§ 3.9 p.m.
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Lord Belstead) rose to move, That the draft scheme laid before the House on 30th November be approved.
§ The noble Lord said: My Lords, this scheme and the scheme following it on the Order Paper today makes changes in response to the changing needs of agriculture and are designed to make policy savings of about £30 million a year. I should explain that one reason for confining the major changes to the national grant 786 schemes is that current discussions within the European Community about a new farm-structures directive will inevitably lead to changes in the European Community scheme before too long; and amendments to those schemes, therefore, have been kept to a minimum.
§ The package of changes which we are discussing today brings together a number of related aims not only for the improvement of the structure of farm businesses but also for the conservation of our national heritage. The Government believe that, given the will, agriculture is a strong force for the conservation of the countryside, so part of this package gives encouragement to conservation aspects of farming. The other aims of the package are to give additional aid to the glasshouse sector; to simplify the schemes and make them more selective in their operation, while preserving the balance of additional support for less favoured areas; and to achieve the savings necessary to pay for the increased glasshouse assistance and for the eventual introduction of increased support in the marginal areas.
§ If I may, I will speak about both this order and the next one now, since changes in the Agriculture and Horticulture Co-operation Scheme, which I am moving now, are largely consequential upon the Agriculture and Horticulture Grant Scheme, which is the next item on the Order Paper. Inconsidering changes to the coverage of the AHGS, we have reallocated resources between differing sectors of the industry and have aimed to achieve administrative simplicity. The latter thought was uppermost in our minds when it was decided that in future we would grant aid only the external envelope of agricultural buildings, together with any integral dividing walls. This followed the exclusion of plant and equipment because it would be inconsistent to allow in items of equipment under the guise of fixtures and fittings, as this has been a fruitful area for argument in the past under the national scheme, where plant and equipment have not been eligible for some time. Our decision will, I hope, mean a greater simplicity in the administration of the scheme.
§ Land drainage has always been an important element in our capital grant schemes because of its effect in achieving long-term improvement to agricultural land. For this reason we have maintained substantial assistance, though at the reduced rates of 30 per cent. and 60 per cent. in the less favoured areas. There are three other areas of saving in the national scheme which I should like specifically to mention. Grant aid for grain drying and storage where the grain is to be sold off the farm is to be discontinued. Secondly, as I mentioned earlier, agricultural plant and equipment have been ineligible for grant aid under the national scheme for some years; and in the case of mixed holdings it has been difficult to judge whether the plant and equipment used for crop production or harvesting had an application to only the horticultural side of the business. So we have taken the view that plant and machinery ought to be removed totally from the grant schedules, apart from plant and equipment for the preparation for market of horticultural produce and for heating systems for glasshouses, including boilers. Thirdly, the lowland rate for land reclamation and grassland regeneration, introduced to meet a 787 particular set of circumstances, has done its work, we believe, and can now be dispensed with. Thus, this item will remain eligible only in the less favoured areas.
§ An area of clear need which remains protected in these orders is the orchard replanting scheme, which will remain at its initial level of 22½ per cent. As I have said, we have taken the opportunity in these orders to do something for two very worthwhile causes: the heated glasshouse sector and conservation. The Government's election manifesto included a commitment to the glasshouse industry for special help in the form of additional investment aid to encourage the better use of energy in glasshouse heating.
§ The changes brought about by these Statutory Instruments are increased aid for the replacement of heated glasshouses and improvements to existing glasshouses, including thermal insulation and, furthermore, because of the very exceptional circumstances, an increase in the six-year ceiling under the national scheme on the amount of investment which can qualify for grant by about £30,000, where this expenditure is incurred wholly for eligible energy-saving facilities. This additional support, worth about £2 million a year, represents a worthwhile and necessary assistance and I expect that growers will take full advantage of it.
§ As to the co-operation scheme, I would pick out the following for special mention. The Government have accepted the view of the Co-operative Development Board and the organisation Food From Britain that grants for certain non-capital costs incurred by co-operatives are a priority in the co-operation scheme, and we have therefore agreed that an additional £200,000 should be added to the present financial ceiling of £250,000 during each of the next three financial years. I know that the board and its chairman, particularly welcome this increase and I hope that your Lordships will welcome it likewise.
