HL Deb 17 April 1975 vol 359 cc581-91

7.7 p.m.

Lord STRABOLGI rose to move, That the Beef Premiums (Protection of Payments) Order 1975, laid before the House on 19th March, be approved. The noble Lord said: The Order provides for various conditions to be observed when cattle and beef carcases are certified for payment of a premium in accordance with Community arrangements for supporting beef producers. Together with existing statutory powers, the provisions of the Order will enable the Intervention Board for Agricultural Produce to ensure that the various administrative requirements attaching to premium payments are met.

Your Lordships will know that in August 1974 the Council of Ministers adopted a proposal by the United Kingdom Government and introduced on a temporary basis a scheme of direct premium payments to beef producers. This was a significant development. It indicated a departure from the doctrine that producer prices for beef should be maintained at given levels primarily through intervention buying. In November the Community took a further important decision enabling the United Kingdom Government to make additional variable payments to beef producers, again on a temporary basis. The combined effect of these two schemes undoubtedly provided very real help to United Kingdom producers at a time when market prices were severely depressed throughout the Community.

Our experience over those difficult months convinced us that we should continue to press in the Council of Ministers for the adoption of similar direct pay ments to producers on a continuing basis. As your Lordships will know, the Minister of Agriculture was able to persuade his colleagues to agree. As a result Member States, including the United Kingdom, will be paying premium on a headage basis in 1975–76 and the same Member States will also be given the option of adopting the variable premium. These premiums have been incorporated as an integral part of the new beef régime. To make direct payments to beef producers in order to raise their total returns to assured levels is not of course a novel idea for us in this country. For many years until 1973 we operated very successfully under the Fatstock Guarantee Scheme arrangements which were basically very similar to the new scheme. We were indeed very fortunate last August that the administrative machinery of the old Fatstock Guarantee system not only remained in existence, but was capable of administering the new EEC premiums at remarkably short notice. We were able to apply to the new scheme the essential procedures with which our producers and the beef trade had become familiar over the years. In consequence, the EEC and national premiums we are now running are based on exactly the same form of certification by qualified fatstock officers and use virtually the same certification standards as we had under the Fatstock Guarantee arrangements.

Now that the premiums are established as a permanent part of the EEC beef support system, the Intervention Board, who have the responsibility for administering them need to have similar statutory means of control to those which governed the Fatstock Guarantee arrangements. Some of the necessary controls are already available in existing legislation. The Order that is now before your Lordships provides the remaining controls which are considered to be essential for the proper protection of public expenditure on beef premiums in 1975–76. It is framed in such a way as to apply also to any further Community schemes which may provide for similar direct payments to beef producers.

The Order provides the Intervention Board with full powers to require the marking of any animal or carcase that is certified for premium. Such marking is essential to prevent resubmission for certification. The Order also provides for the keeping and production of records and the power to obtain evidence of suspected offences. I should perhaps explain that an authorised officer already has the necessary right of entry to premises for those purposes by virtue of the Common Agricultural Policy (Agricultural Produce) (Protection of Community Arrangements) (No. 2) Order of 1973.

The Order further provides—and this is the main respect in which the present scheme differs from the Fatstock Guarantee Scheme—for the slaughter of a certified animal to be required within a specified period. Under the Community Regulations, payment of premium depends on slaughter, but to accommodate our own livestock marketing system the regulations provide a period of grace within which slaughter has to take place. That period has up to now been 15 days, but in the light of experience over recent months it is the intention to extend the permissible period to 28 days in new Community Regulations due to come into effect in May. The Order allows for such variations in the period. My Lords, I trust that I have provided sufficient explanations of the reasons for and the provisions of the Order and I commend it to your Lordships. I beg to move.

Moved, That the Beef Premiums (Protection of Payments) Order 1975, laid before the House on 19th March, be approved.—(Lord Strabolgi.)

7.12 p.m.

