§ 7.42 p.m.
§ Lord STRABOLGI rose to move, That the draft Hill Livestock (Compensatory Allowances) Regulations 1975, laid before the House on 27th October, be approved. 1309 The noble Lord said: My Lords, these regulations, will, with your Lordships' approval—which I hope will be forthcoming—implement the livestock subsidy provisions of the European Economic Community Directive on the Less Favoured Areas. The regulations will replace the hill livestock schemes, variations of which have already operated under United Kingdom hill farming legislation since 1946. For the first time, aid to hill sheep and hill cattle producers throughout the United Kingdom will fall within the compass of one scheme, and for the first time the House is being asked to approve a hill livestock subsidy scheme made under Section 2(2) of the European Communities Act. Before passing to the content of the proposed new regulations, I propose to remind your Lordships, if I may, of the background to the Directive itself.
§ My Lords, the Directive had its roots in the United Kingdom's negotiations to enter the Community in 1970 to 1971, conducted by the Conservative Administration. The attention of the Community was drawn to the special problems of our hill farmers, and in the Treaty of Accession the United Kingdom obtained general recognition of the need for the Community to take special measures in such areas. Subsequently, the preference of the original EEC members for a Directive related to the mountains only was broadened so as to take account of a wider area of land including the livestock rearing areas benefiting from United Kingdom hill sheep and hill cattle subsidies.
§ Noble Lords had the opportunity to consider the proposals of the Commission for the Directive on 3rd February this year, when it received a general welcome. On that occasion, I voiced from this Dispatch Box the dissatisfaction of the Government about the proposal of the Directive to limit headage payments on livestock—which I think we shall have to get used to calling "compensatory allowances"—to farmers who were not receiving a State retirement pension. I am glad to say that we were successful in getting this difference of treatment removed, although each member country has to bear the full cost of any livestock subsidies paid to pensioners. The amended Directive was finally approved at the end of last 1310 April, and member countries wishing to take advantage of its provisions have to introduce their own legislation implementing them within a year.
§ I should now like to summarise the main features of the regulations. First and foremost we have been able to include virtually the same definition of eligible hill land as in the former schemes. In other words, hill areas which were accepted as fully eligible under those schemes will be accepted under the regulations. The Directive does, however, restrict the payment of compensatory allowances to occupiers of three hectares—approximately 7½ acres—of eligible hill land. I am afraid this means the exclusion of some farmers who were previously able to claim. They are relatively few in comparison with the total number who benefit, but we are actively considering how best to cushion the blow.
§ My Lords, there are two other differences which I feel I should bring to noble Lords' attention. The payment of a compensatory allowance will depend upon the claimant signing a simple undertaking that he will continue to farm at least three hectares of eligible land for the next five years. State pensioners will be exempt from this provision. I believe that it will prove possible to administer this provision fairly bearing in mind that the regulations provide for release from the undertaking on a number of grounds including circumstances beyond a farmer's control.
§ The other difference concerns the limitation on payment. Here there has always been some difference in approach North and South of the Scottish Border, as, indeed, often happens, but throughout the United Kingdom regard has always been had to the carrying capacity of the land and to the need to have some limitation on the number of animals qualifying for subsidy. We have, however, always treated claims for cows and sheep separately even though they were grazing the same land. This separate treatment will no longer be possible because the Directive imposes an overall financial limitation of 50 units of account—which is about £28.50—for each hectare of hill land. Thus some farmers who stock fairly heavily with sheep and cows will, I am afraid, find that the limitation on 1311 the payments they receive under the regulations is more severe than under the hill livestock schemes. There is, of course, nothing necessarily permanent about the 50 units of account.
§ Otherwise such differences as noble Lords will find in the regulations are mainly of a technical and administrative nature. For example, there will for the first time be a common qualifying day for cattle and sheep of 1st January. This means that this winter's hill sheep subsidy formerly paid in relation to a December date is being deferred for about one month. We hope that this inevitable delay in the first year of the changeover will not cause farmers too much inconvenience. I can assure noble Lords that we are fully aware of the need to deal with farmers' claims as quickly as possible in the New Year. The rates of subsidy payable under the former orders have been incorporated in the regulations including, of course, the higher rates of hill sheep subsidy which followed the Annual Review earlier this year.
