MEAT AND LIVESTOCK COMMISSION LEVY SCHEME (CONFIRMATION) ORDER 1979 (Hansard, 26 March 1979)

§ Lord LEONARD
My Lords, I beg to move that the Meat and Livestock Commission Levy Scheme (Confirmation) Order 1979, a draft of which was laid before the House on 6th March, be approved.
My Lords, this scheme revokes and replaces the Meat and Livestock Commission Levy Scheme 1968, consolidating 1450 various amendments. It thus provides for the continuation of the system under which the Commission is enabled to impose charges to meet its expenses and to recover such charges. At the same time, the scheme makes two changes to the existing provisions. These are an increase in the maximum charge leviable in respect of each head of sheep from 8p to 16p; and an extension of the leviable charges to exports of livestock (excluding pure-bred breeding cattle).
We must remember that it is four years since the statutory maximum rates of levy were last increased. It is to the credit of the Commission that it has been able for so long to work within the present limits, while maintaining and developing a wide range of services to the industry. I should like to say something briefly about these services before discussing the changes in the levy scheme.
The Meat and Livestock Commission was set up in 1968 because the Government believed that it was needed to further the development of the livestock and livestock products industries to the benefit of producers and consumers. This belief has proved to be well justified. The Commission provides a range of services to the industry which have brought substantial improvements. Among these services were the livestock improvement work, marketing and economic services, fatstock certification, weighing and classification services and support for scientific projects. All these have played essential roles in the industry's progress and development.
Fresh ground has been broken since 1975 in several important areas. For example, there has been the start of the Retail Meat Price Reporting Service. The Meat Industry Development and Advisory Service, operated in conjunction with the Meat Research Institute, has been launched. It deals with a wide range of technical inquiries from the industry and ensures that these are handled by the most appropriate person in either organisation. And perhaps of most significance, the Meat Promotion Executive, launched nearly four years ago, has steadily developed its role as a powerful stimulus to the demand for British meat.
Carcase classification schemes for cattle, sheep and pigs have continued as a major 1451 element in the Commission's programme. The pig scheme has maintained its success, with nearly 80 per cent. of clean pigs slaughtered being covered in the year 1977/78, but the numbers classified under the other two schemes have been at a much lower level. Nevertheless, these schemes remain important and their significance is underlined by the prospect of an EEC classification scheme for beef and, possibly, one for sheep. The Government and Commission believe that the development of British schemes should make a positive contribution to the introduction of any EEC schemes.
There has been one further development since 1975 which should perhaps be mentioned. Consultation with the industry is of paramount importance to the success of the Commission's activities. The consultative committees provided for in the Agriculture Act 1967 failed to meet this need satisfactorily. Following a review, they were replaced by a system for direct consultation of organisations representing the production and distribution sector of the industry. The Consumer's Committee was, however, retained. As part of these changes a widely-based Industry Forum was set up, which is now the body which the Commission customarily consults on matters of interest to the industry.
My Lords, the Commission's report for the year ending 31st March 1978, which was laid before Parliament, shows in considerable detail the wide range of the Commission's activities. For this reason I do not propose to dwell on them further. I would like, however, to commend the chairman and the other commissioners on the way in which they have discharged their statutory duties.
I now turn to the crucial issue of the Commission's financial position. Like everyone else, it is beset by inflationary pressures which place a severe strain on its resources. During recent months it has accordingly made a rigorous examination of its level of expenditure on levy-funded activities and has made a number of cuts in its budget for the financial year 1978/79. Despite this, it is estimated that there will be a deficit for the year of some £450,000. It has further estimated that in default of increased levy income it will incur deficits of £530,000 1452 in 1979/80 and of £850,000 in 1980/81, making a total of £1,830,000. These deficits must be met by increased income from levies; the present state of affairs obviously cannot be allowed to continue.
The Commission therefore proposed to raise the levies as follows. Under the draft order now before the House, the levy on sheep would be increased from 8p to 16p and half of the revenue from this increase would go for meat promotion. The levy on cattle will be increased under existing statutory powers from 78p to the statutory maximum of 90p—a rise of 12p. In addition, the Commission intends to raise the pig levy by 8p for meat promotion purposes. The increase on pigs can, like that on cattle, be contained within the existing statutory maximum.
My Lords, it may be asked why the sheep sector should be the only one to bear an increase in the maximum rate of levy. The reason is that over recent years much more levy money has been spent on the sheep industry than the sheep levy income has contributed. This step should restore the balance between the sectors, which I hope your Lordships will agree is reasonable.
These proposed increases, and indeed the level of the Commission's levy-funded activities, have been the subject of very thorough consultation with the industry during recent months. There is a wide measure of agreement on the proposed increases to cover expenditure on meat promotion. There has, however, been criticism from some sectors of the industry both on the general level of the Commission's activities and on the size of the proposed increase on the maximum rate for sheep. The Government appreciate the force of these criticisms, coming as they do from sectors of the industry who are themselves under economic pressure, but believe it is essential that the Commission should be given the means to get its financial resources back into equilibrium. The search for economies will continue, and I welcome the Commission's resolve in this matter.
I turn now to the other new provision in the levy scheme: the proposal to extend the levy to exports of live animals. Quite simply, this is being introduced because 1453 the Commission and the industry believe that exporters who benefit from the Commission's various services in much the same way as do those engaged exclusively in the home market should bear the levy on an equal basis. So this is a measure to restore equity in the raising of revenue from the industry.
There is one exception to this provision. Exporters of dairy cattle intended for breeding do not benefit from the work of the Commission and it would be inequitable for them to bear the levy. For practicality of administration it is proposed that the exemption should apply to all pure-bred breeding cattle. It will not, however, apply to breeding pigs and sheep, whose breeders benefit extensively from the work of the Commission. Exporters of livestock may regard this levy as something of a disincentive, but I think that it should be placed in proper perspective. The levy will represent a tiny fraction of the value of the animal. A charge of the order proposed is not unreasonable, bearing in mind the desirability of treating all trade on an equitable basis.
It is understandable that in a period of economic difficulty for the meat and livestock industry—who, after all, are the Commission's paymasters—there should be considerable pressure on the Commission to reduce its level of expenditure substantially. But I believe all sectors of the industry recognise that such a body is required and that it must have the resources needed to do its job. I believe also that the Commission is very conscious of the need for economy, consistent with an adequate level of services. This order will enable it to recover its financial balance, so to speak, and thus enable it to continue its task of promoting the efficiency of the meat and livestock industry in this country. I beg to move.

