FERTILISERS (UNITED KINGDOM) SCHEME 1972

HL Deb 15 May 1972 vol 330 cc1243-8

4.35 p.m.

EARL FERRERS rose to move, That the Draft Fertilisers (United Kingdom) Scheme 1972, laid before the House on 25 April, be approved. The noble Earl said: My Lords, the purpose of this Scheme is to continue for a further year the Scheme under which farmers and growers may claim a contribution towards the cost of their fertilisers. The proposed rates, which are specified in the Schedule to the Scheme, have been reduced by approximately 60 per cent. compared with those at present in force. This follows the proposal in the Annual Review White Paper that £20 million of the proposed subsidy should be used to provide resources in other ways. The total cost of the subsidy in 1972–73, if the House approves this Scheme, is now expected to be about £13 million. In all other respects the Scheme itself is similar to the one which is due to expire on May 31.

In the 20 years during which the Scheme has been in force the use of fertilisers has more than doubled. Originally 830,000 tons of nutrients were supplied, and the figure has now risen to 1,825,000 tons. The subsidy was certainly helpful, particularly in the early years, in encouraging the greater use of fertilisers, though other factors have also played an important part. Since 1960 it has been customary to compensate for increases in consumption by adjusting the rates of subsidy from time to time, so as to keep the overall annual cost at about £32 million. Without such adjustments, the cost of the subsidy would have risen to an unreasonably high level. This year's proposals reduce the total subsidy to about £13 million.

A cut of 60 per cent. in the rates of fertiliser subsidy, which is equivalent to a cut of about £4 to £4.50 a ton, may strike noble Lords as severe, and some noble Lords may, understandably, fear an adverse effect upon the level of consumption. This was of course carefully considered, and the Government are confident that the Annual Review determinations as a whole will provide all the necessary encouragement towards the efficient use of fertilisers. Farmers and growers are in no doubt about the need for, and the use of, fertilisers and, given the resources and the right opportunities, I believe that they will use them effectively. In the light of present conditions in the farming industry and the promise of the future, we think it is no longer necessary or desirable specifically to encourage the use of fertilisers by means of a direct subsidy at the present high level. I trust that your Lordships will accept these proposals. My Lords, I beg to move.

Moved, That the Draft Fertilisers (United Kingdom) Scheme 1972, laid before the House on April 25, be approved.—(Earl Ferrers.)

4.38 p.m.

LORD HOY

My Lords, I am sorry that I cannot be as pleasant over this proposal as I was over the last one. It is really getting a little difficult to understand the Ministry of Agriculture and Fisheries and the language they use. Indeed, I had to complain, when the noble Earl introduced an Order to deal with new subsidies for the fishing industry, that he used the words—which his brief provided—" We are now restoring the subsidies to what they were." In fact what the Ministry was doing was cutting the fishing subsidies by something like 5 per cent. or 10 per cent., so that a restoration and a cut of 10 per cent. did not seem to go together. Then, when the Statement on the Price Review was repeated in this House by the noble Lord, Lord Denham, I took a little exception to the language which was used.

We must remember that by this Order the Government are doing one thing, and one thing only; they are cutting the fertiliser subsidy by 60 per cent. The noble Earl said that this will give the industry greater flexibility in the application of resources, which I find it difficult to understand, as, I am sure, will every other noble Lord. To take away 60 per cent. of somebody's subsidy and then to say that this will give greater flexibility in the application of resources is difficult to understand. You do not take away 60 per cent. and give greater flexibility. I think most noble Lords will agree that this is a piece of nonsense. What the Government are saying is, "We are going to take £20 million off you". Farmers cannot have greater flexibility—the noble Earl cannot argue that—because any farmer in this country could decide at any time whether to use fertiliser or not. Farmers have always had that flexibility; but that flexibility in the past was made worthless by the absence of some subsidy to make it possible for them to use it. Indeed, when the subsidy for 1970–71 was increased the argument then put by the farmers' unions and everybody else, including the noble Lords opposite—who of course now occupy Government Benches and not Opposition Benches—was that the one thing which was scarce in the farming industry was liquidity. Indeed, the Government of that day provided those extra millions for that purpose, to give extra liquidity. Now the Government have taken away two-thirds of it; so there cannot be greater flexibility. One will want to know in a short time, certainly in the course of some months, what effect this action has had on the use of fertilisers, because to say that people have flexibility just does not answer the case at all.

