Lords Sitting of 18 April 1990

Preamble
Reassembling after the Easter Recess, the House met at half-past two of the clock: The CHAIRMAN OF COMMVTTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Peterborough.

The Independent Living Fund
Baroness Fisher of Rednal Baroness Fisher of Rednal asked Her Majesty's Government:
What extra resources have been or will be made available to the Independent Living Fund; and whether such provision has satisfied the trustees.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords., my right honourable friend the Minister of State for Social Security and the Disabled announced on 3rd April that, provided he could reach agreement with the fund's trustees on a sensible limiting of the scope of the fund, a further £8 million would be made available for the current year. This would bring the provision to £32 million for 1990-91, an increase of a third in the current year's allocation and a more than sixfold increase in the resources originally envisaged for the fund. My right honourable friend has had a preliminary discussion with the trustees following this announcement and is now awaiting their considered response.
Baroness Fisher of Rednal: My Lords, I apologise to the House. On the Order Paper my Question should refer to the "Independent Living Fund" and not "Independent Living Foundation". I thank the noble Lord for that Answer. But does he agree that the Government's original estimate of the number of people who would claim from the fund was too low? Am I correct in thinking that the extra amount will mean that the fund will not be suspended, that fresh awards will be possible and that those already receiving help will not be denied it in the future? How long does he think the trustees will need before
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they can let the Government know whether they are satisfied with the amount? They might not want to serve as trustees if they cannot get enough money to satisfy a group of people who are the most vulnerable in society.
Lord Henley: My Lords, I can assure the noble Baroness that existing beneficiaries will continue to receive care. All the trustees have said is that they will have to suspend consideration of new applications as from 9th April. Other than that I can only say that we are awaiting the response of the trustees. As regards the future of the fund, we made clear in our report on disability benefits, The Way Ahead, in January that wider arrangements for care in the community to take effect from April 1991 envisaged care packages devised by local authorities on an individual basis. We would therefore expect people seeking help after that date to be able to look to local authorities. But we recognise that authorities will need time to develop the detailed assessments and complex care packages that will be required. We would therefore not expect them to take on the entire caseload of the ILF in April 1991.
Lord Carter: My Lords, can the noble Lord spell out to the House exactly how the Independent Living Fund is supposed to limit the scope of its awards? Can he say which groups of severely disabled people will lose out as a result of this decision?
Lord Henley: My Lords, I do not think that I can spell out exactly how the trustees can limit the scope of the fund. As I said, we are awaiting their response. As the noble Lord will know, the fund was originally set up partly in recognition of the fact that with our 1988 reforms some severely disabled people would no longer be able to claim the additional requirements payments for domestic support. The fund has never been envisaged as being the only source of income for those who are disabled and might make use of it. There are a range of benefits available within the social security system as well as help from local authorities and health authorities.
Baroness Fisher of Rednal: My Lords, the beneficiaries of the fund are the severely disabled.

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Surely the Government do not want to be seen again as trying to deprive those worst off in the community. I should have thought that a caring government would have wanted to be much more generous than appears to be the case from the answers this afternoon.
Lord Henley: Yes, my Lords. That is why we originally set up the Independent Living Fund and that is why we have expanded the amount of money available to it over the past three years. In the current year it will be something in the order of £24 million. That is why we have offered an extra £8 million to the fund if it can find some way of limiting the scope. The fund was expanding beyond those who were originally covered by the eligibility criteria.
Lord Taylor of Blackburn: My Lords, is it not a fact that the Government originally underestimated the number of people who would be claiming from the fund?
Lord Henley: My Lords, as we have had to increase the amount available from £5 million to £10 million and now to £24 million, that would appear to be the case.
Lord Carter: My Lords, does the noble Lord agree that the amount that the Government are making available is exactly half the amount that the trustees asked for in order for the fund to be able to continue?
Lord Henley: My Lords, we have made an offer of £8 million. That is in addition to £24 million available for this year, which was more than double what was available last year.

MoD Bill Payment System
2.43 p.m.
Lord Ironside Lord Ironside asked Her Majesty's Government:
What alternative arrangements will be made by the Ministry of Defence to make certified payments to small contractors during the installation and commissioning of the new computerised payment system in Liverpool.
The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran): My Lords, we have decided to impose a freeze on our normal bill paying arrangements for a four-week period during October, when the present computer system will be replaced. Special arrangements have been made to ensure that payments are made immediately before and after the freeze period to ensure that any delays are kept to an absolute minimum. Contractors have been given six months' notice of these arrangements to enable them to submit bills earlier than normal.
Lord Ironside: My Lords, I thank my noble friend for that very informative Answer. I hope that all the firms concerned will take note of what he has said. I speak as a member of the Council of the Defence
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Manufacturers Association. I am sure my noble friend recognises the deep concern felt by small firms over this planned four-week stoppage. Is he aware that on a pro rata basis to the MoD yearly spend something like £150 million per week is being put on hold? Can he therefore give the House an undertaking that small firms will not be penalised by this stoppage, which is not of their making?
The Earl of Arran: My Lords, I can tell my noble friend that the Chief of Defence Procurement wrote to the trade associations in both January and February advising them of our plans and giving details of them. They are aimed, so far as is possible, at minimising the effects of the freeze. Further details will be sent to all individual contractors later this month.
As regards the small contractors, because of the number with which we deal and the size and complexity of this conversion task, I cannot give an undertaking that we shall make special arrangements for individual firms who may have special difficulties. However, I can say that, if severe circumstances arise which are considered suitable for re-examination, then that will be the case and they will be treated with sympathy.
Lord Graham of Edmonton: My Lords, can the Minister say how many small contractors are likely to be involved in the problems that he just mentioned? Can he also tell us how long it will be before the installation is finally in place and in running order? Will he bear m mind that such difficulties also arise over a range of economic tendering issues at both central and local government level where other industries are involved? I am thinking especially of the building industry. Small businessmen are put at a disadvantage by having to wait for payment of their bills not just from large contractors but very often from local and central government sources.
The Earl of Arran: My Lords, I cannot give the noble Lord, Lord Graham of Edmonton, the exact number of small contractors who will be affected by these particular circumstances. However, I can say that most contractors will be able to submit bills for payment immediately before the freeze period which begins on 1st October. Contractors will submit their later bills in accordance with a specified timetable during the freeze period. These will be paid on 5th November. The four-weekly cycle will then be restored for all contractors immediately thereafter.
Lord Mellish: My Lords, the Minister will be aware that government are notorious for being very bad payers of bills —and that applies whichever party is in power. Small contractors undertake a job of work and it is inspected; but it is not until it is completely finished and passed that the bills are paid. Why cannot we devise a system which would ensure that if a contractor is doing a job and doing it pretty well he will be paid half-way through the contract for work already completed? Then, when the job is finally completed and inspected, he should be paid the balance straightaway. Such a system would stop this nonsense of holding matters up.
The Earl of Arran: My Lords, I cannot agree with the noble Lord on the point that he makes. Contractors working for the Ministry of Defence normally receive a very speedy and reliable payment service from the Liverpool office. Indeed, I understand that bills are normally paid within one week of receipt. We have done our best to limit the effects of the payment freeze and to maintain an acceptable level of service during this difficult month of conversion.
Baroness Sharpies: My Lords, does my noble friend agree that the problem is perhaps the contractor's fault if he does not pay the sub-contractor quickly?
The Earl of ArranMy Lords, obviously I cannot comment on specific circumstances.
Lord Cledwyn of Penrhos: My Lords, the question which my noble friend Lord Mellish put to the Minister has not been answered. Does not the Ministry of Defence have a system of interim payment for small firms whose cashflows may not be great—indeed, many such firms are on the verge of bankruptcy, although they are very good firms—which could be applied in cases where the work is being properly conducted and confirmed as such by the Ministry's inspectors? Will he deal with the principle of interim payment?
The Earl of Arran: My Lords, I hoped that I had already made clear that if there are circumstances in which it is thought that there is justification for giving sympathetic consideration, especially to small contractors, then such consideration will be given.

Sterling Exchange Rate
2.49 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
When they propose to allow the sterling exchange rate to be determined by market forces.
The Paymaster General (The Earl of Caithness): My Lords, the Government favour a strong exchange rate, although there will inevitably be short-term market fluctuations.
Lord Molloy: My Lords, I thank the noble Earl for that Answer. However, can he say whether the Government will continue with the policy of high interest rates and Bank of England intervention to buck the market; or will they float the pound in order to join the exchange rate mechanism? Can we have a definition as to which of those policies they intend to adopt?
The Earl of Caithness: My Lords, there are more answers to the noble Lord's Question than one might presume at first instance. The exchange rate is a factor that we take into account but there are many others. We would all like to see interest rates come down. I know that the noble Lord will agree with me that inflation is the most important factor to get
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under control and to keep down. As regards the ERM, the Government have made their position very clear. However, as the noble Lord will know, a great deal of our trade is with countries which do not belong to the European Community or the ERM.
Lord Jenkins of Hillhead: My Lords, under Mr. Lawson, the Government were forced to abandon shadowing the deutschmark. While they hover on the brink of the exchange rate mechanism, now into its 12th year, can the noble Earl say whether the Government have an exchange rate policy? If so, will he tell us what it is?
The Earl of Caithness: My Lords, we have an exchange rate policy. We favour a strong exchange rate policy.
Lord Barnett: My Lords, if the Government have an exchange rate policy, would they care to tell us whether interest rates are being kept high because of market forces, because of the need to bring down inflation or because of the need to defend the pound?
The Earl of Caithness: My Lords, as the noble Lord will know from his great experience in these matters, interest rates are high in order to bring down inflation. We have therefore a tight monetary policy as well as a fiscal policy.
Lord Jenkins of Hillhead: My Lords, I am sorry to intervene again. However, in view of what the noble Earl has said, is it because the Government favour a strong exchange rate policy that the pound has weakened by about 10 per cent. in the past few months?
The Earl of Caithness: My Lords, what does the noble Lord mean by "few"? Since the beginning of the year the pound has remained remarkably stable.
Lord Marsh: My Lords, does the noble Earl not agree that, as both parties have discovered when in government, ultimately all exchange rates are determined by the market?
The Earl of Caithness: My Lords, we do want a strong exchange rate. That has been made clear by my right honourable friend the Chancellor of the Exchequer. This affects the domestic money situation.
Lord Stoddart of Swindon: My Lords, is the noble Earl aware that joining the ERM is not a panacea for all our economic ills? Nor will it necessarily affect the value of the pound abroad. Is the Minister further aware, and does he agree, that France, which is within the ERM, has an unemployment rate of 9.5 per cent. whereas in this country the rate is 5.8 per cent.?
The Earl of Caithness: My Lords, I am on exactly the same ground as the noble Lord, Lord Stoddart of Swindon. We have made it abundantly clear that joining the ERM is not a panacea. We have made clear the terms on which we will join. But it is worth noting, as the noble Lord has said, that some

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countries outside the ERM have a much lower unemployment rate and have reduced inflation much more quickly.
Lord Bruce of Donington: My Lords, will the noble Earl accept on behalf of everyone in the House sincere regrets at the untimely death of his noble friend Lord Bruce-Gardyne? During the past 18 months he showed exemplary courage in the face of adversity. He will be missed not only by his own party, but by the whole House.
As regards the various answers which the noble Earl has given, can he explain how it is in the interests of industry that the pound sterling should be artifically maintained at a higher rate than its real competitive rate in the world? Does the Minister really think that maintaining a strong pound—so beloved of the City which does very well out of it —is in the ultimate interest of the exporters of goods from this country and also of the balance of payments?
The Earl of Caithness: My Lords, I am very grateful for what the noble Lord said about my noble friend Lord Bruce-Gardyne. I am sure that all the House will want to be associated with his remarks.
As regards the noble Lord's question, a lower pound tends to lead to higher import prices in sterling terms thus giving domestic producers more headroom to pass on increases: a higher pound has the opposite effect. We prefer a strong pound for all the reasons I have given.
Lord Molloy: My Lords, is the noble Earl not aware that a continued policy of high interest rates punishes very savagely millions of British people who are trying to buy their own homes including those who were encouraged to buy their council houses but who are now having to leave them because they cannot pay the high mortgages? In view of these factors, together with the harm that is being done to British industry, does the Minister not agree that it is about time that the Government reviewed a policy which continues to harass home purchasers and certain parts of the British industry?
The Eari of Caithness: My Lords, that is a separate question. I believe that the noble Lord will agree with me that it is very important that we get inflation down and have it firmly under control again. Inflation will be more damaging to pensioners' saving, as in the 1970s, besides affecting young people who are trying to buy their own homes, than temporary high interest rates. Of course we would like to reduce interest rates as soon as possible; but we must first reduce inflation.
Lord Ezra: My Lords, as the Government are committed to joining the exchange rate mechanism in due course, can the noble Earl indicate whether they have formed a view about joining this year, next year or at some later date?
The Earl of Caithness: My Lords, it is very difficult to prejudge when exactly the time will be right to join because conditions have to be right at that time.
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The conditions are not right at the moment, but when they are, we shall join.
The Earl of Halsbury: My Lords, is the choice between a strong and a weak pound any different from the choice between shooting oneself in the left rather than the right foot?
The Earl of Caithness: My Lords, yes, I believe that there is a difference.

Charge Capping: Effects on Community Care
2.57 p.m.
Lord Carter Lord Carter asked Her Majesty's Government:
What will be the effect of charge capping certain local authorities on their ability to plan for the provision of community care after April 1991 as proposed in the National Health Service and Community Care Bill.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hooper): My Lords, the determination of central government grant to local authorities and the Government's view of total appropriate local authority spending for 1990-91 took account of resources for authorities to undertake the necessary preparatory work to implement our new community care policy after April 1991. Charge capping applies only to those authorities whose budgets for 1990–91 are excessive, in the opinion of my right honourable friend the Secretary of State for the Environment. The proposed caps are in his view fair and reasonable in the individual circumstances of the authorities concerned.
Lord Carter: My Lords, I thank the Minister for that reply. Is she aware that the Association of Directors of Social Services has reported that one-third of local authorities and social service departments have had to implement service reductions and also abandon some new developments in community care as a result of the poll tax? I am referring to authorities which have not been charge-capped. The authorities which have been charge-capped now face the prospect of failing in their statutory duties to provide community care. How do the Government suggest that these authorities resolve that problem?
Baroness Hooper: My Lords, as always, it will be for individual authorities to consider how to make the most cost-effective use of the funds that are available to them in the light of local circumstances and overall legislative requirements. We believe that that kind of approach is the one which is most likely to lead to the innovative local, diverse and flexible service that we all seek in bringing in these changes. If it is any reassurance to the noble Lord, I remind him that local authority PSS spending has increased by 38 per cent. in real terms over the past 10 years. There is no reason to believe that that trend will be reversed.
Lord Taylor of Gryfe: My Lord, in replying to that question, can the Minister say whether rate capping will in any way limit the new responsibilities that local authorities will assume for caring for the mentally ill and other people who become their responsibility after the Bill becomes law?
Baroness Hooper: My Lords, it is for those authorities that have been capped to determine their own spending priorities within their revised budgets in the light of legislative requirements and local needs. However, as I said before, we see no reason to believe that the trend of increased funding for social services will be reversed.
Lord Dean of Beswick: My Lords, is not the Minister aware that most of the authorities that have been capped are in areas of the country which suffer the greatest deprivation, and that apart from education which accounts for just over 50 per cent. of local authority spending, those local authority departments which spend by far the highest amounts are social services departments which will have to take on board new duties under the terms of the new Bill? If sufficient funds are not made available, we shall see more disabled and mentally ill people discharged onto the streets, but it will be the local authorities that will be blamed for that situation instead of the Government.
Baroness Hooper: My Lords, I see no reason for the noble Lord to spread alarm and despondency in that connection. In the view of my right honourable friend the Secretary of State for the Environment, the proposed charge capping is reasonable and appropriate on the basis of the information available to him in all the circumstances of each authority concerned. The charge capping should not involve any disruption to services. However, as regards future plans for community care, it will be the duty of local authorities to consult in the preparation of their plans and to publish their community care plans. If anything should go wrong, the Secretary of State has powers of direction to intervene.
Lord Taylor of Blackburn: My Lords, it is all very well for local authorities to publish their plans, but how can they pursue those plans if they do not have the wherewithal to carry them out?
Baroness Hooper: My Lords, the Government have always said that they fully recognise that local authorities will require adequate resources to discharge their new responsibilities. Resource requirements stemming from legislation and new burdens placed upon authorities will be taken into account in determining the level of central government financial support to be given. While no definite estimates are available at this stage, hundreds of millions of pounds have been referred to. The amount that the Government would otherw ise be providing to finance care through social security payments for people in residential and nursing, homes, for example, will be transferred to local authorities on a pound for pound basis in the grant and personal social services standard spending assessments. The sum involved and the total
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resources for community care will be finally determined in the 1990 public expenditure survey.
Lord Stoddart of Swindon: My Lords, is it not a fact that people in this country have been grossly misled by the Government over the poll tax? Did not the Government tell the country that it would be the responsibility of local authorities to set charges in their areas for the level of services which they thought was correct, and that it was then up to the local electorate to discipline or otherwise their local authority? How can that happen if local authorities, having made their plans and drawn up their budgets, are now told by the Government that they cannot carry those budgets through?
Baroness Hooper: My Lords, local accountability is central to the community charge system. However, it will of course take some time for accountability pressures to be fully effective. Regrettably a number of authorities have chosen to budget excessively for 1990-91, hence the need for my right honourable friend to use the powers given to him by Parliament to protect charge payers from the consequences of excessive spending.
Lord Molloy: My Lords, when the Government's words are put into practice it will become singularly obvious that the community care provisions will be inadequate. The blind, crippled and mentally ill will suffer. Will the Government reconsider their position so that ordinary folk do not suffer?
Baroness Hooper: My Lords, there is no indication of the kind of consequences that the noble Lord has suggested. However, the public expenditure survey is reviewed every year.
Lord Carter: My Lords, I am extremely surprised by the answer that the Minister has just given. Does she agree with the calculation that has been made that charge capping will result in a reduction of £29 million in the social services expenditure of charge-capped authorities? That sum is equivalent to the cost of 3,500 home helps and 11,500 places for the elderly in residential homes.
Baroness Hooper: My Lords, the noble Lord may not be totally aware that the costing of the community care provisions that we hope will be implemented as a result of the Bill which is currently before Parliament will not be taken into account in this year's local authority spending but will come up in next year's public expenditure survey. The amount that has been provided for this year is just for the preparatory work that is required.

Business
Viscount Long: My Lords, after the short debate on the problems affecting the tenant farmer and before the short debate on the forestry industry in the United Kingdom, my noble friend Lord Strathclyde will, with the leave of the House, repeat a Statement that is to be made in another place on Export Controls: Iraq.

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I should like to say a word about this afternoon's short debates standing in the names of my noble friends Lord Stanley of Alderley and Lord Radnor. As the mover is allowed 15 minutes, and as the Minister should rise to reply not less than 20 minutes before the scheduled end of the debate, in the case of both short debates this means that all other speeches should be limited to a maximum of eight minutes. If any noble Lord should speak at greater length he would do so at the expense of subsequent speakers in the debate.

