated on one aspect of agricultural policy, but it is, I think, a particularly important one. It is, after all, only by improvements in the utilisation of manpower and by increasing output per man that we can continue to raise income per man and, at the same time, improve our social services and play our part in world affairs. In recent years British agriculture has a splendid record in increasing food production. Now we must have even greater production through greater productivity, and in view of the different rates of growth of demand for the products of different industries, to say nothing of other factors, the increase in productivity must be accompanied by some redeployment of our manpower resources. This redeployment which agriculture is called on to make is of the same order as that which has been achieved in recent years.

I am confident that, with proper attention to the manpower in this great industry, to the improvement and reward of its skill, to the conditions and method of work, and to the equipment at its disposal, the agricultural industry will indeed play a key role in the achievement of faster economic growth, and will make a key contribution to the solution of our balance-of-payments difficulties.

4.17 p.m.

LORD NETHERTHORPE

My Lords, may I from these Benches add to the congratulations to the noble Lord, Lord Nugent of Guildford, on his maiden speech? It has been my privilege to know the noble Lord for many years, having worked alongside him, I can say shoulder to shoulder, and then sat on the opposite side of the table to him. Whatever my experience of him, I have always found his knowledge profound, his approach objective and the discharge of his responsibilities impeccably commendable.

I should like also to add my thanks to the noble Baroness, Lady Elliot of Harwood, for instigating this debate, and to congratulate the noble Lady on the masterly manner in which the subject has been introduced. I was privileged to know the noble Lady's late husband, not only in his role as a Minister of Agriculture but also, I am proud to say, as a personal friend. We certainly owe him much for his contribution to the promotion of positive agricultural legislation between the two wars—the 1933 Agricultural Marketing (No. 2) Act and the Act to which the noble Lord, Lord Nugent of Guildford, referred, the Wheat Act. I am also mindful that his great knowledge and love of the countryside prompted him constantly to be seeking ways of furthering the best interests of the nation through a progressive and virile agricultural industry. The noble Baroness, however, speaks not only with the benefit of having been the wife of a great agricultural statesman, but in her own right as herself an operator with a profound knowledge of the countryside in general and of hill farming in particular.

For my own part, I must at the outset declare my interest, though this is no longer as the leader of the farmers but as the chairman of a company manufacturing and supplying farm requisites. When first I assumed the position of chairman of that company, after relinquishing active responsibility within the farmers' organisation, a Member postulated the question in the other place as to whether I should prove to be a Trojan horse or a robber baron. I trust that in the event I have been neither. Rather have I sought to ensure that the supplying industry for which I am responsible makes a contribution to the community of interest that is enshrined in all who collectively constitute the agricultural industry.

The subject of agriculture should always be topical, but it is never more so than when, in either war or peace, the lifeline of our shipping imperils the supply of food to supplement our own resources or the transport outward of goods to pay for such imports as are within our capacity to purchase. In the ten years to 1964–65, the expansion of over one-third in home food production is estimated by the Government to have yielded a net import saving to this country, as the noble Baroness mentioned, worth about £250 million, valued at import prices. If taken at the current date instead of 1964–65, then the saving would be even greater.

The net output of British agriculture has indeed more than doubled compared with pre-war, and during the past quarter of a century we have witnessed the greatest rise in productivity in the industry's history. Yet even to-day we produce only half of our food for a population of some 54 million, as compared with one-third of our food pre-war for about 48 million people. A century ago, admittedly for a smaller population—24 million—we were 80 per cent. self-sufficient. I believe that as we approach the end of the 20th century, with our population growing to 75 million, we shall have to depend on our farmers for a much greater proportion of our food than we do to-day.

I am quite convinced that our excessive dependence on imports, greater relatively than in any other major country in the world, is one of the fundamental causes of our failure to achieve steady economic growth. Instead, we have had periodic balance-of-payments crises and "Stop-and-Go" policies, creating a semi-permanent state of economic insecurity and a sense of living from hand to mouth. The simple economic facts facing this country to-day are that we are living beyond our means. Our spending is too high, our earnings too low, our credit precarious and our standard of living higher than certainly economic prudence would dictate.

The national rate of advance of individual earnings in aggregate has outstripped the rate of improvement in national productivity. For so long as this situation persists, so will the decline in our solvency proceed apace and the threat to our standard of living increase. Improvement in national productivity is geared to the most effective use of our total national resources. The only natural resources we can boast are our very limitedminerals—and by their very nature the extractive industries are exploiting a declining asset—and the land of these Islands, which, through encroachment is a diminishing productive asset; but, even so, its productive potential has by no means been achieved.

How timely, then, is the discovery of natural gas, which at any rate promises to be a much-needed supplement to our otherwise limited natural resources—though we cannot afford to mortgage that asset before we have even harnessed it. Our major national resource is, of course, our manpower, representing, as it does, an accumulation of skills, both technical and artisan, that can transform imported raw materials by incorporating those skills into an added value that can earn the necessary foreign exchange to pay for the food we need to import and the raw materials needed to keep the wheels of industry turning. True, our professional acumen, expressed in the form of services, also constitutes an invisible earning that makes an invaluable contribution to our economy. Imports substitution, whether it be food or processed intermediate raw materials for manufacturing industry, is critically important—indeed, I say, equally as important as battling for exports.

In the National Plan, to which the noble Baroness and other noble Lords have referred, the agricultural industry has shown that, afforded the resources, it could increase the volume of net output by about one quarter in the period, say, to 1970; and meet virtually the whole of the additional demand for food resulting from the growth in our population and from higher incomes. Since last September, when the Plan was published, events have shown the need for agriculture to be encouraged to achieve the maximum, rather than merely "a major part", as indicated by the Government in their selective expansion programme. The 1966 Review determinations by themselves will not enable the industry to earn a reasonable enough return and thereby to find resources on the scale required to enable it to carry out the additional investment, which, in tenants' capital alone, may amount to some £800 million over the six years covered by the Plan. The long-term assurances contained in paragraphs 9 and 64 of the White Paper must, of course, play a vital part—indeed, their importance has been acknowledged by both the Prime Minister and the Minister of Agriculture. In the talks with the National Farmers' Unions, it is vital that these assurances should be interpreted in terms which will be meaningful to the farmers, who will have to find much of the additional capital out of their own resources.

For virtually the first time in official thinking, the Plan clearly establishes the close link between the expansion of beef and the expansion of milk, and, if import saving is to be maximised, the fact that the expansion of meat products generally and milk must be based very largely on additional supplies of home-grown cereals for animal feed. We cannot achieve the beef target unless the milk producer, in building up his herd to supply the extra calves for beef, is to be specifically assured that in so doing he will not be severely diluting the milk price. Unless this problem is effectively resolved, beef is likely to be scarce for many years to come, far beyond 1970; and, indeed, current progress justifies our immediate concern. How well, incidentally, all this illustrates the need to keep a balance in the development of our agricultural policy and to avoid a separate commodity-by-commodity approach, unrelated to the overall pattern!

The population explosion is already breaking on us, but its full impact can conjure up an horrific spectacle that would have made Malthus a pale shadow of any modem counterpart. Indeed, Russia's contract, announced only yesterday, for 3 million tons of wheat a year for three years from Canada, and the general run-down of world stocks of grain must give point to this contention. It therefore behoves us to ensure that the land of this country is conserved to the utmost, and that its production potential, whilst fully exploited, is nevertheless so used that its continuing productivity and fertility is in no way impaired.

The most effective use of our great national asset, the land, is dependent on long-term stability—stable markets and stable prices—indeed, an exploitation of such stability as will invite, inspire and justify an investment programme, in both capital and trained manpower, as will make possible the greatest contribution to a buoyant national economy. Progressive efficiency involves investment not only in farm buildings, drainage, farm equipment and the building up of our herds, but also, and I believe equally important, in the industries that manufacture and supply farm requisites in order to enable them to employ the most advanced techniques based on objective applied research, thereby aiding the farmer and grower to produce the quantity and quality of the food needs of our people at the lowest price economically possible.

Over the years since the end of the Second World War successive Governments have sought to inject capital into the agricultural industry through a variety of schemes, the benefit of which is demonstrable. Even so, by far the greatest proportion of capital for development has still to be found by the farmer out of his own earnings, or from sources of borrowing that are contingent upon his credit worthiness and, therefore, the viability of his farming enterprise. In the context of capital availability, while it is gratifying to know that the farmer is to receive a direct pay-back of the selective employment tax, albeit with no premium, even so, as the noble Baroness and others have said, it means that the availability of farmers' working capital is still eroded to the extent of providing the Government with an interest-free loan for the duration between collection and reimbursement. I am therefore encouraged by what the noble Lord, Lord Hilton of Upton, has said, and the assurance that he gave about the rapidity of pay-back. This, however, is a further burden on an industry with already too little capital resources to invest in farm improvements.

Just as on the international scene, where the vacillation of commodity prices can nullify, overnight almost, the value of technical aid to a developing country, so on the national scene instability of prices and of markets can undermine the confidence on which investment and progress is dependent. A sequence of vigorous expansion followed by a retrenchment borne out of insecurity breeds curtailed production. This is conducive neither to sound husbandry or progressive efficiency, nor to the best use of national resources.

By all the criteria enunciated in the productivity, prices and incomes philosophy, agriculture has earned a better recognition than its experience reveals. Whether it be output per man, per acre or per quantum of all inputs, the record of the industry bears comparison with that of many countries of the world, and certainly stands high in the national league table of all British industry. For the sake of the noble Lord, Lord Henley, I can quote figures from the statistics of the Food and Agriculture Organisation. Using figures of gross output available from their studies, the following international comparisons may be of interest. One man engaged in agriculture in the United Kingdom produces as much as four men do in Italy, or Austria; 2¼ to 2½ men in France or Germany, and 1¼ to 1½ men even in Holland or Denmark. And one man produces about the same as a man in Belgium, and about three-quarters of the amount produced by one man in the United States of America—but we must remember, in the case of America, the conditions under which they are prepared to work.

Our system of price guarantees, based as it is on the Agriculture Acts of 1947 and 1957, has proved, I believe, flexible enough to be adapted to varying degrees of food availability and national and international trade policies as they change from time to time. The reward for the capital, labour and management in agriculture has never kept pace either with the reduction in the value of money or with the earnings of the other sectors of the community. Yet, on the basis of improving productivity and the contribution to the balance of payments, agriculture has a worthy record to boast. The element in the farm price guarantee structure that seems to be open to question is the extent to which the industry's efficiency factor—capable as it is of reasonable evaluation—is shared between the three parties involved: the Treasury, the consumer and the farmer.

Just because the present form of "deficiency payment" price support happens, by comparison, to afford benefit to the nation at large, and to the consumer in particular, it seems invidious that the farmer's collective share of his own increased productivity is always threatened, and indeed often eroded, at annual Price Reviews, which inevitably leads to acrimonious argument. It is vital that in the Price Reviews to come a much bigger share of the productivity factor should be retained by the industry. Sustained under-recoupment in a period of general inflation means not only that farmers earn too low a return, but also that the industry is deprived of resources for further investment. It is a remarkable fact that since 1961–62, though the industry's output has increased by 20 per cent., the cost of Exchequer support has fallen by about £100 million, or 30 per cent., and in real terms by even more. Against this record, successive Governments have followed an unwarrantably parsimonious financial policy towards the industry. I am sure that this subject deserves, and I hope is getting, an objective study to ensure an equitable benefit to a progressive and enterprising industry.

As regards the form of agricultural support, may I say that, while from the industrial viewpoint I can see potential advantages in the long term in our closer integration with a larger European Economic Community, I am nevertheless anxious lest we should be over-ready to dismantle unilaterally a proven basis for pursuing a coherent and integrated agricultural policy that has the inbuilt prerequisites for a stable British agriculture before we are satisfied that what takes its place can accord the same prospects of stability. It would be just as stupid to do so as it would be to prosecute a policy of unilateral disarmament. A common agricultural policy for an enlarged European Economic Community, including the United Kingdom, must take account of our basic needs and interests, just as the common agricultural policy at present evolving rather painfully and slowly for the Six themselves represents a compromise reflecting their essential interests.

Agriculture has a proud record of ingenuity and adaptation. The present generation of farmers is fully seized of the need to harness the results of research and development. A good farmer is constantly alert to the advantage of learning from demonstration and example, not only over the fence from his neighbours, but where-ever the National Agricultural Advisory Service experimental husbandry farms or the technical advisers of the commercial firms have something to teach him. It is in this context that the development of Stoneleigh Abbey, the site leased by the Royal Agricultural Society of England as a national agricultural centre, is so commendable. Here there exists, and is developing, a focal point where the latest advances in production techniques can be demonstrated, be they in feeding systems, pesticides, fertilisers or general farm equipment. The active co-operation of the Ministry of Agriculture and of commercial firms in this endeavour is, in my view, both timely and welcome, and calculated to give practical effect to the worthy motto of the Royal Agricultural Society of England "Practice with Science ".