§ My Lords, I began by pointing to several respects in which the new regulations differ from the old United Kingdom schemes. I hope, however, that I have made it clear to noble Lords that in most respects the regulations will continue aid to hill farmers on much the same basis as before. I suggest that our negotiators in Brussels have, considering the total absence hitherto of any Community arrangement for financing this sector of the farming industry, done a remarkably good job. I can assure noble Lords that we shall take every opportunity open to us to seek modifications in the Directive to improve the position of our hill farmers where such modifications appear desirable.
§ Finally, may I remind noble Lords of two very important considerations: first, aid under the Directive will continue on an indefinite basis ensuring the future of hill farmers; and, secondly, the United Kingdom stands to gain a very substantial FEOGA contribution in the region of £12 million annually towards the cost of paying the allowances. I hope the House will see fit to approve these regulations, and I beg to move.
§ Viscount AMORY
My Lords, I should like only to say to the noble Lord that from the very clear description he has given it seems to me that in general these are very sensible arrangements. May I ask him one question with regard to the £12 million he mentioned towards the end of his remarks? Is that, as it were, the net receipt to this country arising from these provisions, or would the net receipt be something less than that, or is it impossible to calculate what the net receipt will be?
§ Baroness ELLIOT of HARWOOD
My Lords, may I also welcome these regulations, speaking as, I think, the only hill farmer in this House at the present moment. As someone who has now for 40 years been a hill farmer and in receipt of subsidies and assistance, which all hill farmers have had, I am very glad that in the speech the noble Lord made—and I might perhaps say how clearly and succinctly he put the case; I was listening with the greatest possible interest because I am affected by this—he also said that the Government are anxious that the hill farmers, whether in Scotland, England or Wales, shall not have any less assistance than they have at the present time. That is extremely important because the fluctuation in prices to which we are subjected in this country—I am not complaining; it happens to everyone—is such that if one cannot have some fairly stable under-pinning of the industry it is very difficult to carry on.
Last year was a disastrous year; this year is a bit better, but you have to go back quite a long way to even it out, and costs are rising all the time. So I do welcome this measure. I hope the Government will continue to support these agricultural discussions at Brussels and try to get the best they can for this country. It is something which affects quite a number of farmers and quite a number of people who eat beef and mutton. We do not want to have any less; we want, if we possibly can, to increase this production, which will save imports and save money. So I congratulate the Government on this and hope that they will continue to stick up for the hill farming industry.
§ 7.54 p.m.
§ Lord SANDYS
My Lords, I am afraid I do not share the intimate knowledge and expertise of both my noble friends in this particular area of hill farming. I should like to thank the noble Lord, Lord Strabolgi, for his very clear statement. We are feeling our way towards aligning our agricultural legislation in this country with the Common Agricultural Policy; it is a process to which we must become accustomed, and the sooner we can become acclimatised to that system the better. There are, however, many matters which will affect the farmer.
I would begin by commenting on the EEC Directive and to comment first of all on Article 3(4) because, as noble Lords rightly said, there are some farmers who will be affected. One understands that there are involved about 750 farmers, mainly but not wholly in Wales, due to the fact that the areas which are defined in Article 3(4) are in danger of depopulation. There is a problem here, and I hope the Ministry will be able to give some assistance to the farmers affected. There is no area of farming in this country which is more important, certainly to the knowledge of the National Farmers Union, than the hill farms, because of the very close interchange in the markets between the hill farming areas and the rest of the country and the great importance of the national stockyard which is derived from the hill farms.
I should first like to ask the Minister whether his right honourable friend the Minister of Agriculture has implemented the full compensatory amount which is possible to achieve under the Directive. We understand that there is a little elbow room here, and perhaps the noble Lord may be able to tell us whether the full amount has been set out in this draft Statutory Instrument.
My second point is this. Can we be assured that the arrangements for winter keep will be unaffected? On reading through in some detail the EEC Directive we understand that Article 10 relates to aids for fodder production and pasture improvement. Of course we do not know what the Government have in mind, particularly as the regulations before us relate specifically to compensatory amounts; but it would be helpful if the noble Lord could assure us that the exist- 1314 ing arrangements for winter keep are unaffected.
As to the amounts concerned and the limitations placed, as the noble Lord, Lord Strabolgi, has said, there is a limitation of three hectares, which we believe to be 7.41 acres, as a minimum acreage. This affects some farms and some smallholdings, and there will be those who will be affected by it who previously were able to claim full subsidy. Other noble Lords have commented on this particular aspect. We hope that suitable arrangements will be made by the Minister in this regard.