Viscount AMORY

My Lords, as one who, about two decades ago, used to have to struggle with these matters, I should like to say, without now feeling competent to comment in detail on what is being done, that in general it seems to me that what the noble Lord, Lord Strabolgi, has told us must be good news and this must be a sensible and improved system. Anyone who knows anything about farming appreciates that it is impossible for fanners to change their production policy overnight. Over the last two or three years, we have had some dramatic evidence of how quickly prices change. Therefore, it must be an advantage for the price support system to be as flexible as possible. The Govern ment are to be commended on what they have succeeded in doing with regard to the EEC, where the policy was not very flexible. I will not dare to comment further, because my noble friend on the Front Bench is far more up to date than I am and will speak with far greater knowledge and authority.

Lord STANLEY of ALDERLEY

My Lord, I should first like to thank the noble Lord, Lord Strabolgi, for explaining this Order. On a personal note, I should like to thank him for bearing with me in the past when I have haggled with him over this Order. There are three points which I should like to make. To begin with, this matter is desperately complicated. Although I have no doubt that the noble Lord, Lord Strabolgi, has an IQ of 140, and his civil servants have IQs of 139, we poor graziers probably have IQs lower than that and, after all, this Order is for us. I hate to say this, but I do not think there is one fanner in a hundred who can understand it. However, I must admit that I understand the problems of the Government, which stem from being half in and half out of the Community.

My Lords, I have two questions which I should like to ask. First, there is the question of publishing target prices, which the noble Lord is doing three months in advance. If it is at all possible for him to publish the target prices a little earlier, this will be more than appreciated by the farming community. I understand the reason why he cannot, but if in the future circumstances permit of the publishing of these market prices a little earlier, it would be much appreciated. I would ask the noble Lord another question but, if I may, I will put it in the form of an example. We have the following problem. The month is September, so the target price has not yet been announced. If, in total, my fixed and variable premiums come to £4, and the average market price is £13, can the noble Lord, Lord Strabolgi, tell me what the buying-in price will be? Secondly, may I ask the same question in exactly the same form, but on this occasion the fixed and variable premiums will be £5. Lastly, and I hope the noble Lord will bear with me, may I ask the same question again, but this time the variable and fixed premiums are £6.

7.17 p.m.

Earl FERRERS

My Lords, it would be an exaggeration, if not a gross inaccuracy, to say that the noble Lord, Lord Strabolgi, has introduced this Order to a crowded House, but for all that, it does not mean to say that it is not very important for those who are affected by it. Of course, as my noble friend Lord Amory said, this is an improvement on the existing system. Indeed I would go along with him entirely in saying that this system as incorporated in the European Community is an improvement on the previous European Community system.

The Order introduced today by the noble Lord is really an Order to protect the payment of Government funds, and to protect the payment of EEC funds. This is a perfectly normal practice. Behind all this is a method of putting stability back into the beef market. I congratulate the noble Lord and the Government on seeing the light, because we went through a disastrous period 12 months ago when, as the noble Lord will remember, all the support for the beef market was removed, there was no deficiency system and no intervention system. Consequently, those producing beef were at a severe disadvantage. It has taken a long time, but at least the Government have put a support system back into the beef production cycle. I congratulate them on it. It is what we invited them to do for a very long time. They have now put back a system which is really the belt and braces, because the Government have incorporated the headage premiums, the variable premiums and also the intervention system. Therefore, this is an amalgam of what used to be the old EEC system and, up to a point, what used to be the deficiency payment system; but I do not believe it is a total guarantee, and I will explain why.

First, of course, it lasts for only 12 months, which is a great drawback. On the very day when the Government have published a White Paper called Food from our own Resources, which looks to the future, as one must in agricultural matters, over a period of five years or so, to have an Order introduced to allow the protection of beef for a matter of 12 months is really inadequate. Anyone involved in the rearing of beef, which takes, after all, a matter of some three years from conception to the time it is on the table, knows that a 12 months system of guarantee is inadequate. One appreciates the reason why this was done, but one does wonder what happens after this 12 months period is over.

The other reason why I feel it is not a total guarantee—I may be wrong here, and perhaps the noble Lord will be able to explain why—is that it depends on how the intervention system will operate. I hope the noble Lord will be able to explain this a little. This is a complicated matter, because you have target prices, guide prices, intervention prices, buying-in prices, and then you have headage payments and variable payments and percentages and coefficients; it really becomes very difficult. But as I understand it, the target price and the intervention price are the same thing, at £22.85 per cwt. There is also a headage payment of 28 units of account, which is £1.50 per cwt.; the headage payment is made on all animals going for slaughter, and that sum is receivable from FEOGA funds. If the market price and the head-age payment do not achieve the target price, then the Government can make up the difference by a variable premium, and that variable premium is payable not out of FEOGA funds but out of Government resources. However, the variable premiums and the headage payment average over a year must together not exceed 80 units of account, which is £4.42.

