HL Deb 21 February 1985 vol 460 cc684-90

3.55 p.m.

Second Reading debate resumed.

Lord John-Mackie

My Lords, the Minister put the case for the Bill very well and we thank him for doing so. He also explained—and we all agree with him—that there was very good reason for action because of the milk surpluses costing the Community an enormous amount of money. Therefore, we thoroughly agree that action had to be taken.

However, as the Minister almost admitted, one way and another there has been a considerable amount of uncertainty over this scheme. I need not go into that; it was well aired in another place and, as the Minister has said, account was taken of it in an amendment to the Bill that has now come before this House. We now have the Bill. But I must say that the Bill is still not very definite about how the scheme will work. Like a Bill which we were discussing recently, this Bill contains many powers to enable the Minister to change his mind and make alterations. I can quite understand that that is necessary because much of it is tied to what the Community might do in the future.

However, that does not help farmers to reach a decision, although the Minister has given some figures as to how many farmers have applied to be included in the scheme. I gather that the initial amount available over five years is £50 million. That is probably an estimate and we are not sure whether it is enough. If it is not enough, can the Minister persuade the Treasury to produce some more? There is usually a difficulty there. Is the figure of £130 a year over the five years a final figure, being a total of £650 a cow? Five years is a long time. We do not want inflation to increase, but even with 5 per cent. inflation it does not seem to be a very good deal to divide the £650 over five years.

The Bill will come into force two months after it becomes an Act. I hope that there will be no delay after it has become law. The noble Lord has indicated that his Ministry have all the arrangements in hand. But we can all remember the shambles there was when the quota scheme came into operation, and the alterations that were made and the continual doubts among farmers as to how it would work.

The Minister referred to the number of farmers who have already applied and I believe he said that they had received 1,000 firm applications and that they had been dealt with. As the noble Lord said, it is difficult to visualise how many people will go in for the scheme. Can he give us some idea of how the estimate is made? The noble Lord said that many people have withdrawn and that invitations have been sent out inviting them back again. I wonder if he could help us over how many and the amount of milk that it represents.

The noble Lord mentioned that this Bill was to help the small producers. Does he think that it will apply mainly to small producers and do the Government really want the small producers to go? I cannot think what a small producer will do. He cannot go in for cereals; beef is not very attractive. I think it will be a pity if the Government indicate that they really want small producers to go. The Minister said that we have some ideas as to figures. What is going to happen to all the cows? This is a difficult situation. Are they to be slaughtered? If they are not to be slaughtered they are going to go into milk production elsewhere, producing over the quota if other farmers buy them. If they are slaughtered this will further depress the beef market, which is not particularly good anyway. The repercussions there could be quite bad for beef farmers.

The Minister went into the question of what arrangements they have made about a tenant farmer; he has to get written permission from his landlord. This is a difficult one. It is hard on a tenant who wishes to go out of milk and his landlord says no. I know the Minister made the point that it depended on how much of the fixed equipment for milk production the landlord had provided. He would naturally give him precedence there. But I still think that there are not enough arrangements being made in tenant rights between a landlord and tenant about this and about the question of the quota. We really have an added complication here. I think the Minister said that the CLA would accommodate farmers as best they could, but I do not think that that is enough.

I am sorry to ask the Minister so many questions, but he must admit that this is a major restructuring of the biggest section of our agriculture and will have far-reaching effects for many farmers outside the dairy industry. What many of them are asking is whether fellow farmers in other parts of Europe are being treated the same. I know that rumours are a bad thing to quote but nevertheless we hear rumours that they are getting a much better deal, particularly in Italy. However, in no way would I suggest that we should delay this Bill. It is necessary to get it through as quickly as possible so that the scheme can go on. The Government are committed to the scheme, so the sooner it is on the statute book the better so that farmers can make up their minds.

The Minister went into the question of whether there were enough people likely to go out to top up the quotas of those who had hard cases. I hope that there will be, and he indicated that the calculations were about right. But then he indicated that there would be a future supply of extra quota which would be distributed, I forget at what time. But we still have an enormous surplus of milk, and this scheme of quotas and going out of production is only tackling just over 50 per cent. of it. I forget what the surplus that is left is costing the Community per year, but the Minister needs to be very careful before suggesting that there would be a further topping up of quotas when the situation in two, three or four years' time will be just as bad as it is now. However, I hope the Minister can answer some of these questions, and in the meantime we support the Bill.

4.4 p.m.

Lord Walston

My Lords, I am tempted to take this opportunity to develop an indictment of the Government for having made this Bill necessary at all. I would indict them on grounds of short-sightedness; of having failed to foresee the situation many years ago when it was clear to any of us who studied the matter that this was going to happen and that drastic steps had to be taken; of having agreed with the Commission to the introduction of a barely thought-out scheme leading to many anomalies, many difficulties, and great hardship. In addition to that, I indict them for pinning their faith, as I know they have done and I gather they still do, to the theoretical idea that the way to control surpluses in farming is purely by the price mechanism, and only when that fails does one have to resort to something of this sort.

