AGRICULTURAL AND HORTICULTURAL CO-OPERATION SCHEME 1971 (Hansard, 18 February 1971)

§ LORD DENHAM
My Lords, I beg to move that the Agricultural and Horticultural Co-operation Scheme 1971, a draft of which was laid before this House on January 28, be approved. Before I describe the effect of the new Scheme I should like to give your Lordships a brief account of what has been done under the present Scheme since it was introduced just over three years ago. The Scheme is administered by the Central Council for Agricultural and Horticultural Co-operation, who have succeeded in arousing a good deal of interest among producers in co-operation. In the past three years grants amounting to £2.8 million have been approved, on about 1,000 applications. Grants to co-operatives for buildings and fixed equipment have amounted to about £900,000 of the total. These grants correspond to those given to individuals under the departmental grant schemes. The remaining grants have been for special co-operative purposes, such as the provision of working capital, feasibility studies of new projects, the employment and training of managers and the formation of new co-operatives. The Council have succeeded in developing forms of co-operation suitable for a wide variety of enterprises and commodities, but the main expenditure has been in horticultural marketing, pea vining and silage-making.
Under the existing Scheme the maximum rate of capital grant for co-operatives has been 33⅓ per cent. But individuals currently receive 35 per cent. under the Horticulture Improvement Scheme and 40 per cent. under the Farm Capital Grants Scheme. There is no logical basis for this discrimination between producers acting collectively and producers acting individually. The new Scheme therefore provides a maximum rate of grant of 40 per cent. Eligible co-operatives will in future have parity with individuals; they will receive grants of 35 per cent. for items covered by the Horticulture Improvement Scheme and 40 per cent. for those covered by the Farm Capital Grants Scheme. Secondly, the grants for working capital will be withdrawn. These grants have served the purpose of stimulating 772 interest in co-operation. But there are no corresponding grants to individuals, and it would be wrong to continue to put a premium on co-operation. There has been a danger of creating an inducement to co-operate for the sake of grant. It is undesirable to distort the judgments of producers in this way. They must decide whether co-operation is worth while for its own sake in their particular circumstances. For similar reasons, the special high rate of grant for co-operative projects of a pioneering nature is being withdrawn; there has been little occasion to use it.
The new Scheme continues the remaining special grants for managerial salaries, training, formation expenses, surveys, studies and research. These grants are particularly relevant to the needs of cooperatives. In addition the Council will be able to give particular assistance for encouraging co-operation in marketing where the need for better organisation is paramount. There are other minor changes in the Scheme designed largely to simplify administration. Departments will handle more of the routine work through their existing machinery and this will enable the Council to devote increased resources to their continuing and increasingly important promotional role. The Council support the proposals embodied in the new Scheme, and I should like to take this opportunity to express the Government's thanks to the Chairman, Sir Roger Falk, and to the members of his Council for their services.

§ LORD BESWICK
My Lords, I thank the noble Lord, Lord Denham, for the way in which he has introduced this Motion, and I welcome what he proposes to do. What I do not welcome is what he proposes not to do. I am bound to say that I did not follow at all the explanation he gave for leaving out the part of the 1967 Scheme which relates to grants for working capital or for pioneering new aspects in co-operation. Why is it wrong to promote co-operation for its own sake? What is the wrong about that? He paid a tribute, and I thought a very pleasant tribute, to the work of the Central Council for Agricultural and 773 Horticultural Co-operation, and I have no doubt that he, like the rest of us, pays a genuine tribute to co-operation in agriculture generally. Why should he, therefore, be so tardy about the possibilities that were in the 1967 Scheme as far as the provision of working capital is concerned and for encouraging pioneering work in this respect?
I understand that one reason given for leaving out this part of the 1967 Scheme about pioneering was that there had been little call for a grant. In that case, as there is no financial obligation and no great central overhead cost involved, why not leave the power there? Even if there had been little call in the last three years, it is possible that in the next three years there may be interest stimulated by the Central Council, and I should have thought it would be a good thing to have a Scheme based more on the 1967 Scheme as far as this part of the Scheme is concerned.

§ LORD DONALDSON OF KINGS-BRIDGE
My Lords, may I support my noble friend? One of the things that have always been most difficult in agriculture is that the large co-operatives, who do almost all the business, because of their constitutions have problems in raising capital. Their constitutions come under the Friendly Societies Act, which makes the raising of capital very difficult. I always understood that the introduction of this provision some years ago in the 1967 Scheme was to make it easier for them to do so. I think it is a pity to go back on that, just at a time when, under the Mansholt Plan, which is probably going to be adopted, our colleagues with whom we shall soon be competing are bringing in new and important measures to support co-operation. I think this point needs a good deal of explanation.

§ LORD WOOLLEY
My Lords, I too, think it is rather unfortunate that the pioneering grant should be withdrawn at this time. Most of us would agree with the noble Lord, Lord Denham, that there is a danger that people may embark on schemes because of the attractiveness of the grant facilities. That is something that has to be guarded against, and I think that the Central Council could exercise that restraint by approving or rejecting proposals put before them. But 774 this is a time when one would have thought that there was a good case for looking at this matter fairly baldly, because, as the whole system for agricultural support changes, as the noble Lord has said, so it is becoming increasingly obvious and urgent that farmers should be given every encouragement to organise to the best commercial efficiency. That brings in the whole question of co-operation, and it brings into consideration many possible avenues which have not perhaps been so urgent and so relevant as they may well be from now on.
While welcoming, as the noble Lord, Lord Beswick, has welcomed, these proposals, I think it is a mistake to cut back at this time. I would rather have seen this danger—which I recognise, and which I have spoken about on occasion in connection with particular schemes—safeguarded by the vigilance of the Council itself, who have the power to do this, rather than to discourage adventure in a time when adventure is being advocated as the way in which we have to proceed in the future.

§ LORD DENHAM
My Lords, I am most grateful to the noble Lord, Lord Beswick, for the general support he has given to this Scheme, and for his comments on it and those of the other noble Lords. I should like to assure all noble Lords who have spoken that the Government are extremely keen on encouraging co-operation. The withdrawing of the working capital grants is not because we want to discourage co-operation, but because we want to bring home to the people who will take part the benefit of doing it for its own sake, and not just for the purpose of getting a particular grant. It is quite possible that if a number of people form a co-operative because they see the financial advantage of it, they may thereby overlook the very real advantages that the Government want to encourage.
As regards the special grants for pioneering schemes, these have been little used in practice. In most cases where pioneering grants have been given, they have been given within the lower scales which will of course still continue. In the few cases where they have been used they have proved very expensive indeed. The emphasis is now placed on the 775 Central Council concentrating on administrative support for schemes of co-operation, and their administrative expenses will go up by about a quarter. It is on the administrative side that Her Majesty's Government see the most important work being done for the encouragement of schemes of co-operation.