The Tenant Farmer
3.6 p.m.
Lord Stanley of Alderley Lord Stanley of Alderley rose to call attention to the problems affecting the tenant farmer; and to move for Papers.
The noble Lord said: My Lords, I must say that I am not particularly happy to move the Motion because, although the subject is certainly not party political, it can cause the odd difference of opinion within the agricultural industry. I am therefore grateful and relieved to know that it is my noble friend Lady Trumpington who will sum up the views of your Lordships.
This is a specialised subject. Reading through the list of noble Lords who are speaking today, I am more than conscious of the fact that every single one has great specialist knowledge. Like me, each speaker will have to declare an interest. I start by declaring my interest in that I was a tenant farmer of New College Oxford for some 30 years. I am still a partner with my son in that farm, but I am now an owner occupier. Therefore my farming experience and my problems, satisfaction and occasional pleasure gained from farming have been those of a working farmer. No doubt noble Lords will accuse me of being tenant friendly. However, to balance the books I should say that I spent all my Christmas holidays as a child in one of England's most beautiful houses to which was attached many thousands of acres of tenanted land.
What are the problems facing today's farming tenant? They are, of course, the same as those that face the whole of British agriculture. British agriculture is in a desperate financial crisis. The particular difficulty that faces the tenant is that because he has to make a living out of farming and because he has to pay a rent his problems are greater than those of most other people. In my case my rent in 1988 represented the single most expensive charge to my account, whereas in the 1950s, 1960s and 1970s it did not.
I mention that because any alteration in future tenancy legislation must ensure that the tenant is no worse off financially and that his slice of the cake is not diminished. The trouble is that today the cake is non-existent for either landlord or tenant. That really is the nub of the problem. The only possible cake lies in any development value of the land which goes of course to the landlord, often to the severe detriment of the tenant. I wonder how many
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landowners with farms in hand could earn enough money to support a family if they had to pay present day rents. Most fail to make money when they pay no rent and put in their own money, charging only a nominal interest for that money. That is not an option, however, for the working farmer tenant.
This is not the time to spell out the reasons for the crisis—and I use the word advisedly—in British agriculture. I know that your Lordships appreciate the problem. However, until the farming industry, the public, the clearing banks and the Government truly accept the position we shall make no progress whasoever towards solving the problem. The ironic fact is that it has in part been caused by the British farmer's efficiency, much admired by all until a few years ago.
Certainly the problem will not be solved by encouraging the tenant to be less efficient. Such a recipe, apart from destroying what is left of the farmer's self-repect and pride in his job, would encourage foreign imports to the detriment of our balance of payments, and the price of food to the housewife would increase. Moreover, in today's economic climate it is impossible for any tenant to devote money to improving the environment. I have yet to find any alternative diversification scheme which is economically viable for a tenant paying today's rents and interest charges.
That in a nutshell is the position of today's tenant. If noble Lords feel that I am landlord-bashing, that is not the case. I realise that even with the present uneconomically high rents landlords do not make enough to service their farms as most would wish.
Having dealt briefly with how the economic problems affect today's tenanted sector I move on to ask what is the future—and perhaps whether there is a future—of the landlord-tenant system. The system has been responsible for the youthful enterprise and vigour that were so admired and has given an example to this nation of what constitutes a day's work, albeit for only a quarter of a day's pay. The trouble is that the system is dying on its feet for a number of reasons, some of which I have already mentioned, and because of the reluctance of landlords to let through the fear that they cannot repossess the land should they need to do so.
I therefore believe that if we are to revitalise the landlord-tenant system we should look again at the legislation to see whether it can be improved. I am pleased to note that my honourable friend the Under-Secretary of State did not rule out possible legislation when he referred to the matter on 16th February this year in another place. I hope that your Lordships will come forward this afternoon with some compromise options. It will not be possible to spell those out in detail but I hope that all noble Lords will agree that those on all sides of the argument should be flexible in their approach and prepared to discuss all the options.
I start by suggesting that all future tenancies —and any legislation should not be retrospective —should include a retirement clause. That would make tenants think about making provision for their retirement, which sadly the majority do not. I used to think that the retirement age should be 65. Now

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that I am 63 and have just finished lambing 1,300 ewes I think that it should probably be 60. But that is a matter of detail. I hope that my noble friend Lord Monk Bretton will refer to that point because he brought the subject before your Lordships in 1983–84.
Secondly, I believe that the industry should try to solve the problem of the type of fixed-term tenancy. As your Lordships know, I have always been bitterly opposed to fixed-term tenancies for a number of reasons, the most important of which are fear of eviction and the long-term process of agriculture. Perhaps I should call it the nature of agriculture, although nowadays farmers are not allowed to believe that they know anything about nature.
It is for those reasons, and others, that I cannot accept complete freedom of contract. I know that it is the CLA's first option. Complete freedom of contract might bring more land on to the market. However, the quality of the agreement, and more important the quality of life of the tenant and his life after eviction, would be totally unacceptable in today's more caring society. Moreover,] know that total Freedom of contract is not acceptable to the other parties in the matter. I believe that it should not be the step that your Lordships recommend today It would sink the boat and any further discussion on the future of the landlord-tenant system.
Of all the suggestions put forward for a type of fixed-term tenancy I believe that the one called an extended agricultural tenancy has the most merit and deserves thought, albeit with modification. In brief, it would allow the landlord and tenant to negot ate a tenancy of 10 years with a renewal clause allowi ng extension of the tenancy for further periods. At the end of that period the landlord would be able to regain possession if he could satisfy certain limited grounds. Those limited grounds would have to be consi(iered carefully.
I hope that the CLA, the NFU and the Tenant Farmers' Association will discuss that scheme. I believe that all parties should appreciate that, if a short-term fixed tenancy is to be created, the rent must be fixed so that the tenant is able to borrow money and save enough for the day when he vacates the holding. A longer period than the statutory 12 months should be allowed for the tenant and landlord to make other arrangements.
The first two points apply to lifetime tenancies. However, as those tenants apply for a longer period there is a better chance, God willing, to ride temporary downturns in farming profitability. I accept that short-term tenancies will probably create exploitation of the land and short-term lets may well go to established farmers or established tenants. However, surely that is better than having no let at all.
I believe that traditional landlords, such as the Oxbridge colleges and many of your Lordships, would prefer a lifetime retirement tenancy. The land would be better farmed and looked after and the relationship between landlord and tenant would be a very much happier one—as it certainly was in my case. There is no doubt in my mind that lifetime
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retirement tenancies are the ideal. Any alteration in legislation to allow shorter-term lets should favour and encourage those longer tenancies.
I should have liked Sub-Committee D to study the problem but unfortunately it is outside its terms of reference. However, I hope very much that all your Lordships will agree that the matter must continue to be discussed. Any discussion on the landlord-tenant sector should take account of two points: first, that the present financial position of the tenant is precarious to say the least, and, secondly, that any new arrangement for short-term tenancies should be the exception rather than the norm and that the rent formula should favour lifetime retirement tenancies.
I hope that your Lordships and my noble friend Lady Trumpington will agree with that line of thought, or at least some of it. I hope that my noble friend will be prepared to offer the services of her Ministry to encourage a solution. I do not think it responsible to sweep under the carpet the financial problems of the existing tenant or the future of the landlord-tenant system, for I am convinced that the pendulum will swing again and the country will one day again be short of food. Many of us can remember those days. The country will need the expertise, the hard work and the effectiveness of the landlord-tenant system, which has served this country so well. I beg to move for Papers.
3.20 p.m.
LordJohn-Mackie: My Lords, I am much indebted to the noble Lord, Lord Stanley of Alderley, for raising this subject, which, as he emphasised in his last few sentences, is very important. There was no collusion between us over the debate, but the noble Lord has said just about everything that I intended to say. I shall try to say it as differently as I can, but that will be a little difficult.
First and foremost, like the noble lord, I must declare an interest. I am a tenant farmer with a three-generation lease. My young,er son, who manages the farm, is already agreed in principle as my successor and he has two sons to follow him, if necessary. I agree with the noble Lord's point about rent and with his point that, on a rented farm today, one must try to diversify into something that will raise money to pay the rent. My son and I have raised sufficient money to set up a riding centre and stables, which are doing quite well, but it took a great deal of capital to begin with. As the noble Lord, Lord Stanley, said, it is not as easy for a tenant farmer to raise money as it is for an owner-occupier.
My family has a long history of tenant farmers on both sides. Both my mother's and my father's people were tenants of the Haddo House estate of the Aberdeens in north-east Scotland. The farm in which I was born is how a fourth-generation tenancy without any legal requirement to put in an heir. The noble Lord, Lord Stanley, mentioned the rapport in the old tenancies between the landlord and the tenant. In 1923 or 1924 the Government introduced rural housing subsidies. My father built four houses on that farm. When he had finished he went to Lord Haddo, who was then the landlord, and said, "Look, we need to do something about who owns these houses. You've paid about a third, I have paid about

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a third and His Majesty has paid about a third". Lord Haddo immediately replied, "We'll cut out His Majesty straightaway". That was a nice gesture from the landlord.
The situation today is different because, in my opinion, landlords do not have the same rapport. They do not take an interest. The interest is through agents. There is no local factor. That makes quite a difference to the rapport between the farmer and his landlord.
When considering tenancies, one must remember that in almost every case the farm is the farmer's home. That is most important. At present my home is a nice house on the farm in Essex and I do not want to leave it, save feet first. Many farmers would feel strongly if they had to leave and look for another house. I recently chided the Tenant Farmers Association on that point and suggested that it wanted to push farmers out into council houses, but it strongly denied that that was the idea.
Because of that aspect, I very much favour life tenancy. There is no doubt that a farm is better looked after under a life tenancy. Like the noble Lord, Lord Stanley, I can imagine nothing worse than short-term tenancies. I believe that there is a suggestion of five-, 10- or 15- year tenancies. Let us take the case of a young man with, for example, a 10-year tenancy and no guarantee of continuing thereafter. He will use up the fertility of the farm and suck the land dry. That is the natural thing to do. He will not build up the land in the course of a short-term tenancy. The maintenance will be the minimum necessary to satisfy a full repairing lease. Any development to improve buildings or fixed equipment will be absolutely nil over a period of five, 10 or 15 years. I cannot emphasise that point too strongly.
The same would apply to retirement tenancies. Landlords may be tempted as well as anyone else. It will be difficult to resist the temptation to give the tenancy to as old a farmer as can be found so as to obtain a short-term tenancy by that method. If landlords are in the business of letting farms, surely it is an advantage to have a long-term tenancy with the usual proviso of rent reviews.
We all want to see the tenant farmer system continue, but, when one looks at the graph of its decline, one sees that it is practically a straight line from about 1910 to the present day. There has been a gradual falling away of tenant farmers. There are virtually no points at which one can say that the fall has been the result of legislation. I believe that figures show that, a good few years after the 1976 legislation, fewer than 30 per cent. of farms covered under the legislation were carried on by a son or relative. The fuss about it was therefore not warranted.
The main reasons for that fall have been the breaking up of estates after the two wars and the temptation in the last 15 to 20 years for landlords to sell farms when they became vacant because of the ridiculously high price that land has reached. One cannot blame them. The noble Lord, Lord Stanley, mentioned the price of land 10 or 15 years ago and the price today. Any farm that comes on to
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the market is almost bound to be sold. I cannot see the problem being solved until the price of land and the rental value become more comparable and reach a stage at which institutions such as the Church, the Crown and even private individuals will invest in land and obtain a reasonable return.
I see that my time is just about up; as a matter of fact, it is up. I could expand on the issue, but I shall leave it at that for noble Lords to consider.
3.28 p.m.
The Duke of Somerset: My Lords, as a landlord with several let farms, I have been dismayed to observe the gradual decline over the years in the availability of this excellent system of tenure. As British agriculture faces the increased competition of the single European market and of the slide towards world prices and the various directives from the Commission, it is a shame that the industry cannot agree on a formula to arrest that decline and so share on broader shoulders the responsibility of returning to a vigorous and prosperous agriculture.
It is the usual situation of two extremes with the need being to agree at a middle point. Generally speaking, landlords favour complete freedom of contract and tenants fear eviction as a result of that. Is there not a meeting point between those two opposing views? I believe that everybody involved in the system, certainly the Tenant Farmers Association, wants to encourage the system to continue and to rejuvenate. It has great merits. Primarily it gives farming opportunities to the younger generation and those who do not have the resources to buy a farm. The landlord provides the farmland and buildings and the tenant provides the working capital and stock. As we have heard, through many generations tenants pass on the farms to their sons, and that is an important asset to an agricultural estate.
The first and most important point to be made is that there should be no retrospective legislation so that existing tenants will be unaffected. Any new tenancy entered into would therefore be one in which both sides were fully aware of the position as regards length of security as well as the other usual terms.
There appears to be a demand for tenancies but landlords are often unwilling to relet because of the lifetime commitment that is now demanded. In view of the extreme swings of the pendulum found at general elections in the United Kingdom, it is a brave person who will make a financial commitment for 30 or 40 years into the future. It must be possible to find a halfway house.
One or two suggestions have been made: a fixed term tenancy or retirement tenancy and, at the other extreme, freedom of contract. With regard to the first, the noble Lord, Lord Stanley, outlined a system which seems worthy of close consideration. Retirement tenancies—in effect, also fixed term—seem to be of fairly limited use when dealing with a hopeful young tenant in his twenties, for the reason that I have already outlined; namely the commitement of 30 or 40 years until his retirement. Nevertheless if that could be agreed it would be a useful step forward.

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The option of freedom of contract is, I am afraid, opposed by the NFU, the TFA and the CAAV because the very short tenancies that might result could lead to evictions. Perhaps one could impose a minimum term, say 10 or 15 years. One would thus have a mixture of all three options. I can see that being very useful to a man of 50 who wants his son to continue in business at the original farm when he himself wishes to continue farming and earning until his retirement 15 years hence. So long as the term was understood and planned for at the beginning and when it came to dealing with tenants' improvements, I can see very few difficulties arising, if I rr ay slightly disagree with the noble Lord, Lord John-Mackie.
If the Government can see the benefits of the landlord and tenant system, they ought to legislate. Perhaps the noble Baroness the Minister will tell the House whether the Government have such plans. It would help our tried and trusted system to rejuvenate and the industry would have a stronger arm to battle with in European agriculture.
However, existing tenant farmers often have more pressing worries which normally include finance. The tenant farmer does not have access to the capital value of the farming land and is less able to borrow for expansion or diversification or to restructure by a strategic capital sale or development. Many people would argue that not having access to today's interest rates is a positive advantage. On the other hand, where the landlord obtains development permission for non-agricultural use, the compensation formula, which was fixed in 1968, does not always recognise the true economic loss that the business suffers. I hope that most landlord and tenant relationships are good enough to overcome the hurdle, but that is not always the case, especially where the land has been bought with development specifically in mind.
Many farmers are trying to diversify. According to the way in which the agreement is drawn up the tenant may require his landlord's consent, for instance, to plant trees under the set aside scheme. Some operations merely require the tenant to inform his landlord of his intentions. Many tenants would ask for a greater measure of freedom in business. It must be in the landlord's interest for the tenant's enterprise to thrive. However, I believe it important that any change that will affect the landlord's long-term interest and the letting value of the holding should require his consent. That must include work where trees are planted and perhaps golf courses or any concrete structures—work that is mostly permanent.
Tenants are a vital and hardworking sector of our agricultural industry. It is important that their problems are recognised as much for our rural society as for our food producing industry and, not least, for the landlords, who do not wish to be out at 5 a.m. milking cows on their own land.
3.36 p.m.
Lord Walston: My Lords, we are grateful to the noble Lord, Lord Stanley of Alderley, for enabling us tc discuss this important matter. He challenged us, or suggested that we should declare an interest. Sadly, I now have no interest to declare having
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retired from farming. But in my time I have been a tenant farmer, a landlord and an owner-occupier. I straddle the three different methods of farming.
Like the noble Duke, I am a strong believer in the landlord-tenant system. I view with grave disquiet and unhappiness the decline that has taken place over the years in the number of tenancies and in the growth of owner occupancy. I believe that there are two absolutely different functions in farming. One is the ownership of land, which requires various skills, experience and capital; the other is the farming of land. Occasionally they are well mixed but it is rare to find somebody who is capable of doing both adequately and well. Therefore, we must attempt to revive our landlord-tenant system.
I am sorry to say that I do not now believe that the proposals put forward by the noble Lord, Lord Stanley, are workable. First, there was the short-term tenancy and the tenancy until retirement, whether at 60 or 65. I should be inclined to say that 80 is a better age at which to retire. But whatever the age may be it does not lead to the best type of farming. I am sure that the noble Lord will remember the old farming saying that while you live as if you die tomorrow, you farm as if you live for ever. If one knows that there is a term to the tenancy within another few years, one cannot farm as well as when one knows that one is there for life and with luck one's heirs may be able to continue. Therefore, to my mind the old-fashioned form of landlord-tenant relationship is the best. For various reasons—and there is no time to go into them—that is rapidly disappearing. How can we reverse the trend?
I should like to make one suggestion. It is based on the very happy experience that I had for a good many years as a commissioner of Crown estates. There the landlord-tenant system worked, and works, at its best. The landlord does his job; the tenant does his job. The tenant knows that he can go on indefinitely so long as he is capable of farming well and that there is a very good chance that the landlord will allow his son, if he is properly qualified and does the job well, to carry on after him. It is not a question of waiting for the tenant to die, rubbing one's hands and saying, "That is good. I can now dispose of my farm and sell it with vacant possession at an inflated price." One cannot blame people for doing that; the private landlord may be, and often is, tempted to do so. The Crown estates and other such organisations are not so tempted. The Crown estates are debarred by statute from investing in anything other than small-weight government securities and land—albeit urban as well as agricultural land.
I put to your Lordships the idea that it might be worth the Government considering—I put it no more strongly than that —setting up a body that one could call the national trust for estates or the national estates trust. It would not deal with historic houses and such matters, handled so well now by the National Trust; it would concentrate on our agricultural estates. It could be debarred from investing money in anything other than agricultural land but would be entitled to buy land at the going rate perhaps with powers of pre-emption when an estate came on the market. I refer more particularly

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to estates rather than individual farmers although they would not be ruled out. By degrees thereby, over the decades, the amount of land available for tenancy would be increased, as would the number of tenant farms.
A system of really good estate management would evolve such as is practised today on the best estates in the country—and there are still some of them—but without the nagging temptation to take the attitude, "When I die, or when this farm becomes vacant, it is my duty to sell it and gain the profit that I can from it;" or to look upon the capital as being needed for other purposes such as education of children, or whatever it may be, and that it would therefore be bad business not to cash in.
If one takes away that temptation, as one would by a form of national trust for our agricultural estates, over the years there would be an increase in the amount of land available for tenant farming. There would be increased opportunities for the young; new entrants into the industry as tenant farmers. Today it is virtually impossible for that to happen. We would slowly revert to the heyday of the landlord/tenant system but without the drawbacks which one has to admit it has in certain cases with the arbitrary decisions that the landlord could take to the detriment of his tenants.
My suggestion therefore is this. If one were able to achieve agreement between the National Farmers Union, the CLA, the tenant farmers, and so on, to some form of alteration of the present landlord/tenant system, we should be fooling ourselves if we thought that that was going to make any significant difference. If we are sincere, as I believe we all are, in saying that we want a viable form of modern-type 18th and 19th century landlord/tenant system —by creating a large national estate (call it, if you wish, nationalisation by the back door, but it would be in a purely voluntary form with no compulsory purchase) over the decades we should return to the advantages which in the old days placed British agriculture at the top of the league for agricultural advance throughout the world.
3.44 p.m.
Baroness Elliot of Harwood: My Lords, I too should like to thank the noble Lord, Lord Stanley, for introducing the debate. I make only a very short intervention.
As noble Lords know, I am a farmer and have in the past had a single tenant. I now farm all the land because the tenant has given up. The subject has been a difficult one for many years. Up to now tenant farmers have had complete authority when renting a farm and landlords have been unable to change this unless the tenants wish to leave and give notice.
In the past when some landlords had a great many farms to lease, the system worked quite satisfactorily, and can still do so. However, recently the conditions of farming all over the world, and in this country in particular, have changed and are still changing. Many landlords do not wish to let land indefinitely. I am one who has had a small experience of this: on
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my estate one farm was let for two generations to the same family and although I wanted the farm for a nephew I could not get it back until one day, without any notice, I had a letter from the tenant saying that he wanted to give up and move elsewhere. That was a great relief and I got the farm back. It is being farmed by my nephew today. The tenancy had lasted for over 80 years. I do not think that that is a good way of organising farms today. We talk of freedom of choice in many industries. I should have thought it possible to allow tenant and landlord to make an agreement mutually satisfactory to both sides and including if needed, options to give up or to continue. Let us suppose that some event alters the situation: the tenant dies or does not wish to continue. It should be possible to make a clause in the tenant's contract to allow the landlord to take over the farm again, either for himself if he so desires or to relet. That would have to be part of the original tenancy agreement. Under the 1947 Act I do not think that that is possible at present.
I believe, as we all do, in the system of landlord and tenant. It is one of the ways of encouraging new entrants into the agricultural industry. I know of several cases where the tenant has been so successful that in the event the landlord has sold the farm to him, again by agreement, and the tenant is now a successful farmer.
My hope is that if alterations can be made they will be by agreement on both sides and will result in improvements for both sides and will help our great industry of agriculture. Today it is even more important than it ever has been. Certainly in the light of the European situation we are just about the best farmers in Europe. I therefore hope that we shall be able to achieve some arrangement which will be satisfactory to both sides.
3.48 p.m.
The Earl of Swinton: My Lords, I also should like to thank my noble friend Lord Stanley for introducing this important and topical debate.
If I described a well farmed, attractive, environmentally-friendly countryside with a more than reasonable return for the farmers who produced it and, in the case of tenanted farms, perhaps some small reward for the landlord, noble Lords might say that I had a pie-in-the-sky idea of what the country was like. However, perhaps I may use a phrase much loved by the noble Lord, Lord MoUoy: that is what the great British public would like. It would appeal to the Greens and to the great bulk of people who go into the countryside. I hope that that is what we can achieve again.
I am sure that the landlord and tenant system has much part to play in producing a countryside such as I have described. It could, and indeed should, provide that. We only have to look in this day and age at some of the country's great estates to see what well farmed and attractive landscapes they provide. I believe that they should have the opportunity to do so again in the future.
This debate relates to the difficulties facing tenant farmers. In my opinion, the main difficulty relates much more to the state of British agriculture at the moment than to the future of the landlord/tenant

