HL Deb 20 December 1984 vol 458 cc749-56

12.40 p.m.

Lord Belstead rose to move, That the draft regulations laid before the House on 29th November be approved. [4th Report from the Joint Committee.]

The noble Lord said, My Lords, these regulations, which apply throughout the United Kingdom, consolidate with amendments the Hill Livestock (Compensatory Allowances) Regulations 1979 and give effect to the decisions on livestock compensatory allowances in the newly-extended less favoured area which my right honourable friend announced in answer to a written Parliamentary Question on 29th November.

Your Lordships are familiar with the system of headage payments on cattle and sheep kept on eligible land in the less favoured areas throughout the United Kingdom which has its earliest origins in the Hill Farming Act 1946. Your Lordships will also recall that in February of this year the Council of Ministers of the European Community accepted the case we had put forward for an extension of the less favoured area in the United Kingdom, thereby adding 1.2 million hectares to the United Kingdom's less favoured area and bringing the total area of land so designated to 9.8 million hectares. This fulfilled our long-standing objective to improve the position in what we call the marginal areas. In anticipation of this decision my right honourable friend had already made clear that, once the Community had approved the extension, he would introduce livestock compensatory allowances in the newly-added area.

The regulations laid before the House at the end of November follow a review this autumn of the economic conditions of farming in the hills and uplands. They change the definition of eligible land so as to distinguish the original less favoured area which is defined as "severely disadvantaged" and the recently added marginal area, which is defined as "disadvantaged". This paves the way for different rates of allowances in the two areas and different financial and stock ceilings. The consolidated regulations maintain the existing rates of headage payment in the original less favoured area of £44.50 per cow, £6.25 per hardy ewe in a specially qualified flock and £4.25 for other ewes. They also perpetuate the existing overall financial ceiling of£60 per hectare of land available for the herd or flock and the stocking limit of six ewes per hectare. The compensatory allowances in the existing less favoured area are paid on nearly 900,000 hill cows in the United Kingdom and some 9½million hill and upland sheep. I must make it clear to your Lordships that these moneys contribute a very significant proportion of net farm income in those areas—usually over half in the case of sheep farms. The substantial injection of funds implied reflects the importance the Government attach to the well-being of hill farming.

In the newly-added areas which are less disadvantaged than the original areas allowances are to be paid at lower rates; namely, £22.25 per cow and £2.12 per eligible ewe. That is almost exactly, to a penny or two, 50 per cent. We do not propose to make payments at a higher rate on sheep in the newly-added areas because the higher rate in the original area is for the particularly hardy breeds that are kept on especially difficult land like the high hills. My right honourable friend made clear last year that he had in mind compensatory allowances in the marginal areas at about half the level in the existing area and, having carefully reviewed the position this autumn in the two areas, we have kept to this approach. We might have adjusted the financial ceiling per hectare in the newly-added area on a proportionate basis and kept the same stocking maximum. But we thought that would be inappropriate since land in the newly-added area can reasonably take a higher level of stocking. We therefore set the financial ceiling at £45 per hectare in the new less favoured area and the stocking maximum at nine instead of six ewes per hectare. These levels, in our view, take full account of the need to discourage over-stocking while recognisng the higher carrying capacity of the marginal land.

In addition, the consolidated regulations set out the method of calculating payments where holdings run across the boundary between old and new less favoured areas. They also carry forward the existing safeguard which requires eligible flocks and herds to be maintained and managed in accordance with sound husbandry practice. In case any of your Lordships are concerned about a risk of over-stocking, I should add that the statutory rules governing the payment of compensatory allowances do provide a strong deterrent against this. The allowances are payable only on the number of animals that the land can carry without over-grazing. If local problems emerge, the Ministry's advisory service will investigate the circumstances and, where appropriate, allowances will not be paid on the extra stock concerned.