§ Lord LYELL
My Lords, before we comment on this order, I believe that this is the first occasion on which the noble Lord, Lord Leonard, has made a contribution of some length from the Dispatch 1454 Box, and for that reason I should like to congratulate him on the very clear way in which he has gone through the order. As he has pointed out to us, this is a very complicated matter. Expert help has just arrived in the form of the noble Lord the Leader of the House, but it is most interesting that the noble Lord, Lord Leonard, had no need of that special help on his first solo flight.
All of us on these Benches would wish to thank the noble Lord for his very full explanation of this rather complicated order and especially for the reasons for which it is required. It appears that the level of the maximum amount of levy is the result, as he has pointed out, of long negotiations between the industry and the Commission and, from what I have understood, those negotiations have been fruitful, although at some stages they have become quite harsh. Nevertheless, it seems that they have been concluded amicably. For my part, I must add that I have a minute interest in the workings of this order, in that I am, when away from your Lordships' House, a livestock producer. Also, I note that the Commission carries out very valuable work in researching market trends and especially in promoting the sale of meat. For that reason I think that the nation must be grateful for the boost to the agricultural industry which is given by the committee.
As the noble Lord, Lord Leonard, has pointed out, the change in the maximum permitted levy will, first of all, affect sheep; but it will also affect livestock which are being exported. I should think that the case for such an increase could not be dismissed as unjustifiable. The Commission has compromised with the producers and, for that reason, we would consider the provisions of the order are, so far as possible, fair. For that reason we give it out support.

§ Lord BALERNO
My Lords, may I, as a superannuated livestock producer, make a few comments about what we have heard. I think that we have not been given a sufficiently proper picture of the industry to which the order applies. One would not have gathered from the Government's statement that the estimate of the turnover for the British meat industry for the current year is £5,000 million. That is 1455 quite a considerable sum of money by any standards. The meat industry is the biggest sector of the food industry in Britain. Of this levy, which is expected to yield approximately £6 million, £3.5 million will go for the organisation of the industry, the grading of the meat and for research and development. I repeat, £3.5 million for an industry with a turnover of £5,000 million. It is a ridiculously small amount. There is not the slightest need to apologise for any increase. In fact I would rather criticise the powers-that-be for not having applied for this sooner, in view of the deficit which has been piling up.
I wish to make two points. The first concerns meat promotion to which £2.5 million of the levy will go. I wish to give an example. Anyone who has examined the pig industry in this country—particularly the bacon industry—realises that the bacon industry produces every bit as high a quality as our old competitor Denmark. There used to be a substantial difference between the quality of Danish bacon and the lower quality of British bacon. That has all disappeared. However, what remains is a big price differential and that cannot be put right without more being given to the promotion of British bacon and that is one thing that the levy will do.
Secondly, I should like to make a point regarding research and development. The Meat Research Institute is the last of the major agricultural institutes to be set up. It took steady agitation, starting from the end of the last war, with Government after Government to get anything done about it. One of the pleas was that there was no money available for the purpose. But, as the noble Lord, Lord Peart, will well remember—because he was responsible for the Agriculture (Miscellaneous Provisions) Bill—the funding of the Meat Research Institute was to be included in the levy on the Meat and Livestock Commission. Therefore, it had responsibility for raising money for the Meat Research Institute; the funds for other agricultural research institutes are to a very great extent raised by the taxpayer.
What I find somewhat depressing is that the Meat Research Institute, which is administered by the Agricultural Research Council, was funded for 1977–78 at £290,000 and for 1978–79 is funded for 1456 precisely the same sum. I point out to the noble Lord, Lord Leonard, that there is not the slightest need for him to apologise for any increase in the levy, therefore necessitating the order. On the contrary, I should be inclined to criticise the powers-that-be—and by that I do not mean only the Government—for failing to bring in the order sooner and for failing to make it for a larger sum than has been put forward.

§ Lord LEONARD
My Lords, I am very pleased to hear the compliments which have been paid to me by the noble Lord, Lord Lyell, and I am thankful to him and have noted the points which he has made. I have also listened to the noble Lord, Lord Balerno, and it gives me great pleasure to know that he supports the increase.
As the noble Lord, Lord Lyell, has said, I have behind me a very big gun from the agricultural world. I did not want to be like the inspector who went to Wales on an agricultural visit, and who looked at the cows in the field and asked the farmer, "What are those cows without horns in the other field?" "Well", he answered, "They are horses".
Being a city dweller, I am not too well versed in the agricultural world. Nevertheless, as I indicated in my opening remarks, in common with everyone else, the Commission is faced with inflationary pressure on its finances. These new levy rates which it proposes to introduce next month are, in its estimation, the minimum necessary to combat that pressure. Neither the Commission nor anyone else can foretell how long these rates will last, but the support which has been expressed today for the Commission and for the order will, I am sure, be an encouragement to the Commission and its staff as they seek to maintain a high standard of service to our meat and livestock industry.