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system. My noble friend Lord Stanley referred to that point at the beginning of his speech and I echo everything he said. When one looks at falling incomes, increased costs, high bank interest rates and an unfavourable valuation of the British green pound, the difficulty is obvious. I become annoyed when I hear people say on television that they will strike because they have been offered a rise of less than the current rate of inflation. In practical terms farmers are worse off than they were five or six years ago and incomes have been lowered. That is a far greater problem than the landlord and tenant system.
I declare an interest, as have other speakers. I am lucky enough to be a tenant for life of a lovely estate in Yorkshire. It stretches from good arable land on the banks of the River Ure to moorland at 2,000 feet and everything in between. It is a microcosm of farrr ing. During the past few years a number of my tenants have found themselves in economic difficulties. It is interesting to note that it is not the high side farmers on the poorer land who are in trouble but those down on the better arable land. They borrowed money when interest rates were high and invested in machinery but found the falling price of grain going against them. I do not say that the hill farmers are having an easy life. However, they tighten their belts and tend not to have to pay anyone else because theirs is a family business. They do not spend much money and they survive. They do not find themselves with their backs to the wall. Even these people, however, now find it almost impossible to make a living of any kind—or at least not what Members of your Lordships' House would describe as a living. It would be easy for me to tighten my belt considerably more but it is not easy for them.
I speak from the heart in saying that, although in this country we are used to the image of the feather-bedded farmer crying wolf, that is not the case at present. A few days ago I spoke to one of my senior tenants. He is a much respected man whose farrr. has been in his family for many generations. He has many cousins and relations farming in the area. He told me that both his sons, now in their mid–20s, are studying at evening class; one is taking accountancy and the other electrical engineering. I replied that that was useful because both subjects can be of help on a farm. He said, "No, they aren't doing it for that reason but because by the time they come to take over the farm there won't be a farm left". By comparison the problem of the landlord and tenant system is fairly insignificant, although the situation is not good at present.
I was impressed by the point made by the noble Lord, Lord Walston, about landlords being bad farmers. I know that I am one, as are a number of my friends. Following the latest legislation they took back the land and tried to farm it, but they caught a considerable cold as a result. My policy has been to relet the land. I am amazed to see people prepared to enter into a tenancy in the present climate. I wish them luck but I should not like to be in their shoes. It is important that we should establish a better relationship and that landlords should not take back land and try to farm it. As was said by the noble Lord, Lord Walston, some are successful, but in my opinion they are the minority.
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I was cheered to hear the words of my noble friend Lord Stanley at the beginning of the debate. Again I declare an interest because, like other Members of this House, I am a member of the CLA and NFU. I was slightly dispirited to read their briefings for the debate. The CLA stated that it wanted only the freedom of contract as regards tenancy but the NFU said, "That will be over our dead bodies". My noble friend Lord Stanley has given us hope that a way forward can be found.
I cannot see an easy solution to the problems of agriculture in general in this country. I do not have the time nor should I like to try to give the answer. However, I wish to draw to the attention of my noble friend on the Front Bench an imaginative proposal from the Countryside Commission. It is for a single scheme of farm support to promote—and again I must use the awful expression—environmentally friendly farming. There is a future in that and if my noble friend has time to look at the proposal she will not be wasting her time.
I hope that the NFU and the CLA can talk together with the Government. I further hope that in future we shall again see in this great country of ours the kind of countryside that I described at the beginning of my speech.
3.55 p.m.
Lord Middleton: My Lords, I join other speakers in congratulating my noble friend Lord Stanley on bringing the matter to the attention of your Lordships. The chief problem facing tenant farmers is that there is little land available for rent. As the noble Lord, Lord John-Mackie, reminded us, the tenanted sector is becoming smaller. In 1908 the proportion of tenanted land by area was 88 per cent. but it is now only 36 per cent. Therefore, during the past 40 years efforts have been made to support the landlord and tenant system. However, it is my view that the efforts have been unsuccessful because successive governments believed that that support could be given by legislative control.
By 1950 the proportion of tenanted land had dwindled to 62 per cent. By 1976 it was down to 44 per cent. The then Labour Government attempted to arrest the decline by giving increased security of tenure. The 1948 Act had given the farmer the right to a life tenancy. The 1976 Act provided for three life tenancies in succession. What was predicted by those of us who participated in the passing of that legislation in fact occurred. Landowners, faced with losing control over their land for up to three generations—and that could be a century—were unwilling to create any new tenancies. Sitting tenants and their descendants remained happily in possession but opportunities for new entrants completely dried up.
At that time one of my friends promulgated a law; that the effect of most legislation is directly opposite to the intentions of those who promote it. Of course, that was said tongue in cheek but it was true of the 1976 Act which received enthusiastic support from the National Farmers' Union. By the late 1970s it was obvious to everyone, including the NFU, that far from stabilising the landlord and tenant system the opposite had happened. The then Minister of

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Agriculture, Mr. John Silkin, set up a committee of inquiry under the noble Lord, Lord Northfield. It examined the landlord and tenant system and took a good look at the institutions which were buying up the land only to move out when the going got rough. Its report was favourable to both but it coincided with the change of government in 1979.
Meanwhile, my party had agreed that new legislation was required to pull the landlord and tenant system out of what appeared to be a terminal decline. However, it insisted that any new Agricultural Holdings Bill could be based only on a consensus within the industry. I had grave misgivings because I believed that it was most unlikely that any effective measures would emerge from what I considered to be an abrogation of government. There was bound to be a divergence of views making it difficult to find a formula which would reconcile the interests of the two parties.
I was heavily involved in the negotiations leading to an agreed compromise in the terms of what was to become a new Agricultural Holdings Bill finally enacted in 1984. I backed the Bill strongly because, for all its faults, it was better than nothing. More importantly, there was a faint chance that something better would emerge once it became obvious that it would not produce many more farms for rent.
It is for "something better" that my noble friend Lord Stanley is groping. He is right to do so and he is right to be worried. However, I fear that his prescription may not be effective. The mistakes of 1976 and 1984 seem not to have been taken on board. My noble friend Lord Stanley seeks yet again for some kind of consensus. That is a very attractive concept but I have worries.
Mr. Richard Ryder, who was then at the Ministry of Agriculture, speaking in another place on 24th April last year said:
"If the tenanted sector is to be revitalised, we must find ways of making the letting of land more attractive to landowners".—[Official Report, Commons, 24/4/89; col. 781.]
He went on to say that there must be clear prospect of the legislation being of worthwhile practical effect and that there must be some sign of agreement in the industry. I am not quite sure what that means. If it means another attempt to achieve unanimity, we went down that road in 1984.
Of course, no one wants legislation which is unacceptable either to owners or tenants but if any government really want to revive the system, they must be prepared to take a firm line. As someone said recently, half-way house legislation is a waste of time.
How should the problem be tackled? I see from the brief which I have from the CLA—and my noble friends Lord Swinton and Lord Stanley have referred to this—that it is asking for complete freedom of contract between landlord and tenant for any new tenancies. The parties to a new tenancy agreement could agree any terms they wished, presumably including the various options put forward by my noble friend Lord Stanley.
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That makes very good sense to me and I agree with the present CLA president when he said at a recent conference:
"There are those who will be alarmed by a call for such freedom to negotiate".
He went on to say:
"I do wonder why. Landlords asking unreasonable conditions will get no tenants; unreasonable tenants will get no farms."
The crucial question is whether it will satisfy Mr. Ryder's criterion of effectiveness.
The results of a survey carried out by the CLA are interesting. The introduction of retirement tenancies, advocated by my noble friend, would result in 27 per cent. of land that would not otherwise be let by landlords being relet. Therefore, there is something to be said for that idea. More significantly, it was found that given freedom of contract landlords would be likely to relet 59 per cent. of land which would otherwise not be let. It has been calculated that over five years that would result in a 10 per cent. increase of land in the tenanted sector. I believe that that would be worth going for.
When my noble friend kindly wrote to me about this debate he told me that total freedom of contract would be rejected outright by the National Farmers' Union and the Tenant Farmers' Association and he said that again this afternoon. I hope that I am wrong in fearing that once again the farmers' representatives may be preparing to shoot themselves in the foot. They may do well to compare the landlord-tenant system in West Germany and Belgium where landlords have the confidence to let with that in Holland where restrictive legislation similar to ours is in force. In Germany and Belgium, the system is thriving. In Holland, it is virtually extinct.
4.3 p.m.
Lord Wise: My Lords, I am sure that we are all grateful to my noble friend Lord Stanley for initiating this debate because it is opportune. The number of agricultural holdings has been declining steadily for many years. I venture to suggest that the main reason for that is purely economic although there are many contributing factors.
Although the number of holdings has decreased, the size of holdings has increased. Again that is purely economic because larger holdings tend to be more viable. It makes sense economically but it is unfortunate because as holding sizes increase, it follows that fewer and fewer are available to rent.
As my noble friend Lord Middleton said, legislation over the past 40 years, especially the 1984 Act, has given tenants security of tenure. Indeed, it has given tenants' relatives a statutory right to apply to accede to the tenancy on the death ! of the sitting tenant. As my noble friend says, it is a possible contributory cause to the decline in the number of farms available for rent. I would not wish to see that changed. I believe that it is fair that if a son has worked all his life on his father's farm he should not lose his livelihood in the event of the death of his father.

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Nevertheless, in certain circumstances I feel that there is a case for short-term tenancies. For example, if an owner-occupier for some unfortunate reason becomes incapacitated, he may have a son at school or college and it could be expedient to let the farm to a neighbouring farmer until the son was old enough to take over. That would be a good thing. However, as matters stand the farmer must be very careful because there is a grave danger of a full tenancy being created. Therefore, in certain circumstances and only in those circumstances short-term tenancies could be reasonable and sensible.
On the question of tenants' compensation for dispossession, I can well understand a landlord's frustration when he wishes to embark on some lucrative development project on his own land and then is fought tooth and nail by the tenant who is obviously fighting for his very livelihood. The present compensation terms are completely inadequate. If they were more generous, surely agreement would be reached more easily.
I believe that a set of guidelines on this question would be a good thing. I know that it would be very difficult given the vastly differing complexities of each individual case, but set guidelines could be a base on which negotiations could then proceed.
As we have already heard, the landlord-tenant system has served the industry, and indeed the nation, well for generations. It has been a means of giving young people with limited financial means the opportunity to enter farming. I must admit to being somewhat apprehensive as to its long-term continuation in the present manner. As we all know and have heard, there is a continuing decline in the availability of land to let, for whatever reason, which may have to be arrested by some change in the present law. However, I hope that all the problems—whether as regards compensation, the tenant diversifying into other spheres or even tenure—can be resolved by discussion and agreement among all the parties—the CLA, the Tenant Farmers' Association and everybody else. If consensus could be reached it would be better than government legislation. We must somehow keep open the opportunities for young farmers to farm as they wish.
4.9 p.m.
The Earl of Radnor: My Lords, I too am very grateful to my noble friend Lord Stanley for bringing this matter to the attention of your Lordships. On his suggestion, I declare an interest in that I am tenant, landlord, manager and partner, if that has any relevance, in parts of Wiltshire. I also follow my noble friend in saying that the troubles of the tenant farmer are to a very large extent shared by any farmer these days.
It is an extraordinarily difficult time for farming. Incomes are dropping; a stabilising position has been established whereby overproduction in the country as a whole is penalised in the income of the individual. There is no doubt that every farmer, be he tenant or owner-occupier, must look to his laurels quite carefully and concentrate upon the usual business remedies—if they are applicable to
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farming—beyond the stage of looking to his costs, marketing and output.
There has been thrown out somewhere in this debate, I suspect at the beginning, the suggestion that landlords charge, shall we say, a rather large rent. I use that description rather than the word "exhorbitant". But that suggestion must not be allowed to pass without comment. Legislation is quite clear on the point. Rents are reviewed every third year. My impression, both personal and from looking around me in the countryside, is that at present rents have reached a plateau; they are not increasing and on occasions are decreasing. I think that that is a fair and reasonable description.
There is no doubt that some farmers are finding difficulty and within the three-year period are applying to discuss the rent further. On that point I entirely agree with the noble Earl, Lord Swinton. In my experience it is the good farmer on the better land who is having difficulty. He has been a leader in the past when times were good and has borrowed too much from the bank. The banks must bear a certain measure of guilt for the situation. But it tends to be the better farmer who always believed that the boom times would continue for ever who is having difficulties.
I sense that that is not what this debate is concerned with. It is concerned with the fact that fewer young people are coming into farming and using that bottom rung of the ladder—perhaps a smallish farm on an estate —to get a start. The reason for that goes back to the very high price of land and the fact that there is tremendous security for tenants. We already have a ridiculous situation in the United Kingdom where some tenants have security for three generations and others for the whole of their life. As far as I can see such situations are just not reflected in the rent at all. But that is by the way.
It is assumed that the tenanted sector is necessary. The noble Lord, Lord John-Mackie, pointed out that there has been a gradual depression of lettings from 1910 up to the present. It has in no way been evident to me that efficiency in farming has gone down in the same way, and I see no reason why an owner-occupier should not be at least as good a farmer as a tenant. However, I admit that it would be a very good thing to have a few more people entering the industry.
A number of alternatives have been put forward to accomplish that. I shall take the short-term tenancy and freedom of contract suggestions first. Matters move slowly in the country. Seasons come round slowly. Rotations, if anybody uses them these days, are long—the Norfolk fourcourse is one of the shortest in Wiltshire. We had one of seven or eight years. Therefore it is quite wrong to think of bargaining over a period such as 10 years.
What has not been mentioned in the debate so far are the complications of dilapidations, the house in which you live and other such matters. Everyone knows of the difficulties at the end of a tenancy and how they can strain relationships. Tenants in the old days used to bid high for their farms because of key money, and unwise young men will now be bidding high and coming unstuck in a very short period. In

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my mind, therefore, I dispose of both those alternatives.
The 65-year retirement proposition will simply be a temptation to employ people aged around 60 and will not help the situation. It is all that has been suggested so far. Nobody suggested partnerships, which I shall not have time to go into but which I think offer an alternative.
Before I sit down, I think it was Lord Melbourne who said when in doubt do nothing, and if you have to do something, do as little as possible. That is my suggestion on this subject.
4.16 p.m.
Lord Monk Bretton: My Lords, I too should like to say how grateful I am to my noble friend Lord Stanley of Alderley for initiating this debate. I was also pleased to hear that the Minister had indicated that he intends to look again at the problems of tenancies and how they are progressing. I must endeavour to declare a rather complicated interest. I belong to a land-owning family but I am in fact a tenant within the family with all the professionals continuing to say "He has got to pay an arm's length rent". I therefore understand some of the farming problems—indeed I do—touched upon by my noble friend Lord Stanley.
In 1984 I moved the Tenant Farmers Association amendments on tenancy to retirement age. I make no apology now for having done so because in my view those amendments should have been accepted. I remain convinced that that was the only proposal which would have made the 1984 exercise produce something effective. I agree with my noble friend Lord Middleton regarding the inadvisability of again repeating an exercise of that kind. However, there must be a reasonable degree of consensus because if the tenancy legislation is altered I do not believe we want it to become a political football; that would be a serious tragedy for us.
Before I go on to other matters I should like to say a word regarding retirement tenancies. First, it now seems that they have become the lowest common denominator of consensus opinion, which was not the case in earlier days. I am sorry that the noble Lord, Lord John-Mackie, was thoroughly discouraging about them today. In those days, though he saw objections which most people today do not worry about so much, he was more receptive of the idea.
If we have great trouble in reaching a consensus the retirement tenancy proposal remains very much better than nothing. My noble friend Lord Radnor said that sometimes there is a great deal to be said for doing just a little. If matters are like that, I would not decry government efforts to try to bring it about. Although it would not arrest the decline in the let sector it would at least stem the tide a little, and that is always something. We have to remember how much the let sector does in providing opportunities and in helping the finance of farming.
For the landowner, the virtue of retirement tenancies is a greater degree of certainty—agreed on a long term—as to when the tenancy ends. I
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emphasise that certainty is of very great importance to those who are letting land. Retirement tenancies also enable us to escape from the political problems which lifetime tenancy has produced. I refer particularly to the octogenarian tenant supported by a son who unfortunately experienced difficulties in finding another tenancy when the octogenarian died. That produced a demand for succession and succession proved to be the last straw in the hope for survival of the landlord-tenant system. I venture to suggest that retirement tenancies would to some extent stem the decline.
I agree that if we want more land available quickly for letting it must come from the owner-occupied sector. It cannot come from the landlord-tenant sector unless one interferes with the existing succession tenancies. I believe that nobody wishes to do that. Certainly I do not.
The CLA is right to cast doubt on the owner-occupiers' likely reception of the tenancy-to-retirement-age proposals. They do not think that the proposals go far enough. The owner-occupier sector appears to be looking for something like a maximum 10-year term. Therefore, there is a gap to fill. It is a difficult subject. The CLA is right that to get results, or more land into the letting sector, one must be I bold. However, I doubt whether its proposals for freedom of contract will wash without a minimum term of years at least.
It is interesting that the RICS farm tenure survey shows a high degree of tenant farmer support for freedom of contract; virtually as high as for retirement tenancies. I find that to be surprising. Possibly, it is a straw in the wind. At any rate there must be a minimum term of years. I refer particularly to the efforts of the five land agents—sometimes known as the "famous five" and sometimes the "infamous five". If various people are of such different opinions, they will be somewhere near the mark. I believe that is the only other line of thought.
I have to bring my remarks to a conclusion quickly and I am sorry that I have to rush my speech. The proposals of the five land agents are worth considering if we are to bring more land into the let sector, which might be of great assistance and provide opportunities for farmers in the future.
4.26 p.m.
Earl Waldegrave: My Lords, I, too, declare an interest; perhaps more than some people because I was born in 1905 and spent my early life in my father's house which was a parsonage. He was the younger son. My grandfather died after the battle of the Alma and my father never saw him and, therefore, neither did I. I lived in the parsonage and was told that one day I would succeed to a small agricultural estate in Somerset and that that is what I should think about. That is all I have thought about ever since and I am still very confused!
My qualification, if I may put it so, is that for four years I held the job now held by my noble friend Lady Trumpington, but that was a long time ago. It is interesting to realise that agricultural land, or farm land—the problem is mostly economic, which we have not really faced today —did not rise to the dizzy