My Lords, I am not despondent about the future of this country, despite the present setbacks and the unhappy portents of continuing inflation. If only we could, as a nation, earn more overseas by hard work, technological initiative, creative enterprise and vigorous salesmanship, and spend less overseas by positive encouragement to ensure a reinvigorated agriculture capable of effective import substitution, then a Britain conscious of its challenge could, I am certain, first, restore its economic balance; secondly, regain its dignity, and, thirdly, contribute its wise judgment to a world that needs all three.

4.42 p.m.

THE EARL OF DUNDEE

My Lords, may I add my warmest congratulations to my noble friend Lord Nugent of Guildford on his admirable maiden speech? I think we have seldom heard a speech in which so much wisdom and experience was expressed in so pleasant a manner and in so short a time. That is what we should have expected of anyone with my noble friend's record of office and of service to the country behind him. We all look forward to hearing him very often again.

My noble friend's speech is the only speech on behalf of the Front Opposition Bench which will be made in this debate, but since my noble friend Lady Elliot of Harwood had managed to collect only one other supporter from Scotland, I thought that perhaps my noble friend Lord Balerno might allow me to share with him that great privilege for a few minutes.

I hope that the Government will pay very careful attention to the powerful case which was put by my noble friend Lady Elliot of Harwood and by other noble Lords who followed her. I would particularly urge them to consider the impressive record of the agricultural industry in increasing its productivity, in its contribution to our balance of payments, and in the increase of efficiency which has continued uninterrupted since the end of the war. In the last ten years United Kingdom agriculture has increased its total output by one-third; and since, at the same time, the number of men employed in it has been reduced by something like one quarter, that means that the amount produced by each man has more than doubled. I think this is the only industry in the country in which a continuous and effective prices and incomes policy has always been applied since the war—often, in the opinion of those engaged in the industry, rather a mean and severe one. With only one exception, I think that every Annual Price Review since the war has given an award which was substantially less than the farmer's increase in costs, so that practically every time the farmer has been expected to make up the difference by increased efficiency.

As my noble friend Lady Elliot of Harwood has so clearly pointed out, all the prices he has to pay have been steadily rising and all his materials have gone up, while the prices which he receives have remained constant. The increase in agricultural incomes has never been inflationary because it has always been less than the increased contribution which has been made by the industry to our national wealth and to our balance of payments. And there has certainly been no question of any hoarding of labour. On the contrary, the industry has reduced its labour supply more quickly than anybody else.

I think your Lordships can well understand that an industry with a record like this, when it was suddenly told a month ago that it would have to pay an additional tax of £65 a year on every fully-employed man, while manufacturing industries whose record was very much worse were going to get a premium of 7s. 6d. a week on every male employee, should have felt like a man of rather modest means whose pocket book and watch have just been stolen. When the pocket book is given back by the thief, although the victim may feel that he does not owe any gratitude for that, he may experience some considerable sense of relief—and certainly the agriculture industry has been relieved by the decision to reverse this tax—but he still has not been given back his watch. He still has to pay to the Government an interest-free loan of £65 on every man he employs from the beginning of September until, I believe, the following April. My noble friend has already given your Lordships the figures.

THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION)

My Lords, did I understand the noble Earl to say £65 in the short period of three months?

THE EARL OF DUNDEE

It is more than three months. I said that farmers have to start paying in September and they get it back the following April, six or seven months later. Is that not right? I think it is. That is what I understand is now proposed. On that sum they have to pay bank overdraft interest, as my noble friend has pointed out—and nearly every farmer now, except a very few, is farming on an overdraft. My noble friend gave the figures. Overdrafts have gone up from £200 million ten years ago to more than £500 million now. It is not the fault of the banks. I believe they are playing the part of a reluctant Shylock, but they are effective Shylocks all the same. In Scotland, the bank overdraft interest rate on unsecured overdraft is 2 per cent. above bank rate, and when the bank rate was 7 per cent. the farmer was paying an overdraft interest rate of 9 per cent. on his bank overdraft. Now the bank rate is down to 6 per cent., he is still paying 8 per cent., and he has still to pay at that rate between the time at which this tax is collected and the time, more than half a year later, when it is refunded.

LORD CHAMPION

My Lords, I think the noble Earl ought to correct the figure of £65. After all, as he says—and he is right—this will be held for some three months.

THE EARL OF DUNDEE

Six months.

LORD CHAMPION

Three months in the case of each man. This is only the initial period, otherwise it will be for a period of three months. Of course that could not possibly be £65. For a period of thirteen weeks it would be £16 5s. 0d. The noble Earl is rather exaggerating it and making it appear much worse than it would be. Indeed, in the case of this money, which he regards as a loan, this is an increasing figure over the whole thirteen weeks so that the full impact of the loan would be for the tiny period at the end of thirteen weeks.

THE EARL OF DUNDEE

I am glad to hear that it is not as bad as I thought. But the farmer has to pay quite a lot before he gets it back.

LORD CHAMPION

And it will be taken care of in the Price Review.

THE EARL OF DUNDEE

That was said at the beginning, but I am afraid it did not carry much conviction, in view of our experience over the last two years.

Why should there be this distinction between an industry with a record like agriculture, with its service to our economy, and other industries which are getting a premium of 7s. 6d. per week in respect of every man they employ? I am sure the Government would not suggest that an Aberdeen Angus prize bull sent at a large price to South America is a less useful export than a number of motor cars, and I am sure they would not suggest that the £1,700 million worth of food for home consumption which is estimated to be produced next year is a less valuable contribution to our balance of payments and to our economy than the newspapers. I hope they would not argue that many of these industries which will receive a premium are not hoarding labour and are not giving increases in wages and raising their prices to an inflationary extent, none of which agriculture has ever done.

The noble Lord, Lord Henley, rightly said that agriculture does not want to be classified as a manufacturing industry because it is not one, and because being classified as a manufacturing industry might involve paying rates, and as the noble Lord pointed out it would not be in the general interest that a raw material such as land should be rated. But why should there be this discrimination in favour of many manufacturing industries which are inflationary, and against agriculture, which is not? So long as that continues I think we are bound to expect resentment among the farming community when they see that they are making this payment and only getting it refunded a little later on, while other industries, which are hoarding labour and in which restrictive practices still remain uncorrected, are receiving the premium.

The growth of farming output in Scotland is not so great as in the United Kingdom as a whole. If your Lordships have read the Government's publication on the Scottish economy you will have seen that the increase in Scottish agricultural net output in the last ten years is only 15 per cent., which I think is less than half the United Kingdom increase, and that the increase in productivity is only 40 per cent. That again is less than half although, as this publication rightly adds, that 40 per cent. achieved by Scottish agriculture is a rate which exceeds the average for all the industry in the United Kingdom.

What is the reason for the difference? It is not that the Scottish farmer is less efficient or that the Scottish worker does not work so hard or so skilfully. There are many reasons. The principal ones are that the average quality of the soil in Scotland is not so rich, the climate on the whole is very much more severe, and the distance from some of the most lucrative markets in the United Kingdom is much greater. The Scottish farmers always feel, with some reason, that they get the rough end of every Price Review. I think they always have the feeling when the Price Review is settled that their incomes are going to be more severely restricted than those of farmers in other parts of the United Kingdom, and I think they will be particularly hard hit by the decision of the Government to abolish the existing investment allowances and to substitute their new scheme of investment grants.

I think your Lordships were probably touched by the Lady Elliot of Harwood's account of her not very successful shopping tour yesterday morning at the Highland Show, saying to herself all the time, "How much is that combine in the window? I do hope it is not for sale, because I cannot afford to buy it". If I understand the Government's proposals rightly, on fixed agricultural equipment the existing 15 per cent. investment allowance is going to be replaced by a grant of 10 per cent., and the 30 per cent. investment allowance on machinery, tractors, combine harvesters and other vehicles is going to be replaced by a grant of 10 per cent., while the improvement grant, as the noble Baroness, Lady Elliot of Harwood, has mentioned, is being reduced from 33⅓ per cent. to 25 per cent. I think it is a great pity that at a time when we need so much—and I think the need may become more urgent a great deal sooner than we expect—to have a larger increase of home-produced food in Great Britain the investment cuts should come.

I would make one practical suggestion to the Government, drawn from an analogy with their industrial investment policy. That, as your Lordships know, we also deplore because it is much less favourable to industry than the investment allowances which have prevailed up to now, and even in the development areas their proposals are less favourable to new industries than those applied by Mr. Maudling in his 1963 Budget, with his one year depreciation. But they have at least maintained the principle of giving preference to the development areas. The industrial investment grant is to be 40 per cent. instead of 20 per cent., and I would put this suggestion to the Government because they are very keen on the idea of regional policy, where one deals differently with different regions. I suggest that they should act on the same principle with regard to agriculture. As the whole of Scotland is now a development area, would it not be consistent with the Government's general policy to double the investment grants in Scotland, from 10 per cent. to 20 per cent.? I do not think it would be resented elsewhere and I think it would do a great amount of practical good.

I am not going to say anything on the positive policy which has been so fully and adequately put by my noble friend Lord Nugent of Guildford and supported by noble Lords on this side of the House, although it may possibly come up again next week in the debate on the Common Market. I have confined myself to present policy, which in our view is becoming increasingly inadequate for the needs of this country. But so long as that policy is continued we will do our best, while reserving our right to criticise its administration and its inadequacy, to help the Government to improve it and to administer it to the general advantage, and I do most earnestly beg the Government to pay particular attention to what has been said and will be said in this debate by so many of your Lordships on all sides of the House who have such an unrivalled knowledge of the subject.

5.2 p.m.

LORD ARWYN

My Lords, we are indebted to the noble Baroness, Lady Elliot of Harwood, for one more opportunity to discuss agriculture, which opportunity the noble Lord, Lord Nugent of Guildford, has seized so well in making a very comprehensive speech on this complicated subject. It is some fifteen months since I took part in a debate on the subject in your Lordships' House, and in reading up in the OFFICIAL REPORT the debate on March 31 last year one finds that most if not all of the same conditions still exist, except for the incidence of selective employment tax and the effect of this year's Price Review.

Enough has been said about the merits or demerits of the new tax. I should like to deal very briefly with one item of the Price Review; that is, the reduction in the subsidy for agricultural lime spreading. I must once more declare my interest. I am connected with a group having substantial interests in the quarrying and spreading of agricultural lime. We are very much concerned about the long-term policy of the agricultural lime producing industry. It is the duty of directors to safeguard the interests of shareholders, and if an investment proves to be unprofitable or likely to be unprofitable in the foreseeable future it is the duty of the board to reduce its commitments as quickly as possible and to re-invest the capital released to greater advantage; in other words, pull out as quickly as possible. So, on the one hand we have a Government Department with a duty to perform in reducing expenditure, and on the other hand boards of companies with a duty to perform as trustees of shareholders' money. It is therefore obvious that, before lime producers can plan for the supply of farmers' needs, they have to consider the profitability of their capital investment.

The small producer can adjust his capital investment programme to the Annual Price Review with a far higher degree of flexibility than we large producers can. The small producer is unable to give anything like the technical service which is required and expected of the large producer. He has no expensive research laboratories to maintain or highly trained field technologists working with mobile laboratories always at the farmer's service to programme a series of tests of every field on his farm and to rectify deficiencies in trace minerals so vital in increasing productivity. I do not know whether sufficient has been mentioned in your Lordships' House about this very vital factor. We have been engaged for some ten years on research work on the effects of deficiencies of trace minerals, and they are bewildering.

It is therefore reasonable for lime producers, both large and small, to seek the maximum co-operation from the Ministry. For instance, we need to be told what the Government's views are on the effect of the subsidy reduction on the level of consumption. The farmer has been encouraged by lime subsidies to give his land adequate dressings of lime for nearly thirty years. If the subsidies are to be continually reduced (this year's reduction was nearly 20 per cent.), then the time might soon come when the subsidy disappears entirely. The reduction in the subsidy this year means a loss of £1¾million to the farmers. The increased costs of the producer and spreader of lime preclude any reduction in prices; the profit margins are too thin. So the farmer has to stand the whole cost if he is to continue spreading lime. The producers of lime are fully aware of the national economic difficulties and appreciate the need for economies, but it is difficult to understand why the lime subsidies were reduced by nearly 20 per cent. in this year when fertiliser subsidies remained unchanged and the overall agricultural support increased by over £20 million—that is the difference between the £243 million in 1965–66 and the £264 million in 1966–67.