That is not possible whether it is for milk, whether it is for wheat, for sugar beet, or for any other commodity. The only way in which this can be done is by the system that the Government have now been forced into adopting—the system of quotas—but all I would urge on this particular subject is to accept that and to plan ahead for the future when the surpluses of other commodities become insupportable rather than forcing upon producers of those commodities the hardships, the difficulties and the uncertainties that this rapid action has necessitated.

But that temptation, as you will see, I am forgoing. I will not follow through that indictment, much as I should like to. It is all, if I may coin the phrase, milk under the bridge; whether the milk be milk in butter, or from the mountain, or whether it be dried milk powder.

However, there are one or two questions I should like to ask the Minister with regard to this Bill. The first concerns the matter of the landlord and tenant situation, which the noble Lord, Lord John-Mackie, raised. It really is deplorable that it has been impossible to get agreement between landlords and tenants in this matter. I fully realise the interest that both parties have in this; interests which in some cases are almost entirely on the side of the producer and in others far more evenly spread, but I hope that the Government are continuing to try to get some agreement between landlords and tenants in this matter so that those who wish to give up milk production and gain the advantages from this scheme will not be in future prevented from so doing because they have failed to obtain their landlord's permission.

The other point about which I should be grateful to the Minister if he could give us some indication is the allocation of the additional quotas. He mentioned it briefly. Will the Ministry be guided in allocating quotas to give the increased quotas, so far as possible, to those where the hardship is greatest? If so, how will they assess the actual hardship? Will they give them only on the grounds of the size of the herd, as appeared probable from what the Minister was saying?

Will they be guided in any way by regional considerations so as to keep a reasonable supply of milk in all the regions of the country rather than letting one area be completely denuded and allowing other areas to stay roughly as they are? Or will they be guided by principles laid down in the Treaty of Rome, for instance, or rather the common agricultural policy? The commodity in question—milk in this case—should be produced in those areas which are most suited to it; in other words, in the West Country and in certain other parts of the United Kingdom at the expense of other areas. If he can tell us what sort of guidelines his Ministry is following in this, it would be of great interest.

Having said that, I shall do no more than echo the noble Lord, Lord John-Mackie, and say that, given these circumstances, which should never have arisen but which have arisen, this Bill is the best way out of a pretty shabby little mess, and we therefore support it and hope that it will get on to the statute book as soon as possible.

Lord Belstead

My Lords, I am grateful to both noble Lords for their support of the Bill, but there is one point I should like to take up from the remarks made by the noble Lord, Lord Walston, because I think it is important. I know that the noble Lord, the Government, the Opposition Front Bench, the noble Lord, Lord John-Mackie, and other noble Lords in the House realise, and that we all accept, that something needed to be done about the milk situation. I gave a really astounding figure at the beginning of my Second Reading speech, saying that support for the milk market in Europe last March was costing £10 million a day. The total support for the year for the milk market in Europe was over £3 billion, rising towards £4 billion. The whole thing had become unsustainable.

If I may, I will pick up what the noble Lord said. The noble Lord took the British Government to task for not having seen this coming. I would only say that Ministers of Agriculture of both the Labour and Conservative Parties have drawn attention in the European Community to the dangers of the ever-escalating price of the common agricultural policy. The noble Lord, Lord Walston, said, on the one hand, that it was the fault of the Government for running into the great difficulties which milk quotas have caused, but, on the other hand, the noble Lord criticised the present Government for saying that we thought that through the price mechanism surpluses could be alleviated. I would only say to the noble Lord, with all his experience of agriculture, that if surpluses are not tackled either through some form of quota arrangement or through the price mechanism it is difficult to know in which other direction to go.

I would add to that, and repeat, that what we did consistently over a period of years was that many British Ministers of Agriculture drew forcefully to the attention of our Community colleagues the fact that unless something was done about the price mechanism we would inevitably reach a situation in which something else would have to be done which would hurt even more.

Lord Walston

My Lords, of course Governments of both complexions realised this. My complaint is twofold: that they were not sufficiently forceful to be able to carry their colleagues with them, and that they were not sufficiently thoughtful to put forward practical systems for quota restrictions many years ago—three, four or five years, even, before the noble Lord and his friends were there—so that this situation could never have arisen. My fear is that they are following the same ineffectual path with other commodities.

Lord Belstead

My Lords. I should be foolish if I did not listen to what the noble Lord says—and, indeed, I do. The noble Lord has long experience. But I would make two points by way of rejoinder. One is that I cannot help but reflect on the outvoting of the then Minister of Agriculture some two years ago when my right honourable friend Mr. Walker tried to use the Luxembourg compromise. It came to that, and it was a question of being outvoted. Then, to try to be more constructive in reply to the noble Lord, Lord Walston, in thinking of the future the present Government have used not only their best endeavours but their negotiating skills to get the Ministers in the Community to map out a firm financial plan for the future. We must now try to see that we stick to it.

