FARM AND HORTICULTURE DEVELOPMENT (AMENDMENT) (NO.2) REGULATIONS 1976 (Hansard, 14 December 1976)

§ Lord STRABOLGI
My Lords, I beg to move that the Farm and Horticulture Development (Amendment) (No.2) Regulations, a draft of which was laid before Parliament on 17th November 1976, be approved. I suggest, my Lords, that it would be convenient to discuss these regulations with the Farm Capital Grant (Variation) (No.2) Scheme 1976 since they cover much the same ground.
Noble Lords may perhaps be surprised that the Government are asking Parliament to approve changes in our capital grant arrangements so soon after the coming into effect of the revised schemes on 1st June last. Noble Lords may recall that these schemes were designed to give differential encouragement to investment aimed at better use and conservation of grass and more economic milk production; and also brought some welcome simplification to the Farm and Horticulture Development Scheme. We have been pleased with the response to the new schemes.
Nevertheless, the recent rains have not washed from our minds all recollection of the drought that struck farmers and growers this year, not only in the United Kingdom but also in many parts of Western Europe. Many of our partners in the EEC have introduced special measures to aid farmers affected by the drought and on 5th October 1976, my right honourable friend the Minister of Agriculture, Fisheries and Food announced a package of measures to help our own agricultural industry. One of these takes the form of increased grant for water storage, and the genesis of the two orders before your Lordships' House today is our need to seek Parliamentary approval of this change.
874 In broad terms we propose, for one year, to increase by 20 per cent. of cost the rates of grant for water storage facilities under both the Farm and Horticulture Development Scheme and the Farm Capital Grant Scheme. This will lead to rates varying from 40 per cent. of cost in lowland areas to 70 per cent. in less favoured areas. The facilities to benefit from these rates, which will be available in respect of applications received between 1st January and 31st December 1977, will include storage tanks and the pipework and pumps required for the filling and emptying of the tanks. I should perhaps add that growers can benefit under either scheme and for this reason we propose no changes in the Horticulture Capital Grant Scheme. Irrigation and ordinary water supply systems are not covered by the special rates but can be grant aided under the present arrangements at rates ranging from 20 to 30 per cent. in lowlands and at 50 per cent. in the hills. I hope noble Lords will agree that this special measure, which is estimated to be worth some £3 million, will be useful to the industry.
My Lords, we are using the opportunity presented to us by these amendments to the schemes to implement in the United Kingdom two small, but I suggest not insignificant, changes in the EEC Farm Modernisation Directive, 72/159, which your Lordships will remember we debated on 10th May. At the Council meeting on 25th and 26th October 1976, the Community Agriculture Ministers approved increases in the grant for farmers keeping farm accounts and in the upper limit of the range of cost within which investment aids may be paid on investment in the pig sector. Member States are enjoined to bring these changes into effect by 1st January 1977, and the instruments before your Lordships' House provide for this.
The grant for farm account keeping is available only to farmers with approved development plans under the Farm and Horticulture Development Scheme who keep accounts in a prescribed form. The total amount is raised from 473 units of account to 600 units of account, to be paid over not less than four years. We propose to pay 180 units of account (approximately £102) for the first year, when the farmer is likely to be setting up his accounting system and thus has 875 special costs, and 140 units of account (approximately £80) for each of the following three years. We consider this grant to be of considerable value to modernising farmers, and I commend the increases to your Lordships' House.
The increase in the upper limit on grant aidable pig investment, from 42,060 units of account (£23,958) to 53,333 (£30,300) will, we believe, be welcome to the industry in view of the rise in building costs in recent years. The lower limit of £5,992 is being left unchanged, so that the position of the smaller investor is not adversely affected. This change applies to both the Farm and Horticulture Development Scheme and the Farm Capital Grant Scheme.
My Lords, the two instruments before your Lordships' House are of limited scope but, apart from implementing two EEC provisions which are of advantage to the agricultural industry, they give a specific boost in an area, namely water conservation, which experience now shows to be of some importance, at least in our climatic conditions. I commend them to noble Lords as providing for reasonable and valuable improvements to our capital grant arrangements. I beg to move the first order standing in my name.