In 1958 there was in our farm lands an estimated deficiency of calcium carbonate of 30 million tons. The annual tonnages being spread average around 6½, million tons. This is practically all maintenance tonnage. Very little, if any, dent is being made in the 30 million tons deficiency on the very sour land which we need to bring into top production. This is land which is in need of very heavy dressing before it can be made really productive. If the subsidies on agricultural lime spreading are to be reduced step by step and finally withdrawn, there could be a danger that lime spreading would almost cease altogether, especially when the farmer is undergoing a squeeze on his capital expenditure from other causes; he may decide to drop liming for a year or two.

The effect of this, if widespread, would mean severe losses to lime producers. Their slender margins between break-even and profit would disappear. They would no longer be able to support their programmes of research and would have to cut down on their technical services to farmers. The need, therefore, for the closest possible liaison between producers and the Ministry is extremely important. There should be every encouragement for one to help the other. A decisive long-term policy would enable producers and farmers to take every advantage of long-term budgeting.

I think I have said enough on the subject of lime spreading, but before I sit down I should like to have a little jab at the farmers. When we travel by train or car we too often see fields which are a disgrace to the farming industry. I am referring to grassland particularly, when it is covered with buttercups and daisies as well as excellent specimens of Scotland's national emblem. Why the Scots should choose a weed which is neither a fruit, a flower nor a vegetable as their national emblem I do not know, but we do know that the National Agricultural Advisory Service is doing its best to limit the thistles as well as those friends of our childhood, buttercups and daisies, and other hazards to maximum grass production.

The Government Advisory Service, their research institutes and those of commercial organisations, have developed a range of herbicides and methods of control which have proved conclusively that, given proper treatment, such fields as I have described can increase grass yield by 40 per cent. These are not wild figures; we have ample proof in our laboratories and in our field research. Between the N.A.A.S. and the knowledge made available from the top-rank commercial organizations, the farmer has on tap far more free first-class technical expertise than any other industry. My squabbles with farmers are all because of their reluctance to admit that they are not technically self-sufficient and their reluctance to go outside the range of their own experience. We all have similar failings, and they are more understandable in the case of farmers who so often have to tight alone and be dependent on their own resources.

My Lords, the future of farming in this country is more secure than that of any other industry, provided we realise that it must kick off all its remaining shackles. The future farmer will be one of the highest skilled and most versatile of all the professions, and the most important. Our agricultural research centres must be given greater priority. Our scientists have a world-wide reputation, but there are still more worlds to conquer. When one sees the effect of long-term research one is astonished at what can lie before us. With the new advances in protein production, and maximum cultivation, it may not be so impossible as it appears to-day for us to feed ourselves. That should be the long-term aim of our farmers, particularly those of the future. I hope that we shall still call them farmers rather than agronomists. We lead the world, except in one case, in agricultural efficiency per man in productivity, but we are still dependent on imports. It is in closing this gap that our opportunity lies.

5.13 p.m.

VISCOUNT BRIDGEMAN

My Lords, I hope that the noble Lord, Lord Arwyn, will excuse me if I do not follow him in what he has said to us just now, except to say that his description of the treatment of the agricultural lime industry seems to me to be a good example of the tendency of the Government to say one thing about agriculture and to do another; and for that we are grateful to the noble Lord. It seems to me that at the moment there are two major opportunities in front of the agricultural industry. One is to get the economic structure, the price structure, the support system and all that, right in relation to the needs of the present time, which are different from those of ten years ago. I am not going to say a great deal about that aspect, because the subject has been fully covered by the speeches of my noble friend Lord Nugent of Guildford (he has left the Chamber, but I should like to congratulate him on his maiden speech), and of the noble Lord, Lord Netherthorpe. But my second point is the need to get the manpower position and the wages structure right. I am going to talk about that and follow, if I may, a number of the things that were said by the noble Lord, Lord Hilton of Upton, and perhaps succeed in getting some of the things he said into rather sharper focus than he did.

This opportunity has arisen largely because of the publication of two excellent Reports. One was the Report of the Wise Committee on Smallholdings, sponsored by the Ministry of Agriculture, in a blue cover; and the other was the Pilkington Report of the Advisory Committee on Agricultural. Education, sponsored by the Department of Education and Science, in a green cover. Both Reports, to my mind, are well worth the time spent in reading them. In my own view, they are Reports which should be acted upon by Her Majesty's Government without delay. They would be better acted on, again in my own view, if they are taken together, because they attack this important subject from two different directions, and on many points they seem to me to meet in the middle. What struck me when I read them was that they do a great deal to blow away, perhaps with the wind of change, a great deal of confused thinking which has bedevilled this side of agricultural policy for a long time past—in fact, for as long as I can remember. The Wise Report does something which ought to have been done a long time ago. It draws into the light of day the attitude of the Ministry of Agriculture towards smallholdings. For years, that has been completely schizophrenic.

If your Lordships take your minds back to the start of the farm improvement grant you will remember that the Ministry decided to refuse grants for smallholdings which in their opinion were too small to he viable. In doing that, I think they were right. It was never too easy to find out what was their yardstick; but trial and error proved it to be somewhere around 20 acres. That is what one department of the Ministry did. But the other one, which was responsible for statutory smallholdings, went on subsidising the statutory smallholdings, notwithstanding the fact that, when seen on the ground, they exactly resembled the private enterprise ones. That distinction cannot have been right. Either it was right to spend public money on a smallholding of a certain size, whether in farm improvement grants or a subsidy of statutory smallholdings, or it was wrong. I personally think it was wrong to go on with the same policy of statutory smallholdings for anything like so long as the Ministry have done. Therefore, I think that the Wise Report is right in its approach to this problem.

That Report begins with what seems to me a masterly history of the whole of the political history of smallholdings—the three acres and a cow, and all the rest of it. By doing so, it has shown up how much the previous thinking on statutory smallholdings or smallholdings in general is quite irrelevant to agricultural economics of to-day, because it is largely bound up with old-fashioned notions of a peasant economy—the sort of peasant economy which some people may remember the more starry-eyed of the Americans thought it right to impose on defeated Germany after the Second World War.

So the Wise Report takes the line, broadly speaking, that the only justification for statutory smallholdings is that they provide a farming ladder, if indeed those smallholdings are large enough to give the modern farmer experience to start on the first rung of that ladder: because as someone has said (I think it was the noble Lord, Lord Hilton of Upton) to be viable the size of farms is getting bigger and bigger, and therefore the jump from the smallholding to the farming ladder is getting higher and higher. But let us think for a moment of that farming ladder, and see whether any of it is straight thinking, or whether some of it is wishful thinking.

In farming, as in any other business, there is always a certain number of men who would rather be their own boss in a small way than work for another boss, and some have the character, the knowledge and the physical strength to do so. Therefore, we must continue to provide opportunities for such people in farming, because this has been the traditional way for the local lad to make good. In past years that farming ladder was the only way by means of which the farmer's boy could get to the top and own his own farm. But is that true to-day? I very much doubt it. The smaller unit which the aspiring farmer is likely to get hold of may well be too small to make sense, unless the man or his family have the money to start him off on the farm.

However, another ladder of advancement is beginning to appear, the ladder of the agricultural technician, or whatever we are going to call him. It will not lead to that man becoming his own boss and running his own farm, but it will lead to his being appointed to positions of very great interest, carrying high rewards. The larger the farm units become the more necessary it will be to have these skilled people, and the more careers of that sort will be available, worthwhile careers in themselves, with security at the end, and possibly an easier life for the man's wife than would be the case if the man were running the farm himself. This is where the Pilkington Report begins to fit in with the Wise Report, for, as the noble Lord, Lord Hilton of Upton, said, it stresses the importance of agricultural education for herdsmen and shepherds, as opposed to knowledge and experience. I do not say that knowledge and experience are not just as necessary as agricultural education, but I think the day has come when the two things have to go side by side, and when one is of no use without the other. I very much doubt whether this aspect of the situation is appreciated as much as it should be on the smaller farms, although I think that on the larger enterprises it has been well appreciated for a good number of years.

The recommendations of the Pilkington Report point to the need for educating the right men for responsible jobs, and I think it will be found that they also point to what may be a slightly new approach in considering the problem of farm wages. The Pilkington Report says a very great deal on the matter of technical detail, and covers much ground in dealing with the higher ranges of agricultural education, diploma, degree and all the rest of it—matters which are quite well known and which have been covered before in many ways. But where the Report breaks new ground (and I am very glad that it does) is in talking of the education of the men referred to as the craftsmen, which I take to mean the herdsmen, the shepherd, the pig man, whoever it is, who is sent on a recognised course. The man returns to the farm knowing the biology and the chemistry behind his job, and realising the need for accuracy which is so important if we are to increase productivity on the farm in the ways we all talk about. I think that all this points the way to the work which the Pilkington Report says the Industrial Training Board is going to carry out as soon as a board is established for agriculture, which I take it will be in the fairly near future.

May I turn for a moment to see what effect any proposals of this sort will have on the problem of agricultural wages? I think that they can have a great deal of effect. I must say that I was very sorry about one thing which did not appear in the Pilkington Report. I think the noble Lord, Lord Collison, was a member of the main Committee, though not, I believe, of the sub-committee, which I fancy did most of the work. The National Union of Agricultural Workers did not give oral evidence, or send in written evidence, and, although I may have missed it, I could see nothing in the Report which gave any indication of the attitude of that union to this problem and to the proposals which the Pilkington Report was making. This is absolutely vital, because if anything is to happen in these directions it will not happen merely because the Government accept the Report. That may be all right for a start, but things will get moving only if the proposals are accepted by all sides of industry as common sense proposals and as something which ought to be operated constructively and not just given lip-service.

Therefore, I very much hope that, although the N.U.A.W. seem to have drawn a bye in the first round—and after all I suppose they are "seeded"players—they will not draw a bye in the second round, because their co-operation and advice are absolutely vital if we are to break away from the dreary round of "hard-line" stories which characterise the Annual Review of Agricultural wages. We shall have to break away sooner or later, if only because one "hard-line" story has gone over the side since last year. Up to now, if I am right, one of the main "hard-line" stories told in support of an increase in wages is the need to arrest the drift from the farms. But now those who are responsible for the selective employment tax would have us believe that there are too many people in agriculture already. I wonder which view is right.

I was very pleased to see the kite being flown, in the last two issues of the Farmers' Weekly, in support of a definite system of wages for increased skill. If the unions implement that idea they will be following, about a generation later, in the steps of the National Farmers' Union. I should like to mention the work which was done by the noble Lord, Lord Netherthorpe, on behalf of the National Farmers' Union, work which he carried out together with his two predecessors as President. They got the N.F.U. out of the rut by thinking of the professional standards of the people it represented, rather than just the size of the membership.

I believe that now is the time, when we are thinking about keeping the agricultural wage level in line with the needs of the day, to think very hard about paying wages for skill. The only satisfactory way in which wages can be paid for skill is by linking the increased wage rate, whatever it may be, with a definite, recognised attainment of the kind discussed in the Pilkington Report. Only in that way can we avoid having the farming industry bedevilled by demarcation disputes and such things, from which we have been free, thank goodness! all the time. If we were paying increased wages, or bonuses, or whatever it may be, for something which is recognisable, which men either have or have not, then everyone—the employer, the worker and the people who carry on the education, which is very important—would know where he was, and the plan would then be accepted. As I said just now, if it does not have universal acceptance, it will not be a starter.

Those are the ideas which I wanted to put before your Lordships this evening. I hope very much that the Government will lose no time in acting on those two Reports, and I hope, equally, that all sides of the agricultural industry—farmers, workers, landowners and the rest—will do everything in their power to assist the Government, if they decide to take that line of supporting these two Reports.

LORD MOYNE

My Lords, before the noble Lord sits down, and before I speak, I wonder whether he would either confirm or dispel an impression, which I think he did not mean to give, that no smallholdings were viable. He may have meant to say what he did, but I have not read the Wise Report and I suspect that specialised smallholdings such as the Land Settlement Association, with co-operative marketing, are probably viable and should remain.

VISCOUNT BRIDGEMAN

My Lords, I am most grateful to my noble friend, because in my remarks about smallholdings I was not referring to specialised smallholdings, or co-operatives like the Land Settlement Association, or the small horticultural or pig or poultry holding. I was talking about the kind of smallholding which can be described as a small-scale farm. Of course, if the Ministry of Agriculture ever decided to arrange their terminology in regard to smallholdings otherwise than by the exact acreage, it would be much easier for people to make the right speeches about these matters.

5.33 p.m.