After that brief exchange, I shall briefly try to reply to the questions which noble Lords have put to me. The noble Lord, Lord John-Mackie, asked me whether the £50 million was enough. In particular, the noble Lord said that it is spread over several years and that that, with inflation and other things, makes it less attractive. The £650 per cow, which is what it comes to—judging by the level of acceptances we are receiving from people who want to go out and make their quota available for people who want to stay in—shows that we have pitched it about right. Secondly, on the instalments point, this is the way in which payments have been made in the past. I am thinking in particular of the non-marketing of milk premium scheme and other schemes which the noble Lord will probably remember better than I do. Instalments can help with income tax liability, and it made it the more possible to make the £50 million available. It would have been the less easy to have found such a large sum in one year and in one year only.

I attach to that reply an important point which arises from another of the questions asked by the noble Lord, Lord John-Mackie. The noble Lord asked whether the Government really want to see the smaller farmer go out. I cannot emphasise too strongly that the beneficiaries of this scheme will be, first and foremost, the up-to-40-cows small producer who it is our firm intention should be brought back up to the 1983 level of production. Incidentally, the noble Lord, Lord Walston, was talking about regions. It is interesting that whereas farmers in Wales who have been particularly hard hit are offering only some 12 per cent. of quota, Wales will benefit to the tune of about 25 per cent. of the beneficiaries under the scheme.

When we asked the applicants whether, having made their original applications, they were really serious in wanting to go out and claim the money under the scheme, after a great deal of thought we decided that the only equitable thing to do was to start by asking first the smallest producers who had said that they wanted to go out. We did that. No pressure was brought to bear on them; they were simply asked whether it was their wish. Then we moved up through the applicants until at last we came to the largest applicants.

Lord Walston

My Lords, I have one short question about the payment which is being made to the farmers. What happens if a farmer dies during the intervening period? Will payment cease because it is personal to him, or will it be part of his estate and continue to be paid to whoever succeeds?

Lord Belstead

My Lords, I think the answer to that question is that it is part of his estate, but if I have that answer wrong I hope that I will receive some more advice before we finish, which may not be many minutes hence, so that I may be able to put it right. But I think that is the correct answer.

I should like quickly to answer one more question asked by the noble Lord, Lord John-Mackie. He quite rightly drew attention to the effect on the beef market, but not quite so accurately, with respect to the noble Lord in that he was not quite as optimistic as he might have been. The fact is that, although there has been an increase in slaughtering, producers of certified cattle have received over 98 per cent. of target price in the marketing year to date, and recently there has been 100 per cent. of target price. We have done our best to improve the beef market by more substantial intervention arrangements based on the carcase classification grid and by variable premium payments of from £2 to £3 million a week; and, of course, the suckler cow premium was doubled. Although I take the noble Lord's point that one has to keep a close eye on this, nonetheless I think things have been rather better than the noble Lord indicated.

The noble Lord, Lord Walston, particularly asked about tenants. The one thing that I ought to say to the noble Lord in reply is that, despite the fact that it has not been possible so far to say other than that the tenant in England and Wales must have permission of the landlord, it is interesting that, taking the percentage of tenants in Scotland who have said that they want to avail themselves of the outgoers' scheme as outgoers and the percentage of tenants who have their landlords' permission in England and Wales and have been able to say with permission that they want to avail themselves of the scheme as outgoers, the uptake has been only 8 per cent. less in England and Wales than the uptake in Scotland. I believe that it has not been working out too badly.

Finally, the noble Lord asked me about the reallocations of quota by size, by hardship and by region. So far as exceptional hardship is concerned, all producers will be given their full award which they have been awarded by the tribunal; and may I at this point say how exceedingly grateful the Government are to the noble Lord, Lord Grantchester, who has been chairman of the Dairy Quotas Tribunal and who has done really marvellous work together with all the tribunal members.

On small producers, there will be no differentiation by region, but the net effect, I am advised, will be to move some quota, we believe, from the eastern parts of England over to the west into Wales. I feel that this will be a welcome effect of the working of the scheme. I think that those are the answers to all the questions I have been asked. I hope your Lordships will agree that the Bill be read a second time.

Lord John-Mackie

My Lords, the important question, I think, was the last one I asked about future allocations. There is still a huge surplus of milk.

Lord Belstead

I am sorry, my Lords; I thought that the noble Lord was labouring under a slight misapprehension. I went out of my way to say that, although the Bill takes legislative power to say that there can be another scheme of this kind in the future, we are not making any provision for another outgoers' scheme.

On Question, Bill read a second time; Committee negatived.