§ 1.Income, output and productivity
§ The figures in the following table update the series shown in Table 13 of the 1971 Annual Review White Paper and incorporate revisions to the figures in the earlier years:
| ALL COMMERCIALLY SIGNIFICANT HOLDINGS | ||||
| June-May years | ||||
| Net Income at current prices | Net Product at constant prices | Labour Productivity | ||
| Year | Actual | 3-year moving average | Index | Index |
| £m. | £m. | Average of 1964/65–1966/67 = 100 | ||
| 1967–68 | 527 | 501 | 107 | 116 |
| 1968–69 | 490 | 528 | 100 | 114 |
| 1969–70 | 567 | 556 | 105 | 124 |
| 1970–71 | 611 (612*) | 615 | 111 | 135 |
| 1971–72 (forecast) | 668 (630*) | — | 116 | 143 |
| * Adjusted to normal weather conditions. |
§ permission, in your Lordships' OFFICIAL REPORT. The Statement concludes:
§ "Further details about the Review will be given in the White Paper, which will be published in the normal way on March 15".
§ Following is the note referred to:
1111§ 2. Gross capital formation
| Year | In plant, machinery and vehicles £m. |
In buildings and works £m. |
Stock valuation changes £m. |
Total £m. |
| 1967 | 111 | 75 | 37 | 223 |
| 1968 | 123 | 87 | 52 | 262 |
| 1969 | 113 | 97 | 70 | 280 |
| 1970 | 118 | 110 | 114 | 342 |
| 1971 (forecast) | 127 | 135 | 125 | 387 |
| 3. Aggregate cost changes | ||||
| Net change for all products + £56½ million. | ||||
| Net change on guaranteed production + £48 million. | ||||
| (3) "4. Exchequer support for agriculture. The cost to public funds of agricultural support in 1972–73, was estimated prior to the 1972 Annual Review at £341 million." |
§ 3.45 p.m.
§ LORD HOYMy Lords, I should like to thank the noble Lord for repeating this Statement. If I may take the concluding part of it first, the Government say:
Further details about the Review will be given in the White Paper, which will be published in the normal way on March 15".But, of course, the noble Lord knows that what is happening to-day is not the normal way; that in fact when the Price Review is intimated, we always have the White Paper with us, so that we can discuss the Review intelligently. I am also bound to say that one finds a little difficulty in taking the Review so quickly, because, as I understand it, it was completed only yesterday afternoon, yet it all appeared on the tape last night. It seemed to me that it was "leaking at a stroke", if I may coin a phrase; and I wonder whether the Minister is making any investigation into why in fact this should have taken place. I think that the general public should get all the information that they require, but it is a little difficult to understand why they should get it before the Houses of Parliament.May I ask the noble Lord whether it is not a fact that when this Review took place, it was not quite so much against the background of the economy of this country as it is but that, the Statement says:
The background to this year's Review is our approach to Europe"?There are one or two questions I should like to ask the noble Lord about prices, in that case, because in my view the price that will have to be paid by the consumer will be fairly substantial. I should like to know what year is meant when the noble Lord says that prices will not go up "this year". Does he mean to the end of this calendar year, or 1112 merely to the end of the financial year? Because if milk is to get an extra penny per gallon, it means a charge on the consumer—and the noble Lord will correct me if I am wrong—of no less than £22 million. In other words, a penny increase on a gallon will mean that the consumer will have to pay £22 million more a year for milk; and coming on top of the increase of £54 million last year that represents an increase of £76 million.May I also ask the noble Lord what the Government mean when they say:
We have also decided to switch about 60 per cent. of the fertiliser subsidy to end prices"?If 60 per cent. of the fertiliser subsidy is to be taken away from the direct grant—and the fertiliser subsidy was always regarded as a cash injection, as anybody in agriculture will tell you—it represents a sum of, as I understand it, no less than £20 million. By "end prices", does the noble Lord mean that this £20 million will be carried by the consumer?—because these two items alone mean that we are placing a burden on the consumer of £42½ million.May I also ask what estimate the Government have made of what the increases in foodstuffs will amount to as a whole? In addition to these two increases, as noble Lords know, the main ingredient in animal food is cereals, and this Price Review outlines a fairly substantial increase in the guaranteed price of cereals. Inevitably, this will cause increases in the retail prices of bacon, pork, eggs and poultry. As anyone in the industry knows, this is where the main price comes for the animal feed. So if beef, milk, cereals, pork, bacon, eggs and poultry are all going to increase in price, I am sure that your Lordships would like to know what burden is going 1113 to fall on the housekeeper. Because if you take beef, milk and cereals—and I do not think the Government seek to hide it—it is here that there is the greatest difference in price between Great Britain and the E.E.C. As we all know, prices have to be brought up to a similar level (that means increasing prices in this country) over a period not greater than five to six years, and this seems to me to be a fairly substantial contribution.