LORD MOYNE

My Lords, before I come to its agricultural aspects, I hope I may be forgiven for saying a few words about the selective employment tax in general, so as to present in its proper perspective what I have to say on its agricultural effects. I have often wondered how this tax, which is now widely seen as inequitable and full of anomalies, was received at first by the public with such comparative equanimity. I suppose it was because we all have a tendency to look no further than the end of our noses. Service employees tended, I think, to feel that it was a tax that would not come on them, forgetting the effects on their jobs and their shopping; and industrialists, in the first flush of their surprise at learning they were actually to be given a bonus for every man employed, tended to forget that increased costs of services, whether in shops, transport or hotels, must in the end mean increased prices and so increased wages and costs of production. Never can the inflationary spiral have received from ill-conceived fiscal measures so strong a stimulation.

It is perhaps arguable that the tax could actually prove an inducement to an industrialist to hoard labour and to postpone automation, though I should perhaps say that this will certainly not be the effect on my own firm of brewers which has in England been in the forefront of modernisation. But, welcome as any bonus must be in itself to any manufacturing company to offset the effect of other new taxation, the selective employment tax seems to me misconceived when its wider aspects are considered, particularly in regard to agriculture.

The justification advanced seems to be that industry, whether it produces gadgets or consumer goods, helps our balance of payments. But the maintenance of our balance of payments is not the object of our existence; it is a means to an end, not the end itself. The end is surely a happy and civilised life for our citizens. If the exportation of gadgets, or pints, is to be the sole object of existence, you end by crowding more and more people into our overcrowded island to make more and more gadgets and have to export more and more gadgets to maintain more and more people still. And by the selective employment tax you favour gadget-producing industry as against other forms of employment which are equally helpful to the maintenance of a civilised life—and in the case of agriculture produces the very essentials of life which otherwise have to be imported, and indeed the raw materials for the exports of such firms as the brewery of which I am a director.

To rely too much upon industry for our living, at the expense of agriculture, is surely dangerous. I know from my own firm's experience that one large overseas market after another has threatened to disappear owing to prohibitive tariffs—Nigeria and Malaysia, for example—and they have only been retained by yielding to requests for local manufacture. It is natural that the new countries should want to develop industry to make up a balanced economy with their agriculture, and I suggest that it is natural and right that we should also foster a healthy agriculture to maintain a balanced economy with our industry here at home.

I know it is now proposed that farmers should recover the tax, but apart from the fact that it is a ridiculous charade to have to pay a tax that is not due from you and later to have to claim it back, the very recovery of it—and the more I have gone into it the more complicated it sounds—is going to put the farmer, who wants to be out and about on his farm, to serious trouble in new record-keeping and form-filling. In some cases this extra work may be the last straw on top of other form-filling, and may drive him to employ a clerk, which is not, presumably, the object of the tax. in any case, as the noble Baroness, Lady Elliot of Harwood, the noble Earl, Lord Dundee, and other speakers have pointed out, the tax will be an enforced loan and will oblige many farmers to increase their overdrafts and to pay interest to the State, instead of receiving it, on the money compulsorily advanced.

Already, presumably in anticipation of the tax, I hear that in Wiltshire transport costs are to rise, which of course will affect everything used by the farmer and the produce he sells. It may be said that the tax is not going to be passed on, but it seems to me that people are probably increasing their costs in anticipation of this being prevented.

But the worst effect will be the encouragement of industry to suck labour away from agriculture. The drift from the land already, caused by high industrial wages, can only be intensified by the bonus to the factories for every man they can tempt away. I cannot conceive what grey eminences, what economic theorising, could have induced the Government to foster our mills, even though no longer dark and satanic, at the expense of the self-supporting, self-fulfilling life of our "green and pleasant land". The doctrine surely runs counter to Blake's poem, which noble Lords opposite used to sing as the anthem of their Party, and which used to make me feel that they were at least aiming in the right direction, even if they sometimes took some curious turns to get there. One of the saddest and strangest manifestations of a wrong direction which I have lately seen was the equanimity with which the noble Lord, Lord Hilton of Upton, in his speech just now, seemed to view the gradual disappearance of a large proportion of our yeoman farmers.

I should like to end on a practical note. I make an appeal on behalf of the over 65s. We all know that there are many elderly men who keep at work on farms until they are 70 or more. With the rising rates of agricultural wages, it becomes increasingly difficult for farmers to afford to employ any but the most able-bodied and efficient workers. None the less, many are still glad, in view of the shortage of skilled manpower, to keep on some elderly men. This new tax must tilt the scales against them. Their work is their life to many of these old men, and they can be most useful, too. May I appeal to noble Lords opposite, out of the goodness of their hearts, to consider exempting the over-65s from the effects of this tax, which seems, in general, so anomalous and inequitable, and, in respect of the over-65s, so particularly cruel?

5.41 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I should like to start by congratulating the noble Lord, Lord Nugent of Guildford, on his admirable maiden speech, which I listened to most attentively. I should also like to thank the noble Baroness, Lady Elliot of Harwood, for so speedily putting this Motion down on the Order Paper. I support what my noble friend Lord Moyne has just said about the selective employment tax. It really seems a complete charade when we remember that while the last Government were in power we had an increase in the number of civil servants of over 10,000—and now, I understand, we are to have a further increase of several thousand. Is it really necessary to make the farmers pay this selective employment tax and then to have the complete absurdity of handing it back to them, which is obviously going to require quite a few extra clerks? With the high rate of bank interest, farmers are having a very hard time, and now they have to grant an interest-free loan to the Government. Albeit the loan will be for only a short time, why do it at all? It seems complete nonsense, and I am really surprised at Her Majesty's Government.

On this question of manpower, we are told in the National Plan that 140,000 persons could be released from agriculture during the period up to 1970. Last year over 30,000 agricultural workers left the land. I have perhaps done it wrongly, but I have been trying to do a bit of mathematics in the last few hours or so, and it appears to me that if we are going to lose 140,000 persons from agriculture in the next four years, the annual increase in output per man in agriculture, if the present production is to be maintained, will have to be 9 per cent. In the White Paper the Government talk about increased production, about an increased productive capacity. Is this really going to be possible if we lose a further 140,000 workers from agriculture? The present regular force of agricultural workers, men and women, is 388,000, and if we take it down to nearly 250,000 I do not think we can possibly maintain production.

I quite agree that many arable and mixed farms can probably become still more efficient, but the really large, efficient arable farms can surely not become more mechanised. I do not think they can be mechanised any more. Perhaps the manufacturers of agricultural machinery have something up their sleeves, but, apart from farmers controlling tractors by radio, without there being any drivers on them, I cannot imagine any great increase in the efficiency of mechanisation. We can, of course, secure greater efficiency by having larger units, but then we come up against the very big social problem that I think has been mentioned in this debate.

But, my Lords, the Review places emphasis on the expansion of meat production, especially beef. Of course a certain amount of this expansion must come from the stock-rearing farms, from the hill farms in Scotland and Wales, and the North of England. I agree that the majority of the beef expansion—probably two-thirds of it—will probably come from the dairy herds; but, nevertheless, some of it has to come from the hill farms. It really is not possible to take any more labour from the hill farms. As I have often said in this House before, you cannot have a mechanical shepherd. You can improve your shearing arrangements, and you can give your shepherds land rovers to drive up rough hill roads, so that they do not have to walk; but you cannot mechanise hill farms. Therefore, I think the Government are not being completely realistic in asking, on the one hand, for greatly increased meat production and, on the other, for a greatly reduced labour force.

I have only just come down from Scotland, and the other day I was speaking to a tenant of mine who has 2,000 ewes. He also has about 150 cattle. At the moment he has only one shepherd. He is trying desperately to get other shepherds, and of course to be completely efficient he should have three. This lack of shepherds on the hills inevitably means a very big death rate, and therefore inefficiency. As my noble friend Lord Dundee pointed out, I think, the increase in Scotland of agricultural output has been far less than in England, and to some extent this is owing to lack of labour. So how the Government can expect hill farms to dispense with more labour I really cannot imagine.

On the question of hill cattle—and I am glad to see that we are having a new beef cow subsidy outside the hill cattle subsidy—the problem is that of the vast areas of summer grazing which cannot be fully utilised because the amount of permanent stock carried is controlled by the amount of winter keep produced. I should very much like to see the manufacturers of farming foods and requisites produce a compact food, perhaps in nut form, which could be fed to the hill cattle in the winter to supplement their roughage diet. I feel sure that we could treble the stock on the hills with such a food. I have tried nearly all the manufacturers, but so far have not been successful in obtaining the right type of compact food.

My Lords, another point that I should like to make is that hill grazing is a very haphazard affair: the animals graze everywhere. A vast amount of fencing is required to make large enclosures on the hills to control their grazing. I note in the White Paper that the Government are doing away with the grass renovation scheme. I wonder whether they could institute instead a controlled hill-grazing scheme under which the hill farmers would receive a very large grant for the purpose of fencing. I should also like to see the Government make a grant for liquid manure (probably the noble Lord, Lord Netherthorpe, would not like this), because at present we use very large amounts of artificial fertilisers, and I think it is time that there was a grant for some natural fertiliser. Perhaps the noble Lord who is to reply might consider this. I think the noble Lord shakes his head. He indicates that he cannot do this; but I think it should be done.

In the Price Review, Her Majesty's Government appear to pat themselves on the back because in the determinations they have increased the guarantees by £23 million; but I would point out that in the last Review the farmers were about £20 million relatively worse off. Therefore, the Government have nothing for which to pat themselves on the back. Of course, the people who should be patted on the back—and I am glad to see it has been done in this debate—are the farmers themselves. The record of the farming community, in production and in the saving of imports, is quite a magnificent one. But I have always had the feeling that Socialist Governments are anti-farmers. Perhaps it is that farmers are a small community compared with the urban communities. Perhaps I am wrong, but I have always had that feeling.

There is another point that I think has not been brought out in the debate so far: the matter of capital investment. In agriculture we have the seasons to contend with, and we have to have extra capital in order to contend with the various seasonal contingencies. In fact, the agricultural worker—I think I am right in saying this—has more capital investment behind him than almost any other worker in industry. I should prefer over a period of time—and here I agree completely with the noble Lord, Lord Nugent of Guildford—to revert to a system of import control. I feel that the Exchequer deficiency payments give the public the idea that the farmer is subsidised and feather-bedded; but, as I think other noble Lords have pointed out, it is, in fact, the consumer who is subsidised.

Eventually, if we join the Common Market (as presumably we shall, when we have a Conservative Government), we shall have to do away with these Exchequer deficiency payments. So far as I am concerned, the sooner this happens the better; because there is a great deal of nonsense talked about such action resulting in a rise in food prices. Perhaps it might put up the food prices slightly—by 5 or, at most, 10 per cent. But I would hazard the guess that half the families in this country to-day spend more on gambling, drink and tobacco than on food. Perhaps I have exaggerated, but in any case I would say that one-third of them do so. Therefore to say that people cannot pay an extra 5 per cent. or, at the utmost, 10 per cent. on food is, I think, nonsense.

Finally my Lords—and coming from a land owner and a farmer this is rather a delicate point—there is the question of tied cottages. As regards agriculture, these have now, of course, been abolished. I entirely agree that 99 per cent. of agricultural workers are the most magnificent people. But there are always a few rogues, in every strata of society, and in every profession and employment—including, perhaps, in your Lordships' House, though I do not think so. But it has come to my notice that the ending of the tied-cottage system has led in one or two cases to the privilege being abused. After all, the whole trend of the White Paper is to reduce the labour in agriculture, so that we now have tens of thousands of farms where the farmer has only one farm worker. If that worker turns nasty and downs tools, he can remain in his house, rent-free, for several months, and the poor farmer has not any labour force. I hope that the court procedure can be speeded up when dealing with these cases, because to my knowledge, from what I have heard, it can take six to seven months to deal with such a case. The individual concerned can appeal, and so the case drags on; and all the time the farmer has to hire a contractor. I feel that if only the court procedure could be speeded up it would be a great help.

My Lords, I do not wish to say anything else, but before I finish I should like to point out the great burden, to which I have referred in the newspapers, that farmers have to endure over the very high hank rate. I should have thought it possible for the Government to come to some arrangement with the banks so that bona fide farmers had not to pay this extremely high bank rate. After all, the farmers are saving imports, and it seems economically stupid that a body of people who are saving imports should have to bear this burden.

6.3 p.m.

LORD BALERNO

My Lords, I was much interested in what the noble Viscount, Lord Massereene and Ferrard, had to say about natural fertilisers. If the noble Viscount cared to do so, he could get help from the Government were he to install a system of organic irrigation on his farm. He would then find that he could get quite a reasonable subsidy from the Government to help him to do so. There are other forms of natural fertilisers for which there is some element of Government help. It is largely due to Government help that seaweed research has been carried out. Another form, which would confront the noble Viscount with a second delicate problem, would be the drying of sewage from the urban areas for agricultural purposes. So the Government are not entirely negligent on the question of natural fertilisers.