The question I would ask the noble Lord, Lord Strabolgi, which is a very similar question to the one asked by my noble friend Lord Stanley of Alderley, is, what happens if the market price drops by more than £4.42 below the target price? As I understand it, either the intervention system will operate and the price to the producer will be maintained, or the Minister will, as he has done in the past, refuse to use intervention. If this is so, as the premia cannot be increased above £4.42, so the producer's returns will drop in direct relation to the drop in the market price. This is what we had before; and if this happens, of course, producers have no ultimate guarantee. We all hope that the market price will not drop by that amount, but nobody knows whether it will.

If this is to be a proper guarantee— and a guarantee, after all, is not wanted when things go right but when they go wrong—I hope the noble Lord will be able to say that the Minister will use intervention; and I would ask him whether under this scheme he is obliged to use intervention if this happens, or whether he merely has an option to do so. I think this scheme is another example of our benefiting from being in the European Community. FEOGA's liability for the headage payment is, I think, £47 million. I wonder whether the noble Lord can say what is the liability of the United Kingdom Government and what is its anticipated cost in the course of a year. The two figures are not necessarily the same figures.

The Government will obviously have taken note of the remarks made by the Joint Committee on Statutory Instruments. I would ask the noble Lord whether he is sure that the Government have adequate powers of access to books and records. Article ll(l)(b) allows the officer to take possession of any book or record. It does not give him the right to enter land to do so. This was one of the points which the Joint Committee on Statutory Instruments produced. I understand that the officer has not got the right under this particular Order, but that he has under the Agriculture Act 1957. But that permits the officer only to enter land and not to enter buildings. If one may take a supposition, supposing a man suspected of a misdemeanour in fact keeps his records not on his farm, not in a building on his farm, supposing he is a director of, say, a plastics company, and he keeps his records in the town in the offices of this company. The officer looking into these regulations is entitled to access to the books. Is he entitled to access to a company's premises in a town, simply because that is where the person happens to keep his books? It may seem an unnecessary question, but if there are those who are out to defraud it is precisely against those people that the Government should be prepared to take the necessary precautions. I think there may be much in what the Joint Committee on Statutory Instruments said, that these protections should be put in the Order. I wonder whether the noble Lord has taken note of that fact, and, if so, is he able to say whether in the future the Government are likely to put these protections in an Order?

7.28 p.m.

Lord STRABOLGI

My Lords, I am very grateful to the noble Lords for the reception they have given to this Order. I am particularly grateful to the noble Viscount, Lord Amory, for his remarks, which I shall pass on to my right honourable friend the Minister of Agriculture. I am also grateful to the noble Earl, Lord Ferrers, for his welcome, which I think, in many ways, was slightly more qualified. I think we must admit that we inherited a rather difficult situation when we were first in the EEC. I think my right honourable friend has done very well to persuade the Community to adopt the variable premium system, as well as keeping on the intervention system, to which this Order gives rise.

I shall do my best to answer the various points which noble Lords have raised. First of all, if I might deal with the points of the noble Lord, Lord Stanley of Alderley, I agree that this is a very complicated Order. It took me some time to understand it myself, so I can sympathise with what the noble Lord said. I may say that a revised leaflet describing the scheme is now being prepared by the Intervention Board; it will give full details of the scheme, including the provisions of this Order. Notices will also be prominently displayed, as appropriate, at auction markets and slaughterhouses drawing attention to the main provisions of the Order.

We shall, of course, take note of what the noble Lord said about the target price. With regard to his point about the buying-in price, the average intervention price for the current marketing year is £22.85 per live hundredweight. Prices for qualities and grades will vary slightly around that figure. The buying-in price is the intervention price less the total amount of premium; that is, the headage payment plus the variable supplement Therefore, if the total premium is £4 per live hundredweight the average buying-in price will be £18.85 per live hundred-weight. Similarly, with premiums of £5 the buying-in price will be £17.85, and with premiums of £6 the buying-in price will be £16.85.