It is estimated that the Government's commitment—not expenditure, but commitment—will be some £49 million. This we know from past experience is absolutely fictitious, and I should like to know what the estimated expenditure will be. Even the noble Earl, Lord St. Aldwyn, when introducing the Review last year, at least had the courage to say, "This figure is a similar one, and we do not expect to spend the cash". I should like to know what the Government estimate the real cost of these increases will be, and what will in fact be the total cost which will have to be borne by the consumer.
§ 3.50 p.m.
LORD HENLEYMy Lords, I, too, should like to thank the noble Lord for repeating this Statement. The noble Lord, Lord Hoy, pointed out that it was not normal to have a Statement a fortnight before the White Paper and suggested that it was due to a leak. Another noble Lord pointed out to me before I came into the Chamber that it is always normal to have a leak with regard to the Price Review. I note that this Review is designed to help us expand competitively in Europe and to save our food imports. But I do not think that it will do that; it is quite inadequate. It will not help us in any way to bridge the price gap between ourselves and Europe. It may be that it cannot do so because there is something wrong with a great many European prices. That may be so; but at the same time I do not feel that it will do much to encourage further investments. The noble Lord pointed out that farm incomes had risen. I hope he will not forget that part of that is an apparent rise due to inflation and also to the amount of capital injected into the industry in the last few years, not only from this Government, and also that there had been two good reasons, two good winters. 1114 I am glad that the emphasis is on livestock, for I think that that is where it should be in relation to going into Europe.
There are one or two small points I should like to raise. I am not quite sure whether the change in regard to fertilisers is a good thing in relation to lime. It may be all right in respect of the other fertilisers, but not to lime. I am glad that the extra rate for drainage is to be retained, but I am sorry that it has been financed at the expense of various other items being removed from capital grant—notably I think with regard to fences. There are increased liabilities as to fencing under the Animals Act passed last year; and I think that this is not perhaps the moment to reduce the capital grant for an item of that nature. There seems to be a considerable gap between what the Farmers' Union were asking and what the Government are to grant. That is often the case; but until I have had a rather closer look at the figures—and I thank the noble Lord for adding as a supplement to his Statement quite a considerable schedule—I shall say no more. But on the face of it it does not look quite as good as I had expected to find in view of our move into Europe.
§ LORD DENHAMMy Lords, the noble Lord, Lord Hoy, to whom I am grateful for his general acceptance of the Statement, was I thought a little less than generous in his comments at the beginning of his speech. He was making great play of the fact that the Statement was coming now and that the White Paper was not coming until March 15. My Lords, it is not that the White Paper is going to be a fortnight late; it is that the Statement is a fortnight early. I should have thought that your Lordships would have been grateful for that. The noble Lord also made great play with the fact that some version, a rather bastard version, if I may use that term, appeared on the "tape" last night and he suggested that this House and another House should have the information before the great British public gets it. But if the noble Lord casts his mind back to last year and the year before—and years before that—he will find that the fact is that the leak which has unfortunately somehow come about, although it is not an accurate leak this year—
§ LORD DENHAMMy Lords, it is not a normal leak. During the years of the noble Lord's Administration, the leak happened ten days before and not one night before the Statement was made. If the noble Lord is going to say anything to Her Majesty's Government on this I should have thought it would he a matter for congratulation.
My Lords, the noble Lord, Lord Hoy, also wanted to know what extra price was to be paid by the consumer. I thought I made it clear in the Statement that there would be no extra price to be paid by the consumer because of this Review. The reason for this, as I am sure the noble Lord, Lord Hoy, will know, is that there are three items in the Price Review on which any increased cost might be borne by the consumer. The first item is potatoes—and the price of potatoes is not being altered in this Price Review. The second is sugar beet—and, although there will be a marginal increase possibly in the price of sugar, this will not show until next year. The third item is milk. As Lord Hoy will know, the Milk Fund is particularly full at this moment so it is calculated that there will be no additional price to the consumer. The £20 million which the noble Lord estimated on milk (and I think he is probably about right) it will be possible to carry out of the Milk Fund. So there will be no increase in the price of milk to the consumer during this year as a result of this Review.
§ LORD SHEPHERDMy Lords, is it a calendar year or a financial year?