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heights of £100 an acre until 1960 when I was sitting in the place now occupied by my noble friend Lady Trumpington. In 1971 the price rose to £300. By 1978 it was £1,000 and by 1983 it had reached £2,000 for purely and solely agricultural land. I do not propose to enter into the realm of statistics as I am not good at arithmetic, but I find those to be staggering figures.
My noble friend Lord Stanley opened the debate—and we thank him for bringing this subject befon; us today—by saying that agriculture is in a crisis. It is in a crisis and during my involvement with agriculture I have seen it go through other crises. In my own small way as a farmer I am just getting out of a crisis. I happen, by one means or another to have a large milk quota and that is probably the only part of farming which is profitable today. How long will the milk quotas last and how long are such advantages to be available for some of us? Real farmers are having a terribly bad time and that i:; the reason why there is such a big decline.
I was interested to hear my noble friend Lord Swinton describe his great estate in the North—as I have heard him do on the Front Bench on previous occasions—and what a family party it was, and how much he liked to see tenants coming on. I have always believed that that is the right way for the old estates to be managed. After all, if you have been born in a farmhouse and your father was a tenant he was on the second level in the old village life, in the old community, which I am afraid can never return. It may continue in some of the more remote districts of the country, but I do not think it can survive very much longer in a district such as that in which I live, which is quite close to the great new conurbation of Bristol —14 miles from Bristol, 14 miles from Bath, five miles from Keynsham, Shepton Mallet and other great places where there are many cottages.
I find it interesting that nobody on the Benches on the far side has asked what all this landlord and tenant business and all this agricultural change means. to the workman. Probably the landlord lost his town property long ago, as did my family. Our little coalmine ran out before I was born so we had to live on the estate, and we depended on our tenants. We did not know how to farm. I was taught how to farm and as a schoolboy was sent to learn to milk a cow instead of going to Switzerland to ski. Nowadays the farmers who own their land send their boys to Switzerland, or the public education authorities send the boys to Switzerland; but I still do not go there.
The real problem is that everybody who has said that the old tenancy system must survive by some means or other—and they said there were various means of doing it—has forgotten that the old system of country life, village life, community life, was completely different 50 or 60 years ago, when the landlord and tenant system was flourishing. The landlord did not want to farm his land. He perhaps had a big castle or at least a big house, and he was on the top level. His younger brother was possibly a parson, and perhaps his nephew would one day succeed to the estate. They were interested in sport and the social life and perhaps in being Members of this House. Not all landlords were Members of this House, but all landlords had money from somewhere
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else when they built their castles and set up their community estates.
I do not believe that we can return to that. If a landlord learns that land is worth £2,000 an acre he surely feels he must cash in on that and send the proceeds to the City. Although there is need for fewer cottages because of the machinery that has come along, a farmer does have to buy the machinery. He never had to buy the cottages, which were rent and rate free. Some of us are in rather a mess now concerning what to do with our rent-free cottages. It is sensible to sell them to people who are going to work in the neighbouring town. I remember selling a cottage for £40 which had the roof nearly off, but I heard of somebody the other day who sold for £100,000—which was rather more—a tumbledown barn which had planning permission to be turned into a fine house. On cannot blame a landlord for cashing in on such things.
I have not heard in this debate how we can get back to the system where the landlord was the top structure, where the tenant looked after the land, which the landlord did not want to because he wanted to go into politics or go about his business, and there were large numbers of workmen because there was no machinery. My father never owned a motor car, but we did have a dog cart even though we were not in a very rich living—£80 a year.
I have to end on a pessimistic note. I do not see how we can revive the landlord and tenant system unless we go back to the old country system that has surely gone with the passing of time. There is one thing which I think we might consider; that where the man who is farming has to spend his capital on machinery and equipment he should own his land. Where there is rough, difficult or far away land, and the land is worth more than the tenant's capital, then there is a good case for a landlord; but it must be on that basis.
4.35 p.m.
Lord Burton: My Lords, I had not intended to speak but some points have arisen in the debate which I should like to mention, as speakers have been commendably short and well within time.
A good farmer would normally have security. Unless the landlord had good reason for terminating or failing to renew a lease he would feel it better to keep the devil he knew than the devil he did not. Therefore, tenants such as those of my noble friend Lord Swinton would probably go on for many years. Indeed, a number of them must have been there before the current legislation came into being, though I agree that for the good of the land the lease must be for a reasonable length of time.
I should like to draw attention to the fact that the law of tenancy in Scotland is very much worse than it is in England, and if the Government are going to amend the rules I hope they will look urgently at the Scottish legislation because matters are not so satisfactory there. Long-term or even secured tenancies are all right if they are given to a good or even reasonable tenant, but I can think of at least two farms where the tenants have become alcoholics. Then one is in trouble because until such time as

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the farms are ruined and the farmers have become bankrupt there is no way of getting rid of them. Clearly that is not good for the land or the landlord, and in fact it is not good for the tenant.
4.37 p.m.
Lord Mackie of Benshie: My Lords, this has been a very interesting debate. I will not congratulate the noble Lord, Lord Stanley, on introducing it, but I will congratulate the Government on having the courage to turn him loose on a subject as important as this. For me it has been extremely frustrating because, first of all, my noble kinsman told the story I was going to tell about my father (I cannot say "our father" because that sounds like the Lord's Prayer), and then the noble Earl, Lord Swinton, told the joke against himself, which I had stored up, after he referred to the tightening of belts.
I suppose that I too should declare an interest. My father started his two sons and three daughters not on rented farms but on owner-occupied farms. As the third son I had to become a tenant, which I suppose is quite right, but as I had a very good farm in Strathmore I did not mind a little bit.
I think we have reached a degree of consensus in the debate, with a degree of disagreement as well. The system is worth preserving. I was very interested in the speech of the noble Earl, Lord Waldegrave. He said that the old system could not return unless one had the social system with it, but the fact is that we still have nearly 40 per cent. of the land on the landlord-tenant system. That is a large proportion and, as has been said, a valuable proportion, which I think can be increased. It is a good division of responsibility when you think of the landlord owning the land, supplying the capital and getting a modest return on it, and the tenant supplying the working capital, which is now considerable—at least £300 an acre to go into a farm. Even if tenancies are available, farming is an expensive business for a young man to go into. We should recognise that, particularly, as has already been said in the debate, when returns are so small and so insecure. We should recognise in looking at the system that if a tenant is to farm well and do the land some good he needs security. By security I do not mean stagnation, which is what the present system tends to lead to.
I have great admiration for the noble Lord, Lord Middleton. While I think he is right to urge the Government to adopt a consensus approach and then to take action, he is quite wrong to say that a freely negotiated contract will do. In every field of commercial life there is legislation to protect people against unfair contracts. In farming, one is dealing with a passion for land. Both the people who buy it for enormous sums—more than £2,000 an acre—and those who rent it do so with a totally non-commercial view of the future. Young men who want to farm will be led into foolish agreements in their great desire to have the land. In Scotland in the past—in the era to which my noble kinsman referred—legislation affected the bargains. The system was made up mostly of 14-year leases—sometimes they were for 19 years and
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sometimes for 21 years —with a break at seven years. But the terms of compensation were laid down.
I disagree with my noble kinsman on another point. One can legislate a little against bad farming. Fixed-term rotation built up the fertility of Aberdeenshire from the blasted bog it started as and kept the land in good heart. In England in the 1930s the place was full of buttercups and there were meadows all over the place. In Scotland the long lease system and the virtue of the Scots meant that the quality and standard of farming were kept up. If we look at anything we must look at the security of long leases. The retirement provision might be a step forward and would bring more land onto the market. We should look at the long lease system with legislation about the terms of compensation where a tenant dies at or just before the end of his lease. But one cannot have new legislation in this business without laying down terms.
Several new factors have already been touched on. I refer to the high price of land and to the high price of houses. The Government should be looking at those points. It is ludicrous that people should still be paying £2,000 an acre for land. When one bears in mind the high interest charges it becomes even more ludicrous. To make that the equivalent of money in the City, one would need to pay a rent of around £300 an acre. As that is more than the gross income of most farms, it becomes totally uncommercial.
Taking all these factors into consideration, we should be looking at serious discussions about the long lease system with protection and legislation to ensure not only that the tenant is protected but that the landlord is protected against his land being despoiled. It would be a great step forward for a change if the Government would consider this seriously and sensibly and do something to protect the landlord and tenant system which has served this country well, and particularly well in Scotland.
4.45 p.m.
Lord Gallacher: My Lords, we are grateful to the noble Lord, Lord Stanley of Alderley, for introducing this important subject and for the dispassionate way in which he did so. This is an important subject, and in our view it needs to be discussed in a wider context than that provided by the Agricultural Holdings Act 1984 and related legislation. As we see it, there are three major questions: first, the Government's present economic policies and their effect on farming in particular; secondly, the effect of changes in the common agricultural policy with special regard to tenants; and, thirdly, changes in the pattern of ownership of farm land, especially those which have taken place since the report in 1979 of my noble friend Lord Northfield. These three questions are basic to the problems.
In our view the Government are now reaping the harvest of seeds sown in the 1980s when illusions of economic well-being provided a basis for expansionist policies culminating in the sharp application of brakes from mid-1989 to date. As yet there are no signs of a let-up. The use of a high bank rate to the exclusion of all else is particularly severe on the tenant farmer who rents because he cannot

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afford to buy and who must, like most farmers, borrow working capital whether for the growing or the breeding seasons. Dear money in the United Kingdom as well as green rates in equities puts British famers at a double disadvantage; that is to say, they have high costs and receive low prices by comparison with their Continental competitors. There has been no response to pleas for easement. Indeed, the joint stock banks are too busy making provision for doubtful debts overseas to listen to farmers at home. We should also say here that the effect of interest rates on rent reviews must be considerable. If I were a landlord I should certainly, when leviewing the rent of a tenant farmer, be taking account of the fact that the overdraft rate is of the order of 18 per cent.
The common agricultural policy is undergoing structural change. This will continue as member states restrain growth in the Community budget. United Kingdom farmers, including tenants, do not qualify as small in the Community's definition of that word. Thus present and future economic Community help is likely to pass our farmers by if the target is the small farmer. The Commission favours early retirement for small fanners to permit opportunity for younger men, diversification and amalgamation of holdings. This has implications for tenants, but so far the Department of Social Security has been unwilling to vary its general rules about the retirement age for state pensions. So little has come of Community proposals in the United Kingdom, which in any case has a derogation from a directive equalising retirement ages by 1993.
The cumulative effect of structural change in the common agricultural policy threatens tenant farmers not least because of some of the complications flowing from it—for example, the attachment of the value of milk quotas to land. Landowners are now seeking alternative uses for land which will give them a better return. Set-aside, for example, is for some a less pleasing environmental prospect than a well maintained golf course. If local authorities will grant planning permission for a golf clubhouse and related development to replace farm buildings, one can see applications for possession by landlords under Case B of Schedule 3 to the Agricultural Holdings Act 1986. A Private Member's Bill currently in another place seeks to put right a position arising following a Court of Appeal decision under Case B which allowed a private landlord to recover possession of a farmhouse sub-let by the tenant for residential purposes to persons employed outside agriculture and required by the landlord for his own non-agricultural use. This may not of itself be greatly significant but in a period of change all decisions are important.
The Northfield Report was concerned with changes in patterns of farm land ownership following acquisition by pension funds and other large investors. The report found no detriment to tenants at that time but no government investigation of the position has taken place since then. In our view this Government seem curiously reluctant to instigate any inquiry. But if there is to be a change in the landlord-tenant law in the near future, an up-date of the Northfield Report is an essential preliminary.
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To be fair, it should be said that Her Majesty's Government appear sympathetic to changes in the law. Reference has already been made to the statement made by the Parliamentary Secretary, Mr. David Maclean, in another place on 16th February. He said:
"I also want to make it clear that on this occasion, as opposed to the early 1980s, we shall not let the lack of total consensus stop us. I know that in the early 1980s, before we came forward with the Agricultural Holdings Act 1984, my predecessors took the view that unless there was complete unanimity in agriculture and all unions could agree on a proposal, we should not legislate. Now we shall not let a lack of total consensus stop us from legislating. The difficulty would be to find a legislative slot if we came up with a solution that was acceptable to many in agriculture and to the House. It would, of course, be helpful if we had all-party agreement on what needed to be done".—[Official Report, Commons, 16/2/90; cols. 622-3.]
In our view, that is a significant statement and one to which no doubt the noble Baroness will refer when she replies to the debate. Paradoxically, all-party agreement may be easier to achieve than a common view of desirable changes in present law from the National Farmers' Union, the Country Landowners' Association and the Tenant Farmers' Association. Their views about alternatives to the status quo show wide disparity. That fact has been fully emphasised in today's debate.
Timing is of the essence in this matter, but apart from changes brought about as a result of the CAP there are indications that those who rent farm land may wish to consider alternatives, including disposals. For example, certain county councils are looking at the farm land that they rent to see whether they would be better off by selling. Pension fund trustees may also be in the mood to realise gains rather than retain assets in an industry offering reduced opportunities for capital gains.
As noble Lords who read the financial press will know, builders have been reducing the value of their land banks in their balance sheet to the detriment of the profit and loss accounts. In our opinion all that bodes ill for the tenant farmers and especially young persons who would like to start out on their own and who are well qualified to do so. If the Government care to take the initiative in this matter seeking all-party support we on this side of the House will respond and favour the kind of inquiry suggested by other speakers in today's debate.
In our opinion the Ministry of Agriculture, Fisheries and Food has given an indication of its willingness to respond positively in England and Wales. We welcome that indication. However, in the light of other speeches made during the course of the debate we must not forget the Scottish dimension. The debate has been most useful and we look forward to hearing the Minister's reply.
4.53 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, it is some years now since we have had a wide-ranging debate on landlord-tenant issues. I do not think that I need to declare an interest as it is some time now since my father farmed or since I was a landgirl. However, I hope that the three years I have spent at MAFF have brought me up to date

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on such matters. My noble friend Lord Stanley of Alderley timed today's debate well in view of the current discussions within the industry on possible ways of revitalising the tenanted sector. I have listened to your Lordships with great interest.
Incidentally—stop press—the Bill of the honourable Member for Montgomery, the Agricultural Holdings (Amendment) Bill, completed its Committee stage, with government help, this morning in another place. During the past 80 years or so the proportion of agricultural land which is rented has decreased from approximately 90 per cent. to about 37 per cent. in 1988. Those figures more or less agree with those of my noble friend Lord Middleton. The main factors contributing to the decline—my noble friend Lord Waldegrave mentioned some of them—have been: first, socio-economic factors such as the redistribution of wealth, economic depression and changes in class structure; secondly, the effects of capital taxation; thirdly, the value of vacant land; and, finally, the legislation giving increased security of tenure to the tenant.
At this point I should like to mention compensation where land is taken for development. It is a matter to which the noble Duke, the Duke of Somerset, and the noble Lord, Lord Mackie of Benshie, referred. It is important to remember that the landlord is the owner of the capital asset.
He should be entitled to realise it if there is a suitable opportunity. If landlords were deprived of that right, there would be another disincentive to fresh lettings. Compensation is clearly a contentious issue. I recognise that there is concern that the level of compensation provided for in the Agricultural Holdings Act is unsatisfactory, but no formula will satisfy everyone. Further, landlords can always offer more than the statutory minimum —and I know that some of them do so. The main problem for those losing land is the difficulty of finding new land to rent. We must not do anything which would make landowners more reluctant to let. The first priority must be to find ways to encourage landlords to let their land.
I return to the different factors in the matter. Such factors have assumed importance at different times. However, the results of last year's CLA landlord-tenant survey suggest that the agricultural holdings legislation is now the key obstacle. Financial and estate management considerations, the political risk and taxation are seen as being of less importance.
I think it is fair to say that much of the agricultural holdings legislation has its origins in the 19th century, at a time when the majority of tenants were likely to be relatively uneducated and would not be expected to take professional advice. One of the main aims of the legislation was therefore to protect the weaker party. This concept was carried through into relatively recent legislation and was taken to an extreme in the Labour Government's misguided 1976 Act which provided for two-generation succession. I do not need to remind your Lordships that a tenant farmer embarking on a career in 1990 is very different from his counterpart of a century
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ago. Like any good farmer, he must be a businessman who takes professional advice as a matter of course and is therefore much better placed to look after his own interests.
I do not intend to venture into the CAP, as suggested by the noble Lord, Lord Gallacher. However, I should remind him that, as my noble friend Lord Middleton implied, the tenant farmer is in a precarious position in some other EC countries. With regard to the CAP, I merely say that it is vital to get the overall framework right. That is precisely what we have been doing with respect to the CAP. I believe that we have turned the comer. We are of course pressing for all we are worth in Brussels for a substantial devaluation of the green pound, insisting upon more than the Commission has proposed.
Your Lordships will remember that we had hoped that the Agricultural Holdings Act 1984 would stem the decline in the tenanted sector. Unfortunately, although it has proved to be a step in the right direction, it has not had the desired effect. It has only slowed the decline in the tenanted sector not reversed it. The Central Association of Agricultural Valuers' annual tenanted farms surveys show that since 1984 there have been more relettings than in preceding years, but the overall decline has continued.
The CAAV's recent surveys also show that, while many landowners are unwilling to enter into lifetime tenancies under the Agricultural Holdings Act 1986, they are prepared to use a range of short-term arrangements, partnerships and Gladstone Bower lettings of more than one but less than two years. That suggests to me that there are a significant number of landowners who do not want to farm their land but will only give up direct control of it if they can retain a much greater degree of flexibility than is offered by the 1986 Act.
I am conscious that some people question whether there will be a viable tenanted sector in the future, or indeed whether that matters. I should like to make it clear that we consider that the tenanted sector makes a vital contribution to the agricultural economy. We all worry about the future of agriculture and in particular the position of young people going into farming. My noble friend Lord Wise mentioned the would-be young farmers. They are the lifeblood of the industry. They are the ones who will ensure that it continues to adapt to the challenges that it faces, as it has always done in the past.
I regularly visit agricultural colleges and I ask students if they have jobs to go to. The answer is usually that they do but that opportunities for those whose parents do not farm or whose farms are too small are very limited. Their position is made much more difficult by the lack of land to rent. It is very important that a solution is found to this problem. The Government are concerned therefore that the current legislation seems to be strangling the sector. Change is necessary to cope with the demands of the 1990s. We are looking at the options and want to hear the industry's views.
For that reason I very much welcome the debate within the industry on ways of revitalising the

