HL Deb 02 December 1976 vol 378 cc426-37

3.27 p.m.

Lord STRABOLGI

My Lords, I beg to move that the Farm Amalgamations (Variation) Scheme 1976, a draft of which was laid before this House on 2nd November 1976, be approved. I suggest that it would be convenient to discuss this scheme with the Farm Structure (Payments to Outgoers) Scheme 1976, since they go together.

As noble Lords will be aware, there has been a continuing trend since the end of the war for farms in the United Kingdom to increase in size, and this has had the effect of increasing the productivity of the industry. The policy followed by successive Governments has been to encourage productivity and efficiency by gearing capital aids to viable farms. As part of this policy, the Farm Structure Schemes were introduced in 1967 to encourage small farmers either to take on more land or to release their land to form, or expand existing, commercial farms, which are defined for the purpose of the schemes as farms providing work for at least two men. Thus the schemes offered annuities or lump sums to farmers who left their land, and special grant for the amalgamating farmers to compensate them for their additional expenses.

Nevertheless, the response to these and succeeding schemes was disappointing. Our entry into the EEC in 1973 made it necessary to build the requirements of Directive 72/160 (concerning encouragement to cease farming) into the present schemes which, as noble Lords may recall, were introduced in September 1973. The Directive contained a number of features which did not suit United Kingdom conditions, but these cannot be held responsible for the poor take-up of the schemes, which covered a wider range of amalgamations than that prescribed by the Directive.

The lack of success of the 1973 schemes led us to carry out in 1974 and 1975 a detailed and comprehensive review to evaluate the contribution that all the schemes had made to United Kingdom farm structure and thus enable us to review our policy. The review found that the impact of the schemes had been minimal. For example, in 1967 there were some 150,000 "uncommercial" holdings (that is, employing on a full-time basis fewer than two persons) of which some 96,000 were run as full-time farms. The schemes were primarily directed at these, but in fact were concerned in only some 6,000 amalgamations between 1967 and 1975, notwithstanding that the number of "uncommercial" holdings had fallen by some 30,000 over this period and the total number of farms by some 60,000. The survey clearly demonstrated that amalgamations were going ahead irrespective of the schemes and this suggested that in many cases they were benefiting farmers who were intending to leave farming in any event. The economic gains resulting from scheme amalgamations were not large and were associated with broadly equivalent Exchequer cost.

These findings caused us to conclude earlier this year that the schemes were not worth continuing. However, the EEC Directive requires us to provide a scheme for outgoers and pending the review of the Directive, which is now getting under way, it was decided at that time to defer a final decision until the future character of the Directive had been settled. This decision was, however, overtaken by the development of the economic situation, which, as noble Lords are aware, made it necessary for the Government to announce cuts in public expenditure in July. Part of the agricultural share in these savings is to come from the changes in the schemes which are made by the Instruments now before your Lordships' House, whose effect is to limit the schemes, by and large, to what is needed to satisfy EEC requirements. By doing this we hope to effect a saving during the next five years of not less than £2½ million. This, together with the consequential staff savings of some 20 man-years, is, I suggest, a worthwhile part of the total reduction of £25 million in respect of agriculture announced in July.

With your Lordships' permission, I will briefly outline the changes we propose. The Farm Amalgamations (Variation) Scheme 1976 brings to an end the present Amalgamation Scheme. This type of aid is not required under the Directive, and we are in fact the only country in the Community to operate such a scheme. As to the Farm Structure (Payments to Outgoers) Scheme 1976, this follows the general pattern of the 1973 scheme. But, whereas the current scheme offers annuities or equivalent lump sums to full-time farmers of any age who release their land for an approved amalgamation, the scheme now proposed restricts this provision to those in the age band of 55 to 65 specified in the Directive. In addition, the land must be released, as provided in the Directive, either to a farmer undertaking a development plan, or for afforestation, or, in certain prescribed circumstances, for public use.

The grant rates remain unchanged, and approved outgoers will continue to retain the option, which currently applies to this age category, of taking either the annuity or the lump sum. The existing lower rate lump sum will continue to be paid to "part-time" farmers who release their land for the recognised purposes, and also to all approved outgoers who fall outside the age band. Noble Lords will wish to know that we have retained one of our existing provisions which is not specifically required by the Directive. This is the payment of half the annuity to the spouse of a deceased annuitant, subject, however, to the age provisions of the new scheme.

