Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1981 (Hansard, 17 December 1981)

§ Lord Sandys
My Lords, I beg to move that the Hill 330 Livestock (Compensatory Allowances) (Amendment) Regulations 1981, a draft of which was laid before your Lordships' House on 1st December 1981, be approved. These regulations, which apply throughout the United Kingdom further amend the Hill Livestock (Compensatory Allowances) Regulations 1979 and give effect to the increase in the hill cow allowance which my right honourable friend announced on 19th November.
Your Lordships will, I am sure, be aware of our long tradition of providing aid to hill livestock farmers in recognition of the special problems they have to face. Under the European Community's Less-Favoured Areas Directive we have continued this aid through annual compensatory allowances on breeding cows and breeding sheep. This is the third year running in which the Government have laid before your Lordships' House proposals for increasing the aid given to hill farmers through these allowances. That, in itself, indicates our commitment to maintaining the confidence of the hill livestock sector even when, as now, there are necessarily severe constraints on the level of public expenditure. It reflects, too, our recognition of the part which hill and upland farmers play in the livestock sector. They provide about 63 per cent. of the specialist beef cow herd, 20 per cent. of the combined beef and dairy herd and 57 per cent. of the national breeding flock. In the production of suckled calves and store lambs for fattening in the lowlands and in the provision of draft ewes to renew the breeding flock their role is fundamental.
But that, important as it is, is not the whole story. Over much of our hills and moorlands livestock rearing on an extensive, rather than an intensive, basis is the only feasible use of the land apart from forestry. The presence of hill farmers is, indeed, vital to the economic, social and environmental well being of these areas. And, as many hill areas are in our national parks, townsmen as well as countrymen have a stake in their future. This wider role of hill farmers is something which we should never forget.
The recent economic history of this sector is that following two satisfactory years in 1977–78 and 1778–79, net incomes began to decline sharply. This Government, in the autumn of 1979, therefore increased compensatory allowances by the highest amount ever. Last year there was some improvement in incomes but it was considered necessary to make further increases. This year's review has revealed a further and quite significant improvement, partly as a result of the increases in the compensatory allowances themselves. But incomes are still substantially below the level of the late 1970s in real terms. This, of course, reflects in part the difficulties being experienced by the economy as a whole.
The position on hill sheep shows the numbers of breeding ewes are still rising and although severe storms in certain areas last April caused difficulties for some hill farmers, the winter weather picture overall was good, with consequent benefit to lambing. The considerable benefits of the sheepmeat regime are now being felt in the hills by way of better store market prices and (more directly) payments of the annual sheep premium. Those hill farmers who are able to fatten some of their lambs before selling them are also being helped through the variable premium. Overall, therefore, the position of the hill sheep sector 331 offers particular encouragement, and we have decided not to alter the higher and lower rates of hill sheep allowance from their present levels of £6.25 and £4.25 respectively.
The situation with hill cows is somewhat less encouraging. Numbers overall in the United Kingdom are continuing to decline, although at a lower rate, and we have decided that a further increase in the rate of compensatory allowance is called for. The regulations now before your Lordships' House, therefore, provide for the rate for hill cows to go up by £2, from £42.50 to £44.50. This increase, which will be paid from 1st January next, will be worth some £1.8 million. It will mean that hill farmers will stand to receive, with the suckler cow premium, a total of £56.87 on each cow. This represents an increase of 96 per cent. on the amount of aid per cow paid in 1979. The total level of aid on hill livestock compensatory allowances and suckler cow premium in 1982 will be some £101 million.
No one can underestimate the difficulties which the economy as a whole is presently experiencing and I know that farmers, like all those in industry, are worried about high interest rates and input costs. But the amount of assistance which is now being given to hill livestock farmers in the form of hill livestock allowances, suckler cow premium and sheep annual premium bears testimony to the Government's determination to ensure that hill and upland farming remains in good heart. This determination is, I think, well understood by the industry and there has been a general welcome for the increase given effect in these regulations. My Lords, I beg to move.