I should like to congratulate and thank the noble Baroness, Lady Elliot of Harwood, for introducing this debate and for doing so in such a wide-ranging manner, which has provided many pegs for the rest of us to hang our ideas upon. I particularly liked the reference of the noble Lord, Lord Netherthorpe, to Walter Elliot, than whom few people did more for British agriculture. I thought that the noble Lord's phrase "positive agricultural legislation" was peculiarly happy because so much of agricultural legislation lacks positiveness, but everything that Walter Elliot did was positive. He was such a very positive man, and the noble Lord, Lord Netherthorpe, used exactly the right word to describe his legislation.

I should also like to congratulate the noble Lord, Lord Nugent of Guildford, on his maiden speech. It was a most meticulous survey of the situation and left little in the general field about which the rest of us could say anything more. There is, however, one point about which I should like to question the Government. I believe that the British farmers spend about £1,000 million a year on goods and services. With the selective employment tax being imposed on those goods and services, how much will the cost to the farmer be put up? By £30 million a year? By £60 million a year? I do not know, but the important question is not exactly how much the sum will be; it is whether the Government are going to recoup the farmer with that sum in the Price Review.

I should like to support what was said by the noble Baroness, Lady Elliot of Harwood, about the agricultural implement industry. This industry depends primarily on a healthy agriculture. It was built up only because we had a healthy agricultural industry. If we had not been given a healthy agriculture through the Agriculture Acts after the war (and I acknowledge the outstanding contribution of the noble Lord, Lord Williams of Barn-burgh in this respect) we should not have developed our agricultural implement industry as we have done.

I support the noble Baroness, Lady Elliot of Harwood, in what she said about the expansion of British farm output in recent years. This increase in production is now saving £250 million a year on the import Bill. The noble Lord, Lord Netherthorpe, spoke about beef and milk. I cannot agree with the proposal put forward under this head by the noble Lord, Lord Henley, which I thought was more cows, less milk—

LORD HENLEY

My Lords, I think that the noble Lord, Lord Balerno, is confusing me with the noble Lord, Lord Nugent of Guildford.

LORD BALERNO

My Lords, I apologise. I know that one should not enter into controversy at the present moment. The point I should like to make is that the two are absolutely combined together. In this country you cannot separate beef production from dairy production. Over 80 per cent. of the beef produced in this country conies from dairy herds and, as Mr. C. de Boinville of the British Oil and Cake Mills has said twice in his recent annual reviews, the country could support a larger herd of dairy cows (a point which the noble Lord, Lord Netherthorpe, made) provided that there was a platform put into the price of milk and milk products. But I do not think that this can come about without the implementation of the Meat and Livestock Commission, which is embodied in the Agriculture Bill.

I noticed that this Bill was reintroduced recently into the other place, and I should like to ask the noble Lord, Lord Champion, whether when he replies he can give us some indication of the likely rate of progress of this Bill. If there is to be any slowness about it, would it be possible to go on with Part I of the Bill, which deals with the Meat and Livestock Commission, and so put an end to the uncertainty which at present exists in the livestock industry? I would take this opportunity of saying that I am one of those who welcome the controversial Clause 9 of the Bill, which puts teeth into the Commission, although there are also safeguards in the clause, which is not going to allow the Commission to bite without the permission of the Ministers concerned.

In Part II of the Agriculture Bill there are two new clauses dealing with the promotion of agricultural investment. These make rather curious reading in the light of the Finance Bill and the Ministry of Labour Bill dealing with the selective employment tax. Under these new clauses for investment incentive, agriculture is treated the same as manufacturing industry; but under the Finance Bill it is being treated below the manufacturing level. This is an interesting point and adds to the collection of in consequences which the noble Viscount, Lord Bridgeman, has been displaying to us this afternoon.

There is at the moment a point about meat which I think is of major importance; that is, the exporting of meat from this country to Europe. This is a most interesting development, which has been growing during recent years, and the new Meat and Livestock Commission, when it gets going, may be able to help this trade considerably. I would illustrate this by the type of sheep which we are producing. In the Paris market there is a big difference between top and bottom quality payments, and some of our breeds and crosses are coming very near the bottom. Others, notably one of the breeds in which the noble Baroness, Lady Elliot of Harwood, is most interested—the Cheviot lamb—are about the most highly thought of there, though this seems to have taken a little time to discover. It could be a function of the Commission to help this trade, because they would have proper market intelligence as to the quantity and quality to be produced. At the present time, the lambs produced in France have a larger proportion of lean to fat than lambs produced in this country. This is a rather a reflection on us, because we used to think of ourselves as the stock farm of the world.

There are other interesting developments which point again to the need for the Meat and Livestock Commission to get down to work. There are other Continental breeds which are now being more highly valued than our own in this country. For instance, Yugoslavia is sending to Smithfield chilled beef which is making nearly as much as prime Scotch and sometimes a little more. Again, these car cases are very lean.

There is one point on the Finance Bill on which I think we may perhaps get some enlightenment. It is another anomaly to add to Lord Bridgeman's collection. The Finance Bill defines part-time workers as working not more than eight hours a week, but under the Redundancy Payments Act the definition is 21 hours a week for a part-time worker.

I would support what the noble Lord, Lord Moyne, said about those who have served agriculture well and worn themselves out in its service. They are kept on by good farmers. Good farmers will always want to hold their old employees on the ground and keep them going in part-time employment, even though they are badly disabled, usually by arthritis, and able to do only light work. And here is a tax being put upon them. It is good husbandry for a farmer to look after his workers just as much as to look after his land. The workers love the land and want to die on it, just as any good farmer ought to want to do, too. This selective employment tax is going to bear hardly on them.

I agree with the noble Viscount, Lord Bridgeman, about the ordinary smallholding—the old idea of three acres and a cow—being uneconomic. But there are the intensive smallholdings, to which the noble Viscount referred, where there is usually some form of intensive livestock production. If these units are to be made subject to rating, then it will not be possible for young men to enter into them. I know of a case where a young man—a degree diploma chap—employed on the administrative side of agriculture gave that up in order to go into intensive pig breeding on something like ten or fifteen acres. Being a progressive and thoroughly well-trained young man, he will certainly make a success of it, and, at the age of 30 to 35, that will start him well up on the first rung of the farming ladder. As regards Scotland, this sort of beginning is going to become almost impossible, if these intensive units are to be rated, because the rating burden in Scotland is substantially heavier than it is in England. It is, I am informed, nearly double. However, in Scotland, because of this, there is a measure of industrial de-rating. So my further question on the rating problem is this: if intensive agricultural units are to be rated, will they get potential de-rating as industrial units?

I was interested in what the noble Lord, Lord Hilton of Upton, said about agricultural education and the Pilkington Report and also in what the noble Viscount, Lord Bridgeman, said about this. If I may again bring this on to Scottish lines, may I ask the noble Lord, Lord Champion, who informed me that he was willing to carry the brief of the noble Lord, Lord Hughes, while he is in Iceland, if there are any plans for developments of this nature in Scotland? Would these proposals link up with the agricultural training boards which, I gather, are likely to be set up under the Industrial Training Act 1964? If so, how would they operate in Scotland, where the organisation of agricultural education is somewhat different? And, most important of all, will they be financed by the State or by another levy on the farmer?

My noble friend Lord Dundee has touched on a number of Scottish problems, and I should like to conclude by adding one or two more to those which he and my noble friend Lady Elliot of Harwood have mentioned. We had in Scotland for the year 1965–66 another record output. Scottish farmers are estimated to have produced £205 million gross output, an increase of £9 million on the previous year; and that, if I remember rightly, was an increase of £14 million on the year before. The greater part of that increase came from livestock, to which noble Lords have made reference. In Scotland this accounts for about three-quarters: of the total marketed output from the soil. This has been achieved in spite of the fact that in the last three years there has been a substantial reduction in the total of subsidies and grants coming to Scotland. The total figure for 1963–64 amounted to £46 million, and in the next year it dropped to £39½ million, which is something of the order of a 15 per cent. drop.

But farmers' incomes in Scotland, like those in other parts of Britain, have not kept pace with the industry's performance. I should like to commend to your Lordships a statement made the other day by the President of the Scottish Famers' Union to the Secretary of State for Scotland. He said: To put it very simply, the nation as a whole has had the lion's share of the benefit of the industry's increased efficiency. Food prices to the housewife are cheaper than in other countries. I believe that that comment puts our problem in a nutshell. Agricultural efficiency has reached a higher overall pitch in Scotland than in England; and the reason it does not show as great a rise in recent years is because English agriculture had more slack to take up. We have been forced to do this because our conditions in Scotland are, by and large, much tougher; and we have a lower proportion of arable farming, in which, of course, mechanisation has been more easily accomplished in recent years.

My Lords, there is at the present time a serious and increasing unrest among the farmers of Scotland. I venture to say, with respect, that it is perhaps much more deep-seated than among English farmers. The fact that Scottish farmers have not threatened to go on strike, and have not sent circuses around the countryside, does not mean that they are not worried; but that is not their normal way of doing things. We are worried. Our hank overdraft is over £70 million, and the farmers of Scotland cannot for much longer carry this strain of increasing efficiency with diminishing returns. Some of your Lordships may be surprised to hear that the reason there has been no vocal manifestation from the Scottish farmers is because the Scottish farmer is not so violently emotional as the farmer South of the Border. I would merely add that the Government will disregard these facts at their peril. For Scotland, under pressure, goes for action rather than words, and this pressure is building up. Scotland will not let off steam: we shall explode!

6.26 p.m.

LORD ALLERTON

My Lords, I join with other noble Lords who have spoken in thanking my noble friend Lady Elliot of Harwood for having initiated this debate. I should like also to add my con- gratulations to the noble Lord, Lord Nugent of Guildford, on the quite admirable maiden speech that he made, which, needless to say, we all expected from him. And we were not disappointed. Like my noble friend Lady Elliot of Harwood, I am a simple commercial farmer. Having listened to the noble Baroness this afternoon, and on many other occasions, I have a nasty feeling that I am a great deal simpler than she is; and I think it is probable that her sense of commerce is more highly developed than mine

No fair-minded man should expect those who invest money and labour in agriculture to do so on worse terms than those who invest in industry. The purpose of the Annual Review of Farm Prices should be to ensure that farmers get a fair return. However, as agriculture is subsidised by the taxpayer, and not all taxpayers are either farmers or countrymen, I feel that more should be done to make the public realise that agriculture is one of our key industries, and to understand the benefits which derive from agriculture. Were it more generally realised that its output is in excess of £1,800 million a year, which I believe is twice that of coalmining and the motor industry, that it saves imports worth £400 million, and that we have the cheapest food in Europe, fair-minded people must regard the money spent on food subsidies, or, as the noble Baroness put it, consumer subsidies, as being well spent. The country may also be interested to know that farmers are not as prosperous as some people think. Indeed, they owe the banks a sum in excess of £500 million. I think they would probably owe them more, were they able to get it; but even loans to farmers are now difficult to negotiate: and this, I think, in many ways is hampering the industry.

My noble friend Lord Bridgeman has been thoroughly into the question of the small farmer. Unfortunately, I have not read the Report to which he referred. I did not know of its existence. I welcome the schemes for retirement and amalgamations, which must, in the long run, be beneficial. Although I have the greatest respect for the industry and the independence of the small farmer, which he shows by working for himself, he often incurs excessive expenditure by not having machinery, which is capable of cutting costs and reducing hours of work. Such machinery is too expensive to justify the cost for a small acreage. It is possible that more could be done by sharing labour and machinery among small farmers, although such schemes are difficult to operate, because each member of a syndicate will naturally want the machine on the first, and possibly only, day when the weather is suitable.

The direct injection of capital is undoubtedly an immediate help. But the question must remain as to whether or not there has been lasting benefit, and whether farmers are in a better position to face the future. Moreover, suppliers of capital are only too well aware that in farming it is possible to do something which, although technically sound, is economically suicidal. I should have thought that the best solution for the small farmer was to rely on specialised lines such as pigs, poultry and horticulture, and to avoid mixed farming like the plague. Even for the bigger farmer costs continue to rise, and labour becomes more expensive and, in my experience, more difficult to get. We have heard quite a lot this afternoon about reducing labour. I think most people are finding that they have not enough labour. I do not think anybody has made that point, but that certainly has been my own experience.