May I take the matter one step further? I do not know what the proposal is, but I am certain that the noble Earl will not object to my asking the question. In the case of horticulture, the noble Earl said, when introducing the White Paper, that the fertiliser change will be offset by increasing the combined grant rate under the Horticultural Improvements Scheme from 35 per cent. to 40 per cent. Of course, it is not offset at all by this method, because the fertiliser subsidy is a recurring subsidy, whereas this is an increase from 35 to 40 per cent. in capital investment. I see nothing about that in this Order, and perhaps the noble Earl will be able to say one or two words concerning it.

I want also to raise the question of the hill farmer, because he is losing the subsidy as well; but as I understand it there is to be another Order to-morrow dealing with the Scottish hill farmer—I do not know what has happened to the others—and perhaps I may postpone my question until then. So I simply conclude by saying that this is an Order cutting fertiliser subsidy by 60 per cent. for every farmer in the country, and I do not believe that that can have a good effect on agriculture. I hope that the noble Earl will not repeat the statement that by taking away 60 per cent. of the subsidy greater flexibility will be provided.

LORD NUNBURNHOLME

My Lords, before the noble Earl rises to reply, may I ask him by what amount he expects the total amount of fertiliser used will be reduced as a result of cutting the subsidy by 60 per cent., and what the premium to be paid is going to be in the labour situation on the manufacturing side of the fertiliser industry? How many people are going to be thrown out of work by this? These two questions need careful consideration, especially when we have over one million unemployed.

4.43 p.m.

EARL FERRERS

My Lords, I should have liked to say that I was grateful to the noble Lord, Lord Hoy, for his welcome, but I do not think it was much of a welcome. In fact, he rather took the Government to task over the fishery grant, because he said that the Government had said that they were restoring the grant to what it was before, whereas in fact they were making a cut. The noble Lord complained that under this Order there is a cut of 60 per cent., and asked how, therefore, could the Government say that that would give greater flexibility. I would respectfully say to him that he has taken this matter slightly out of context, because admittedly the fertiliser subsidy is being cut by 60 per cent.—a cost of £20 million—but through the February Price Review that sum of money has been put on to the end prices of agricultural products, so that the recoupment at the last February Price Review was to the tune of £72 million. In addition, the sum of money which had previously gone to the fertiliser subsidy has been added, so that the total available recoupment includes the subsidy which has been removed from fertilisers.

LORD HOY

My Lords, may I interrupt the noble Earl for a moment? The noble Earl says that this sum has beep switched to another source. It may well be that there has been an exchange, but this is a fertiliser subsidy. Indeed, when the statement was made it was said that this amount would now have to be recouped from the end price. Where is the end price met? Is it not the consumer who pays the end price?

EARL FERRERS

My Lords, this is a re-allocation of resources. The noble Lord looks surprised, but perhaps he will try to follow me a little. As he well knows, at the February Price Review annual determinations are carried out. On this occasion, the determinations were increased by £72 million, which is the highest amount by which they have been increased since 1948, and the amount which had previously been allocated to fertiliser subsidy was also allocated to the general determinations. The noble Lord asks: How does this create greater flexibility? The answer is that although the fertiliser subsidy has been reduced, this has nevertheless gone on to the end prices which the farmer is guaranteed, and he is therefore entitled to choose how he should best spend such resources as he has. It is our belief that the subsidy has done an extremely good job of work in encouraging fertiliser use over the last 20 years, but that it is better at this juncture to remove that part of the subsidy and place it to other uses.

The noble Lord, Lord Nunburnholme, asked: How much will this reduce the use of fertilisers, and how much will this therefore reduce the amount of employment in fertiliser manufacturing concerns? My Lords, any farmer who is engaged in his business knows full well the use of fertilisers and that if he wishes to get maximum output from his crops he has to use the optimum fertilisers. We believe that the farming community know their job and are not going deliberately to reduce the use of fertilisers simply because part of the subsidy has been removed. We believe that fertilisers play a very great part in the prosperity of agriculture, and I do not think for one moment that farmers who know their job are going to cut down the use of fertilisers because of this subsidy. I do not blame the noble Lord, Lord Hoy, for making his point—I expected him to do so—but I think he will agree that this is not a direct cut for which there is no other benefit, but that the other benefit has in fact gone on the general determination of guarantees.

On Question, Motion agreed to.