§ Lord DAVIES of LEEK
My Lords, may I ask my noble friend a question since, as a Welshman and brought up for a while in Cardigan, I know what the hill farming means there. I had not intended to speak until after Christmas, but here I think I should say a word for the sweetest mutton in the world, which is Welsh mutton. These are very small farms, and for centuries the very small acreages, unbelievable as it may sound, were enough to keep the hardworking hill farmer going. I hope that this small acreage will receive some new look from the Government. In Wales particularly we are interested in what happens to the small Welsh mutton farmer.
§ Lord GLENKINGLAS
My Lords, before the noble Lord sits down, and being personally interested in hill farming, would he not agree that one of the great attributes of Welsh sheep is that, whatever area they are supposed to be confined to, they can always get over or under or through any fence that God has ever devised?
§ Lord DAVIES of LEEK
My Lords, I agree absolutely; but it was not for me to say that. The mountains are free.
§ 8 p.m.
§ Lord STRABOLGI
My Lords, I should like to say how grateful I am to noble Lords in all parts of the House for the general welcome given to these regulations. I will do my best to answer the questions that have been raised. I am very grateful to the noble Viscount, Lord Amory, for what he has said. He raised one point about the FEOGA contribution. We cannot precisely calculate the net benefits to the United Kingdom, but the reimbursement represents 25 per cent. of 1315 United Kingdom expenditure, and we are the largest beneficiary in the Community, so we can be sure that there is a net gain over the United Kingdom contribution to FEOGA funds in respect of this particular EEC measure.
I am grateful to the noble Baroness, Lady Elliot of Harwood, for what she said, and also to my noble friend Lord Davies of Leek. If I may I shall refer later to the questions they raised about the farmers who have been excluded. First, I should like to answer the questions raised by the noble Lord, Lord Sandys, to whom I am also grateful for his constructive approach. He asked first whether the Government have taken advantage of the maximum permissible rates of subsidy allowed by Brussels for both cows and sheep. At the current rates of exchange for the Green Pound, the maximum level of subsidy permitted by the Directive is £28.48 for cows and £4.27 for sheep. This compares with the rates included in these regulations of £24.50 for cows and £3.60 (at the higher rate) for sheep.
Member-countries determine their own rates within the minimum and the maximum rates laid down in the Directive. Our current rates for sheep reflect a sizeable increase (that is, 60p per ewe) from the Annual Review determinations for 1975, and an increase of over 100per cent. in rates of sheep subsidy in only two years. The Government, though, are aware of the pressure from the industry for an increase in the current rates, and this is a matter which is under discussion as part of the Annual Review of the agricultural industry.
The noble Lord also asked me to confirm that the winter keep supplement will remain at the same level and is unaffected by the order. The winter keep headage supplement is included in the rates of allowance shown in the regulations, and will no longer be calculated as a separate item. In Scotland, acreage payments were also payable as an option to headage payments and noble Lords will have an opportunity of debating this later in the week when, through my noble friend Lord Kirkhill, the necessary order revoking the acreage scheme comes up for approval. I understand that the Secretary of State is actively considering with those concerned how best to cover 1316 the position of those Scottish farmers who previously benefited from the acreage scheme, and hopes to make an announcement early in January.
There is also the question of those farmers who enjoyed the old subsidies but will no longer qualify for the new allowances, referred to by the noble Baroness and by my noble friend. The new regulations disqualify about 1,300 farmers at present receiving hill livestock subsidies compared with some 63,000 farmers who are expected to benefit from the new allowances. Some 1,200 farmers with less than three hectares, most of whom are part-time farmers, will not benefit, as was mentioned by the noble Lord, Lord Sandys. In the past these farmers have received a total of £42,000 of subsidy annually and it is estimated that the average loss of subsidy per farmer will be roughly £35. One hundred farmers in England and Wales in the so-called "scheduled areas" will also be disqualified. They will lose a total of £33,000 of subsidy and an average of £330 each. However, many farmers in these two categories will be able to claim the beef cow subsidy, which should go some way to mitigate their loss. The Government are of course sympathetic towards these farmers and we are actively pursuing proposals designed to make available some alternative aid. I am glad to say that it is hoped shortly to announce details of arrangements for helping the farmers concerned.
§ On Question, Motion agreed to.