My Lords, as I indicated during our debate which, your Lordships recall, took place in the early hours of 6th October, on the EEC Commission's Report on the Structure Directives, we have doubts, which are shared by some of our Community partners, about the value of Directive 160. We hope that, following the review of the Directive, we shall be free to abolish these schemes. We believe that experience in this country has proved that the best way to aid small farmers to increase their productivity and income lies in providing investment aids of the kind already available under the Farm and Horticulture Development Scheme and the Farm Capital Grant Scheme. Noble Lords will be aware that last June we extended aid under these schemes, and further orders have been laid to extend the schemes still further; these orders will be coming before your Lordships shortly. These are the two schemes from which many farmers continue to benefit, thus assisting them to increase their productivity. The savings which will result from the changes we are proposing will make a contribution from agriculture to public expenditure savings. The agricultural industry has acknowledged the reasons for making these changes, and I commend the Instruments implementing them to your Lordships' House. I beg to move.

Moved, That the draft Farm Amalgamations (Variation) Scheme 1976, laid before the House on 2nd November, be approved.—(Lord Strabolgi.)

3.37 p.m.

Earl FERRERS

My Lords, we are extremely grateful to the noble Lord, Lord Strabolgi, for having introduced these two orders and explaining what they mean. I thought that I detected a certain lack of enthusiasm in the noble Lord for these two orders, and this in a way is slightly surprising because I think in the past they have been of very great service to small farmers. They both refer to the incentives which the Government gave, and in my view quite rightly gave, before we joined the EEC, way back in 1967, to small farmers who were prepared to amalgamate their holdings. One of the schemes was to give a lump sum or an annuity to a farmer who gave up his farm for amalgamation purposes. The other, the Farm Amalgamation Scheme, provided grants for the farmer who had the vacated farm amalgamated to his. The noble Lord, Lord Strabolgi, pointed out that it is this scheme which is coming to an end. I could not help being a little amused by the title of the order, which is the Farm Amalgamations (Variation) Scheme, which infers a modest alteration in the existing scheme. It might have been more appropriate to have entitled it Farm Amalgamations (Coming to an End) Scheme, and then we should have known what it was about.

In my view, the Government are quite right to encourage the amalgamation of small unviable units in order to form larger, more viable units. That must be right for agriculture and it must be right for those involved in farming small unviable holdings. Everyone has, quite rightly, sympathy for the small farm and for the small farmer, but there is little virtue, and still less pleasure, in living and working in a unit which is unviable. It is not nice to find that the passage of years and the trend of economic life, over which individuals can exert little influence, have locked people not only into a business but into a way of life which has become unviable and from which they cannot escape. In so far as these schemes have been a help to cushion that, they have been worthy schemes. It may be that not so many people have availed themselves of these provisions as the Government would have liked or as they would have expected. But the fact that these provisions are there is a great help to those who have availed themselves of them and those who will avail themselves of them in the future. It is an indication of the Government's desire to see units become more viable.

My Lords, I could not help but contrast the Government's view today with that which was expressed in the Agriculture (Miscellaneous Provisions) Act, which your Lordships will remember we passed in the last Session, because that gave hereditary rights of tenancy for what could be up to 100 years to all tenant farmers, including, of course, tenants of unviable holdings. Today the Government are saying in effect, "You are living in an unviable holding. Therefore you should be encouraged to leave it. "In the Agriculture (Miscellaneous Provisions) Act the Government were saying, "Even though you are living in an unviable holding you and your children, and your children's children, should be encouraged to stay on in it." It seems to me extraordinarily contradictory.

The definition of a commercial holding in these measures is one that can provide full-time work for two men. We sought in the Agriculture (Miscellaneous Provisions) Act to exclude the operation of the Act from farms incapable of providing full-time employment for one hand. Presumably, that is even more uneconomical than providing full-time employment for two men. But the noble Lord, Lord Melchett, said, "You cannot do that because you will be excluding 35,000 holdings from the operation of the Act". Presumably, if 35,000 holdings are covered by those which are incapable of providing full-time work for one man, there must be many more that are incapable of providing full-time employment for two men. I think that the noble Lord, Lord Strabolgi, said that there were 150,000 such holdings. That is a large number of holdings which could be affected by these orders.

I was a little surprised to hear that one of the reasons for doing away with the scheme is because market forces are operating. Of course when you get uneconomic units, whether they are in agriculture or elsewhere, market forces will operate, and these unviable units will come to an end and people will be hurt by that process. The object of these schemes was not only to accelerate the process but also to cushion the effect of the process. In so far as that has been curtailed I would be a little sorry.