§ Lord Bishopston
My Lords, I am sure that we are grateful to the noble Lord, Lord Sandys, for explaining the order in the way in which he has. We welcome the help given in the order. The noble Lord said that the increase is indicative of the Government's commitment to maintain the confidence of the hill livestock sector when there are constraints on public expenditure. That may, of course, be true, but the Government should also recognise that the farming industry itself is facing Government restraints in other directions, which makes its task of increasing food production much more difficult, unless, of course, it has adequate Government support.
The help of course is welcome, but the industry thinks that it does not go far enough, for there is to be no increase in sheep allowances, nor for hill ewes or for other types of ewe or, indeed, for the categories mentioned in the 1979 regulations, to which the order makes reference. There is, of course, greater need for an increase in the hill cow allowance and for more for sheep too. There is need for more help for the farmers in the less-favoured areas, because the climate and the production difficulties there are a real problem. The importance of the hill farmer is shown by the figures given by the noble Lord. The hill and upland farming sector has 63 per cent. of the specialist beef cow herd—this, incidentally, is a slight increase above the 60 per cent. of last year—and 20 per cent. of the 332 combined beef and dairy herd. The breeding flock has hill sheep representing 57 per cent. of the total. In addition, the importance of the hill and upland use by farmers is indicated by the fact that such areas are vital not only for the production of food but also socially and environmentally, too, because the alternative productive use of this land is very limited indeed.
Aid is available through the less favoured area directive—the LFA—of the EEC, and this is appreciated, but as the noble Lord may know there has for some time been some discontent by those outside the less favoured areas and who do not benefit as much or at all. It would be helpful if the Minister would say whether the Ministry is reviewing the boundaries of the LFA, which I understand when reviewed need to be endorsed by the EEC itself.
The noble Lord admits that incomes are "substantially below that of the late 1970s in real terms". The industry will hardly think that the limited increase of £2 a head for hill cows will be enough to compensate. Will the noble Lord say what help the Government will give the farmers whose livestock has been affected and indeed depleted by the recent and present snow and storms? It would be helpful to know what aid may be given and also what compensation may be expected. If this is a matter which has not yet engaged the Ministry's attention—although I am sure it has engaged its concern—I wonder whether the noble Lord's right honourable friend will consider the matter urgently.
Could we be told also what other aid is given to the livestock sector through the Community? The total aid given by the Government to the industry may sound impressive as a percentage increase since 1979—and the noble Lord gave these figures—but the question still arises as to whether it is sufficient in view of the difficulties facing the industry, and of course the higher costs and general decline. Finally, as we all know, the British farmer must be able to compete not only in the home market but also within the Community and in export markets too in order to maintain a healthy agriculture. As he knows, and the industry knows so well, the maintenance of confidence is vital to the industry. While we welcome this limited amount of help, I hope that the Minister will bear in mind the general problems facing the industry.

§ Baroness Elliot of Harwood
My Lords, on behalf of hill farmers, I should like to say that we are extremely grateful to the Government for this additional allowance. Of course everybody wants more. I entirely agree with the noble Lord who has just sat down that if we can have more we will take it happily. On the other hand, let us be grateful for what we have been given. It is true that, while most hill farmers have been having two or three extremely bad years, this year has been slightly better. One only hopes that it will continue. On behalf of the many hill farmers, of which I am one, we should like to say to the Government that this is helpful and useful, and we are grateful to them for having arranged this with the EEC as well as with the National Farmers' Union.

§ Lord Sandys
My Lords, we have had a very useful short debate on these regulations. I am grateful both 333 to my noble friend Lady Elliot of Harwood and to the noble Lord, Lord Bishopston, for the support they have given—limited support in Lord Bishopston's case—for the views expressed. A number of points were raised by the noble Lord, Lord Bishopston, and perhaps I may reply to these in a little detail. First, in regard to the effects of the present storms, it is not Government policy to compensate hill farmers for exceptional losses of livestock arising out of the effects of the severe winter weather recently and now being experienced. Such weather is one of the natural hazards of farming. Sympathetic consideration is nevertheless given to farmers who, because of the effects of exceptionally bad weather, have found it difficult to meet the rules on the replacement of breeding animals which are conditional on the payment of hill livestock compensatory allowances. I am sure the noble Lord, Lord Bishopston, and other noble Lords who are interested in this technical matter will be pleased to hear that.
In regard to the question of the LFAs to which the noble Lord referred, the position on assistance to marginal areas is that, following discussions between the NFUs and the Country Landowners Association, it is hoped to submit our proposals to the EEC Commission early in the new year. Extension of the United Kingdom's less favoured areas has to be agreed by the Commission and the Council of Ministers. However, it should be stressed that, in conducting this survey, the Government are not committing themselves to providing extra financial assistance to those areas.
The Government consider that the overall level of aid to the hills and uplands, including the increase which we are now proposing, affords valuable assistance to farmers in those areas. Certainly they are experiencing severe difficulties, as are all sectors of the economy, but I believe your Lordships recognise that in the present circumstances, with severe constraints on public expenditure, the Government's action signals their continuing commitment to the hill livestock sector.