HL Deb 22 May 1969 vol 302 cc480-3

3.51 p.m.

Debate continued.

LORD HENLEY

My Lords, may I bring your Lordships back to the subject of agriculture and fertilisers? I think the farmers' note of criticism is perhaps partly psychological. They were not happy about the Price Review, not so much because in itself it was a bad Price Review—because it was not—but because they though they had been led to expect something better. So far as this reduction in subsidy is concerned, they have a psychological feeling that they have been badly done by, and it is probable that psychologically the Government are wrong to have made this very small cut. But, having said that, I think in fact it was a sensible cut to make. It is not so much a cut as a redistribution of the money. We are still going to have something like £30 million, and it is true to say that the rate of use of fertilisers will not go down as a result of this change. I am not afraid of that. I think we are a long way from the day when people had to be encouraged and taught that fertilisers would work. They know that now, so I consider that the Government have not done anything which is not sensible.

Having said that, I have a feeling that this is one of the subsidies we ought to phase out. We ought to get on to achieving this aim by means of the end price. The Government have done this to some extent, and I welcome it. Also I think it might well be phased out because it costs something to administer. I do not think it is expensive to administer; I believe the cost is only about a quarter of a million pounds. It is value for money. Nevertheless, it is a quarter of a million pounds, and this subsidy might well be done away with. Similarly, it is one of those subsidies about which one is never quite sure that it goes into the right pocket. So, for this and other reasons. I feel that this is the sort of subsidy which should not be estimated upwards but should be gradually phased downwards.

LORD BESWICK

My Lords, I am grateful to the noble Lord, Lord Nugent of Guildford, and to the noble Lord, Lord Henley, for their general welcome to this Scheme. I am particularly grateful to the noble Lord, Lord Henley, for virtually answering on my behalf the criticism made by the noble Lord, Lord Nugent. I agree with the noble Lord, Lord Henley, that this is a form of assistance which can well be gradually phased out, but "gradually" is the operative word. As he will know, it has been the general policy under successive Governments over the years to reduce the rates at which the fertiliser subsidy has been paid, in order to contain the cost to the Exchequer. Therefore really this Scheme is no different from previous Schemes.

I was asked by the noble Lord, Lord Nugent, about the effect, and also on what we based the estimate that this slight cut will not mean a reduction in the uptake of this essential part of farming work. We base it on experience. I do not wish to say that we reduced it less than the Conservative Government re duced it, because that sort of thing does not help very much, but it is true to say that over the years between 1960–61 and 1968 there was a reduction in the rates of subsidy, while the uptake figures went up each year; and one would hope and expect that this would continue. The noble Lord, Lord Nugent, appeared to be saying (although I was not quite certain whether I had heard him correctly) that there was a reduction last year. There must be some misunderstanding here, or possibly he is referring to an incomplete year. In the year 1967–68 there was in fact an increase of 4 per cent. in the volume of the uptake. The noble Lord may conceivably have got hold of a shorter period. From June to the end of December in 1968 there was a drop, but that is accounted for by special factors. One was that in the comparable period in the previous year farmers were anticipating a rise in price and therefore bought heavily at that time of the year. Secondly, in that part of 1968 there was bad weather and the farmers bought rather less than average. So if one takes that part of the year and makes comparisons it is true that there was a drop, but if one takes the whole year there was an increase; and the fact that there was an increase in that year, despite the increase in the price of fertilisers, leads us to think that we are right and that the noble Lord, Lord Henley, is right in thinking that this further reduction will not lead to a reduction in the uptake.

I accept the point made by the noble Lord, Lord Henley, about the psychological effect. It is difficult to put all these things over in such a way that they gain the general applause of the farming community. Indeed, it is not easy to dress up any of the facts to get the applause of the entire farming community. Although there was £37 million extra on the end price subsidy" the amount which was extracted from the Treasury was £34 million. In order to get that concentration on the commodities it was necessary to make an economy elsewhere, and it was made as to £3 million on these subsidies. The noble Lord, Lord Nugent, asked me about potash. He was quite right, of course, as he almost always is—excepting when he is criticising the Government. There was a special situation before. We were almost entirely reliant on Central Europe for our supplies of potash. It is expected that, certainly by 1971. there will be three companies producing potash in Yorkshire, and this will create a diferent situation. The point made by the noble Lord will have to be considered in the light of the changed situation in this country, and I give him the assurance that this consideration will be given. With that, my Lords, I hope that we can approve this Scheme.

On Question, Motion agreed to.