The new payments on compensatory allowances in the marginal areas imply new expenditure of some £4 to £5 million a year in the United Kingdom. This will be a very helpful injection of money in the marginal area, where farm incomes are generally not high and circumstances may be quite difficult. My right honourable friend is making these funds available without offsetting reductions being required in the original less favoured area. I recognise that farmers in the original areas had hoped for an increase in allowances, but in this time of financial constraint I think it is a considerable achievement to have maintained existing rates in the old less favoured area and, in addition, introduced totally new payments in the extended area. This highly satisfactory outcome is also the end of a long history of negotiations in the European Community to give the marginal areas the less favoured area status and action deriving from that success. I beg to move.

Moved, That the draft regulations laid before the House on 29th November be approved.—(Lord Belstead.)

Lord John-Mackie

My Lords, the noble Lord is having a busy morning, and I should not like to hinder him too long. He has given us a very clear explanation of the regulations, but I wonder whether a hardworking hill farmer would understand the appalling official language in the regulations. Had there been more time, I should have entertained your Lordships by quoting a few passages which I cannot understand—and I have experience of reading such documents. I hope that the noble Lord and his colleagues in the Ministry of Agriculture will see that there is an explanatory leaflet that a farmer can understand concerning what he can do, when he can do it, and so on.

Reading through the document quickly to begin with, when I came to the top of page 9 I thought, "Heavens above! This will not be paid to a pensioner". I then read it a little more closely, and I found that it means that a pensioner does not have to sign the document for five years. I should not like to be the official who tells a pensioner filling in a form, "You don't need to sign it because you will be dead within the five years". That is slightly tactless. I wonder whether the noble Lord would have a look at that paragraph.

Having criticised the physical nature of the regulations, I should like to ask the Minister a couple of questions on the regulations themselves. First, I note that they come into effect on 1st January. Is that the official payment date? He will recall how long people had to wait for payment last year. If I remember rightly, he said that the payments amount to over 50 per cent. of the net farm income in these areas. If the payments are not made promptly, there is a tremendous effect on rural communities in these hill areas. I hope that the Minister can tell us the date when the payments will be due and assure us that they will be made promptly. We definitely welcome the fact that it is going to be paid to these extended areas, even though it is at a reduced rate, as he said—practically within a penny of 50 per cent.

The second question that I should ask the Minister—and he made some reference to it—is: would he not have thought that there was a case for an increase in the hill cow rate? Hill cow farming in these areas has not been very profitable in the past. I believe the numbers are falling. Although we have a situation where there is a surplus of beef, mainly I think caused by the cull cow situation, it would be a pity if our true beef herds from these areas fell because of lack of profitability. If I may say so, in the less favoured areas, where probably more capital expenditure goes on than in the true hill sheep areas, hill farming areas, the capital grant reductions that there are (most of them up to 50 per cent.), would affect incomes there as well. I should like to ask the Minister whether they have given this the consideration I think it deserves. That is all I propose to say. Naturally we welcome the set-up. I should just again put in a plea for prompt payment of these moneys.

12.51 p.m.

Lord Sandford

My Lords, I listened with interest to what my noble friend had to say in explaining this statutory instrument to your Lordships, but I listened in vain for what I hoped to hear, which was some response in the context of this statutory instrument which, after all, as well as dealing with the new marginal areas also consolidates all the material that bears on the payment of hill livestock compensatory allowances under the less favoured areas Directive.

I was hoping to hear some response from Her Majesty's Government to the strictures—the rather critical strictures—which we found ourselves having to make in this report from the Select Committee on European Communities on agriculture and the environment. That was a report which was issued in the summer, in June, and debated in your Lordships' House a few months back.

That report was focused on the Directive under which these payments are made. The reason is this Directive makes it clear that the kind of farming for which these compensatory allowances are paid is, to read the words of our first article of this Directive: In order to ensure the continuation of farming, thereby maintaining a minimum population level or conserving the countryside. Further on, in Article 3 of the basic Directive, it says: The less favoured farming areas shall include mountain areas in which farming is necessary to protect the countryside and other areas where the maintenance of a minimum population or the conservation of the countryside are not assured. So it is the whole basis of this Directive and the payments authorised to be made under them, that the kind of farming which ought to be encouraged is farming which is not only profitable and productive but farming which has the effect of helping to conserve the countryside, maintain the populations and sustain the local economy. That is the kind of farming which this is designed to support.

