§ 2.37 p.m.
§ THE EARL OF KINNOULLMy Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
§ [The Question was as follows:
§ To ask Her Majesty's Government for a statement on the apparent conflict between the present policy of the Agricultural Mortgage Corporation on interest charges and their clear duty 5 laid down under the Agricultural Credits Act 1928 to provide agricultural loans on favourable terms.]
§ LORD BESWICKMy Lords, there is no conflict. In determining their lending rate the Corporation have to consider many factors. These include the cost at which the Corporation have to borrow and the need to ensure that they meet their obligations so that their services to agriculture may continue. The Government are satisfied that the Corporation decided upon the present rate only after a thorough consideration of all these factors.
§ THE EARL OF KINNOULLMy Lords, while thanking the noble Lord for that reply, may I ask him whether the Government are implying that a favourable term of lending is in fact 10 per cent.? It seems very high. Secondly, would not the noble Lord agree that this very high rate of interest, fixed interest, cuts right across the Government's policy of expansion and modernisation of the agriculture industry?
§ LORD BESWICKMy Lords, if the noble Lord is saying—and I gather that some other noble Lords support him in the view—that 10 per cent, or above is high, and that in a sane world we should pay a lower reward to the lenders of money, I entirely agree with him. But at the present time the Agricultural Mortgage Corporation would be unable to raise the money to continue its services to the agricultural community.
§ THE EARL OF DUNDEEMy Lords, is the noble Lord aware that the present rate of interest charged by the Scottish Agricultural Mortgage Securities Corporation is 10¼ per cent, for a minimum period of several years—I think it is five years—and do the Government, in particular, really think that the expansion programme agreed on last November can be carried out when the money necessary to produce it has to be raised at these prohibitive rates of interest?
§ LORD BESWICKYes, my Lords. The current rate for the Agricultural Mortgage Corporation is also 10¼ per cent. It is also true that in the main they are lending on the medium-term and mostly on the longer term. As a longer-term source of capital, of course, it compares reasonably favourably with other facili 6 ties. But I assure the noble Earl that, so far as the figures I have are concerned, there is no indication that the expansion programme is being held up through lack of credit.
THE EARL OF MANSFIELDMy Lords, are Her Majesty's Government aware that the present hill lambing, in Scotland, in the North of England and in certain parts of Wales, is disastrous; and do they realise that this blow follows a largely indifferent harvest, followed by an unsatisfactory Price Review? Will they not try to take steps to make available on more reasonable terms the credit which the agricultural industry badly needs at the present time?
§ LORD BESWICKMy Lords, I do not think the need for capital at a lower rate than this is restricted to the agricultural community. It would be a good thing, not only in this country but elsewhere, if the rate of interest were lower. As to the other considerations to which the noble Earl refers, we did of course go into them in the discussions on the Price Review.
§ LORD NUGENT OF GUILDFORDMy Lords, is the noble Lord aware that the raising of the mortgage rate in this way is bound to work its way through, and to have an influence also on agricultural rentals thereby having a boosting effect on costs in agriculture from the, very bottom, which must raise the cost of food in due course?
§ LORD BESWICKMy Lords, this may well be, but the point is what is to be done about it?
§ LORD NUGENT OF GUILDFORDYou are the Government.
§ LORD BESWICKWhat does one do about it? The noble Lord, if he is criticising this, should have some constructive suggestions. He may say that the Government should subsidise the agricultural community, and this is what is done to the tune of some hundreds of millions of pounds; but the subsidies are injected in another way.
§ LORD ALLERTONMy Lords, may I ask the noble Lord whether in the event, unlikely though it may be, of the bank rate being reduced, the agricultural mortgage rate will remain at 10¼ per cent., 7 or does it fluctuate in sympathy with the bank rate current?
§ LORD BESWICKMy Lords, if the Corporation are themselves able to borrow money at a lower rate, of course, this will be reflected in the interest rates they charge on new loans. But loans that are undertaken at the present time are loans which are contracted for on the basis of current rates. Of course it cuts both ways. I understand that there are quite a number of fanners who bought their farms with loans raised at 3½ per cent., and that is the amount they are still paying on the outstanding mortgage.
LORD INGLEWOODMy Lords, would the noble Lord agree that when interest rates on loans from the Agricultural Mortgage Corporation are at 10 or 10¼ per cent, and you add capital repayment charges to that, you find that the charge is something like £20 per acre on medium-quality agricultural land, and that there can be no future for the expansion programme if large areas of this country are bearing burdens of that weight?
§ LORD BESWICKMy Lords, it would be quite unnecessary pessimism to say that there is no future for the agricultural industry. Of course there is a future. But if the noble Lord himself says, as I have said, that 10 per cent, and above is high and should be lower, then I agree with him.
§ BARONESS PLUMMERMy Lords, does my noble friend agree with me that the expansion programme is selective?
§ LORD BESWICKMy Lords, I quite agree; and on that basis it is going forward.
§ LORD TREFGARNEMy Lords, can the noble Lord say whether the Government took into account this high rate of interest when they arrived at the decisions on the recent farm Price Review?
§ LORD BESWICKMy Lords, I am not sure whether the noble Lord took part in the debate on the Price Review; but if he did, he will remember that the point was raised and the answer given was in the affirmative.