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tenanted sector. It is encouraging that there is now a general agreement that some change is required. But, as your Lordships are aware, there is as yet no agreement concerning the wide range of proposals under consideration. These include retirement tenancies, fixed term tenancies, either for any term agreed by the parties or for a minimum term of between 10 and 25 years, and complete freedom of contract.
The noble Lord, Lord Walston, has introduced another idea, though I do not believe that his proposal is practicable. I hope that the industry's discussions will gain new impetus as a result of our debate today.
As regards the extended agricultural tenancy which was mentioned by my noble friend Lord Stanley of Alderley, the five land agents have obviously done a great deal of work. Their proposal for an extended agricultural tenancy provides an interesting contribution to the debate about the future of the tenanted sector. I shall certainly look forward to hearng the industry's views on that and on other proposals.
The noble Lord, Lord John-Mackie, referred to tenants' homes. I want to make it clear that I am very sensitive to the question of how the farmhouse should be treated if there is a move to shorten term tenancies. I mentioned this to the Tenant Farmers' Association when I met its members recently. I am sure that the industry will be addressing this issue very seriously. I shall certainly be urging it to do so.
I am in the process of meeting the various groups with an interest in the issue and I make it clear to then: that we are looking for effective solutions to the problems. To be acceptable to us any proposals must genuinely address the problem and increase the amount of land available for letting. Furthermore, it would be obviously desirable for the industry to reach as much agreement as possible within itself.
However, I agree with my noble friend Lord Middleton. I assure him that we are willing to discuss proposals with the industry without waiting for a complete consensus. I am delighted to take the opportunity to emphasise these points to noble Lords today. I am sure that noble Lords will agree that we cannot justify using parliamentary time for measures which will be of only very limited effect: effectiveness is the key issue.
Before I reply to other points made by your Lordships, I want particularly to assure all existing tenants that no one is suggesting that their tenancies under the 1986 Act would be affected by any new system which may be introduced. I hope that this statement reassures the noble Duke, the Duke of Somerset.
My noble friends Lord Stanley of Alderley and Lord Swinton referred to farm incomes. They rose last year by 16 per cent. If I were to stress that figure to the House and if I had built my speech on it, I might have misled your Lordships into thinking that the picture is a rosy one. I did not because it is not. Last year's rise represents only a slight recovery from the significant fall in 1988. It also hides considerable differences between sectors and individuals. I shall not disguise the fact that for
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many of our tenant farmers these are not easy times, with incomes under considerable pressure.
However, I do not believe that our farmers should despair. I am equally sure that all is not gloomy. The Government are firmly committed to the industry and well aware of its difficulties. We are continuing to provide very significant levels of support. Indeed, in the last year we have done several things to increase the help we give, in particular to those most hard pressed. For example, we have raised HLCA payments for hardy breed ewes. HLCA payments for those facing natural handicaps now amount to £125 million a year. Other measures have included raising BSE compensation to 100 per cent. and the suckler cow premium to the maximum permissible rate.
My noble friend Lord Swinton compared the position of arable and hill farmers. There will be a wide range of circumstances depending on the type of enterprise and its location. Government policy is to create a situation where market forces play a full role. However, we recognise the problems of those facing natural handicaps; for instance, through the HLCA system.
My noble friend spoke about the Countryside Commission and its idea for environmentally friendly farming. I understand the commissions' desire to encourage environmentally friendly farming. I am sure that many farmers, be they tenants or owner-occupiers, are keen to continue in their role of custodians of the countryside. Farming remains the greatest user of the land. The Government are already doing a great deal in this area through carefully targeted schemes such as the environmentally sensitive areas scheme.
My noble friend Lord Stanley of Alderley spoke about the economic position of tenant farmers. He suggested that tenants are in a worse position than owner-occupiers. However, thougth to a limited extent the economic position of tenant farmers depends on a different set of factors than those for owner-occupiers, the two groups have much in common and it would be wrong to separate them. Differences in income levels and trends are usually much more striking between the different types of farm—for instance, dairying and cereals—than between tenants and owner-occupiers. Indeed, figures for England from the Farm Business Survey suggest that farm incomes have been fairly similar overall on tenanted and owner-occupier farms since the mid-1980s. Morever, latest results showed incomes to be slightly higher on tenanted than on owner-occupier farms.
Most cost items are common to both tenants and owner-occupiers. Each has to buy feed, fertilisers, seed, machinery and other inputs; each needs to employ labour and each needs to pay interest on borrowings. In fact the latter cost is often much more keenly felt on owner-occupied farms because borrowings are usually greater.
One cost item which is unique to tenanted farms is of course rent. This, however, is a matter for negotiation between the landlord and the tenant. One would obviously expect farm rents to reflect economic conditions in the industry, but since rent reviews normally take place at three-yearly intervals,

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rent movements may lag behind changes in the circumstances of the industry. However, latest information from the rent inquiry suggests that on average farm rents rose by only just over one-half a per cent. overall in 1989 or just over 2 per cent. on those farms where there was an increase.
Turning to capital, naturally, as I am sure noble Lords will recognise, a tenant's business is worth less than that of an owner-occupier because there is no land or buildings within the business assets. However, borrowings are also lower on tenanted farms. If one subtracts the borrowings from the assets of the business, the resulting net worth figure averages around £100,000 in England. I appreciate that there is much variation around this average, but borrowings exceeded assets on only 1 per cent. of those farms in 1989. For 60 per cent. or so borrowings were less than a quarter of their assets. The financial position of most of these businesses is, I would suggest, fairly secure.
Looking to the future, it is difficult to predict developments, but the major factors affecting farm incomes are likely to bear upon both tenanted and owner-occupied farms. For both groups and for all types of farms there is a wide range in farm performance depending upon a number of factors, not least the skill of the individual entrepreneur. For the future, farmers, both tenants and owner-occupiers, must be willing and able to make the most of the opportunities that are available to them.
Lord Raglan: My Lords, before the noble Baroness sits down, she mentioned that she was going to listen to various representations about forms of tenure and so forth. However, neither she nor any other noble Lord today has mentioned share farming, in which there is a great deal of interest and which might be more universal as a form of contract if potential owners and tenants were more sure of the law in respect of such contracts. Will the Government look into the matter and consider share farming as one of the provisions for which they may legislate?
Baroness Trumpington: My Lords, as part of the exercise I am willing to look at anything, but I do not believe that share farming would solve the tenancy problem. However, those who are involved in that kind of farming would find it worthwhile to put their two bits in with everyone else in an attempt to obtain some form of agreement which would permit us to bring forward meaningful legislation.
5.12 p.m.
Lord Stanley of Alderley: My Lords, I believe that I have a moment or two left as I spoke for less than my rationed time at the beginning of the debate. I thank all noble Lords who have spoken in the debate. If the problem could be put before noble Lords alone, I believe we could achieve a consensus. I shall mention a few points on which we were in agreement. We were all in agreement on the excellence of the landlord-tenant system and the financial position of the industry. If my noble friend Lady Trumpington is worried about that, I would
40
commend to her the recent papers of Professor Nix and Dr. Murphy on the dire state of the industry.
We were all agreed on the inability of the tenant farmer to save enough for retirement, on the difficulty of compensation and on the fact that the landlord should of course take the first cut. We were all agreed that we should try to produce legislation to help landlords let land. We also agreed that it was not necessary to have 100 per cent. consensus, although we could possibly reach some consensus.
I was delighted to hear my noble friends Lord Swinton, Lord Radnor and the Duke of Somerset say how much they valued the long let system. Certainly most of us agreed with the traditional landlord system of one let. However, I am somewhat doubtful about the surveys. It seems to me that they are of the kind that would ask me whether, for example, I preferred one chocolate or a box of chocolates. I would reply that I would prefer to have three boxes of chocolates. I feel that that may be the nature of such surveys.
Finally and most importantly, I was delighted to hear the final remarks of the noble Lord, Lord Gallacher, on the willingness and encouragement of the Opposition to look at this problem with an open mind. I also noted that my noble friend Lady Trumpington is charging round young farmers and others and will continue to do so. I hope that we shall achieve some consensus on this matter as both Front Benches are agreed on the important issues. That is not altogether a common occurrence. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Iraq: Customs Seizure
5.15 p.m.
The Parliamentary Under-Secretary of State, Department of Employment (Lord Strathclyde): My Lords, with the leave of the House, this may be an appropriate moment to repeat a Statement made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
"With permission Mr. Speaker, I wish to make a Statement on export controls in relation to Iraq. On Tuesday 10th April customs officers at Teesport detained eight large steel tubes destined for Iraq which they considered might require an export licence under the Export of Goods (Control) Order 1989. Subsequently, customs obtained related documents from firms believed to be involved. Experts from the Ministry of Defence later inspected the tubes and documents and advised that all the indications were that the tubes were components of a large-calibre armament, albeit of a scale outside anything previously experienced. The tubes were therefore seized and customs are making inquiries to see if any individuals or firms within the UK have committed customs offences.
"The House will want to know that, in the summer of 1988 the DTI was approached by two of the companies now known to be connected with

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the manufacture of these components. In June 1988 Walter Somers asked if licences were needed for the export of metal tubes to Space Research Corporation in Belgium. In July, Sheffield Forgemasters asked if licences were needed for the export of tubes to Iraq for use in the polymerisation of polyethylene, and Walter Somers in August made a further inquiry related to that contract.
"On the information available at that time, it was decided that the export licences were not needed for these goods. Until a few days ago, my department had no knowledge that the goods were designed to form part of a gun. If my department had known that purpose then it would have advised that licences were necessary, and they would not have been granted.
"The Government recently became aware in general terms of an Iraqi project to develop a long range gun based on designs developed by the late Dr Gerald Bull. The goods that were seized at Teesport, and related documents, are consistent with what is known of Dr Bull's design. Subsequent to the seizure the Government have also received information about further aspects of the gun's development. The Government are enti rely satisfied that these tubes form part of a gun and that the customs action was correct.
"I would like to congratulate customs for last week stopping the export of these parts of the gun. I understand that it will not be possible to build a Complete full-sized gun from parts that have been supplied from the UK. I hope that the House will understand that, while customs inquiries are continuing into possible criminal offences, it is not possible to go further into the details of this case."
My Lords, that concludes the text of the Statement.
5.17 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Lord for repeating the Statement made by the Secretary of State in another place. It is by any standards an extraordinary story. We now know that the customs were right and that the tubes were destined to make a gun—that is, if the Government are to be believed. And we assume that the Government are right. We assume that the custons acted on information obtained from we know not where. However, I shall not inquire too deeply into that.
The extraordinary part of the story is the role of the DTI over the past year or so. It is on that matter that I wish to focus. The DTI had access to the specifications of these tubes at the time and knew from Walter Somers of the export of other equipment related to the project to the Space Research Corporation —the corporation which was owned and run by Dr Gerald Bull, a noted expert in long-range guns—obviously for re-export. Are we to believe that the DTI, which had the specifications of these two pieces of equipment in its hands, did not rumble the fact that this could be an Iraqi project? Is that seriously to be believed? If so it is an extraordinary commentary on the performance of the DTI at the time.
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I suppose that we have to believe the Statement when it says:
"Until a few days ago, my department had no knowledge that the goods were designed to form part of a gun".
If that is the case why did the DTI not make the proper inquiries when it knew from Walter Somers that Space Research Corporation was involved? Space Research Corporation was known to be a corporation owned by Dr. Bull which was involved, not in petrochemical equipment, but in the design of long-range guns. Why did the DTI not check who was Walter Somers' client? If it had checked, the department might have come to a different conclusion.
What are we to make of the fact that the Government now say that a complete, full-sized gun cannot be constructed from the parts that have been supplied from the UK? What parts have already been supplied from the UK? Is it the case that 44 pieces of the alleged gun have already been exported to Iraq? If that is not the case what is the figure? What is the situation?
Over the last week we have had a succession of different briefings from different government departments on the nature of the object. We now know from the Government, in an official Statement, that they believe that it was a gun. This is yet another case of the DTI having failed on reasonable examination to pick up the truth when it was presented to it in June and July 1988. There have been many cases in the last year or two where the DTI has been at fault. It passes all belief that a properly organised department, with all the documents in its hands, should not have spotted that something was pretty odd about the contracts. By all means let us congratulate the customs, but let us yet again ask serious questions about the performance of the DTI and whether it is not guilty of negligence in this matter.
Lord Bonham-Carter: My Lords, I do not propose to repeat the very relevant questions put by the noble Lord, Lord Williams of Elvel. As he indicated, it is yet another example of total inactivity on the part of the department of utter passivity, which is what the DTI has now become. Whether it is the Fayeds or Iraq, unless someone else tells the department to do something, it apparently assumes that all is for the best in the best of all possible worlds.
In this case it was not as if the department was not approached. It was asked by Walter Somers in June 1988 whether export licences were needed. It was approached in July 1988 by Sheffield Forgemasters, and Walter Somers made a further inquiry in August 1988. The contracts in question were for metal tubes for the Space Research Corporation, owned and run by Dr. Gerald Bull, who, as far as I know, was not an expert in the construction of petrochemical plants. Did the department think that that was a normal commodity for him to want? Did it not consider that the export of tubes to Iraq by Sheffield Forgemasters required a certain amount of investigation on its part? When in September 1989 Astra discovered contracts for advanced propellants and boosters for a giant gun, was the DTI totally unaware of the fact? If it was

43
not, did it think that that was a perfectly normal contract for a British firm to be engaged in?
It makes one wonder what is going on in that ministry. It appears to be quite incapable of drawing conclusions from the strongest possible evidence. That is either negligence or extreme stupidity. There can be no other explanation for this amazing catalogue of events and mistakes.
Lord Strathclyde: My Lords, perhaps I may respond to the two noble Lords who have just spoken. Before doing so I should make the general comment that I find myself in a certain amount of difficulty. I cannot go into the details of what passed between my department and the companies involved while customs investigations are continuing. I am sure that noble Lords on all sides of the House will agree that it would be wrong to prejudge the case until that investigation is complete.
However, two specific points were raised by both noble Lords, in particular concerning the 44 pieces which have already been exported. The eight large tubes which were apprehended last week are the crucial components. We do not believe that the design can be completed without those eight tubes.
As to the point that because of the involvement of SRC the DTI should immediately have smelt a rat, I have to say that whether a licence is needed depends on the item and not necessarily on the end user. SRC, as a company, is involved in several other businesses, including purely civil businesses, as well as in the manufacture of arms.
The point that I should like to make is that the plan has been foiled. Customs have done their work. The export of the weapon has not been allowed to be completed. We should all be grateful for that.
5.27 p.m.
Lord Boyd-Carpenter: My Lords, can my noble friend confirm what I believe he has just said; namely, that the tubes already exported are insufficient either in quality or quantity to enable the cannon to be constructed? Can he confirm that to be so? Can he also confirm that his department, quite apart from this case, will look and continue to look with some suspicion on applications for licences to export materials of this kind to Iraq given the way in which that country has behaved over the past year or so?
Finally, whatever might have been said about the Department of Trade and Industry, will my noble friend allow me to join in the congratulations to Her Majesty's customs who appear to have acted with alertness and intelligence?
Lord Strathclyde: My Lords, I am grateful to my noble friend for his intervention. I can confirm that it will not be possible to build a complete full-sized gun from the parts that have been supplied from the UK.
As to tightening up export control procedures, we must continue to rely on our existing checks and informative sources. The UK has an excellent record of export control. Let us not forget that we have
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succeeded in withholding the essential components of the gun. If a similar case should arise we would use the same solution and stop the export.
Lord Gisborough: My Lords, to what extent will it be possible for Iraq to obtain the remaining pieces from other countries which might be prepared to supply them? Is my noble friend satisfied that no other country is likely to fill the gap?
Lord Strathclyde: My Lords, I do not know whether other countries are capable of creating the tubes which are missing. I suspect that Britain, which has an excellent record in that kind of development, is possibly the only country which could do so; otherwise, presumably, the Iraqis would have gone elsewhere in the first place.

The Forestry Industry
5.29 p.m.
The Earl of Radnor The Earl of Radnor rose to call attention to the forestry industry in the United Kingdom; and to move for Papers.
The noble Earl said: My Lords, in moving the Motion I must say how humble I feel. I shall be followed by not only one maiden speaker —the noble Earl, Lord Carlisle, whose speech I look forward to with great interest—but no fewer than three chairmen of the Forestry Commission and a recent chairman of Timber Growers United Kingdom Ltd. As a mere son of a past chairman of the Forestry Commission it may seem that I have the wrong position in the debate. However, I shall not let that deter me in any way. I am sure that those distinguished noble Lords will pick up any mistakes that I may make.
At the same time I must declare an interest. I have been planting and felling trees—mostly planting—all my working life. It is with some pride that I have passed my 1,000 acres of planting, among them some beech, some oak and some ash. I shall not divulge the other species in case I put the noble Baroness, Lady Nicol, off her form before she stands up to speak.
The forestry industry in this country should first be considered in the world context. On the whole, wood is a diminishing resource. That is a recognised fact with regard to virtually whatever part of the world one considers. Let us take the extreme example to start with. In Brazil, for political reasons and reasons of greed, the rain forest is being demolished and burnt and the land then sold. The wonderful timber there is not even being used. I am sure that the same applies to the great hardwood areas in the Pacific Basin. One has only to be in Bangkok and watch the timber coming down the great river which flows through the city to appreciate that. Canada—another enormous area of woodland, particularly towards the west, containing quality woods such as the Douglas Fir—boasts that it is on a perpetual yield basis. However, any noble Lords who have been there recently or, perhaps more importantly, have visited over a period of years, will begin to disbelieve that claim as I do.
One should then cast one's mind closer home to Europe and this country. It will be discovered, without quoting any figures, that in comparison with the rest of Europe we are ill served with regard to the forestry industry. We grow a small proportion of trees over our land and we import almost all our impor:ant wood for manufacture. There is therefore a great deal of leeway to be made up. I wish to speak about that aspect, particularly in view of the fact that farming is perhaps not as good or will not be as good as it has been.
I should like to start by talking about the Forestry Commission. When I was a much younger man, I felt that it was a competitor, something to be feared with its relatively large acreage of woodland. As all noble Lords will realise, it is nothing of the kind. It was of enormous importance for me and other private foresters. It was created in 1919 to replenish the forests and the timber that was felled during the First World War. Woodlands were planted up very efficiently until the next world war and then again after the 1939 war. Noble Lords will have seen those forests.
The important point for me and for the country is that the Forestry Commission was able to fund that planting and therefore to attract industry. We are talcing about the forestry industry, not just the planting of trees. I am sure that without the Forestry Commission industry of that kind and size—large sawmills, proper pulp mills and chipboard mills—would never have come into existence. There would not have been the continuity of production from the private forests.
As I have become, like other noble Lords, a little more worried about the so-called peripheral sales of Forestry Commission land, I should like to ask my noble friend the Minister whether that is to continue and, if so, how far it will go. I should like to ask him whether he shares my admiration for the Forestry Commission and my belief that it is of enormous importance to the country. I hope that he will reassure me that little more land will be sold off. Some people would consider that to be a form of back-door privatisation, as I have heard mentioned in this Chamber.
I should also like to mention the Forestry Commission in relation to the report on forestry which the Select Committee on Agriculture in another place has just produced. As noble Lords probably know, the report contains many recommendations. I am not tremendously in agreement with it simply because I think that there are too many recommendations, that it would be hard tc follow them all up and that the whole thing might become a nightmarish muddle.
If I understood it rightly, one of the recommendations is that the Forestry Commission would be divided into three regions, presumably Wales, England and Scotland. I am not sure about Northern Ireland. If that is one of its recommendations, I would be against it because the strength of the commission and the way in which it has been able to help the industry and private foresters in this country is due to the fact that it has been large and flexible. I hope that my noble friend can assure me that that split will not take place.
I am aware that my noble friend Lord Crickhowell is sitting below me. The other suggested split was the poacher-gamekeeper split; namely, that the regulatory side of the Forestry Commission should be divided from the wood-producing side. Although such a split was excellent in the case of the National Rivers Authority, I am much more doubtful that it would be of any use to the forestry industry.
We are dealing here with a completely different matter. It would be best if the Forestry Commission was left precisely as it is, without disturbance, to do its dual job of producing wood, which I put first, and then its important job of providing access and amenity for the general public—a job which came lately to it after the Second World War and which it does extremely well. It provides endless pursuits for many people.
That is the spine of English forestry. I should now like to look at private forestry. Here there is a considerable problem as there always has been. I hate to think that there always will be, but it is possible. The question is one of cash flow. You plant a tree and, if it is a deciduous tree, it takes 60 years to come to maturity and probably 30 years pass before you gain any profit from it. If you plant a lovely oak, you certainly do not see much benefit from it. Noble Lords will know that in the 1988 Budget the tax incentives were taken away from people who planted trees. You used to be able to plant trees under Schedule D, take the maintenance cost off your tax and finally sell your timber free of tax. That just about kept the pot boiling, with a few grants thrown in as well. Now all that has gone. The whole situation is dealt with by grants.
I myself brought up in your Lordships' House the matter of grants which is broadcast and told to everyone. They sound extremely good. However, a tree grows over a very long span of years and the grants become eroded by inflation. Some noble Lords may remember that debate in which I was able to cite figures to show that over a 10-year period —I cannot remember precisely which one but it was quite recent —the value of the grants went up by 94 per cent. but the expense based on labour (which is the major cost in forestry) rose by 726 per cent. At that time I checked the figures very carefully and I believe that they were right.
At that time the intention was to have a three-yearly review of grants. That was the best that could be wrung from the Government. I understand that that review either is in progress or has now been completed. I hope that my noble friend will be able to tell us something about that matter.
The next aspect of the forestry industry that I should like to cover is what I call corporate forestry. That was also hit severely by the taxation measures which were withdrawn in 1988. Big firms got together owners who had no particular inclination to plant trees but wished to take the tax advantage. That was, perhaps rightly, considered to be wrong. It was perhaps one of the main reasons why the tax advantage was taken away.
The fact is that corporate forestry was very important to the industry. A massive amount of timber was and is being grown which will be of great

