§ 2.48 p.m.
§ LORD NUGENT OF GUILDFORDMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ [The Question was as follows:
§ To ask Her Majesty's Government whether they will consider providing the agricultural industry with cheap credit facilities to help finance their expansion programme.]
§ LORD BESWICKMy Lords, cheap credit is only one of a number of ways of encouraging investment in agriculture. As the noble Lord will be aware, it features prominently in the support systems of some Continental countries and elsewhere but the view we have taken here is that cheap credit would be less effective than the guaranteed prices and direct grants available under our support system.
§ LORD NUGENT OF GUILDFORDMy Lords, while thanking the noble Lord for that Answer, may I ask whether he is aware that the high cost of interest rates on farm overdrafts, at present amounting to some £50 million a year, is directly due to the Government's policy of an 8 per cent. bank rate, and has a very handicapping effect on the most enterprising farmers? As it is the Government's policy to ask farmers to 877 engage on a five-year expansion programme involving some £220 million worth of new capital, will the Government consider, as well as increasing product prices on farms, providing a cheap credit scheme similar to that of the ship-building industry at 5½ per cent., which would help farmers in this expansion programme?
§ LORD BESWICKYes, my Lords; I am inclined to agree with the noble Lord about the iniquity of a 10 per cent. interest rate. This is wrong. But to say that it follows from anything this Government have done is also wrong. I assume that noble Lords opposite know what is happening in the rest of the world. On the second part of the noble Lord's supplementary question, the fact of the matter is that our way of helping is more selective and more effective than a blanket cheap credit policy, as practised in other countries.
§ VISCOUNT MONCKTON OF BRENCHLEYMy Lords, is the Minister aware that those of us who are losing money on our farms at the moment do not really want any more credit, but a lot more help in the Price Review?—otherwise we shall be demonstrating again.
§ LORD BESWICKMy Lords, I go this far with the noble Viscount; the total amount of assistance that will emerge from the Price Review will be the deciding factor, and this must take into account the current interest rates. But if the noble Viscount is fair, and bears in mind the Farm Improvement Scheme, the Investment Grants, the Horticultural Improvement Scheme, the Hill Land Improvements Scheme, the Field Drainage and Farm Water Supply Schemes, the Farm Amalgamation and Boundary Adjustment Schemes, he will I am sure agree that the borrowing requirement of the farmer in this country is reduced to some extent by these various schemes.
§ THE EARL OF DUNDEEMy Lords, in spite of all these Schemes, are the Government aware that the farmer can only produce cash (except in a few rare cases) to improve agricultural production, and put new capital into his farm by raising more bank overdrafts, because he is not able to make a large enough 878 profit to do it out of cash? Further, are the Government aware that so long as these rates of interest (which would make Shylock appear a philanthropist, and which have now lasted for longer and at a higher rate than ever before in our history) continue it will not be possible to produce the capital required for the Government's increased production programme?
§ LORD BESWICKMy Lords, the noble Earl and I are at one in this. We have debated it and agreed that a 10 per cent. interest rate is practising usury to an extent that neither of us wants. But at the same time it is not possible in the present world situation to reduce interest rates in this country. I would say to the noble Earl that there is really no evidence to the effect, despite what the noble Viscount opposite says, that the farmer is now unable to secure ample credit.
§ VISCOUNT MASSEREENE AND FERRARDMy Lords, is the noble Lord aware that the present high rate of interest, which is the highest rate of interest that I think this country has ever had before and for the longest period, is also a great cause of the present unemployment in the country?
§ LORD BESWICKMy Lords, I can remember a time, which extended over quite a number of years, when the rate of interest was very low and the rate of un-employment was very much higher.
§ LORD ALLERTONMy Lords, while agreeing with my noble friend Lord Nugent of Guildford that cheap credit would be of value to the agricultural industry, may I ask the Minister whether he would agree that to borrow is only to anticipate profit, and that capital can be created only by ploughing back profits which at the present time barely exist?
§ LORD BESWICKMy Lords, again, I am not sure that the facts entirely support what the noble Lord has said; but I agree with him that at the present time there is a need to make it possible for farmers in this country to invest adequate amounts in their production programmes.
§ LORD BELSTEADMy Lords, can the noble Lord say a little more about the £230 million extra fixed capital and the £110 million extra working capital 879 which the Economic Development Council recommended was necessary for this expansion, and which the Minister accepted in a modified form on November 12, 1968?
§ LORD BESWICKMy Lords, I should be delighted to go into this further but in a debate on agriculture and not at Question Time.