§ 11.55 a.m.
§ LORD HILTON OF UPTON
My Lords, I beg to move that the Draft Fertilisers (United Kingdom) (Amendment) Scheme 1970, which was laid before the House on March 18, be approved. This Order has two main purposes: it extends the 1969 Scheme for a further year, to May 31, 1971, and it increases the rates of subsidy on fertilisers delivered to farmers in the period April 1, 1970, to March 18, 1971. I should like to point out that this increase in subsidy rates is a once-for-all-measure. I should also like to explain the second of these purposes in a little more detail.
Noble Lords will be aware that one of the prime features of the 1970 Annual Review determinations was the Government's decision to improve the immediate cash position of the industry by injecting £10 million over a period of one year through the medium of the fertiliser and lime subsidies. Of this, £9 million will be disbursed by raising the subsidy rates for fertilisers. The Government were anxious to ensure that farmers received the benefit of the increased subsidy as quickly as possible. They were also concerned to avoid a hiatus in the trade with farmers holding off deliveries of 1513 fertilisers until they could claim the higher rates of subsidy. It was therefore proposed in the Annual Review White Paper that the twelve-month period for payment of the higher rates should commence on March 19.
We were advised that the particular wording of the enabling legislation—the Agriculture (Fertilisers) Act 1952—would not make it possible to give retrospective effect to the provisions now before the House; hence the proposal in the Draft Order that the effective starting date for payment of the higher rates should be April 1, 1970. But, subject to Parliament's approval of the Draft Order, the Government wish to ensure that farmers who take delivery of fertilisers between March 19 and April 1 receive the benefit of the increased subsidy by means of exgratia payments. I trust the House will agree that this is a necessary and sensible arrangement.
Quite apart from the benefit which the increased rates of subsidy will bring to the liquidity of farm businesses, they can also be expected to encourage a worth-while increase in demand for fertilisers. This has been taken into account in assessing the rates, which will be increased by about 20 per cent. on average over those set out in the 1969 Scheme. During the year in question, the subsidy as a percentage of gross cost of fertilisers will rise from the present 22½ per cent. to 27 per cent., on average. I should also like to draw the attention of the House to the assurance given by the principal fertiliser manufacturers that, in the absence of exceptional circumstances, they will not seek to exceed their current list prices in the coming year. This is a very useful assurance for the farmer to have.
Finally, my Lords, I would make it clear that this temporary increase in subsidy does not affect the Government's underlying long-term policy of containing the cost of the subsidy as consumption of fertilisers increases. The average Exchequer cost of £32 million a year has been maintained with little variation for the past ten years. The considerations before the House are, therefore: should the Fertiliser Scheme be extended for a further year, to May 31, 1971, and should there be a temporary increase in rates for one year, as set out in the Schedule to the Draft Order? I feel sure that the 1514 House will wish to approve both proposals. I beg to move.
§ Moved, That the Draft Fertilisers (United Kingdom) (Amendment) Scheme 1970, laid before the House on March 18, 1970, be approved.—(Lord Hilton of Upton.)
§ LORD BELSTEAD
My Lords, I thank the noble Lord, Lord Hilton of Upton, for explaining this Order to the House. I should like to question him on two interrelated matters which appear to arise from it, the effect on farmers and the effect on the Government's declared expansion policy. The noble Lord gave us percentages. Perhaps, when he replies, he will tell the House, in simple terms, what this will mean in cash advantage per ton to the farmer. For farmers this Order increases the subsidy, as the noble Lord explained, by about £9 million. But, of course, last year's Review reduced the subsidy by £3 million, so that in fact this award represents an increase over 1968, in real terms, of only £6 million.
Referring specifically to fertilisers, paragraph 14 of the Review says:The increased subsidies will put money into the farmers' pockets by reducing costs which they would otherwise have had to meet.Despite the noble Lord's explanation that this Order will cover the period March 19 to April 1, next, as a result of ex gratia payments, for many farmers this sentence in the Price Review White Paper will not be effective until next autumn, because much of the fertiliser buying has already been done, particularly for a fertiliser-intensive crop such as sugar beet. I wonder whether the noble Lord could give any forecast of the consumption of fertilisers for 1970, perhaps by a projection of the 1968 and 1969 figures, which I believe have shown a slackening in demand?
The Government's policy, the 1968 "Little Neddy", Imports Saving Target for Agriculture, required, I believe I am right in saying, an increased expenditure on fertilisers up to 1972–73 of about 40 per cent. in total, and this the Minister accepted in a modified form, as his declared policy later on in 1968. Do Her Majesty's Government believe that this award in this Order will help to achieve the Minister's expansion target for fertiliser consumption? I believe that 1515 this is the nub of this Order. This is what the Government should tell the House this morning to justify this award, and this is what noble Lords will wish to know.
Within the last week, the Economic Development Council Report, Economic Assessment for 1972, has told us that the Government's objectives for increased arable production will not be achieved unless there is a "pronounced up-turn", (to quote the words of the Report) between now and 1972–73. In 1969—last year—the cereals acreage fell back to 9.1 million acres, the lowest for four years. Have Her Majesty's Government any figures for the total tillage acreage fore-cast for this year, 1970? It would seem essential to know this if this Order is to be accepted as being a stepping-stone for the Minister to hit his targets in three years time.