We are told to offset these higher costs by increased mechanisation and greater efficiency. But mechanisation is not cheap, either in initial cost or in maintenance, and, as I have said before, nor are loans easy to obtain. Even if loans were more readily obtainable, it must be remembered that working capital has to earn a high rate of interest, both to pay for its annual cost and to contribute towards its eventual repayment. I think the repayment point might be stressed, because one frequently reads in certain sections of the Press that if more loans were to be forthcoming, the difficulties would be over. But loans, sadly enough, like pigeons, come home to roost.

In my view, farm implements and farm machinery are ridiculously expensive, presumably because they are not sold in quantities sufficient to lower the costs of production. This prompts one to ask whether the effort made to sell machinery abroad is quite as strong as it might be. I know that the tractor figures sound very impressive, but one never seems to hear much about the implements they pull behind them. In any event, even a very short journey across the Channel is sufficient to show one that foreign standards of mechanisation are deplorably low, and to lead one to suppose that it should be possible to sell foreigners more equipment than we do. If this could be done, it would certainly do something to reduce the appallingly high costs which we have to face here.

Increased mechanisation must inevitably produce a new concept of the agricultural worker. The present-day skilled agricultural worker, who understands and can service machinery, is well worth the high wages which he earns. I do not think it is fair to say that the highly skilled workers do not earn good wages. I should have said that the minimum wage is but very rarely paid, and certainly not to the skilled workers. But why the minimum agricultural wage should be regarded as the lowest basic wage for any other occupation, I have never been able to understand. The agricultural wage is one negotiated through the agricultural industry, and has no bearing at all on any other employment.

The noble Viscount, Lord Bridgeman, referred to the Pilkington Report and the agricultural colleges. I sometimes wonder whether up to date these agriculture colleges have been tackling the problem in quite the right way. Maybe the Pilkington Report will nut that right. It always seems to me that they attempt to produce too many managers and farmers on their own account. With more amalgamations and a reduction in the number of farms, I should have thought that the demand for them must necessarily be fairly limited. I would suggest that it would be more practical to have more shorter courses designed to produce the highly skilled agricultural worker, as well as the longer courses for managers.

A new problem which faces the agricultural industry is that of the capital gains tax. As I understand it—and in all fairness it is difficult enough to understand—this tax must bear very heavily on the family farm. In the past many family farms have passed down from generation to generation, and they include many which are among the best run in the country. It now seems that if a father wishes to take into partnership his son—in all probability a young man brought up and fully educated to assume this responsibility—the father would become liable to capital gains tax. It may well be that the father has no capital other than that invested in the farm, so in order to pay his capital gains tax he would have to sell off some of his land if the son is to join the business. This would seem to be in conflict with the Government policy for the amalgamation of holdings. I hope I have misunderstood this very complex tax, and I am sure that if I have the noble Lord who is to reply for the Government will correct me. I hope he will be able to. If he is not, I must ask him if something could not be done to help this class of man, who has been the backbone of agriculture throughout history.

The new beef cow subsidy is a welcome and sensible help in a direction where it was needed. Up to date, there has been little profit in rearing beef calves except possibly in the hills. I hope my noble friend Lady Elliot of Harwood will not correct me here. It is clear that more beef is needed, and this new subsidy will help those who rear calves on better land—a type of farming which fits into a mixed farming business quite well, and is deserving of encouragement. Even so, it does not put beef on a par with other forms of farming enterprise as regards profitability. In my view, it is dangerous to grow too many cereal crops without a break, although apparently some people are able to do so. Nevertheless, a few years under grass can only do good, and this is where the beef herd helps out.

On the subject of beef cattle, I would suggest that the calf subsidy for genuine beef cattle should be at the same rate for both heifer and steer calves. It is only by good fortune that a man, breeding for beef, gets a preponderance of steer calves. They both cost the same to rear, even though the heifers make less in the market. So if the producer has bad luck and a great many heifer calves, he loses both ways, through no fault of his own. I hope that this point may be considered.

If I may be permitted to have one final agricultural grumble, may I suggest that it is unreasonable for farmers to be required to pay the road fund licence duty on agricultural tractors and combine harvesters. Surely this is taxing the tools of our trade. The tax must be expensive to administer and can bring in only a small amount of money. Now, when the road fund licence no longer dates from January 1, and falls due at all sorts of odd times, the unfortunate farmer is involved in a great deal of work in keeping abreast of the dates on which they are due and in filling up yet another of these horrible forms with which the agricultural industry is already so bedevilled. Would not one initial registration be sufficient, on payment of, I should hope, a very small fee? The identity of the vehicle would be established and this could last until it was disposed of. I am well aware that it is possible to get exemption for vehicles which do not travel more than six miles a week on the road, but even this entails continual form filling and must be just as costly to the licensing authorities.

In conclusion, I would refer to paragraph 14 of the White Paper, which expresses the hope that the well-being of the industry can be put on a firm foundation so that it can contribute even more effectively to the growth of the national economy. My Lords, this is also the hope of the industry.

6.41 p.m.

LORD RAGLAN

My Lords, may I thank the noble Baroness, Lady Elliot of Harwood, for initiating this debate? I, too, am a farmer, and I am almost wholly dependent upon my farm for a living. I have no grumbles, at the moment. I am in slightly too big a way of business to feel the pinch which some smaller farmers are feeling, though I may say that the ones I talk to seem to be as cheerful and as careful as ever, and not depressed by anything much except the weather; and it seems to me that the go-ahead ones are rightly doing fairly well for themselves.

Food is, of course, unique in that it and its by-products are the only man-produced articles which we must have to live, and so agriculture is liable to be an emotive subject, for if farmers are making any more than a bare living from their job they are likely to be accused of profiting out of other people's very existence. This resentment is behind much anti-farming propaganda, and I think it is an understandable sentiment which farmers must try to be careful not to stimulate.

Yet if the country is to prosper, farming must prosper, for we must have food, and it is better to have a surplus to worry about than a deficit. But it seems to me to be a poor reflection upon man's capability and foresight that after at the very least 10,000 years of highly organised agricultural existence, we in the Western world are only just learning how to manage our food production and distribution not too badly; that is, we do not starve every few years, though we could, if by some cataclysm one harvest went completely wrong.

We have reached this comparatively secure situation for two main reasons. First—and I think I must say this—we have become disinclined to believe that the crops grow better through religious practices and superstitions, which is the trouble in many parts of the world, and we put our faith in the results and documentation of research. Agricultural research, and education in the fruits of that research, is of first importance, and I may he unpopular in suggesting that more money should be spent on that rather than on direct subsidies to farmers which are of dubious value, like building grants, where, in my experience, the Ministry's stipulations are needlessly expensive and elaborate to start with, and the contractors, knowing of the grant, appear to put their prices up accordingly.

Secondly, we have discovered, or are discovering, that the so-called law of supply and demand is too fickle a force to rely upon when a commodity is needed, as we need food, in even supply at all times. The movement of shares on the Stock Exchange never ceases to surprise me. If I were the manager of a public company I should be thankful that it was only the price of the shares and not the actual running of the company which was affected by the whims of those jittery speculators. The same sort of speculation happens with food, but its effect is too often directly on the farmer. A month ago the wholesale price of meat shot up by sixpence a pound because the seamen went on strike. A week later it was down by nearly a shilling a pound when it was realised that meat was not going to be short after all. It is this psychological factor which is left out of the reckoning when economists airily talk about the law of supply and demand. In fact it is not a law at all. If it were, it would give predictable results. It is a theory which does not work out in practice because of the desire people have for what is scarce, or appears to be or threatens to be scarce, and their disdain for what is plentiful. This means that prices go way up beyond their scarcity value in times of shortage, and way below what they are worth in times of plenty.

I should think, too, in this connection, that housewives ought to be glad that the price of a loaf has not been tied to the price of copper these last few months. We have not been very clever over securing our copper supplies, but at a pinch we can use less copper, and find substitutes for it, and we shall not die for the lack of it. But it is not possible yet to find substitutes for grain and other farm produced food, and the farming industry must have the price stability, so that we can plan forward and keep producing the goods at moderate cost and the housewife may know roughly where she is from week to week.

The noble Baroness mentioned the selective employment tax. I am proud of belonging to an industry which has so enormously raised its productivity, and keeps on raising it. We have done it mainly, of course, by mechanisation. Indeed, the machines have been enthusiastically welcomed, in all of which I think there are some lessons for other industries with less happy labour relations. My farm is not very expensively mechanised, yet on its 750 acres of good land, half corn and half grass, I have only two men besides myself, one aged 57 and the other aged 58, and with help from a contractor at peak times. Yet the farm has a greater output than it had 15 years ago when there were 12 men, and we do not work such long hours as we did then. I am bound to say, rather smugly, perhaps, that the selective employment tax would not have hit me very hard; but though I believe that a great many farmers do waste labour, none that I have seen waste it to the scandalous extent that I have seen it wasted in other industries.

To conclude: given the stability and ever more research and education, I am certain that farmers and their men, and the industry as a whole, can keep on producing more at reasonable cost and that consumers can have every confidence that their next meal will be increasingly well assured.

6.50 p.m.

LORD BURTON

My Lords, I will be very brief, but I should like to make a few points which do not appear to have been mentioned to-day. May I first start by thanking the noble Baroness for having made this possible? First, there is a serious problem, brought about by the shipping strike, over barley in the Highlands. I do not know whether this is a national problem, but it is one in which I must declare a substantial interest. I have had a substantial amount of barley lying in store since the last harvest which I am now quite unable to move. It will be well known that at the end of this month the subsidy year comes to an end. Not only shall I be unable to get the subsidy on my last year's barley, but I shall have to pay a premium, for it will pass into the next year. I do not know whether this is a national problem, but it is certainly a very serious one for us, and I hope that it will be possible for something to be done about it. I will not ask for an answer to-night, but certainly it is a serious problem for a large number of people in the far North.

Secondly, my noble friend Lord Massereene and Ferrard touched on the plight of the hill sheep industry. A number of people, again in the North, are talking about removing their sheep from the hills altogether, as sheep on some of those West Coast hills in the north of Scotland are becoming quite uneconomic. They consider that in the present state of the industry it might well be worth increasing their deer stocks and farming deer instead of sheep. Thirdly, again in our part of the world, we are not at all happy about the beef cow subsidy. I appreciate that in some of the richer areas this may be a useful thing, perhaps particularly in Lord Raglan's part of the country: it is obviously a very prosperous one if there are no complaints there about agriculture. However, it does concern me that to administer this grant is probably going to cost a quarter of a million pounds. I would much rather see that quarter of a million pounds going into the farmers' pockets, and I feel that this could have been done by putting the money available for the subsidy on to the calf subsidy or on to the finished product, on the beef prices. I appreciate that the money would not have gone where this subsidy will be going, but it would have gone where it is most needed.

Fourthly, I buy very large quantities of artificial fertiliser and, as a result, I am able to get preferential prices from the merchant. I felt that it would be a good thing from my own point of view, as it would help my tenants, and also from my tenants' point of view, if they joined me in purchasing these fertilisers. so before I bought last year I circularised all the tenants and asked them to join together to get preferential prices. I was very surprised that no replies came. I went to one or two of the more progressive tenants, and asked what was the position. I found that they never paid cash for their fertilisers at all: they went to their merchant and undertook that the price of their fertilisers would be deducted when they sold their corn. This means that they are completely tied to the one merchant, absolutely in a cleft stick. This shows how very "sticky" it is for the small man in the capital world; and it is getting increasingly difficult to borrow from their bankers.

Finally, I would mention again the point that was touched upon by my noble friend Lord Allerton—agricultural wages. It is not easy now to get good men. They are going out of the industry very quickly; and not surprisingly when they see what wages they can get in industry for very much shorter hours. I should be very happy to see agricultural wages rise to something near what they are in industry, or perhaps even better; for, after all, we have had virtually no agricultural industrial disputes, and this is quite a remarkable achievement for man/management relationships, in view of the fact that this industry is probably the poorest paid of any. If the wage is to be adjusted I hope that it will be done prior to the Price Review and not, as so often happens, after it.

6.55 p.m.

VISCOUNT STONEHAVEN

My Lords, I want to thank the noble Baroness for making it possible to have this debate. I wish to make merely two points, perhaps three, to get a little clarification, if that is possible. My first is for a little more clarification on the policy or potential policy of import levies. People seem to be rather frightened of this because it affects the cost of living, and this is what I want to get a little clearer. When your Lordships bandy about millions of pounds I find it very difficult to know where you are. Having said that, I am going to do exactly that, so I apologise; but I hope to keep it simple.