The noble Earl, Lord Ferrers, raised various points which I shall do my best to answer. He asked about the length of the Order. The Order is indefinite but the payments are reviewed annually in Brussels and are subject to agreement by the Council of Ministers. This Order only determines that payments are not misapplied. I can also assure the noble Earl that the intervention system will be available for use as a safety net.

Earl FERRERS

My Lords, does the noble Lord mean by that that the Government are obliged to, and will, use the intervention system if the market price drops to a level which, with the addition of the headage and variable premium, will not bring the return to the producer up to the level of the target price?

Lord STRABOLGI

Yes, my Lords, we have that flexibility that the two systems can operate. We now come to the total amount of the premium. I think the noble Earl asked me what would be the Government's liability and the anticipated expense of the premium. The anticipated total amount of the premium cannot be determined exactly, as this will of course depend on market prices. However, I can say that since the scheme started on 5th August 1974 the total amount of premium paid, including the supplementary premium introduced on 18th November 1974, is approximately £59 million, of which £39½ million has been paid in England and Wales. Further, £10 million has been paid in Scotland, and £9½ million has been paid in Northern Ireland. I hope that that gives the noble Earl some idea of the amounts likely to be required in the future.

Then there is the question of the powers of entry. As the noble Earl said, these powers of entry flow from Statutory Instrument No. 288 of March 1973, as the noble Earl may remember as he was in Office at that time. The relevant clause is Article 4, which allows any officer authorised by the Board to enter upon land. These wider powers have been supplemented by Article 11 of this Order when an officer not only wishes to enter but to take possession as well. But in this case, under this Order, he must carry a warrant which he must have with him, and he must also have authority under Article 11(2), from the Board or the Minister of Agriculture, or in Scotland the Secretary of State, or the Department of Agriculture for Northern Ireland. That is the position with regard to powers.

I thought that the question of the extent of these powers was an interesting point, which the noble Earl raised when he said that a farm or collection of farms might have offices in a town; and he also referred to a plastics company with premises in a town. Here I am informed that the question whether "land" in an enactment includes buildings on land, is one which must be collected from the context. In this case the land, I am informed, could be used for production, storage, grading, packing, slaughter, or sale of specified commodities. Most of these activities take place under cover in permanent buildings, and some of them must, of course, so take place. There is, therefore, no doubt that the power to enter upon land extends to the power to enter into buildings used for the purposes thereof. It is quite clear that if, for example, the building in the town was being used for sale—and sale, of course, can include an office which prepares invoices and deals with the books, and so on—then, indeed, it could be entered by an inspector with a warrant and with authority to take possession of the books. I hope that that has answered the various points raised by noble Lords, and I beg to move.

Earl FERRERS

My Lords, I am sorry to be tedious about this, but could I ask one question? I do not wish to put the noble Lord in a spot, but I am still unclear about one thing. The system operates at the moment with variable premiums and headage payments on the one side, and the ability to use intervention on the other. The question on which I should like a clear answer, if possible, is whether the Government are obliged to use intervention if the market price drops too far, or do they merely have an option to do so? If the noble Lord cannot give me that answer straight away, perhaps he would be kind enough to write to me about it; but I should be grateful to have the answer.

Lord STRABOLGI

My Lords, I am informed that the answer is, Yes, but I shall go into it more carefully and write to the noble Earl.

Lord STANLEY of ALDERLEY

My Lords, can I ask one more question, then I will go away pleased. I am grateful for the noble Lord's answer about this buying-in price. Should the target price in the autumn be £20—it is a fairly simple system—and the variable premiums at that time amount to £4, and I am getting £16 in the market, it seems to me on this sum that there is a great case for the wholesaler selling into intervention, because he will then be able, according to my arithmetic, to get about £18.85 if he sells into intervention. I hope that I have understood that correctly. I shall understand if the noble Lord has not understood how I have put it. Perhaps he would like to write to me.

Lord STRABOLGI

Yes, my Lords, I should like to go into that also and write to the noble Lord.

On Question, Motion agreed to.