CALF SUBSIDIES (UNITED KINGDOM) SCHEME 1977

HL Deb 01 March 1977 vol 380 cc534-8

4.15 p.m.

Lord STRABOLGI rose to move. That the draft Calf Subsidies (United Kingdom) Scheme 1977, laid before the House on 8th February, be approved. The noble Lord said: My Lords, I beg to move that the Calf Subsidies (United Kingdom) Scheme 1977 be approved.

The object of this scheme, which was laid before this House on 8th February, is to provide for the continuation of calf subsidies after the present scheme expires at the end of March this year. Provision is made for subsidies to be paid for a further period to include calves born up to and including 30th April 1977, and for carcases presented between 1st April 1977 and 30th June 1978. The rates of subsidy will continue to be £8.50 in the case of male calves or carcases and £6.50 in the case of heifer calves or carcases.

The decision to extend this scheme for six months to include calves born up to 30th April 1977 was announced following the 1976 Annual Review, but it was pointed out at the time that we could not continue to make this aid available to United Kingdom farmers after the end of the transitional period when they would be receiving the benefit of the final steps towards Community support prices. Although the transitional period, which was settled prior to our entry to the EEC, ends on 31st December this year, payments will, as I will explain later, be continued beyond that date to provide farmers with eligible calves born before 30th April this year with a reasonable opportunity to collect the subsidy.

As the terms of this scheme are, in the main, identical with those of the existing one, I do not think the House will wish me to give more than a very brief description. Part I of the scheme provides for the payment of subsidy on live calves born during the period beginning with 30th October 1976 and ending with 30th April 1977. Part II provides for payments on carcases presented for certification between 1st April 1977 and 30th June 1978.

These two ways of paying subsidy are generally known as "Stage A" and "Stage B". Stage A continues the provision contained in earlier schemes for paying subsidy on any male or heifer calf of suitable beef potential except heifers of the four main dairy breeds. In general, only calves over eight months old are accepted for certification but, in the hills, we accept spring-born calves at six months so that the farmer can sell them away before he faces a shortage of winter feed. Applications for subsidy under Stage A will continue to be accepted up to and including 1st May 1978. By this time the last eligible calves under the scheme will be 12 months old. This closing date should not cause producers any real difficulty, since, even when considerably longer time was available, we have found that the majority of calves are certified by the time they are a year old. The House will be interested to know that under Stage A about 3 million calves receive subsidy each year.

Stage B continues the facility to make payments on carcases of any home-bred cattle which have not received subsidy as calves, which are not imported and which conform to the qualifying standards set out in the Schedule to the order. This stage enables subsidy to be paid on heifers of the dairy breeds which cannot be eligible while they are still alive because of the likelihood that they will subsequently be used for milk rather than beef production. Under Stage B, less than 200,000 animals—a distinct minority—qualify for subsidy each year.

The Scheme provides for the period during which animals may be presented for certification at Stage B to be extended to cover the period from 1st April 1977 to 30th June 1978. By this time we shall have completed our transitional steps up to EEC prices and United Kingdom producers in both the milk and beef sectors can look forward to higher support prices than they have now.

The only other change I think I need mention is that the Schedule to this scheme which sets out the standards for certification at Stage B is now in metric terms. It is, of course, always difficult to end a long-standing payment such as the calf subsidy, but the factors applying when the scheme was originally decided upon were very different from those which now apply. The outlook for beef production is good and prospective returns from the market, backed up by the higher support levels, should provide adequate incentives to those already involved in this enterprise and those also who may consider moving into beef production in the future. I recommend the approval of this scheme to your Lordships' House. I beg to move.

Moved, That the draft Calf Subsidies (United Kingdom) Scheme 1977, laid before the House on 8th February, be approved.—(Lord Strabolgi.)

4.21 p.m.

Lord SANDYS

My Lords, the House will be grateful to the noble Lord, Lord Strabolgi, for introducing this draft Instrument. It is of course the case that this scheme supersedes the calf subsidy scheme of 1974. Your Lordships will be grateful to the noble Lord for going into such detail about it, but there are a number of questions I should like to ask the Government, of which I have given prior notice.

First, in regard to the question of support, we should like to know why there is no increase in the subsidy. Production costs have increased over the last 12 months by a factor of probably no less than 20 per cent., and we feel this is a relevant question to ask at this stage. Secondly, why is a closing date fixed which does not allow the eligible live calves to continue to qualify for subsidy until they cut their incisor teeth? I hope the Government will be able to satisfy us on that technical issue.

Thirdly, is the subsidy to be phased out in 1978 because of EEC rules or because of some other factor? Fourthly, why has the final date for Stage B presentation to be fixed as early as 30th June 1978? Of course we realise that the transitional provisions are due to terminate on 31st December 1977, but nevertheless this is a very important factor. Fifthly, will not the termination of the subsidy have the tendency to lower the amount of beef production? I wonder whether the noble Lord can give some answers to those five questions.

Lord STRABOLGI

My Lords, I am grateful to the noble Lord, Lord Sandys, for the welcome he has given this order and I will do my best to answer the various important questions that he has raised. I am grateful to him also for giving me prior notice of these questions. He asked why a closing date is fixed which does not allow eligible live calves to continue to qualify for subsidy until they cut their incisor teeth. In fixing the Stage A closing date we face the need to strike a balance between allowing time for farmers to present calves born before 30th April of this year for certification and not allowing certification to continue long enough to draw in calves born after that date. Normally we have accepted calves for certification until they have cut their first incisor teeth, but any final date fixed to cover this contingency would incur the risk of calves born after 30th April 1977 being certified for subsidy as there is no sure way of accurately knowing the age of a calf.

The noble Lord also asked why the final date for Stage B presentation had been fixed as early as 30th June next year. In the previous schemes the terminal date for the presentation of carcases for certification has been six months after the last date by which calves must be born to be eligible for subsidy when certified live. The date in the final scheme is 14 months after the final birth date for calves qualifying under Stage A. Moreover, any later date for Stage B could enable calves born after 30th April 1977 to obtain subsidy to which they would not have been entitled under Stage A—or perhaps I should say to which their owners would not have been entitled.

The noble Lord also asked, very properly, whether the subsidy is being abolished because of EEC rules. Under the EEC rules on State aids the Commission generally disapprove of national aids like our calf subsidy. This was of course a factor in our decision, but the main factor was that, given the completion this year of our transition to full EEC prices, it did not seem justifiable, especially with the importance of containing public expenditure, to continue the subsidy beyond the summer of 1978. The noble Lord asked why there has been no increase in the rate of subsidy. The decision to continue this subsidy at the same rate as previously for this further period was made following the 1976 Annual Review, and there seemed to us to be no compelling reason to alter it during the final stages.

Finally, the noble Lord asked whether the termination of the subsidy would lead to an ever greater fall in beef production. Home production of beef last year was lower than the record levels of 1975 and seems likely to decline again during this year. This follows from the earlier decline in the breeding herd. Encouraged by recent and prospective firm market prices and higher support levels and the improvement in the dairy herd, from which nearly 70 per cent, of our home production comes, we expect to see beef production pick up in 1978. The decline in production has occurred while the subsidy has still been payable, and since the subsidy is now small in relation to total return:; its removal seems unlikely to have any significant effect on overall production. I hope that has answered fully the various points raised by the noble Lord.

On Question, Motion agreed to.

House adjourned during pleasure and resumed by the Lord Chancellor.