§ LORD DENHAMMy Lords it is a farming year, I think. That is the year to which this Price Review refers.
§ LORD HOYMy Lords, I think we ought to get this date correct. Does that mean that the period runs to the end of this year? Or, if we are talking about a farming year, is he saying that between now and the next Price Review there will be no increase in the price of milk?
§ LORD DENHAMI should like to put this rather carefully. This particular Price Review will not cause an increase in the price of milk during the coming year. Does that satisfy noble Lords?
§ LORD HOYMy Lords, we must get this absolutely clear. This Price Review adds £22 million to the cost of milk. The noble Lord says that this will be done during this year. I want to know whether the extra money is to be found from the Milk Fund, as he says—for somebody must pay somehow—and whether it is the case that there will be no increase in the price of milk during the farming year; and the noble Lord has defined the farming year as a farmer's year—that is, from one Price Review to the next.
§ LORD DENHAMMy Lords, I think I am right on that. If I am wrong I will apologise to the noble Lord and to the House. My information is that this Price Review—which lasts, obviously, until the next Price Review, until whenever the year covered by the Price Review ends—will not add to the cost of milk to the consumer. There will be no price increases to the consumer this year—
§ LORD SHEPHERDAnd cheese, and butter?
§ LORD DENHAMNot because of this Price Review.
My Lords, the noble Lord also asked about the cost to the Exchequer of the £49 million. The best advice I can get is that £49 million is the estimated cost to the Exchequer.
§ LORD DENHAMYes, my Lords, commitment.
The noble Lord, Lord Henley gave a general welcome to this Statement. I should tell him that it has been agreed by all the National Farmers' Unions.
§ LORD HOYMy Lords, may I ask one further question because it is important that we should try to get it correct? In the 1971 Review the Minister, for the first time, excluded part of the costs which previously had been taken into account. That was in respect of milk and eggs outside the standard quantity. At the Review last year, that represented a sum of no less than £24 million. If we are to understand this Review adequately, we have to know whether the Minister has followed the same practice again this year, because it represents a considerable sum of money.
§ LORD DENHAMMy Lords, I am not clear about that point and I wonder whether the noble Lord will allow me to write to him about it.
§ LORD HOYYes, my Lords, I should be grateful if the noble Lord would do so. If we are to understand the Review, we have to know what figures were taken before these commitments were arrived at.
§ LORD LEATHERLANDMy Lords, may I ask the noble Lord, Lord Denham, a simple and easily understandable question? Does he consider that this will increase the prosperity of British farming?
§ LORD DENHAMCertainly, my Lords.
§ LORD LEATHERLANDThen, my Lords, may I also ask whether the Government will use their influence to see that the British farmworker gets a fair share of this, particularly as a recent request for increased wages was turned down?
§ LORD DENHAMMy Lords, farm wages, as I think the noble Lord, Lord Leatherland, will probably know, is not a matter for Her Majesty's Government. It is a matter for the Farm Wages Review Board, as I think it is called, and that Board considered the request. But the noble Lord forgets that the farmworkers have already had one increase this year.
§ LORD LEATHERLANDMy Lords, this noble Lord never forgets. May I ask the noble Lord, Lord Denham, whether the Government have not made a virtue of the fact that they are trying to create an atmosphere to regulate the increase in wages? Therefore could not the Government say something on this matter?
VISCOUNT GAGEMy Lords, I imagine that we are going to debate this matter when the White Paper is produced. Would it not be better to reserve all these arguments until then? For that matter, there are several questions which I should like to put to the noble Lord who has spoken about exactly what he means; but it would be most inappropriate to do it now. I hope that we may have a proper debate on this subject when the Papers are before us. I have an interest in the matter, and may I say 1118 that I am very glad to have had the Statement which enables us to make policy as soon as possible.
§ LORD SHEPHERDMy Lords, may I respond to the noble Viscount and ask—since it is the Deputy Chief Whip who has made the Statement—whether the Government could arrange for a debate as soon as possible after the White Paper has been published? I am certain that a number of noble Lords will be anxious to debate the details of this Statement, particularly when information is available; and it would give an opportunity for those who are deeply concerned about the rising cost of food—was it 13 per cent. last year, and we suspect a further increase in the current year?—to deploy their point of view.
§ LORD DENHAMMy Lords, I am most grateful to my noble friend Lord Gage for his suggestion, which I think will meet with the general approval of your Lordships. I am also grateful to the noble Lord, Lord Shepherd, for what he has said. As a "deputy usual channel", I will try to see that these channels are put into operation.