There are few specific questions which I should like to ask the noble Lord. He said that there had been a disappointing response to the schemes. I wonder whether he could say over a period of time how many people have taken advantage of the schemes, and how many amalgamations took place where people could have taken advantage of the schemes but did not. Am I right in believing that up until now an outgoer of any age could get either a lump sum or an annuity, but now these provisions will apply only to those aged between 55 and 65? I think that that is so, but I should be grateful if the noble Lord could say how many of those who have applied for the schemes in the past have been under the age of 55. That would at least give some indication of whether or not this is going to have a curtailing effect.

The noble Lord, Lord Strabolgi, said—and this I found a little difficult to understand, and I am sure it is my stupidity of comprehension—that the approved out-goers who fall outside the band will also get the lump sum, but not the annuity. I thought that the whole object of the scheme was to restrict the provisions to those within the age band of 55 to 65, and I do not see how or why those who fall outside it can be eligible for some of the benefits.

I wonder whether the noble Lord would also explain one thing, on the back of the order, where there is a note which explains what is going to happen. It says, in effect, …that Scheme shall be submitted to the appropriate Minister before"— and then there is a blank— 1976. Presumably the date is to be affixed later. This means that no further applications will be accepted after that date for the approval of proposals for grant in respect of amalgamations under that scheme. I wonder why the date has not been put in. We do not know to what date the order refers. In view of the fact that there are only 29 possible dates that could be inserted, one wonders why the date 31st December has not been put in. It seems, somehow, a little sinisterly precise that the date has not been put in, because there might be some other date which is going to be included other than 31st December. If the noble Lord would be kind enough to explain that I should be very grateful.

3.45 p.m.

Lord MACKIE of BENSHIE

My Lords, I am sorry to have to restrain the noble Lord, Lord Davies of Leek, for yet a further period, but I have one or two comments to make on these two rather curious orders, one of which the Government are glad to see go and the other which they hope to see go quite soon. I congratulate them on the common sense of their attitude. It has been a very silly scheme, because anyone who wants to increase the size of his farm by buying a neighbouring farm, or by renting it, is willing to pay, and to pay a considerable increase in price for it because of the natural economics of the business of getting into a bigger farm and making it easier to work. The paying of many of the amalgamation grants has simply driven up the price of land, which is not a particularly desirable feature when you consider how expensive land is now, and how enormously difficult it is for a man to start a farm at any time.

The other comment I should like to make, very much in line with what the noble Earl, Lord Ferrers, was saying, is that it is not necessary that to be economic a farm provides work for two men. Everyone knows of small one-man farms throughout the country which are very economic, producing much more per acre, particularly in Wales, than large farms, and providing a living and a happy life for a man. I do not think that you should try to bribe people out of them. The prices should be fixed, but if a man is willing to work a small farm by himself and to take a smaller living for the satisfaction of so doing, then he is a valuable citizen and will carry on for a time.

Already such farmers are going out. As we are told, by the Government's rating there are 30,000 fewer small uneconomic farms, and only 6,000 taking advantage of this rather ludicrous grant. I think this also highlights the need for us to play very hard in the EEC over the Common Agricultural Policy. It cannot apply over the whole continent of Europe, and we must see that there is more room for national variation instead of having put on this country orders which we are forced to comply with but which are positively harmful to food production and to our economy. I think that really is all I wish to say. I was delighted to see the Government's sensible attitude here. I am sorry that the noble Lord, Lord Peart, is not here, and that Adam Smith has quite a lot to do with it in that apparently economics put more people out of the uneconomic farms than did the amalgamation grant.

3.48 p.m.

Lord DAVIES of LEEK

My Lords, I was delighted to give way to the noble Lord who is an expert in this field, and it was only right and proper that I should have given way to the Front Bench on the other side. I was delighted to hear the tribute from the noble Lord, Lord Mackie, about the man on the small acreage, because this does not apply to the mountains, nor to the marginal regions of farming just the same as it applies to Cheshire or the Lincolnshire plains. After all is said and done, viability is not a fixed arithmetical or mathematical formula. What is viability? It is a way of life. One of the unheralded people who has contributed to solving the balance of payments problem is the wife of the farmer who has lived for years on marginal land on a small acreage, and who has been able to produce, with her help, food at home although there has been only one man on the land. That woman has contributed as much as, and often more than, some people sitting in an office to the balance of payments and to the life in Britain. Consequently we must watch this trap.

Noble Lords brought me into the Common Market kicking and screaming. I did not like it. But I know that the economy having gone to Brussels, and this problem many times being discussed with Mansholt and others, they look at the problem of farming from a different view altogether. They had millions of small farmers all over Europe who were much less practical farmers than ours. I use the expression "small farmers" though the farmer does not like to be described as a small farmer. I am speaking of the small acreage farm. I believe therefore that we must apply a national colour with common sense. I do not mean that we should be agressivly nationalistic but we should apply a national colour to a Common Agricultural Policy that accepts the common sense of the British farmer, be he Scottish, English or Welsh, who has had generations of farming in the climate and conditions in which he lives. That should be a basic formula for reaching agreements on the Common Market.