The strictures in this report of your Lordships' House were that neither MAFF nor the Department of the Environment, whose responsibility the conservation of the countryside is, were being strenuous enough, imaginative enough or effective enough in making their two policies mesh together properly for that very desirable purpose. It is disappointing not to hear anything so far—perhaps we shall hear something in a moment—from my noble friend about how that is going to be done better in the future.

I should have thought that in introducing new marginal areas, as from March or February this year, giving effect to them in December, having received this report during the summer and hearing what your Lordships had to say about it, there would by now be some signs—when it came to introduce new grants and consolidate the whole thing—that some indication would he given by my noble friend in this matter.

I may say my criticisms are somewhat muted today because, no doubt at my noble friend's instigation, the chief surveyor at the Ministry has sent me a very nice Christmas card and included a lovely map showing the new areas. I find that all very disarming and it has disarmed me to some extent. However, I think these questions remain to be asked.

As an illustration of just how important these payments are, not only to the farmers but to the areas in which they are made, I just want to make your Lordships aware of studies which were completed in January of this year, being first started back in 1980, conducted by no less a person than the previous chief surveyor of the Ministry of Agriculture, into what are the relative effects of all the forms of financial assistance in the various areas to which they are applied.

One of these areas which was particularly studied was the Radnor district in Mid-Wales. I will not go into all the details. What this shows very clearly is that something over 80 per cent. of all the financial assistance going into an area like that goes in the form of aids to hill farmers, chiefly in the form of these compensatory allowances. Eighty-two per cent. of all financial assistance—that is everything done by the Development Board for Rural Wales, everything done by the Welsh Tourist Board, everything done by the county council, everything done by the district councils, everything done in any other way—82 per cent. of all that assistance goes in the form of these allowances. That is very significant.

The other significant factor is that something approaching half the farmers' income comes in the form of these compensatory allowances. So it certainly cannot be withdrawn or reduced; nothing I am saying is arguing for that. What I am arguing is that in making this very substantial contribution—or what is supposed to be a substantial contribution—to farmers for the conservation of the countryside and the maintenance of the population, more thought should be given, than has so far been vouchsafed by my noble friend, to the way in which the purely farm production policy meshes with conservation and rural development. I hope that my noble friend might be able to say a little bit more about that.

Lord Belstead

My Lords, I am grateful to the noble Lord, Lord John-Mackie, and my noble friend Lord Sandford for speaking on this important order. It is an important order for the reasons which were given in the very last words of my noble friend Lord Sandford because it represents a very considerable amount of the income of farmers in the high hills. Nobody would know this better than the noble Lord, Lord John-Mackie, from his ministerial experience and indeed from his knowledge of the hills and uplands North of the Border. I am sorry that the noble Lord found the explanation of these headage payments complicated. This is where the importance of having a good advisory service in this country comes into play. Of course, as the noble Lord will remember we do have the area offices as well as the divisional offices and the regional offices.

One of the most encouraging things in the year that we are now leaving is that the new Director General of ADAS has put forward a very constructive report, on which no decisions have yet been taken but which I hope is going to be a firm basis for ADAS facing the future years.

The noble Lord asked me two specific questions. The first one was this. This order comes into effect on 1st January and the noble Lord. Lord John-Mackie, asked "When are the payments made?" The bulk of the payments made under these headage payments come in the first quarter of the New Year. Again, as the noble Lord will very well remember, this is of considerable importance to the farmers concerned. Incidentally, I should just seize the opportunity to say that claimants for these allowances are shortly going to be sent to all those who received a payment in 1984 and all who have since registered new eligible land. Anyone who has not received a claim form by 6th January, who considers that he is eligible for allowances, ought to contact his local office.