If you take support for agriculture at a round figure of £350 million a year, and the population of the United Kingdom as being 50 million, you can divide a into b and you will find that the total cost of support in these very rough figures is £7 per head. Again, if you do a very rapid sum you will find that that is less than 3s. per week per head of the population. I am assured by my friends who smoke, which I do not, that a packet of cigarettes costs 4s. 6d. The suggestion is that this great burden of 3s. a week should be imposed over a period of five years, so it seems to me a bit of a "mountain out of a molehill", especially in the figures of tax we have been talking about.

I am not going to grumble about the tax—everyone else has done that, and I support them. There is one point the noble Lord, Lord Balerno, raised when he talked about rating. I want to raise another, and it is that although agricultural buildings are de-rated, the assessor of taxes is now endeavouring to assess a farmer if he puts a car into a part of his steading, calling the steading a garage and assessing him on it. I think this is scandalous. If you tell me a farmer can manage to-day without a car, I disagree: he cannot. This is the thin end of the wedge and the kind of swindle that is only too prevalent in perfectly good Acts of Parliament; you get this thing creeping in. This should be stamped on at once because, in my opinion, it is absolutely scandalous.

There is one other point. We are told that the ancillary items will be made up to the farmers in the Price Review. I hope that this is not only done, but (if I may parody the saying) be seen to be done, because there has been much criticism among farmers of Price Review decisions, justifiably or not. I hope it is made absolutely clear that these effects are compensated for in the Price Review. The only other matter I wish to raise is in regard to the increased efficiency of beef producers. If you could ensure that every cow you had presented you every year with twins, then your efficiency would have gone up enormously. I have a herd of roughly 200 breeding cows, and with the exception of old "Rosie", who has done it three times running, the rest have miserably failed. So increased efficiency is not always applicable to all types of farming, and I think that should be recognised. In that connection, I must say that the thought went through my mind that if the noble Lord, Lord Raglan, who had no grumbles, were to take over my farm on my marginal land at the foothills of the Grampians, and I were to take over his, I wonder which of us would go broke first.

7.0 p.m.

LORD CHAMPION

My Lords, my noble friend Lord Hilton of Upton, in making the first speech from this Box to-day, rightly paid tribute to the excellent speech of the noble Baroness, Lady Elliot of Harwood, and there is nothing that I can usefully add to what he said about that except to endorse his every word.

The noble Lord, Lord Nugent of Guildford, has made a maiden speech of the quality and with all the authority that one would expect from a recognised expert. In another place he was the Parliamentary Secretary to the Ministry of Agriculture, when I happened to have the pleasure from time to time of speaking on agriculture from the Opposition Front Bench. We crossed swords on many occasions without, I think, either ever conceding victory, but certainly so far as I was concernedour verbal combat always ended with my respect for him and his knowledge undiminished, indeed usually increased.

When I heard that the noble Lord was coming here, I was happy to congratulate him, although I realised that it boded ill for me and my future happiness, for he happens to be expert on two of my subjects, agriculture and transport. However, I am sure that neither of us will do or say anything which might destroy the friendship that can, strangely as some people would think, spring up across the Floor of either of the two Houses. I am sure that we shall all be happy to hear him again, excepting me, on the subjects in which he is expert, as he has proved himself to-day.

It is always a pleasure to listen to a debate on agriculture in this House, because in this subject so many of your Lordships are expert and knowledgeable because you actually participate in the day-to-day job of running a farm, or are landowners who know something of the problems of this great industry. Recently we have had a number of debates on this subject, and of course some more are in prospect, particularly when we get the Agriculture Bill up here. I think I can assure the noble Lord, Lord Balerno, that we are likely to get it here this time. I cannot imagine that we shall have another General Election so soon as to cause us not to get this Bill up here. I think that after this Bill has received, as it must, careful consideration in another place we shall get it here, and then we shall begin our examination of the Bill that they send to us.

Last October the noble Earl, Lord Ferrers, called attention to the position of agriculture, and we had a most useful debate in which we were able to discuss the key role for agriculture envisaged in the National Plan. A month ago we discussed—and I had to answer the debate—agriculture in relation to the selective employment tax. We shall, of course, have to consider this matter again when the Selective Employment Payments Bill comes to us; and here, I imagine, we shall not be short of people who will raise objections and suggest Amendments, and I am afraid I shall have to fight off many of them. Nevertheless, we shall listen to them because, as I have said previously, we have so many experts here.

The speeches by noble Lords to-day have covered a wide range of subjects in such detail that, quite frankly, I cannot hope to cover them all tonight. If I did, those of your Lordships who cared to remain to listen to me would be here until the early hours of the morning. Your Lordships would not welcome that; nor would I. I can guarantee that anything that has been said in this debate will be studied by the Agricultural Departments concerned, because they recognise your Lordships' expertise in this matter. I do not know whether "expertise" is a word that would be welcomed by the noble Lord, Lord Conesford, but I think we all know what is meant by it. But after all, the whole point of debates such as this is that the Government and all the people who might read this debate will be educated and to some extent persuaded.

I am sure that no noble Lord would expect from me "off-the-cuff" replies to many of the points that they have raised. However, I must begin by replying to some extent to what the noble Baroness said. She posed the question: what part has the agricultural industry to play in the national economy? She is not the only one who has posed this question. To some extent every speaker has. To some extent, too, I think it has been answered by various speakers in the debate. I was particularly struck by the speech of the noble Lord, Lord Netherthorpe, whom I do not see here now. Nevertheless, I was enormously impressed by his speech and its wide-ranging character covering the whole of the national economy and certainly the place of agriculture within it.

Before I come to some of the more detailed points, I should like to put into perspective some of the remarks which have been made about the general position of agriculture and the general effect of the Price Review. I believe that this year's Review award was a fair one. The award of £23 million covered about two-thirds of the increased costs of £32 million. This means that farmers have to find the remaining one-third, about £9 million, out of their rising efficiency, which this year has been assessed at about £30 million. Farmers will therefore he able to take a substantial sum gained from their increasing efficiency to help with investments for further expansion and to provide a reward for their work and enterprise.

Here, I must not fall behind other noble Lords in paying tribute to the work of this industry. They have done a grand job since the end of the war. It is true that their starting point was low, which makes it rather easier for them to show this increase of which they and we are so proud to-day. Nevertheless, despite what I have said by way of a caveat, the farming industry has indeed done an extraordinarily good job of work. If we could only get the same sort of response from the whole of industry in this country we should have little difficulty to-day in our national economy. Most of the problems we have would, I think, already be on the way to a complete solution.

However, the cycle of agricultural production is a long one, and if agriculture is to make its full contribution to the national economy its development needs to be considered not merely on a day-to-day basis but over a longer period. The decisions on prices and production grants at this year's Review must therefore be seen against the background of the National Plan, which sets out a selective expansion programme for agriculture covering the period to 1970. The security provided by this knowledge of our long-term objectives has been reinforced by the assurances given in this year's Annual Review White Paper, not only on the future level of cattle prices, the rate of the beef cow subsidy and on milk, but also on the use to be made of the industry's gains in productivity in the coming years.

Further assurance, if any were needed, of the Government's determination to promote the development of our agricultural industry is provided by the Agriculture Bill itself. The Bill is now before another place, and I must not anticipate the debates upon it, although the noble Lord, Lord Balerno, tried to tempt me into doing precisely that; but he has made his point, and I imagine he will make it again when the Bill has been presented to this House. Your Lordships will know that the Bill contains measures to encourage the longer-term development of the industry through improvements in the size, layout and equipment of farms, including assistance for investment, and through better marketing, and co-operation. It is also designed to promote the fuller use of hill land. These measures and those in the Annual Review White Paper, together with the general guide-lines set out in the National Plan, form a comprehensive and constructive policy aimed at helping farmers to continue modernising the industry and putting its well-being on a firm foundation.

I must say that I have very great sympathy with the point made by the noble Baroness and others about how this applies to some extent to the "barley barons". I gather that the noble Lord, Lord Raglan, is in the minor category of the "barley barons", or, if he is not he seemed to be very happy—and in fact most "barley barons" happen to be quite happy. They are the very people who at this time can use to the full the mechanisation which has been made possible by the research into the use of agricultural machinery, and so on. But I agree absolutely with the noble Baroness and others who have said that what applies to them cannot apply to the hill farmer. All we can hope to do in this connection is to secure that the size of the farm is right and that equipment is used to the best advantage on this type of farm. Everything the noble Baroness said in this connection certainly has my sympathy, for I speak as one who for a short time struggled with a hill farm in South Wales. I know the problems of which she spoke, touching the hill farms, and this applies particularly to Scotland, to Wales, and to some of the counties in the North of England.

The noble Baroness and the noble Earl, Lord Dundee, referred to the figures relating to the increase in the amount of bank loans from £250 million to £500 million, as a measure of the burden placed upon the industry because of the bank overdraft which the industry has to carry. Those figures are an indication of the amount of credit which is being made available to agriculture, and indeed the Government have introduced measures to underwrite guarantees on bank loans, which will be consolidated in the Agriculture Bill and which it is hoped will result in due course in an increase in the amount of credit available to farmers.

THE EARL OF DUNDEE

My Lords, the noble Lord said that these would be guaranteed. May I ask who will guarantee them?

LORD CHAMPION

I said: "to underwrite guarantees for bank loans." I think the phrase is clear. If not, I should like to clear it up with the noble Earl over a whisky afterwards. I understand that that is the product of his country, and he will know as much about that as I do.

The noble Viscount, Lord Massereene and Ferrard, talked about the loss of labour from the land. We recognise immediately that the labour content in some types of production is very much greater than in others. This must be taken into consideration by the Government, by the unions on both sides of industry; and they, in turn, must make sure that the Government take this matter into consideration at the Annual Review and in all their thinking. It is, of course, the purpose of debate that we should focus attention on such points, and that the Government of the day should be prepared to consider them and, if possible and necessary, do something about them.

The noble Viscount, Lord Bridgeman, who was kind enough to apologise to the House for his inability to remain, seemed to me to talk a lot of common sense about education, dealt with in the Pilkington Report, and about smallholdings, dealt with in the Wise Report. There is nothing I can say here tonight that will add to what the House knows about this. These two Reports have been received and are under urgent study by the Departments concerned. I know that this is a phrase which is often used by Ministers at Dispatch Boxes when talking about Reports, but it is a fact that we recognise the value of these two Reports which have been presented to us by these excellent Committees.

Both Lord Bridgeman and Lord Balerno pointed to the fact that many men prefer to be their own boss on a small farm, rather than work for others. They virtually asked the question: is the farming ladder still available for this type of man? We must do what we can to ensure that the ladder remains, but with every passing day difficulties increase. One has only to look at the cost of farmland and farms to-day to see that what was possible for some of us in a very small way in the inter-war years is no longer possible because of this fact. This is some answer to people who say that this industry is in difficulty. If the industry was really in difficulty, I could buy good land in Suffolk, as it was bought in the inter-war years, for £21 an acre—land which you could not get to-day for £250 an acre. I do not mean land that is likely to be built on, but land used for farming. This, I admit, is one of the problems of trying to enable the small man who is anxious to own a farm and to go on from there to something bigger; and how we are to solve it, despite the assistance of these Reports, I do not know.

I hope that we shall never lose sight of the fact that this is a good way to keep the men in the industry and to encourage them so that they have a chance of aspiring to higher things. So many of these men, first-class men, are by a misnomer called labourers and feel that they will be labourers for the rest of their lives without going any further. I dislike calling a man a "labourer", because of its connotation and the way the word has come to be accepted—the understanding that if a man does anything manual he is just a "labourer". For too long this understanding has been applied to the farm worker. Much of a farm worker's job is highly skilled, and with every passing year will become more highly skilled. Technological development will mean that we have got to have men in the industry who have received sufficient education to enable them to be classified as something very different from the ordinary "farm labourer" term now applied to them.

The more I saw of farming in the little time that I was in it, and the more I have looked at it elsewhere—because I happen to have a number of relatives in this industry, and they often read what I say and criticise it—the more do I appreciate the fact that the farm worker is often much more highly skilled than the machine-minder, who gets twice his wage in the town. I think that this is becoming increasingly recognised.

The consideration now being given, not to setting up a general standard or wage applicable to all but to endeavouring to separate farm workers into classifications which will give recognition of the actual work they do, is a tremendous advance. I am hoping that those who are considering this issue will come forward with something which will really remove the idea behind the term, and give to these highly skilled workers in the various classifications a reward for their skills which they must have and which is at least comparable to the payments for skills which operate in our towns.

The noble Viscount, Lord Massereene and Ferrard, said that he regarded all this talk about putting up the price of food as a lot of nonsense. It might be nonsense to a landowner and a farmer, as he described himself, but putting up the price of food is certainly not nonsense to the vast majority of people in this country; and this we must consider in connection with the whole business of, perhaps, going into the European Economic Community. We must consider this as a factor, and we dare not lose sight of it. It has more implications than merely the question of what the housewife pays at the week-end, although that is of enormous importance.