I have one question. I do not want to delay the House because we have a lot of business, but there is one point that I do not like. There are two formulae which are coming in. We are told that this land is only to be used for lumping together if it is for farming, forestry and—and this is the béte noire of the statement—public use. A slick, powerful, old-fashioned county council looking for development land and small towns could mean that once again rich agricultural land will be taken up when millions of acres in Britain within the curtilage of big cities and towns are derelict. That land should be used up before we drive good, rich, small acreage agricultural land out of farming. I should therefore like to know what qualification is behind the phrase, "public use".

I could speak longer but I shall not because most of the practical points have been made by the capable speakers on the Front Benches of the Opposition both above and below the gangway. However, I could not let this pass by without a word from this side of the House and from somebody who comes from small acreage farming and also from a Welsh mining background.

Lord STRABOLGI

My Lords, I am very grateful for the general welcome that your Lordships have given to these orders and I shall do my best to answer the questions that have been raised. The noble Earl, Lord Ferrers, asked first why no date appeared on the order. This sometimes happens, as I am sure the noble Earl will remember from when he was a Minister. There is nothing sinister in it. It is merely a question of convenience because the schemes are to be brought in as quickly as possible and there was considerable pressure on the Parliamentary timetable so that it was not possible to fix a date. But, as soon as your Lordships approve the orders, which have already been approved by another place, and they have been signed by the Secretaries of State, at the final printing the earliest possible date will be inserted.

The noble Earl also asked me about the Agriculture (Miscellaneous Provisions) Act. Of course this was a measure that was designed to allow farms to pass from father to son. The question of viability was therefore not its main purpose. In any case, we hope that the capital grant schemes will aid unviable farms, as I said in my speech. These are the two schemes on which we rely.

The noble Earl also made a point about the number of people who would take advantage of the scheme and asked how many amalgamations took place in which people could have taken advantage of the scheme but did not. I can tell him that between October 1967 and August 1976 nearly 7,000 amalgamators and just over 5,000 outgoers benefited under the scheme. Some 3,000 to 4,000 amalgamations are estimated to take place each year, but it is not known how many of these might have been eligible under the scheme. It is known, however, that, when the schemes started in 1967, 150,000 holdings were potentially eligible, of which 96,000 were run as full-time farms. The impact of this scheme must therefore be judged by comparing the number of amalgamations affected with the potential number of farms.

The noble Earl also asked whether an outgoer of any age could obtain a lump sum or an annuity and whether these provisions were now to apply to only those between the ages of 55 and 65. Those aged under 55 receive the lump sum and those over 65 receive the annuity. Only those between 55 and 65 have the choice. In the proposed scheme where the grants are being paid only to those in that age bracket, the previous choice for the age group is being maintained. Approximately 20 per cent. of the outgoers in the past have been under the age of 55.

The noble Earl also asked whether part-time farmers would be eligible only for the lump sum and whether, as was said in the other place on 17th November, the existing lump sum to outgoers was being paid to those who fell outside the age band. Under the existing scheme, part-time farmers are eligible only for the lower rate lump sum—£10 an acre up to £1,000. This is retained under the new scheme but any outgoer under 55 and over 65 who is otherwise eligible under the scheme will also be entitled to the same grant. This was what the Minister was referring to in his statement.

I felt that the noble Lord, Lord Mackie of Benshie, made a very valid point in pointing out that a small farm can still be viable and in saying that just because it is small it is not necessarily uneconomic. I fully agree and I should like to thank the noble Lord for this welcome that he gave to these orders. While large farms make a major contribution to production, efficient farm structure is not dependent on large farms, as the noble Lord rightly said. The health of agriculture depends on their being a sufficiency of farms to provide for those wishing to enter the industry—namely, the young—and those without large capital resources who wish to farm on their own account.

United Kingdom policy therefore emphasises the creation of viable farms so as to secure the maximum production possible while affording the farmer and his family a reasonable livelihood that is commensurate with that enjoyed by their counterparts in other industries. It is also to continue to provide for both owner occupation and tenancy of farms. My noble friend Lord Davies of Leek also took part in the debate in his usual eloquent way, and I am very glad that he did. He asked about public use. These schemes are not used where the Land Compensation Acts apply, which is in most cases and no schemes have yet been approved for public use, nor is it likely that any will be. I hope that that has answered the various questions put to me by noble Lords.

On Question, Motion agreed to.