When the Review Statement was made in this House reference was made to manufacturers. I think that all noble Lords will have been glad to hear from the noble Lord about the manufacturers' undertaking, on a prices standstill. I believe that the last year has been anything but easy for the manufacturers, and such a prices standstill will be applauded as well as welcomed.
May I tack on one last question, and repeat a question which was put by my noble friend Lord Nugent on the previous Order a year ago? Is it really not possible for this Order to be extended at some stage to potash, which is so necessary, as my noble friend explained, if rough areas are to be ploughed up? I put the question again to the noble Lord, because a note at page 4 of this new E.D.C. Report assumes that the loss of tillage acreage to non-agricultural uses will be compensated by reclaiming rough grazing. Thus by inference, my noble friend's question of a year ago is here assumed by the Economic Development Council, and I bring it again to the attention of Her Majesty's Government. Government policies must cause an historic rise in costs in the next twelve months. There is, therefore, no desire on my part to look a gift horse in the mouth if I claim that this Order deserves only a qualified welcome.
§ 12.4 p.m.
My Lords, I should like again to refer to the omission of any reference to subsidy on potash which my noble friend has already mentioned. As the noble Lord will have seen from the Explanatory Note, the Order applies to payments of contributions towards the cost of nitrogenous and phosphatic fertilisers only, and, as all noble Lords know, potash is just as important a member of the trio as the other two. We know the reason why potash was not included when these fertiliser subsidy schemes were introduced. I believe it was supposed that the production and distribution of potash was in so few hands that it would be difficult to draft and administer a scheme which would be fair and not liable to abuse. But it was also hoped that, sooner or later, ways would be found round that difficulty, because we are now so subsidy-minded that farmers are inclined to put on those fertilisers which are subsidised rather than use the third constituent of most compound fertilisers, potash, which is not subsidised. Therefore, land in this country tends to be short of potash.
Yet, though I concede that it may perhaps be difficult for us to include some subsidy on potash as part of our schemes which run from year to year—I hope that the noble Lord will be able to say something on this point because farmers are worried about it—I am a little surprised that it has not been possible to include some subsidy in this once-and-for-all scheme, which is a little different from a current scheme which is run from year to year. This is a most important point, as my noble friend has said. Therefore I hope that the noble Lord, Lord Hilton, will be able to give us a full answer on this point, because farmers will be greatly interested to hear it.
§ 12.7 p.m.
§ LORD HILTON OF UPTON
My Lords, I am grateful to both noble Lords for what they have said, and in particular to the noble Lord, Lord Belstead, who had several questions for me to answer. I am not sure that I can reply to all of them. He gave me advance notice of one or two of the questions which he proposed asking, and I will do my best to answer those. First of all, he was bothered about the consumption of fertilisers. In 1517 the year 1968–69 fertiliser consumption amounted to 1,729,000 nutrient tons. Estimates contemplated for 1969–70 are 1,765,000 nutrient tons.
The noble Lord was also interested in the forecast of arable acreage. No forecast of the arable acreage during 1970 has been published, but it is expected to be well up on the figure in June, 1969. I am sorry that in that case I cannot give the noble Lord the information for which he asked. Then he appeared to be a little worried about what the Minister said earlier in his speech on the Annual Review White Paper. He was asking for an assurance in regard to fertiliser manufacturers. I have the White Paper here, and if the House would like me to, I can read from paragraph 15 the assurance that the noble Lord is asking for.
§ LORD HILTON OF UPTON
My Lords, I thank the noble Lord. I understood he was asking for an assurance. He having accepted that, I am saved the task of reading it out. So far as potash is concerned, I must confess that I have not the answer here; but I will leave it to my noble friend Lord Beswick who has just whispered that he can supply to the noble Lord, Lord Inglewood, the information on potash.
My Lords, if I may interrupt the noble Lord for one moment, may I say that this information is not interesting just to me; it is most interesting to the whole farming community. Cannot the noble Lord find a way of publicising it a little wider than just by addressing it to me?
§ LORD HILTON OF UPTON
My Lords, those are the answers that I have jotted down in reply to the noble Lord, Lord Belstead, and, with the agreement of the House, I will leave my noble friend Lord Beswick to answer the other question on potash.
§ LORD BESWICK
My Lords, if I can help the noble Lord, Lord Inglewood, (I think he knows the answer perfectly well), may I say that potash is imported. There are, however, three companies proposing to mine it in the North-East, and when they are in full operation we shall no doubt get increased pressure for sub- 1518 sidy to extend to potash. At the present time a certain amount of money is available for subsidy for fertilisers; if it is spread over the three elements there is less for the other two. The total amount would not be affected, and I am sure the noble Lord would agree that it is better to concentrate it on the two rather than on the third which, as he knows, is imported.
In any case, the use of potash spreads much more widely than by the farmer. It is used by the commercial horticulturist; it is used a good deal by the gardener, and the subsidy in that case— I emphasise, the limited amount of subsidy—would to some extent be helping some very worthy individuals, but individuals who are not quite so worthy as the farmer whom we are hoping to help in this case. Moreover, I think that if payment were confined to horticulture and not allowed to go to the gardener, it would involve an administrative expense which I am sure the noble Lord would not wish to encourage. I feel that on reflection he would be glad to see this fixed amount we have contrived to agree with the Treasury concentrated on the two elements of fertiliser and not on the three.
§ On Question, Motion agreed to.