The second point made by the noble Lord, Lord John-Mackie, was that if there is not a case for putting up the allowances generally for the old LFAs, there might nonetheless be a case so far as beef is concerned. I think that I should say to the noble Lord that the decline in the size of the specialist beef herd has now virtually halted. Having said that, nonetheless I agree with the noble Lord that margins have been poor in the beef sector. They continue not to be good. But we believe that producers should be able to look forward to more stable and better balanced conditions once the market has adjusted to the effects of the milk super levy. Incidentally, for those involved in this particular kind of rearing, my right honourable friend, some nine months ago, doubled the suckler cow subsidy. I hope that that has not only been of help specifically to the farmers concerned with suckler cows, but that it may also have helped to bolster the market.

My noble friend Lord Sandford, who kindly gave me notice of the thrust of what he would say, chided me with not saying more about the general protection of the countryside in the high hills and the new marginal areas, particularly in the light of the very important report produced by your Lordships' Select Committee of which my noble friend was a member. I would say to my noble friend that I really think that although this question comes under this particular directive, it is more a debate concerning the capital grants which again will have to be the subject of an order which my right honourable friend will be laying in the new year. When that moment comes, my noble friend will notice that we have, for instance, now proposed to withdraw grants for land reclamation generally. This is, I think, something that my noble friend will approve of. We have also made it clear that we are now considering very seriously assistance for farm diversification when the new grants next year will have to he introduced after the new structures regulations have been agreed.

So, if my noble friend will forgive me saying so, I think that this is a subject for another time and another occasion which will be coming soon. Before giving way to the noble Lord, Lord John-Mackie, I should like to underline what I said in opening because it is relevant. I know that my noble friend is concerned about over-grazing. I underline the fact that the allowances are payable only on the number of animals that the land can carry without over-grazing. Additional constraints are provided by ceilings on the total sum payable per hectare and on the number of sheep per hectare that can attract allowances. If localised problems emerge either as a result of specific representations or by coming to notice during routine inspections and visits, this is a case where the ADAS staff will investigate the circumstances and, where appropriate, allowances will not be paid on the stock concerned; in other words, the excess stock.

Lord John-Mackie

My Lords, the noble Lord said that the subject raised by the noble Lord, Lord Sandford, would be discussed when orders were brought in on the new capital grants. A very important and novel situation will arise when capital grants are used for or biased towards conservation. I hope that we can have an assurance that they will not be discussed at ten o'clock at night or just before a recess.

Lord Sandford

My Lords, if my noble friend will also allow me to intervene, I hope that he will not feel that discussion on capital grants, which is another set of payments made under the less favoured areas directive, is the only appropriate point at which to debate that matter. That is quite wrong. Easily the largest amount of financial support that goes to farmers in the hills—by far and away the largest amount—is in the form of the hill livestock compensatory allowances. Capital payments and the differential rate for capital payments are another factor, though a small one in comparison with the compensatory allowance, that is going all the time. It was those figures that my remarks alluded to.

Both the directive, in the terms that I read out from Articles 1 and 3, and our own legislation, notably the Countryside Act 1968, Section 11, require the Minister in the exercise of his functions—and this is one of them—to have regard to the conservation of the countryside. It is simply not appropriate for these—this is what our Select Committee report was all about—to be paid to farmers without regard to those factors. That is all.

Lord Belstead

My Lords, I have one final word. My noble friend will have noticed in his travels, I am sure, that there are really only two forms of farming that you can go in for in the high hills—either sheep or beef. It is no good my noble friend chiding me for trying to produce some other kind of farming that he has not specified. The fact is that this order deals with headage payments for sheep and for beef, but the headage payments are very closely hedged around with safeguards so far as overstocking is concerned. It is particularly because my noble friend is in the Chamber today that I have gone into some detail about it; and that is the case.

Where my noble friend has, if I may say so, a point is when he says that the Government ought to look a little wider. In that respect I had hoped that I had tried to be helpful to my noble friend by saying that although it does not arise under these regulations. I believe that, so far as capital grants are concerned, we can try to move in the direction that my noble friend urges. I gave two examples of the way we are trying to do so. With a final word that the capital grant regulations have been laid and will be debated in the new year, perhaps I may again move that these regulations be now approved.

On Question, Motion agreed to.