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use for the gross national product input saving in time. Without reinserting the tax situation, I should like to suggest to my noble friend that the Government look extremely closely at broadening the base of woodland ownership through such corporations. I do not know the details and I think that it would be extremely difficult. It would need some amendment to the Financial Services Act which has only recently been passed. However, I believe that that suggestion should be looked at, simply so that timber will continue to come forward.
I have one minute left in which to talk about amenity and I am determined to do so. When he was my chairman in Sub-Committee D, the noble Lord, Lord Gallacher, once sent me out in a snowstorm to look at the biggest planted forest in Europe. There must be some way of organising the situation with so-called blanket forests, so that the noble Lord, Lord Crickhowell, is not irritated by trees planted in head waters and acidifying the rivers and the noble Baroness is pleased that there are open spaces with wildlife and fringes of considerable dimensions of hardwood trees.
There is nothing much more to be said. I shall sit down and listen with the greatest interest to the distinguished Peers who are to speak. I beg to move for Papers.
5.44 p.m.
Baroness Nicol: My Lords, the noble Earl has chosen a very good time to introduce this debate. When agricultural pressures are changing, it is quite likely that more land will be available, if necessary, for forestry and other purposes. I am sure that the debate this afternoon will be helpful to those who make the decisions.
The value of forests is greater than just the value of the timber produced. It is greater even than the value of jobs provided by the timber industry. The noble Earl has already mentioned the global importance of trees. We have come to learn in the past months how very important they are in cleaning the air of carbon dioxide. I understand too that in terms of carbon dioxide collection young trees are much more valuable than mature trees. That seems to me to be an argument for a dynamic forest industry. We should all think of that when we set out to defend the old forests which so often people do not want to see felled.
Forests also contribute to education and recreation. Suitably managed deciduous woods, as the noble Earl just said, meet all the requirements of conservation. They provide an invaluable wildlife habitat and can enhance the local landscape. So why are conservationists and foresters so often in conflict? The answer must lie in the way in which forestry operations are managed and directed; that is to say, in the shape and application of our forestry policy.
That policy, as presently operated by the Forestry Commission, attracts criticism from many informed sources. On 1st February this year the House of Commons Agriculture Committee published a report, entitled Land Use and Forestry, to which the
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noble Earl has already referred. It criticises the lack of government policy to deal with agricultural land now surplus to food production requirements. It examines five possible alternative uses for such "surplus" land and concludes that the most significant alternative land use in the next 20 years is likely to be forestry.
The report than examines the present arrangement for forestry direction and management. It finds many flaws in the existing situation and makes a number of positive recommendations for the future. The noble Earl felt that there were too many recommendations but in fact the document as a whole is extremely useful and covers the whole field of land use, not just forestry.
That report and its recommendations met with widespread approval. The Council for the Protection of Rural England supports many of the recommendations. The Royal Society for the Protection of Birds welcomed the report as:
"a breath of fresh air in forestry thinking".
The Country Landowners' Association approved of the arguments for a more broadly based system of support. So far the Government have not responded and I hope that when the Minister replies today he will give us some idea of when the formal response to that report can be expected.
The recommendation at paragraph vii on page xlvi is fundamental to the future of United Kingdom forestry. Under the heading "The Forestry Commission" it states:
"We believe that the two functions of the Forestry Commission—as Forestry Enterprise and Forestry Authority—should be divided between separate departments.
This would remove the perceived conflict of interest within the present Forestry Commission in its roles as nationalised industry and regulatory body and provide the opportunity for a more broadly based Authority to oversee the development of multi-purpose forestry".
The noble Earl said that he wants the Forestry Commission to remain as it is, but there is the element of poacher and gamekeeper which was so widely quoted in the creation of the National Rivers Authority and which I believe is equally applicable in this case.
That recommendation has the support also of the RSPB and the CPRE. At this point I should declare an interest as a council member of the RSPB. The RSPB would like to see a full review of forestry policy. It stresses the need for diverse forestry to produce not just timber but "public goods" such as environmental benefits. It considers that the use of environmental impact assessments in forestry should be improved and expanded and questions the validity of the national planting target of 33,000 hectares per annum. It is difficult to discover how that figure was obtained. I wonder whether the Minister can enlighten us in his reply. I have seen copies of correspondence between one of my honourable friends in another place and the Secretary of State for Scotland in which my honourable friend tried to discover how the figure of 33,000 hectares has been arrived at and he received quite unsuitable replies.
The Pamham Trust in Dorset is doing excellent work in training craftsmen in wood. If possible it

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uses only indigenous timber. It is very concerned that so little attention is paid to the quality of United Kingdom-produced trees. Mr. John Makepeace, who is the director of the trust, has developed techniques for the use of roundwood and the use of laminates which gives forest thinnings considerable commercial value and could give hardwood growers a return on their investment much earlier than they would normally expect and much earlier than the figures that the noble Earl has quoted.
Leading conservationists have long opposed blanket conifer afforestation of the uplands. That approach to forestry is destructive to landscape and wildlife and the value-for-money aspect of the exercise is often questionable.
The CPRE calls for greater controls of forestry. It presses for the creation of multipurpose woodland. In maintaining its objection to large scale conifer plantin g of the uplands, it points out that changed agricultural policies could bring more lowland forestry into existence if backed by the right financial incentives. I believe that we should ask the Government to give their attention to that aspect.
The CLA also draws our attention to the need to switch the emphasis in forestry policy away from quantity towards quality. It assures us that landowners would welcome the new opportunities to invest in forestry which could flow from incentives to satisfy multiple objectives in new woodlands. It would like to see a more active role for the Forestry Commission in advice to landowners in identifying markets.
For once the needs of conservation and commerce and the possibility of relief of rural deprivation are all in harmony. I hope that the Government will seize this unusual opportunity and take the wise advice being offered from so many well informed bodies.
Much good work has been done and continues to be done by the Forestry Commission. But the time has come for a fresh look at its purpose and direction. The pit-prop policies of the mid-20th century are no longer appropriate for the century's end and will certainly not meet the needs of the future.
5.52 p.m.
Lord Mackie of Benshie: My Lords, I do not know a great deal about forestry. I have planted only about 12 acres of trees in my life. I planted them in a farm woodland scheme of my own. And although the passage of 40 years has not been long enough for me to reap some financial benefit, at least the trees provide shelter. That is quite useful when the west wind sweeps through the howe of Strath More.
There is a general realisation that trees are a good thing and that we need them for our economy and as an amenity in the countryside. I can think of no better person to introduce the debate than the noble Earl, Lord Radnor. He is a dedicated forester and actually knows about the subject. That is a great virtue at any time.
I wish to make one point. Continuity of policy is absolutely essential if we are to improve the look of the countryside and our economic position. Two major c hanges, one of them only recent. have upset
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the pattern. I understand that planting last year was down to less than half the projected figure and that it is expected to recover slowly. I stress the phrase, "expected to recover". That is no way to run an industry which is so long term. When one considers the past, the great period of planting trees was through the late 18th and the 19th centuries. In Scotland there is a saying that one should plant a tree that grows when one is sleeping. Such passion was for the descendants of the people planting the trees; it was not for direct gain.
Big tax advantages have encouraged many people to put money into forestry. I am sorry that the Government have been frightened by stories about Terry Wogan. Why they should be frightened by his putting money into trees, I do not know. It seems a perfectly respectable thing for him to do with his money. However, we now have a new scheme. I trust and hope that the Government will produce a further policy that will give desperately needed continuity.
One of the worst actions of the Government was to remove money from the Forestry Commission to plant trees in the belief that this would be done almost entirely by the private sector. I was delighted to hear the firm support of the noble Earl, Lord Radnor, for the Forestry Commission. It appears to me obvious in this day and age that the state must take an interest in the planting and maintenance of our forests, not only in the excellent advisory capacity of the Forestry Commission, but in the actual planting and maintenance of trees and in the planning of the planting so that the ancillary industries can be set up in the right place. That is extremely important.
A great deal may not come from the set-aside and the farm woodland scheme. I believe that the farm woodland scheme will be extremely useful in providing amenity. But it is unlikely to provide a tremendous amount of planting. It removes land permanently from food production. It is by no means certain that we shall not need that land once again to produce food. Apart from that, there are industrial crops that can be grown and developed. For example, we can produce paper from agricultural crops which would save the tremendous import of pulp into this country. I therefore believe that the Government must consider the long term.
I ask the Minister whether he has read the report from the Forestry Industry Committee of Great Britain. It contains many admirable suggestions for spreading interest. But these need government support and fiscal policy directed towards them. If one is going to plant trees for the future, the Government might consider the position regarding inheritance tax and give full relief for people who spend their money in this way. If they are doing so for their descendants they do not want it eroded.
The forestry industry is a necessity. It is a passion for some people and an industry that any government must encourage by all means possible. I trust that that encouragement will be permanent and that policy will not be changed in the middle of its operation as during this past year when nurserymen had to burn millions of trees. I ask the Minister for an assurance of continuity of policy.
5.58 p.m.
The Earl of Carlisle: My Lords, I am well aware that there are many expert foresters in this House, probably more than in any other place, even than in the Forestry Commission. Most of your Lordships' families have been planting trees for centuries. If one goes, as I always have the good luck to do, to see the Buccleuch estate, one sees proper forestry, with landscape and all the rest of the technicalities of forestry; if one goes to see the Forestry Commission woods they are abysmal.
I differ from my noble friend Lord Radnor. I do not think that the Forestry Commission is doing a good job. I shall briefly sketch through its history. We know that it started in 1919, which is not very long ago. I believe that its chairman, the late Lord Lovat, was a very good choice. He had a large forest; he was a Fraser and they are always clever.
Later the commission obviously had a remit to buy any land that it could find. In 1967 I was taken to an area in Sutherland which the late Duke of Sutherland had practically given to the commission to plant in order to provide jobs for the boys when they came back from the war. You never saw such awful stuff! I understand that the trees did not grow so someone threw in a match and started again. When I last saw the area it was slightly better but it was not very good.
I told that little tale because I was amazed that anybody was allowed to plant the Flow Country, which is somewhere in Sutherland or Caithness. No trees will grow and it is crazy that forestry syndicates can persuade people to invest money there. I like birds but such planting will certainly extinguish any birdlife there. The noble Baroness, Lady Nicol, spoke of the RSPB. I can assure her that in my area on the English side of the Border the commission has blanketed the whole area with its black trees. Therefore, much of the birdlife that I knew in my youth will never be seen again. It is probable that we shall never again see merlins, grouse, golden plover and so forth.
I am annoyed even more by the fact that when in 1925 the commission acquired about 100,000 acres from the trustees of the Angus estate they planted Kielder Forest. They planted every acre and it is the worst form of land management anyone could devise. You blanket the whole countryside with no thought of any amenity. I discussed the matter often with the late Duke of Northumberland, who said that he was very sad about the situation. He said that the right way to plant big hill land was as follows. If he had a 3,000-acre farm—and he often had more—he would go out with his forester and his shepherd and ask what would suit the trees. He said that he would plant sheher blocks, and he did that.
He and I suggested to the then chairman of the Forestry Commission that that was the right way of planting. When we took the chairman to see the area the Duke asked, "What will you do if I drop down dead and you have a 5,000-acre farm?". He said, "We will do just what you have done". With one voice we said. "Liar", because we knew that they would plant every single yard. The commission had the most marvellous opportunity to produce good
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areas of farms, lakes and amenities but I have never seen it do so. The only place it ever did that was at the top end of Grizedale where it carried out a kind of amalgamation. Other than that it has ruined the northern areas.
I am saddened even more because I do not believe that the commission ever thins its woods; it appears to have given up doing so. I can show you woods that were leased by my father for half a crown an acre. Formerly they were deciduous woods, but what are they now? They are black trees with a sprinkling of larch which have never been touched since they were planted in 1950.
Does the commission want to sell the woods? It finds independent valuers to value the areas and then ask appalling prices so no one buys them. One would have thought that it would have enough sense to put them up for auction where a fair figure would be paid. I cannot make out whether it wants to keep the woods or sell them. I do not believe that anyone knows the answer. I am hoping that by the end of the debate someone will have told us. I do not see why we should not sell woods which are not convenient. I suppose that there is a good case for keeping a block of 50,000 acres under the commission. But is it to buy more land or not? Has anyone decided? I wonder what the answer is. In any event, I shall not go on and on about the Forestry Commission, but I want to know what will happen next.
My next point is that the forestry authority as such takes at least six months to grant a felling licence. That is our experience in the North, which is absurd. Our area is governed by an office in York and the employees have never heard of Cumbria. You ring them up and ask, "What about a licence?". There is no hope because the chap does not know where we live. We have only one forestry office left in our area, which is probably the largest area of forest in Britain. What is to be done? Are we to go on waiting for felling licences? There is no question but that all the figures that it issues are incorrect. A friend of mine who is a forestry contractor may go to buy 1,500 tonnes of pulp wood but may receive only 1,000 tonnes. He does not pay for the extra, but the figures are wrong. There will be an appalling shortfall by the year 2001. If no one thins their woods, they cannot grow. I do not know what the authorities are doing or what they want to do.
I should like to see the forestry authority taken away from the Forestry Commission. Let the commission run its own woods and run them well. There must be a zoned area for each forestry authority. Whether it is called Scotland, Wales, North or South England would not matter. We hope that if the right officials are employed they will come up with the right answers.
I should like to see areas such as the New Forest put in the hands of a separate organisation. All such areas which are visited by thousands of people, should have nothing to do with the Forestry Commission. It is good up to a point, but surely such areas should be run by a different authority such as the local county council.
I am keen on amenity planting, although my grandfather was much better at it than I am. He was

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an artist so he had a good eye for colour and knew where to put the trees. Grants are available, although recently I rushed to find them but discovered that they had all gone. However, I have booked for next year. I should like to see bigger grants because the planting of small areas of beech and oak is extremely costly and one never sees the result.
6.7 p.m.
Lord Taylor of Gryfe: My Lords, it is my first duty to congratulate the noble Earl, Lord Carlisle, on his interesting and challenging maiden speech. I am certain that speakers who follow me will respond to his challenging remarks. In all fairness and charity I must say that his experience of the activities of the Forestry Commission is at great variance with mine. I assume that that is also true of other ex-chairmen of the commission who are present in the House.
I am delighted to see that at least three former chairmen of the commission, several ex-members and Ministers to whom I was responsible when I was chairman are present in the House this afternoon. There is one simple message that I should like to go out from our debate. Please, Lady Nicol, it is not that there should be a new look at forestry policy. We have had plenty of those in the past few years. Forestry requires long-term certainty and planning. A long-term strategy should be aimed at in order to promote what is a long-term industry. The message I should like to go out from our debate is quite simply: hands off the Forestry Commission.
In recent years I have noticed a substantial diminvtion in the responsibilities of the Forestry Commission. The selling of land, which began as an exercise in tidying up, had led to another planned disposal of 100,000 acres before the end of the century. In 1980 the commission's planting programme was 15-8 hectares; last year it was 4,500 hectares. That would not be so bad if private enterprise was taking up the slack in the planting programme. However, last year the local planting programme reached only 12,000 hectares against the target of 33,000 hectares, which the Government have regularly accepted. That is a very serious matter for a very important national industry.
As the noble Earl, Lord Radnor, mentioned —and I sat as a commissioner under the leadership of his distinguished father who was a great chairman —the Forestry Commission was not a competitor with private enterprise. It was in partnership with it. Occasionally we competed for purchase of land but essentially it was a partnership pursuing the development of forestry. We shared experience. The Forestiy Commission provided the research for private enterprise forestry in this country. In the countr/side we were always good neighbours and pursued a policy of being good neighbours. We undertook most of the training in the forestry industry and were the pioneers in the development of recreation—camping sites, forest walks and so on—which the private sector has also followed in the past few years.
Most important, because we were a large commercial organisation we could make long-term arrangements in marketing. To attract substantial investment into the new wood processing industry
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there has to be a major supplier to give some sort of guarantees of supply. Therefore, the Forestry Commission was neither a competitor nor a monopoly. It was part of a partnership encouraging a sensible forestry policy for the United Kingdom in both the private and state sectors.
The decline of this industry is a serious matter. The Government must tell us where they are going now, with a planting programme of 12,000 hectares last year against a target of 33,000. Large-scale investment has been made in wood processing plants on some sort of guarantee that home grown timber would be available in the future. It is a large employer of labour. Questions were asked in this House quite recently about the decline in rural employment. I know that some people would prefer to see parts of Scotland as a large wilderness in order that they may enjoy their occasional recreation in those areas. However, there is nothing more interesting and exciting than a living countryside, a countryside in which men find employment and in which families can live. If we are to cut back on forestry and planting as we are doing at present, large areas of Scotland will be left without schools, life or interest.
Therefore, I appeal to the Government to change their course. They have not been wise in the changed fiscal arrangements which they have made for forestry. I hope that they will read and in due course reply to the report of the Select Committee of Agriculture, Land Use and Forestry, because the opening paragraph states that in the new fiscal arrangements for forestry:
"The announcement was made after the minimum of consultation within Government and no consultation outside Government and had the immediate effect of undermining confidence in the industry. It also raised doubts whether anyone in the Government was looking at the forestry sector as a whole and giving thought to the fundamental principles which should guide its development".
I hope that the Government have a reasonable response to this criticism.
Finally, as regards the future of the Forestry Commission the idea in this report that there should be a split between the forest authority and the forestry enterprise is not a sensible proposition. The people who must discharge their duties in the forestry authority are the same people who are exercising and carrying out duties as the forestry enterprise. They cannot be split. The combined experience of the two sections of the industry is required. I hope that the Govememnt will not continue to reduce the Forestry Commission or on account of dogma allow it to be privatised. I hope that they will not accept these proposals about dividing it into enterprise and authority because they are parts of an industry which require to work together.
6.15 p.m.
Lord Crickhowell: My Lords, I am grateful to my noble friend Lord Radnor for enabling us to debate this important subject and to listen to such a spirited maiden speech.
I intervene to make one particular point about the environmental impact of forestry and the results of research which we now have into the serious problem