The noble Viscount suggested that the interest charged to landowners and farmers should be lowered; that they should have a special rate of their own. If we borrow a sum of money at a certain price and lend it at another price, that is merely another form of subsidy, and, however you look at it, you just cannot hide the fact.

The noble Baroness, Lady Elliot of Harwood, asked me about the rural development boards. Of course, this is germane to the Agriculture Bill which we shall be seeing. But I am sure she will be glad to know that the people who will be put on these boards will have a knowledge of farming matters. Also, she will be glad to see that the Bill provides that more than half of the members of a rural development board shall be appointed as having had experience of, and shown capacity in. or otherwise as having special knowledge of, agriculture and forestry. Despite the language of the Paliamentary draftsman, I think that is pretty clear.

BARONESS ELLIOT OF HARWOOD

And there will be women, too?

LORD CHAMPION

The noble Baroness also made the point that women should come into this. I am sure that she would join with the noble Baroness, Lady Summerskill, in getting at me if we did not see to this, so far as it is humanly possible.

The noble Lord, Lord Nugent of Guildford, set before us what is the Conservative policy of substituting import levies for deficiency payments. I do not want to go into this deeply, although I have a fair amount which I could say about it. To some extent, I have said something about it already, because it is related to our possible entry into the European Economic Community. It is a matter of preparing our industry for what might happen if we go into the Common Market. All I will say about it immediately is that there has been a marked lack of support for these proposals by the National Farmers' Union. Perhaps that is understandable, because none of us likes to lose the securities which we have for some insecurity which might flow from an action which we do not at present understand.

But I can say to the noble Lord, Lord Nugent of Guildford, to the noble Lord, Lord Henley, and to the noble Viscount, Lord Stone haven, that these points deserve, and are receiving, consideration by the Government. They must do. We cannot say that because we like the 1947 Act, because we are still working the 1957 Act, this is right for ever and ever, amen. What we must do is to be considering always whether there is a better way of doing this job of securing for the industry a reasonable degree of prosperity, at the same time, perhaps, bringing certain advantages to the country. This is the job of the Government and we must go on doing this. But in this connection, as I said a moment ago, we must remember the warning of the noble Lord, Lord Netherthorpe, about losing a well-tried system. To some extent I should expect that from him, because of his particular connection with the industry as President of the N.F.U. for a long time.

I will not go very deeply into the points of the noble Baroness, Lady Elliot of Harwood, and the noble Lord, Lord Burton, about sheep and wool. I think it is sufficient for me to say that the Government do not want to see any check on the expansion which has been taking place in the hill sheep flocks, and for this reason the rate of hill subsidy was increased by ls. a ewe. This more than offsets the effect of the cut in wool, which was the equivalent of a reduction of about 9d. per hill ewe. In the lowlands, where flocks have been declining, the cut in wool is equivalent to about ¼d. per lb. on a fat lamb. In order to compensate lowland producers for this reduction, and to encourage the moderate expansion in sheep production which is desired under the National Plan, the guaranteed price for fat sheep and lambs was increased at the Annual Review by ½d. per lb. This increase, while giving the most direct benefit to lowland farmers, will benefit hill sheep farmers as well.

I have some sympathy, as have the Government, with the point raised by the noble Lord, Lord Nugent of Guildford, about increasing our dairy herd in order to get more beef, and the Annual Review made some provision for this. But I am not sure that the best way to achieve this is to lower the gallonage per cow. This seems to be a rather wasteful way of attempting to achieve it. But, the suggestion coming from such a source, we must, of course, consider it.

LORD NUGENT OF GUILDFORD

My Lords, would the noble Lord allow me one moment of explanation? It is true that I used the catch phrase, "More milk from less dairy cows". What I intended, of course, was that less of the progeny of the dairy cows would go into the dairy herd, and more of them would go to make beef. I should expect the actual yield per cow to continue to rise.

LORD CHAMPION

I am glad the noble Lord has cleared that point up. So often, when we get up at Boxes or in our places, we love to use a catch phrase which sometimes creates misunderstanding, rather than give the sort of explanation which the noble Lord has now given to the House and with which I am in a great deal of agreement.

The noble Lord, Lord Arwyn, talked about the cut in the lime subsidy. It is not a very severe one. There has for a very long time been a high rate of subsidy in this country on lime distribution, and if we have not had the spreading of lime to the extent which the country ought to have had it, the farmers themselves are to blame for it. But there is still an estimated £9.5 million for the year 1966–67, and that is a tidy slice of money. It still is 50 per cent. of the cost, and this is a lot of money.

However, I agree with the noble Lord, Lord Arwyn—and here I am sure the noble Lord, Lord Netherthorpe, associated as he is with the great fertiliser firm of Fisons, would agree—that much of our grassland, despite all the money that has been poured out on fertiliser subsidies and on lime subsidies, is very poor indeed. Anyone who looks at farming in this country must wish that farmers would devote as much of their attention, their thought and their work to the improvement of their grassland as they have done to the improvement of their arable land. You cannot make any mistake about this. I am sure the noble Baroness, Lady Elliot of Harwood, knows that I am speaking the truth here. Despite all that was ever done at Aberystwyth by Sir George Stapled on in the wonderful improvement in seeds for this purpose, and despite the fertilisers that are now available, much of our grassland is a disgrace to the industry—but not all. Quite a lot of it is very well farmed, but certainly not as much as there ought to be in the circumstances of our time, the knowledge available to us and the subsidy that has been poured out upon it.

The noble Earl, Lord Dundee, made a suggestion to which I must revert, and that is that the agricultural investment grant should be doubled in the development areas. I am sure he seized on the phrase "development areas" because Scotland happens now to be a development area, having been so classified. The agricultural investment grants were drawn up in agreement with the agricultural industry, and it was decided that they should be at a uniform rate throughout the country, as is already the case with the Farm Improvement Scheme. One of the existing agricultural grants is in fact designed to meet the needs of special areas in this country, and this, of course, is the hill farming grant, which has been of particular value to both Scotland and Wales. At this stage, at any rate, neither of the Ministries which are involved here consider it right to apply special rates of grant to agricultural investment generally in the development areas, which have not been drawn up with particular refererence to agricultural conditions.

The noble Earl spoke, as did all the other speakers, about the impressive record of the industry. He urges us to keep this in mind always. My Lords, judging from my knowledge of this House, we are never likely to be able to forget it so long as the noble Earl is here; and practically everybody else who has spoken here to-day made it quite clear that we just dare not forget it. Indeed we never can and never shall.

The noble Lord, Lord Balerno, asked me a pretty straight question about S.E.T., the selective employment tax, and said that this will bring additional charges by the service industries—those industries which serve the agricultural industry and form part of the cost to the industry. My Lords, in so far as this is a genuine agricultural cost, it will, of course, have to be taken into consideration at the Annual Review. I welcome his support for the Livestock Commission proposed in the Bill, and I look forward to his supporting me again when I come to introduce this Bill in the House, after, I think, the Summer Recess.

On the point about Scotland's agricultural education, the Pilkington Advisory Committee on Agricultural Education deal with the further education below degree level in agriculture and allied technologies in England and Wales. The present arrangements for the award of national diplomas which are on a United Kingdom basis would be affected by the recommendations, which have, therefore, considerable implications for Scotland. Accordingly, the Report is now under urgent study (I use these words again; and they do mean something) by the Department for Agriculture and Fisheries for Scotland and by the Scottish Education Department. The Departments of the Secretary of State are in close touch with the Department of Education and Science about this matter. I hope that the noble Lord will accept my assurance upon it. I could answer him to some extent on his point about rating, but the document which has been sent along to me, by "pigeon post", is rather a long one, and I would much rather show it to the noble Lord afterwards than take up the time of the House on the matter at this hour.

My Lords, that brings me nearly to the end of the time I am going to devote to my reply. The noble Lord, Lord Allerton, welcomed the schemes for amalgamation, and advocated, as all of us who have any sense in this matter do, the sharing of machinery and labour. Farmers are about the worst sharers of machinery and labour it is possible to think of, because everybody wants to use a particular implement on the same day as everybody else who happens to be in that co-operative. Nevertheless, it is possible for them to get together, provided they have the good will, and the intention and desire to do it.

The noble Lord then went on to the capital gains tax, and he said he did not understand it completely. Here I have a fellow feeling for the noble Lord. Not being a finance Minister, I certainly do not pretend to understand the capital gains tax. Indeed, when I came to make out my income tax return I somehow dodged that little bit. But they were having none of it. They sent it back to me and said, "Please fill in that part of it". But I can assure the noble Lord that his remarks will be brought to the attention of the responsible Minister, and I am sure he would not expect me to say any more than that to-day.

LORD ALLERTON

My Lords, would the noble Lord say whether I was right in assuming that capital gains tax would be attracted in those circumstances? Perhaps his "pigeon post" has let him down.

LORD CHAMPION

My "pigeon post" does not at the moment happen to be assisted by a number of people from the Treasury, so perhaps it has failed me in this connection; but I will write to the noble Lord on this, and I am sure that is about all he can expect of me at this moment.

The noble Lord, Lord Raglan, talked a lot of sound common sense about this industry, and I would especially refer to his point on research. Research is so vital to this industry, and I hope that we shall never cease to do all we can to ensure that a sufficient amount of money is devoted annually to research, and to stepping up résearch. I agree with him that it is no longer of any use to pray to the moon or the sun or something else in the hope that this will bring increased fertility to our land and to our animals. We have to do some research, and I think we have got to do research on the point made by the noble Viscount, Lord Stonehaven—that is, of trying to ensure twins where to-day we get only singles. I should think that this is an extremely difficult one, but nevertheless I understand some research into it is going on and that some results are already being shown.

The noble Lord, Lord Burton, pointed to the fact, in relation to the purchase of fertiliser, that tenants will not cooperate because of the system which they now adopt of paying out of later receipts. They have not the ready cash and there is difficulty in borrowing from the bank. I did talk a little bit about this before, but the noble Lord's point is taken and we will certainly give consideration to it. I have taken rather a long time and I apologise to the House for it. I end where I began, by thanking the noble Baroness for raising this topic, and by thanking the House for the excellence of the speeches that have been contributed on it. I assure your Lordships, once again, that every word spoken in this debate to-day will be carefuly studied by the Minister.

7.40 p.m.

BARONESS ELLIOT OF HARWOOD

My Lords, I rise for one moment to thank the noble Lord, Lord Champion, sincerely for the extraordinarily delightful and charming way he has answered all our queries in this debate; for his assurance that he will draw the attention of the Government Department concerned to those that he has not been able to answer, and also that he will write to a number of noble Lords. I think there is not one of us here who does not appreciate the courtesy and kindness with which the noble Lord has always listened to what we have had to say, and also his great tenacity in remaining in his seat for the whole time, from 2.30 until now. I feel that this marathon was an Olympic performance by the noble Lord.

I should also like to say how glad I was to hear the first speech from the Front Bench by the noble Lord, Lord Hilton of Upton. It was also good to hear from the noble Lord, Lord Arwyn, from the Labour Benches. We appreciated the speeches of the noble Lord, Lord Nugent of Guildford, and the noble Lord, Lord Netherthorpe and I think that the noble Viscount, Lord Bridgeman, was right to bring up the question of agricultural education. I was very interested to hear the noble Lord, Lord Henley, from the Liberal Benches. I am sure we were glad to have his contribution, and also those of the noble Lord, Lord Balerno, and the noble Earl, Lord Dundee, both old friends of mine who know a great deal about the problems of Scottish agriculture. I was glad to hear from one noble Lord that the mechanisation which he has been able to undertake on his farm was so successful. As the noble Lord, Lord Champion, said, the variety of agriculture in this country is so great that what applies to one area does not necessarily apply to another; and with the best will in the world one cannot achieve everything that one would like.

I think it only right that I should give a slight warning about the labour position. If we go on talking of giving up more and more labour, we may find labour rushing away from the industry, so that there will not be enough to carry on the essential work in the country. We must bear this in mind. The same thing happened in the coal industry; and it has happened in many industries. If you start saying that the labour force could be reduced, then there is a beeline rush away from the industry so that, before you can wink, there are not enough people in the industry.

My Lords, this has been an interesting debate. It is the first in this new Parliament. I feel that it has been quite up to standard, and very useful. Certainly we on this side of the House found it useful. I hope that those engaged in the industry will feel that they have in the House of Lords, on both sides, Members who are genuinely interested in helping them. I think I can say, on behalf of the industry, that we are most anxious to play as important a part as we can in the economic situation of the country to-day. Everything we can do to help, we will do. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.