§ At the same time we recognise that there should be some reduction in grant aid for capital items under the co-operation scheme to contribute towards overall savings. The amount of grant currently awarded under the scheme is running at about £4½ million a year, and is I believe indicative of the Government's commitment and continuing high level of support to co-operation. The co-operation order therefore amends the rates of grant specified under the Agricultural and Horticultural Co-operation Scheme in a number of respects, which I shall not detail now. But I shall of course, try to answer any questions which your Lordships may put to me.
§ The other area where these schemes make what I think is a most useful contribution is that of environmental conservation. So we have increased the rates of grant payable in the upland areas for hedges, walls and shelter belts of trees to 60 per cent. of cost, and I hope that these attractive rates will encourage landowners and farmers to establish or improve hedgerows and traditional walling. Another important step has been our decision to put a complete ban on grant aid for hedge removal. For a long time it has been ministry policy for grant aid for hedge removal to extend only to where it was essential for the achievement of an 788 overall investment; for example, a drainage scheme. But now we are ending even this very minor concession, and I can state unequivocally that hedge removal for field drainage will be ineligible under the farm capital grant schemes. That means no grants for hedge removal at all.
§ Finally, I should like to touch on the position of the marginal areas and their future status as less favoured areas. In announcing these present changes, my right honourable friend said that once this change in status had been agreed by the Community the marginal areas would become eligible for less favoured areas rates of capital grants (with the exception of roads, grids and bridges);also, that for planning purposes we had in mind head age payments at about half the present less favoured areas rate, but the actual rates would fall to be determined in the autumn of 1984. We cannot of course move forward without Community agreement. but we trust that this will be forthcoming. In the meantime, I take this opportunity of reiterating our conviction that the marginal areas are most deserving of help and of our pledge to give it. My Lords, I beg to move the first of these orders.
§ Moved, That the draft scheme laid before the House on 30th November be approved.—(Lord Belstead.)
§ 3.19 p.m.
§ Lord John-Mackie
My Lords, the noble Lord, Lord Belstead, has, with his usual clarity, gone fairly closely into the details of this scheme. Although he said that he would be brief, he has done a good job in a very short time and I shall try to do the same. He opened by saying that the alterations in the various grants are, to a certain extent, to move with the times. I think he mentioned the changing scene in agriculture. He also added that they would save money and I think that saving money is what the Government have mostly in mind.
I wonder whether he could help me on the figure of £30 million, which I think is the amount that is to be saved. When the motion for the approval of the scheme was moved in the other place, a figure of £2,256 million for spending on agriculture was given. Does that cover everything? I gather that there is an increase of £437 million. But a figure of £422 million was also given, which the Minister said was not a real figure. It seems to me that £422 million is a very real figure. However, the Minister subtracted it from the £437 million increase, which resulted in the figure of £15 million which he defined. They want to find a further sum of £15 million, making £30 million. Could the Minister tie up these figures a little better than I can?
The Minister has gone into the matter in detail, and I do not want to repeat what he has already said. If the Government believe that it is necessary to save £30 million. I would ask them to place a little more emphasis on the horticultural and glasshouse industry, and on conservation. I would ask them in particular to increase the help they are giving to the upland areas, or to the less favoured areas as they are now called. I hope that the upland areas will take advantage of what is available, because there is a good deal to be done, as the Minister said, about replanting hedges, et cetera.
We welcome the fact that the co-operative section of the schemes will also be helped by an extra £200,000. 789 The Minister emphasised that some of the savings will change the priorities in the grant scheme. The priority today is not to give any help towards fixed equipment for milk, cereals, grain drying and so on, which is probably right. However, if one looks back to the early 1920s and the 1930s, the infrastructure of agriculture was in a terrible state. It continued in that state right throughout the war and for many years after. These grants have greatly improved the infrastructure of agriculture in every way. Our fixed equipment for buildings, roads, drainage, et cetera, is second to none in Europe. It would be a pity if the infrastructure were whittled away too much. I give that warning to the Government, in particular about drainage. I repeat that nothing has helped arable farming—indeed, all farming in this country—more than the help we have received for draining the land. Literally millions of acres still require to be drained. It would be a pity if this effort were to be depressed too greatly. There was a 50 per cent. drainage grant scheme, which rose to 60 to 70 per cent. for the upland areas. First it was reduced to 37½ per cent., and now it is down to 30 per cent. This is bound to depress the effort which people can put into draining their land. I should like to ask the Minister whether a person who began a scheme but who did not apply for a grant before this alteration was made on 1st December will come into the new pricing scheme or whether, if he can prove that he started his scheme in all good faith and hoped to receive the previous grant, he will receive the old grant.