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of acid water in some of our uplands. Before I do that, I wish to make it absolutely clear that I am not hostile to forestry and have no doubt about the positive benefits which it can bring if planting is properly planned and is done in the right place. For nearly eight years I shared ministerial responsibility for the industry. I was particularly closely involved with the development of the Shotton paper mill and I know very well how substantial is the contribution made by forestry to the national economy and particularly to the creation of jobs in the countryside and in the forest-related industries.
The huge and escalating balance of trade deficit in timber products is a compelling reason for encouraging afforestation. There are equally compelling environmental reasons for replacing the timber cover which has been so depleted down the centuries. It is not only the tropical rain forests which provide a defence against the greenhouse effect. Surely any policy for sustainable development must involve the replacement of the soft woods which provide 80 per cent. of the timber resource for the industrialised nations.
Therefore, I share the concerns already expressed that changes in the grant and tax structure have led to a sharp decline in new planting. I believe that the Government must look again at the package if their own repeatedly stated objectives are to be achieved.
I hope that this time the examination will take place in a calmer and more rational atmosphere than on the last occasion. Yes, tax breaks can be abused and blanket afforestation in the wrong place can be damaging. Yet a number of cases on which I had to adjudicate as Secretary of State led me firmly to the conclusion that with proper planning and consultation it is, more often than not, possible to reconcile conflicting objectives and obtain a wide measure of agreement. I suppose that in my own way I went out with the noble Earl's forester and shepherd to take practical decisions about practical issues.
My plea this evening is that proper planning and consultation are essential if forestry is to receive public understanding and backing rather than sustained hostility and if we are to avoid serious damage to the environment. As chairman of the National Rivers Authority I am particularly concerned with the water environment. A more comprehensive and effective system of land use planning covering agriculture, forestry, waste disposal, urban run-off and other causes of contamination will be needed if we are to halt and reverse the serious decline in the quality of many of the streams and rivers which sustain our principal fisheries.
Major research carried out particularly in Wales and the South-West in recent years has shown unmistakeably the scale of the damage being done by acidification and the contribution to that process by coniferous forestry in some geological and soil conditions.
A senior executive of the Economic Forestry Group said to me in a letter recently that the problem is not the forests; it is the pollution. That is true up
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to a point. It is essential that emissions from power stations and other industrial sources be substantially reduced, but there can be no doubt that forestry is an important factor contributing to the grave damage being done in areas such as the head waters of the River Tywi. Trees are very effective collectors of airborne pollutants which are then washed into streams or percolate through the soil when it rains, releasing aluminium and other minerals into the drainage waters. Unfortunately aluminium can kill fish and other water life, and it is a problem which must be tackled by treating drinking water for the public.
It seems to me that the scientific evidence for these statements is overwhelming. The recently published book Acid Water in Wales brings together recent research by scientists from the universities, NERC research institutes, the Welsh Water Authority and the NRA and demonstrates,
"that in a substantial area of upland Wales, particularly the Cambrian mountains, streams and lakes have either acidified or are likely to acidify over the next century unless there are significant changes in emission and land use policies".
In these areas, rocks are slow weathering and the soils have little or no acid neutralising capacity. Data from these sensitive regions show that streams draining plantations of conifers are more acid and contain higher concentrations of aluminium than streams draining moorland. There are many other upland parts of Britain where similar conditions are found. In some soft water streams and lakes in mid and west Wales the sources of some of our major salmon and sea trout river fish populations have been almost totally eliminated.
Hardly anyone taking part in this debate needs convincing regarding the seriousness of that situation. Many noble Lords are as keen and knowledgeable about their fishing as they are about their forestry. However, I am concerned that there has been a recent tendency in the industry to dismiss the evidence or simply call for more research. I believe that the time has come for action. The trouble is that no system exists for land use planning in upland Britain. Decisions on land use change are taken by individual farms and commercial forestry interests, which was a point very well brought out in the report of the Forest Industry Committee of Great Britain.
My case is not that I want to stop forestry. I want to see more of it, but in the NRA we believe that we have to have a land use policy to restrict forestry in those areas where it is likely to cause significant damage to the water environment. We should like to see the Environmental Assessment (Afforestation) Regulations amended so that the NRA can require an environmental impact assessment for those plantings, grant-aided or not, which it believes may have an adverse effect upon quality.
If that sounds negative I must make it clear that I also want clearly identified the places where plantings should take place. That is exactly what the system of regional indicative forest strategies in Scotland is designed to achieve and what the Forest Industry Committee recommends when it asks for a structured rather than an opportunist approach to land selection in order to achieve the positive and

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balanced contribution that forestry can and should make to our economy and environment.
6.24 p.m.
The Duke of Somerset: My Lords, I add my congratulations to the noble Earl, Lord Carlisle, for his forthright speech. In the words of the Secretary of State for Scotland, the industry is still going through a transitional period after the 1988 Budget changes; so this is a suitable time to take stock. The question is whether we should be looking to plant more trees or whether we should be stopping in our tracks. After all, timber consumption in the UK is of the magnitude of £7 billion per annum, of which 90 per cent. is imported. That is the equivalent of one-third of the current trade deficit, with the constriction industry contributing most significantly to that element of the deficit. The projection is for the UK demand to increase by at least 17 per cent. over the next decade. The trade deficit must be borne in mind when the overall picture of forestry is looked at.
We know that growing trees is long term. Decisions can be taken this year regarding new plantings but it will be another five or six decades before the effect is seen on any future deficit figure. However, that is no argument for procrastination.
In declaring my interest as a woodland owner I should equally like to declare an interest in conservation. Like the vast majority of those who work in, and help to shape, the countryside, I believe that production, be it of food or timber, should be synonymous with conservation of the environment. It is thus axiomatic that the expansion of forestry in the UK would contribute positively to our environmental state, not just regionally, but nationally and globally.
An expansion of forestry would benefit the UK environment not only by creating and sustaining a capital resource for the future, but, for instance, in providing recreation. Trees can accommodate leisure pursuits more easily than open land —from walking and orienteering through motor rallies, war games and many other pursuits in between. That must be part of the aim for the proposed community and urban fringe forests. They will improve the quality of life for the adjacent townspeople but, like forestry in general, such planting will not happen if the finances are not carefully planned.
Other benefits of expansion would include variety of landscape, with varied species of different age classes cleverly juxtaposed. That is an emerging science and one needing further encouragement and study.
Greater planting, which is a viable option on much of the land previously used for agricultural surpluses, would give greater security to the processing sector and add value to the raw materials. Since 1983 £800 million has been invested. That has meant the latest technology and has brought sustained rural employment. The uncertainty of today must not be allowed to jeopardise this industry with resultant knock-on effects.
The Government ask the industry to provide facts, not fears. We know of the 12,000 hectare shortfall
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in planting. But the evidence in my part of south-west England is that the motive behind the WGS and farm woodland planting is improvement of amenity and sporting facilities. There was initially much resistance to the new concept of the broadleaved policy that production of marketable timber was no longer to be the main object of management. While I welcome that sort of planting, commercial planting for timber should be encouraged in England as well as in Scotland and Wales. To continue both types of expansion the Government should help to promote multiple objectives.
Despite the body blow of the 1988 Budget there is no going back. Forestry can go forward and thrive, but it needs a little fiscal help. May I suggest, first, a maintenance or management grant to help maintain employment and prevent neglect in that trough between planting and thinning. As we have already heard, the removal of forestry from inheritance tax would end the anomaly where a single growing product is taxed every generation, hitting the capital value and inhibiting the planting of long-term hardwoods which span up to four generations.
Furthermore, the grant scheme could be amended to encourage better woodland design by including bare land in the forest, wide rides, butterfly lawns, water and even wild flowers. I cannot believe that those measures would amount to any significant cost. I wonder whether the Government have costed, even considered, introducing any of them.
I expect many people will ask where extra planting should go. We have just heard that Scotland has the new indicative forestry strategy. Perhaps I may go into a little more detail. This identifies three areas: first, the preferred area for forestry where it will attract new investment; secondly, potential areas which pre-identify any local issues or constraints that need to be accommodated; and thirdly, areas that are sensitive and under much less pressure for planting.
This planning process greatly reduces the hassle in new schemes because the environment and the economics can proceed together. In turn, all interests assemble their data and justify their case in advance. Therefore, the reactive and opportunistic approach to development, sometimes seen in the past, is largely eliminated. Let us hope that that enlightened strategy can move swiftly south of the Border. I wonder whether the Government will give any active encouragement on those lines.
Finally, who will be making this investment? We hear that the nurseries have destroyed 40 million trees and that planting levels are seriously down. I am certain that confidence can be restored with a clear statement of positive commitment together with the financial adjustments I have outlined. These would appeal to two types of potential investor that the Secretary of State for Scotland envisaged recently at the excellent CFC luncheon; first, the small investor, then the financial institutions and the pension funds. I suggest that we permit the smaller investors to enter co-ownerships by allowing forestry companies to pay dividends tax-free. That would surely be in the spirit of the 1988 Budget.

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How about "planning gain" where an otherwise absentee landlord would be encouraged to use his investment and perhaps build a cottage in his woods? Above all, these investors need stability, not major announcements about a major industry made amid great secrecy in a Budget Statement. That is no way to inspire confidence. This stability should be extended by leaving alone the Forestry Commission, as we have already heard from a number of speakers. I shall not go into more detail on that aspect.
The industry is ready and itching to go. It will clear up after the recent storms. It must forget about the 1988 Budget, but it needs a clear commitment of positive incentives and stability from the Government.
6.33 p.m.
Lord Gibson-Watt: My Lords, this debate initiated by my noble friend Lord Radnor has brought forth a great number of views on what is a complicated industry—the forestry industry. The past few years have seen some dramatic changes in the industry, both in the woods and in the mills. We have also seen changes in the attitude of the general public towards forestry and of foresters towards the other claims on woodland areas.
The code of practice advice produced by Timber Growers United Kingdom is an example. Here I confess an interest as I have been chairman of TGUK for three years following 10 years as a Forestry Commissioner, which has given me some idea of what goes on in the forestry industry. This code of practice, if followed, improves the methods of creating woods and goes a long way towards satisfying other interests, too. Among other things, it lays down that conifers should not be planted close to running water.
As has been mentioned, there is great anxiety about the decline in planting, particularly in Wales, where the figure is very small. This has been largely caused by two factors: the removal of the Schedule D/B tax option and the strong opposition of the Welsh Water Authority. In over half of Wales there is a presumption against planting because of the acidification problem referred to by my noble friend Lord Crickhowell.
I accept that planting of conifers near watercourses can be very harmful. My noble friend made a notable contribution to this debate. There is very little of what he said about acidifcation that I disagree with. He also referred to the indicative strategies which have been worked out on the initiative of the Forestry Commission—and the private side, I remind your Lordships—with the Scottish regions. This may be more difficult to achieve in Wales but it is as well to remember that any planting application now is scrutinised not just by the Forestry Commission but by the water authority and the local authority. Therefore, there is far less risk of damaging planting being carried out. Indeed, I remind your Lordships that there are vast areas which in my view could well be planted. They are a long way from watercourses, are covered with bracken and are habitats for nothing but rabbits.
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Anyone who has travelled over them in a helicopter, which I admit I have not done recently, will have seen the great size of those areas.
There has been huge investment in modem machinery in the mills, and that has greatly increased demand. In the woods the gales of 1987 and of January and February of this year have blown down, I believe, 20 million trees and possibly more. It is encouraging that the markets have stood up so well. A glut of trees and a very dry summer in 1989 have filled timber yards. Ten years ago that combination would have hit the markets for six. The industry is now far stronger. Credit for that must go to private enterprise, to the Forestry Commission —referred to by the noble Lord, Lord Taylor of Gryfe—and to the Government, who to a large extent funded the incoming firms.
I should like briefly to refer to broadleaves. A review of broadleaf policy is at present being conducted and we are hopeful that Ministers will listen to the evidence put forward by the practical foresters. After all, they are the people who have to plant the trees and probably pay for them as well. I hope that some heed will be given to their evidence.
I stress the importance of growing the right trees on the right soil. There is no point in growing oak trees at over 1,000 feet altitude. There is no point in growing oak trees where the last crop after 140 years has been cut down and found to be shaky and useless. However, that is what we are at present being asked to do. The private woodland officers of the Forestry Commission are not empowered by Government Ministers to do anything else but insist that broadleaves should be planted where broadleaves were planted previously. In all sense, that must change. It is only a small point but it would make a great deal of difference. Private owners have no appeal system as a last resort.
We are spending, as a country, considerable sums of money on encouraging broadleaves in both the private and the public sectors. That is a total waste of money unless Ministers come forward with a policy on the killing of grey squirrels. Grey squirrels enjoy eating the tops of trees and the leaders. Unless something is done, such expenditure will be a total waste of Treasury money.
Finally, I come to the report of the Commons Select Committee on Forestry. It is good in parts. It recommends a management grant, which is most acceptable, and this would help to keep our woods in good order. However, its recommendation to carve up the Forestry Commission—both the enterprise and the authority—and to put it into Scotland, England and Wales, is pure lunacy. We have something good, so why knock it about? It has had enough knocks in the past few years and in my view we must keep a reasonably large forest enterprise to give backing and experience to those who administer the Forestry Authority. In my view the Forestry Commission is a fine service. As I said, I have seen it at first hand. In spite of recent reorganisations, morale in the service is very good. Abroad it is recognised as one of the best state services in Western Europe. We need to be proud of it. Forestry needs a period of steady, balanced expansion with recognition of the benefits that multi-purpose forestry can bring to our country.
6.40 p.m.
Lord Gisborough: My Lords, I should like to start by declaring an interest as a forester. I congratulate the noble Earl, Lord Carlisle, on his speech and the well-deserved criticism of the Forestry Commission.
The first point I should like to make concerns the lack of success of the woodland grant scheme in boosting planting. There have been a number of applications but as a rule they never get taken up. We have heard that the target is 33,000 hectares. Last year 12,000 hectares were planted, and in 1990 it will be 7,500, so it is simply not working. Set-aside may help, but the Government must look at the grant scheme again if they want to keep up planting.
Reduced planting will have a disastrous effect not only on forestry but also on the processing industry, and in addition to that on potential investment in the processing industry if people who are going to invest start to wonder whether the planting is going to go up and down according to changes in policy.
Following the fiscal change in 1974, it took no less th in 11 years for the planting to recover. It is interesting that in 1989 the nurseries lost some 50 million seedlings. If we wanted to plant again in a big way those seedlings would not be there and nurser es would think twice about growing so many if they thought they would all have to be burnt again.
For forestry to thrive it must obviously be economically sound. One essential is a balanced, integrated industry, with wood processing in every region, One of the problems of forestry is the large cost of haulage. No only does each region need to have its forestry processing capacity, but obviously those should vary in each area. To take an obvious example, there is the beech processing in High Wycombe and people growing beeches in that area. It is an interesting fact that for every pound which the grower receives from forestry the finished product is worth about £15 by the time it has gone through the processing. In New Zealand it is actually £31, 30 times more than the cost of the raw timber.
We have a £6-5 billion import bill in forestry. That is about half the country's balance of payments deficit. We should aim at having 50 per cent. self-sufficiency in this country in timber industry output-not forestry, because we could not do that. I believe that the Government should ask the Institute of Chartered Foresters to prepare a plan to see whether that could be achieved.
The public feel that softwood is an anathema; in fact, il is a dirty word. I believe that that feeling is founded on prejudice fed by bad forestry management, in particular insensitive planting and insensitive felling over a long period by the Forestry Commission —this has been pointed to in previous speech es —where there has been blanket forestry and impenetrable trees, which are thoroughly offensive. Yet nearby —I am thinking of Eskdalemuir —there is private forestry, planted with rides and lots of open land, where there is exactly the same species of sitka but the wildlife has doubled and it is an environmental asset.
It is interesting that, while we denigrate softwood, some of us save up to go to the American West Coast to see the sequoias, to the Black Forest, where I was
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the other day, which is mainly Scots pine, or even to the areas of access to the Forestry Commission, those few areas that it has looked after which people like to visit because they have been cleared out.
Eighty per cent. of the timber requirements in this country are for softwood, so it is nonsense to try to convert this country totally to hardwood, not that that would work anyway.
In previous times we have been able to maintain our forestry throughout its life—that is to say, brashing, thinning, pruning—with all the essential hard work that produces high forest of good quality. Now that the system has changed —management will be very expensive —that probably will not be done. Much objection has been shown to the black sitka, tree, but now it is said,
"There is only one economic solution to forestry, that is to blanket your land with sitka and never touch it because it will be too expensive to maintain, so put something down which you do not need to maintain".
That is exactly what we do not want, but it is exactly what that policy will point to.
The key to acceptable forestry is not in the variety; it is in the shape of the planting and the management. Whatever tree you get, if you manage it correctly, prune, brash, clean and thin it and produce a final crop, it will look just as good and nicer than a lot of hardwood plantations which have perhaps been neglected.
The problem with management will be cost. I should like to return to something I said in one of the debates on crime. I believe that the enormous amount of brashing which should be done to improve the quality of our forests, in particular those of the Forestry Commission, could be undertaken by convicted offenders. Instead of sending them to prison, where suitable they could be made to brash so many acres of forestry. It would make them work, make them get up in the morning and in the end they would have done something useful and the country would have benefited. I think that is a point which should be followed up.
It is absurd to attack the forestry investors. The country wanted people to invest in forestry, and when they did they were told "You can't do that, you are avoiding tax", so they stopped it. To my mind, that was absurd.
There is talk of 30 per cent. hardwood and of various percentages that should be planted. Again that is meaningless. Twenty per cent. in rows 30 foot apart ends up as 100 per cent. hardwood. Thirty per cent. in blocks ends up as not more than 30 per cent. A lot of the talk of percentages is meaningless.
I should like to finish by saying that we should design forests better and encourage better management, and that we must have increased grants if we are to succeed with our planting.
6.48 p.m.
Lady Saltoun of Abernethy: My Lords, like many other noble Lords who have spoken I have to declare an interest in that I plant and fell a few trees, mainly for amenity.
I much enjoyed the maiden speech of my noble friend Lord Carlisle, and I was very glad to hear that