§ Lord SANDYS
My Lords, the House will be grateful to the noble Lord, Lord Strabolgi, for introducing these two orders to your Lordships. May I say how very much I admire the noble Lord's facility in converting units of account into pounds sterling. When we discussed the previous orders on the 10th May, we touched upon the question of irrigation and I should like to point out to the noble Lord that at column 836 I asked the Government to consider the situation. I make no Party point on that at all, but it was very much in our minds at that time and naturally we welcome most warmly what the Government have done in this connection.
A number of matters arise in this connection, particularly regarding the situation over the proposed ban within the 876 EEC on capital grant aids for milk production. I wonder what the Government believe the effect of that ban will be in present circumstances. My second question arises out of the EEC Directive No.72/159, to which the noble Lord referred. I should like to know whether that Directive is to be revised periodically to meet changing circumstances—because your Lordships will remember that it is upon that Directive that regulations of all Member States are based.
My third point relates to the Farm Capital Grant (Variation) (No.2) Scheme. I wonder why there are no higher rates of grant for irrigation and water supply. The noble Lord referred in this connection to 20 per cent. to 30 per cent. grants available in the lowland areas, and to 50 per cent. in the hills. I am quite sure that those with experience of these matters will understand the anxiety that is felt about this and I hope the noble Lord will be able to tell us why irrigation, as opposed to storage, is not to receive more beneficial treatment.
If I may touch upon the matter of storage, I think it will be of the greatest importance for the Ministry of Agriculture to consider how their colleagues in the Department of the Environment will be able to co-operate in this situation, because of course the regional water authorities have a very direct interest in water storage schemes. It will be insufficient in a large number of cases—and certainly I speak with some experience—for a farmer to consider the incentive alone without some certainty at the back of his mind that the regional water authorities will look with favour on schemes of this nature, to prepare for the possibility—and I hope it is only a possibility—of further serious periods of drought in coming years. We welcome the Government's further arrangements with regard to farm accounts and also the arrangement within the pig breeding sector, because both matters were left out of the previous orders introduced by the Government on 10th May.

§ Lord MACKIE of BENSHIE
My Lords, I shall not detain this packed House for very much longer; but I should like to say, first, that with the noble Lord, Lord Sandys, one welcomes these very 877 sensible additions to the incentives for providing capital to provide for facilities which may well increase production very largely. The water storage increase grant is very welcome, particularly in the hills, at the extra rate. No one would do other than say it was very good.
I should like the Minister to confirm that the grant aid for pig breeding and general breeding is to some extent still linked with the kind of grant available and is not a direct incentive to any scale of factory farming. I really do not see the great value, unlike the noble Lord, Lord Sandys, of the aid of £80 a year, or £600 over four years, towards the keeping of accounts. Does the Minister think that will be an effective measure? If a man has not enough sense to keep accounts properly, will £80 a year make any difference?
I think that is really all I have to say. Obviously these orders are welcome and I should like to hear the Minister's reply to the two points I have raised: the first one concerning the relation of pig subsidies or grants for pig breeding to the amount of land available, and, secondly, whether the noble Lord really thinks the subsidy for the keeping of accounts is worth while.

§ Lord STRABOLGI
My Lords, I am grateful to the two noble Lords for the welcome which they have given these orders, and I will try to deal with the different points which they have raised. The noble Lord, Lord Sandys, asked me a number of questions. First, he referred to the review of the farm modernisation Directives. Under the terms of the Directives, such a review must take place next year. Preliminary work on this has started, and we will ensure that the impetus is not lost. In the meantime, it is important to take this opportunity to maintain the effectiveness of the Directives, as I am sure the noble Lord will agree.
The noble Lord also asked about milk production. He referred, very properly, to the EEC ban on capital grants and asked what would be the effect of this. The proposed restrictions currently being considered would apply for three years, and would take the form of a ban on FHDS and FCGS grants for dairy enterprises, with exceptions for less-favoured areas and for FHDS plans providing 878 for80 per cent. home-produced feed and no more than 1. 3 cows per hectare. We, together with other Member States, are resisting these proposals both in principle and in the method of operation. My right honourable friend made his views about this quite clear during the debate in another place on 22nd October.
The noble Lord, Lord Sandys, also asked about irrigation and raised some interesting points in connection with that. He asked why we did not extend the higher rates to irrigation and water supply systems. The proposed higher grants are confined to water storage, since only limited funds are available and this is considered the best means of helping the industry to meet any repetition of last summer's drought conditions. Irrigation systems can qualify for the standard rate of grant under the two schemes. The noble Lord also asked why there is no provision for higher rates under the horticulture capital grants scheme. Growers with approved development plans are entitled to special higher rates under the FHDS, and may also benefit from the higher rates under the FCGS. In the circumstances, we thought it unnecessary to amend the HCGS and I hope that that reassurance about horticulture will satisfy the noble Lord.
I am also grateful to the noble Lord, Lord Mackie of Benshie, who asked me, first, about the pig grant. He asked whether there would be any change in the feed rule limitation for pig investment. The present review is restricted to financial limits and the question of the feed rule limitation has not been discussed. The whole of the farm modernisation Directive is being reviewed next year. The noble Lord also asked about accounts. Of course, the grants that we are giving are really, as I believe I said, in order to help the farmer start off and we feel that this is a useful incentive. The farm accounts grant is paid to farmers with approved development plans, who keep accounts as required by the Directive. Among other things, this includes an agreement to make their records available in confidence for information and scientific study if required. The detailed requirements are rather extensive, but if the noble Lord would like me to write to him with fuller details of this, which I am sure he will agree goes some way to justify this 879 new grant, I should be very happy to do so. I hope that that answers the various points which have been raised.