I emphasise again that the Government should not make too harsh cuts, in particular when it comes to fixed equipment for drainage. Perhaps I could mention that the liming grant was reduced quite a long time ago to nothing. It, too, did a great deal for agriculture. Apart from those few points, I welcome both the schemes.
§ Lord Kilmarnock
My Lords, we on these Benches would also like to thank the noble Lord, Lord Belstead, for having so lucidly explained the order. We particularly welcome the effects of the order on hedgerow protection. It is always a difficult balance, as we all know, between agricultural and environmental interests, but this seems to us to be a step in the right direction.
§ Lord Belstead
My Lords, I am grateful to the noble Lord, Lord John-Mackie, and to the noble Lord, Lord Kilmarnock, for indicating their support for these orders and for allowing me to speak to both of them together. My brief answers will be confined entirely to the second of the orders, the national scheme order.
The noble Lord, Lord John-Mackie, asked me about a set of figures which my honourable friend the Minister of State gave in another place on 15th December (col. 1275 of the Official Report) in replying to the brief debate on these same orders. I believe it is fair to say that my honourable friend was, first, giving a total planned expenditure figure of £2,256 million for expenditure on agriculture, fisheries and food. My honourable friend added that that figure represented an increase of £437 million over our previous plans. He went on to make the point that much of that sum is still for intervention board European Community expenditure. At the very end of his remarks—and I believe it was this point that was troubling the noble 790 Lord opposite—my honourable friend explained that £422 million of that figure is met from the FEOGA expenditure of the Community, and therefore is either fully or partly repayable. That is why my honourable friend said that it was not a real figure, because we get either some or all of the money back.
The point I should like to make to the noble Lord, Lord John-Mackie, is that although it is a fact that we are concerned with public expenditure (and, indeed, I invited the noble Lord to make the criticism by saying that there was £30 million of planned policy expenditure in the statutory instruments, and the noble Lord predictably said that he felt savings loomed large in the mind of the Government in bringing these statutory instruments forward) I believe your Lordships would wish to be aware of another aspect.
While those two statutory instruments combined, together with two other statutory instruments which do not have to appear on the Order Paper because they are subject to negative resolution, come to £30 million of planned policy savings, my advice is that the expenditure we shall actually incur in horticulture and agriculture during the current financial year will come out at around £205 million on capital grant expenditure. That will be very much the same as it was last year. Therefore, I ask your Lordships to recognise that even though we have this policy savings intention, the buoyancy of investment on capital grants is remaining. I believe that the noble Lord, Lord John-Mackie, will welcome that because he, with his great experience, pointed at the end of his remarks to certain areas, such as liming and drainage, where he felt it was very important that investment should continue.
So far as drainage is concerned, may I just say that in making the package of grant rate reductions we have had regard to the overall balance and the need to allocate reduced resources to where they will be most beneficial. Perhaps your Lordships are not aware—and I venture to say that because certainly I was not— that in England and Wales about 96 per cent. of drainage grants go to the lowland and marginal areas; and about 40 per cent. of the grant paid is to businesses described as cereals or dairy enterprises.
The importance of field drainage is still recognised, since it will continue to carry a higher rate of grant than other aspects: outside the less favoured areas, 50 per cent. higher than the basic rate of 20 per cent. for buildings and other land works; 40 per cent. in the less favoured areas. That shows that we continue to take the words of the noble Lord, Lord John-Mackie, seriously.
I was grateful for what the noble Lord said about the importance of horticulture. In my opening remarks I omitted to say that the difficulty for so many of our horticulturists, particularly in the glasshouse sector, has been what has amounted to unfair competition from the other side of the North Sea. That is for reasons which I believe we would not wish to go into today, but they derive from very beneficial gas prices on the other side of the North Sea. This element of unfair competition has, we believe, been put right; but the legacy is that the glasshouse people have had a very rough time, and we hope that the increase in this package will be of use to them.
Finally, the noble Lord, Lord John-Mackie, asked me about how the changes will work. I am advised that 791 under the national scheme the changes will apply to expenditure incurred on or after 1st December this year. If a claimant can demonstrate that he or she has incurred expenditure before this date they may be eligible for the old, and usually higher, rates of grant. May I finally say I was grateful to the noble Lord, Lord Kilmarnock, for what he said about the emphasis we have put on trying to do something additionally to help conservation, and let us hope that this may have a beneficial effect.
§ On Question. Motion agreed to.