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he thinks Erasers are clever people. I hope he will not have changed his mind by the time I sit down, because not for the first time I am going to defend the poor old conifer.
Two important facts to realise are, first, that, as the noble Lord, Lord Gisborough, has just said, 80 per cent. of the timber requirements of this country is for softwoods; and secondly, that Britain not only still imports 90 per cent. of her £7 billion worth of annual consumption of forest products but that her consumption is forecast to increase by 17 per cent. by the year 2000.
Therefore, it would appear to follow that either we shall have to grow a far higher proportion of our own requirements or we shall have to import once again more than 90 per cent. over the next 10 years. The noble Lord, Lord Taylor of Gryfe, has pointed out that we are not even planting as much as the Government's target. But shall we be able to import more than we do at present? Shall we even be able to continue to import at the present level? Apart from the adverse effects on the balance of payments of doing so, to which the noble Lord, Lord Crickhowell, and my noble friend the Duke of Somerset have referred, will the timber be available?
The depletion and destruction of the world's natural forests is now universally deplored as environmental awareness has grown, and it is doubtful whether we shall be able to cut down other people's forests, whether tropical or the conifer forests of the northern hemisphere, which are also under heavy pressure and whose destruction affects climate, global carbon fixing and so forth. Even were we to continue to assist in their destruction, one day not so far off they will no longer exist and then what shall we or our children do? Is it right that we should deplete the world of its renewable assets by not renewing them?
A recent report to the Government by the International Institute for Environment and Development mentions the idea that, to ensure that the next generation has the same productive potential as the present one, it is necessary for us to pass on a stock of assets no smaller than that which we ourselves have inherited —a concept well known to landowners both great and small from time immemorial but apparently less well known to governments.
So we have no alternative but to try to grow a far higher proportion of our own timber requirements. That means softwoods and principally the much maligned sitka spruce. It grows quickly. It is a most versatile tree, both in the variety of latitudes and soils where it will grow and in the variety and quality of its many end products, from paper to construction timber. It is the tree which can best supply our industrial demand in the future, taking the pressure off other less robust and slower growing trees and off semi-natural woods which can thus be managed for a wider range of environmental benefits. It is the bread and butter crop which will finance and underpin many of the non-profitable benefits which forestry offers and to which many noble Lords have already referred.
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It is necessary to regard the growing of timber as a crop, a crop which may not be to everyone's aesthetic taste but which is just as important as wheat, barley, potatoes, turnips or rape. There are certain caveats. The noble Lord, Lord Crickhowell, mentioned the acidification of water. It is also a greedy feeder and a thirsty drinker. If the rainfall is inadequate it will "steal" local water supplies, and it is liable to exhaust the land.
My noble friend the Duke of Somerset has already spoken about investment in the processing sector and about the socio-economic benefits which are derived from the forestry industry. The Forestry Industry Committee of Great Britain's recent publication The Impact of Forestry in the United Kingdom, based on an independent study by the Eraser of Allander Institute at the Strathclyde University Business School, has demonstrated that the total value of the output of the United Kingdom forestry industry is five times greater than previously appreciated. Indeed, £2 billion of output, £552 million of household incomes and 55,000 jobs are involved. We owe this largely to our conifer resource.
As the noble Lord, Lord Gisborough, has said, conifer plantations need not be ugly blocks of unrelieved dark green. They can greatly enhance landscapes, particularly in winter, as at the Queen Elizabeth Park at Aberfoyle. The edges of plantations need not be straight lines, although it is cheaper to plant so. A requirement to do otherwise would need to be taken account of in the levels of planting and maintenance grants. In Upper Deeside, there are plantations where larch and naturally regenerated birch scattered through plantations of Scots pine, with rowan and gean at the edges and also in some cases scattered throughout, combine to give a rich and varied colour both in spring and in autumn. This is a great attraction to tourists and also makes the countryside a delightful place for the local inhabitants.
Additional environmental benefits are that conifers are efficient fixers of carbon —4 tonnes per hectare per annum, as against beech at 2-5 tonnes per hectare per annum—and the carbon continues to be locked up in the processed wood product. I was interested to hear the noble Baroness, Lady Nicol, say that young trees are more efficient at this than old trees. Young people work more efficiently than old ones anyway.
Misleading statements have been made in the brochures of Friends of the Earth urging the use of recycled paper. They say:
"Each year 90 million trees are cut down to supply paper for the United Kingdom alone. Indigenous forest, rich in plant and animal species, is being replaced by thousands of acres of conifer plantation with soil erosion and acidity as a result. Using recycled paper reduces our need for these plantations".
The facts are that in this country conifer plantations are not replacing broadleaves, for it is not permitted under broadleaves policy. Paper and board products are made from thinnings and tops derived from plantations grown to supply saw logs for construction and so forth. Acidification derives primarily from atmospheric pollution from industry, although it is true that it is the trees which absorb it and conduct it into water sources. My time is up so I shall sit down.
6.55 p.m.
Lord Burton: My Lords, I thank my noble friend Lord Radnor for initiating this debate and I congratulate the noble Earl, Lord Carlisle, on his maiden speech. He has fired his first salvo and we look forward to hearing him again.
The Country Landowners' Association brief for this debate states:
"Forestry is still far too much a source of conflict in the countryside".
I thought that this was a rather good text to start on, particularly in view of what has been said so far in the debate which has been if nothing else controversial. Much of this conflict could, I believe, be disposed of if forestry schools and colleges broadened their curriculum to cover countryside affairs in general, giving a much greater perspective to the young forester. Young men who have just finished their forestry courses seem to know little of the countryside other than how to grow trees.
I shall give one example. A young forester fresh from graduation came to me recently and told me that a certain planting had suffered badly from rabbit damage. As there were no rabbits in the area, this mystified me. A quick look soon revealed that the damage had in fact been done by sheep getting out of a nearby field. Any individual with some country background would clearly have seen that. I am afraid that we are seeing too many young men of that kind at our forestry schools.
Another example is that certain forestry workers have only recently been stopped from putting their feet on any nests of Capercaillie which they find. These birds have become so rare that we may soon have to protect them. It is terrible that instructions used to be given to destroy their nests. Several forestry companies murder all deer that go near their plantings, in and out of season, often to the great detriment of neighbouring deer forests.
Phosphates are sprayed from aeroplanes onto plantations, polluting our water. The Economic Forestry Group has a wildlife branch in Eskdalemuir. The head man there has done an excellent job and has carried out much education not only of his own company but of many other bodies, including the Green Party. But even this company has not extended what he has taught there beyond Eskdalemuir. It is a great pity that it does not do the same in other parts where it manages forests. What a difference there is with German foresters who really do have a knowlege of what goes on in their woods.
The Forestry Commission has no wildlife ladder. Would it not be a good example for the Government to follow if what has happened in Eskdalemuir was practised in the public sector? I do not want to be critical of the commission. It has done much good work and is at least some sort of brake on the financial conjurors who call themselves forestry companies and who leave the Government with little alternative but to do something to curb their activites, which unfortunately sweep all forestry into the net.
On a different tack, most planners know little about trees. As they are the people responsible for
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the layout of the countryside for the future, this can have disastrous consequences. Once again, that seems to fall back on their education.
Roadside trees are another problem. Roads engineers seem to think that trees are something to be destroyed; that they are a danger to the motorist and should be cut down. The salt which is put on the roads is in any event highly destructive to trees. Many places along our new roads are being planted with trees. That could be very nice and beneficial, but once again no allowance has been made for the fact that the trees could grow to a substantial size if they were allowed to do so. They could then become a danger to the motorist. In my view they have not been looked at from the point of view of what they will be like in 20 years' time.
I was told recently by the region's archaeologist that we could not replant a plantation as it was near a stone circle. I emphasise the words "replant" and "near". My family have looked after that stone circle for 400 years and I have myself done so for many years. Therefore, noble Lords can imagine that I was not best pleased when I was told that I could not plant this area as it might interfere with public access and the archaeologists' digging activities. We are getting more and more interference with our efforts to grow and look after our trees from people who know nothing about trees. If we are to continue to look after them, we shall need some help.
I shall conclude with one final brief problem. We are being encouraged to grow more hardwoods. I have with me a cutting from one of today's daily papers. The Economic Forestry Group wants to plant 1,300 hectares of mainly farming ground in the north-east Highlands. The Nature Conservancy Council is reported to have complained that only 10 per cent. of that massive plantation will be broadleaved trees. But what is to be done with even 10 per cent. of these trees? There is no market for hardwoods in the Highlands, or very little. You can of course sell them for firewood; indeed, beech is only required for firewood. Oak and ash can be transported to England but the costs are enormous. If foresters and landowners are to grow more hardwoods—and I hope that they will—there is a great need for further outlets for their products in the North.
7.2 p.m.
Lord Moran: My Lords, this debate is taking place in the shadow of the severe losses of trees caused by recent gales. Immediately after those gales, I walked around our tiny hill farm in Wales and saw the sad sight of 20 fine oaks which had been blown down. Others have suffered much more. For example, the famous Selbourne hanger has been devastated. We all have to set to and replant.
It is unfortunate that commercial forestry has led to so much controversy, echoes of which we have heard during this debate, not least in the maiden speech of my noble friend, which I much enjoyed. Commercial forestry has tended, regrettably, to get itself a bad name. Why is that? There have been perhaps three reasons. The first was the tax dodges by celebrities which were stopped by the 1988 Budget. Secondly, there has been the slow but strong public

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reaction to the errors of past policy—the monocultures of softwoods, hard edges to plantations and the lack of regard for landscape needs. Thirdly, there is the planting of the Flow Country, which the NCC, perhaps to its cost, brought to national attention. That did more than anything else to damage the image of forestry nationally.
However, there are some encouraging developments. First, there are the plans of the Countryside Commission for a Midland Forest and 12 community forests, including three in Wales near Swansea, Neath and Cardiff, and the generally far-sighted views which the Countryside Commission has put forward on forestry which it continues to advance. Secondly there is the work in Wales of Coed Cymru in promoting proper management and natural regeneration in Welsh woodlands. Far too many of those woodlands are dying because of overgrazing by sheep, which has been encouraged by the unsatifactory method of giving grants on the number of sheep one has thereby encouraging overstocking. Coed Cymru is a real success, but it needs funding to give it proper security for the future. Its work could well be imitated in other parts of the United Kingdom.
Thirdly, there is now generally more emphasis on hardwoods and native species. For example, there is the farm woodland scheme. I was surprised to hear the noble Lord, Lord Gisborough, say that it was not working. The figures that I have seen suggest that it has been quite successful. Recent government policy has been helpful. Fourthly, there is now more evidence of better and more imaginative planting. Fifthly, foresters are now reported to be looking at birch as a potential commercial species. I see that the Forestry Industry Committee of Great Britain is funding research at Aberdeen University on the benefits of native birch in Scotland. There have certainly been good results in Scandinavia, and especially in Finland, with properly selected varieties. In my view, more research is needed on the commercial growing of birch in this country.
I am especially concerned with the situation in Wales where I live. The Environmental Study Group of the Prince of Wale's Committee, of which I am vice-chairman, examined many aspects of the question at a seminar held at Lampeter last September. The committee's report is now available. The Council for the Protection of Rural Wales has also just published a study, based upon a year's work, which calls for a coherent forestry policy in Wales. It also makes a number of detailed recommendations which I think are worthy of study.
I continue to be puzzled that the policy announced by the then Secretary of State for the Environment on 16th March 1988, that approval would not normally be given for new planting predominantly of conifers in the uplands of England, gave no similar protection to the uplands of Wales or Scotland. The explanation subsequently given by the Secretaries of State for Wales and Scotland were not very convincing. If conifer afforestation in the uplands has effects in England which persuaded the Government to disallow it, it seems odd that they continue to permit it in Wales and Scotland.
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As the noble Lord, Lord Crickhowell, pointed out in his speech with all his authority as chairman of the National Rivers Authority, the particular problem in Wales is acidification. As he said, this is of great concern to fishermen. Indeed, the Welsh Salmon and Trout Anglers' Association, of which I have the honour to be president, asked to see the Welsh Office about the matter. We were most courteously reveived, had a valuable discussion and were encouraged by the understanding attitude that we encountered.
I mentioned that problem when I asked a Question about conifer afforestation in Wales on 18th July last year. I pointed out that 60 miles of river in Wales had had to be downgraded because of acidification and that many lakes —in fact, between 8 per cent. and 20 per cent. of all the lakes in Wales—had been affected. The noble Lord, Lord Taylor of Gryfe, said then that he thought the dangers mentioned in my Question were grossly exaggerated. I felt constrained to write to him afterwards pointing out that everything I had said was based upon information from Welsh Water or on what had been said by government spokesmen. I said that I did not accept that there had been any exaggeration. I received a helpful letter afterwards from the Director General of the Forestry Commission.
We have now received word from the Royal Society, and its colleagues in Norway and Sweden leading 30 teams of scientists who were reported on 29th January as saying that their researches conclusively prove the link between acid rain and the destruction of aquatic life in thousands of lakes and rivers. They say that trout and salmon in up to one-third of rivers and lakes in Scotland, and large areas of the Lake District, Wales and the Pennines, have been wiped out or badly affected by acid rain. In some areas acid levels are so high that it will be impossible to reverse the process. Many less affected areas can be saved, although it may take decades. I hope that the noble Lord, Lord Taylor, does not think that the Royal Society is guilty of exaggeration. We shall need to study the report carefully when it is published in October.
Unhappily, the great majority of scientists who have studied the problem concluded that, as the noble Lord, Lord Crickhowell, said, conifer afforestation does make the problem worse on base poor soils such as we have in mid- and North Wales by reducing the Ph and increasing the release of aluminium, which is toxic to fish. For example, the research done in Wales on two rivers running into Llyn Brianne, has shown that on the river where there is afforestation with sitka spruce and lodgepole pine, aluminium concentrations in that river, the Tywi, are substantially higher than in the river running from unforested land, the Camddwr. It is a pity that the Forestry Commission tried for so long to resist the consensus of scientific opinion on this, like those who tried to persuade Galileo that the world was flat.
Where do we go from here? The NRA, Welsh Water, the NCC, the Countryside Commission and the RSPB have just submitted proposed guidelines to the Welsh Office and the Forestry Commission.

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I hope that these can be considered very carefully. More generally, what I believe needs to be done in Wales is for there to be far more consultation between forestry and other interests. There should be something like a fresh strategy for forestry.
Commercial forestry should not normally be allowed in the sensitive upland areas of mid- and North Wales but it should be encouraged lower down the hill. I agree with my noble friend the Duke of Somerset that we need multi-purpose forestry as advocated by the Countryside Commission. There should be more mixed plantings, more broadleaves—perhaps encouraged by relief from inheritance tax on broadleaf woods—and fewer monocultures. In that way forestry can regain its proper place in the countryside and serve many interests, such as timber production, employment, landscape, wildlife and recreation.
7.11 p.m.
Earl Waldegrave: My Lords, we have had a most instructive and, I hope, a very useful rural afternoon. It has been a long afternoon for some of us. I was very interested to hear the start of this debate on forestry and the spirited defence of the Forestry Commission by my noble friend Lord Radnor. He was immediately followed by a notable and bold attack on the Forestry Commission by the noble Earl, Lord Carlisle. I think a balance has been held by hearing from one side and then the other all through the debate. I am pleased that, in my own view, if I were asked to adjudicate, I could say that the Forestry Commission won—though with certain reservations, because no one is perfect.
It was very interesting to hear the speech of the noble Lord, Lord Taylor of Gryfe, because he was chairman of the commission for a while and he also served under me when I was chairman for a short time. Then, in some ways he was rather an enemy. The Economic Forestry Group was always said to have an open chequebook to out-buy us, because we had to work very strictly with the Treasury. He has obviously been converted to the Forestry Commission and no doubt he continues to support the Economic Forestry Group as well.
To me, and I am sure to other noble Lords, one of the most important speeches was that made by my noble friend Lord Crickhowell. It indicated that there is something in what the anti-foresters say. I accepted completely his arguments that the conifer can do damage to water and therefore he must try to stop that. If conifer afforestation is properly done, the conifer is the economic tree. In the end the whole subject comes down to a question of economics. People in the private world cannot be asked to maintain a large and public essential industry if it does rot pay and we have to import enormous quantities from overseas.
I do not think that the value of the conifer can be denied if it is planted well and in the proper place. It grows very well in this country. It should be planted in the proper place and treated in the proper way. It is subject to stresses on the natural side for which we are responsible. As a young tree, the conifer and also the hardwoods is subject to some of the pests that we have introduced. The real trouble was
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caused by the rabbit. Myxomatosis was the best grant that had ever been given to the forestry industry.
Unfortunately, the rabbit is coming back and I do not know what we can do about it if it is immune. The elm beetle took away all our elm trees and that was a terrible occurrence. People are now saying that certain regenerated elms are growing again. There are some on my own property which we believe are growing again. It may be that as soon as the elms return the beetle will also come back and the elms will disappear again.
The rabbits will be much more difficult to cope with. It will be a total waste to plant hardwood trees, as my noble friend Lord Gibson-Watt very cogently argued, if they are to be eaten almost at once by rabbits. Rabbit damage will also destroy a great many other indigenous trees. The rabbit will take all the sycamore at its very young stage. Not only is the old and mature sycamore a very useful timber, it is also a very beautiful tree, though the young sycamore is rather a tiresome weed. The rabbit put an end to that and will do so again in the future.
In our love of nature, the Duke of Bedford, and Lord Tavistock, imported the grey squirrel. That has proved a perfectly frightful check on forestry everywhere. I hope that one day we shall find some means of protection against the grey squirrel. The Forestry Commission has often been criticised for blanket plantation in straight lines. The reason for the straight line is because it is very much easier to string a wire fence to keep out the sheep belonging to my noble friend Lady Elliot. If a wire fence is made in a wavy fashion it does not stand up and it is not good craftsmanship.
When the noble Lord, Lord Taylor and Gryfe, and I were members of the commission together, we moved a little way towards the straight lines. We appointed Dame Sylvia Crowe to advise us about these matters. She immediately recommended wavy lines though we said that these were rather expensive and not very effective among the trees. However, the environment is improved if straight lines are eliminated. That was in the far-off days of 1962-63.
I have forested on a very small scale all my life. I was very interested to hear the noble Lord, Lord Moran, speaking of the natural regeneration we may get from birch and that it may prove to be an economic timber. One used to be able to make cotton reels with birch but that use no longer exists.
That is often the problem. Often in an industry such as forestry the timber that grows best is not wanted. I am sure that we must have a national forestry policy. That will be needed while we are establishing forests. The forests that I planted 40 years ago are just beginning to be saleable, though instead of selling the timber for pounds I am selling it for shillings. However, the market has stood up much better than I thought it would. Whole blocks of conifer trees have been sold. Purchasers are taking the best trees. As long as the trees are not rotten, they are fairly easy to remove. I would never have cut the trees down as I am far too old; I wanted to keep them just to look at. However, I have had some of my conifers felled and I have found a market for them. Yet I doubt whether I shall find such a market I for the hardwoods. That is a great loss not only in

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financial terms but also in aesthetic terms for the whole country. I was glad that the noble Lord, Lord Moran, mentioned the storms that we have had. I believe that he was the first speaker to refer to that.
7.21 p.m.
Lord John-Mackie: My Lords, we must thank the noble Earl, Lord Radnor, for raising this matter of forestry. The importance of the industry cannot be denied, as has been shown by the speeches that we have heard from knowledgeable noble Lords all round the House. The last time we had a forestry debate was, I believe, about four or five years ago. I was thanked by the Minister who replied to that debate for almost taking away all his thunder in replying to the points that had been made. I shall try not to take away the Minister's thunder this time.
I declare an interest in that I was chairman of the Forestry Commission for a few years. I have also planted a lot of trees in the past and am still planting trees although I do not own any land. However, I am still interested in planting trees. I lost a few trees that I planted 30 years ago as a result of the storms in January but I replaced those trees last month.
First and foremost, I wish to be blunt about the question of the two industries that occupy the land of this country; namely, farming and forestry. They employ many people and produce much wealth. Several noble Lords have mentioned the fact that over the past few years there has been considerable criticism of those two industries by environmental bodies. The impression those bodies give is that the control of the countryside and of those two essential industries must fit into their plans. However, the opposite is the case. The environment must fit in with farming and forestry. There is no reason why that cannot be done to the satisfaction and benefit of everyone. I cannot stress that point too strongly. I was most interested to hear the Secretary of State for Scotland make that point in a speech given at a luncheon a few weeks ago. Sir David Montgomery, the ex-chairman of the Forestry Commission, made the same point in an article in the Farmers' Club journal.
However, today's debate is about forestry and its importance. I do not want to go into details as the noble Earl, Lord Radnor, did that carefully, but figures show that we should be planting more than we are at the present moment. Conifers and hardwoods cover just under 10 per cent. of land in this country. That is almost the lowest percentage of afforestation in Europe. I wish to point out to noble Lords that in this country we have 18 to 20 million acres of what is called rough or hill land. If we were to double our acreage of plantations over the next few years we could replant somewhere in the region of another 9 million acres. However, not all of that planting would be on the rough or hill land as some land situated lower down hills may come out of agricultural production and could be used to add to that afforested acreage. That would still leave about 10 million acres of free land spread all over the country. That seems to me to be plenty for ramblers and environmentalists to wander over to their hearts' content. However, one only has to plant a small
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forestry plantation for people to object and complain that it spoils the countryside or that it spoils their view. A person called Brasher wrote an article in one of the newspapers the other day. He wrote that he has walked across the Lairig Dhu. He said that when he walked on the low ground he could not see the countryside because of trees that had been planted. However, if the lazy devil had walked across the top of the hills he would have had lovely views. Those kinds of people give foresters a bad name when there is no reason for that.
Many noble Lords have said that we should maintain a steady progress as regards increasing the size of our plantations. The removal by the Government of tax relief for plantations two years ago was disastrous. I do not know whether the grant system will prove as effective as tax relief. Time will tell whether that is the case, but, as has been pointed out, planting has almost halved in the two years since tax relief was removed. The point is that we shall never get industry to invest in processing plant unless it can see that planting is being undertaken year after year and that the acreage of plantations is being increased. If that is done, it will make a tremendous difference to employment in various areas and to wealth production in general. The Eraser Trust report showed the tremendous effect that the production of wood has on the processing industry over a wide area of wood-based production. I attended a craft event the other day and I was amazed to see four stands selling nothing but wood-based products. That just showed how much some industries rely on wood.
I shall now turn to some of the criticisms that have been made. My noble friend Lord Gibson-Watt used the term "lunacy" —that term is perhaps a little too strong—as regards the proposal to separate within the Forestry Commission the forestry authority from the forestry enterprise. One could argue in theory that the activities of the authority could be carried out by a bureaucratic body. However, when one considers the ramifications of forestry and the knowledge that the people working in the forestry authority obtain from the people in the forestry enterprise and to a certain extent vice versa, one can see that it would be a huge mistake to separate the two bodies. Most noble Lords who have spoken argued in support of that point.
Criticism of the Forestry Commission goes back a long way. I noticed that a lot of noble Lords, particularly the noble Earl, Lord Carlisle, who was a forestry commissioner for some time, spoke about the Forestry Commission. I wonder whether he realises what the remit of the Forestry Commission was. That remit was to replace the trees lost through two wars. A certain amount of money was made available for that purpose. I can imagine the criticism that would have been directed at the Forestry Commission if it had left wide rides unplanted on land that had been bought for the purpose of plantations. There was no remit from the Government for any environmental work.
However, the Forestry Commission has since taken up the point about the environment. It cannot be said that it is doing nothing. I have a bundle of booklets here which show what the commission is

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doing and the advice that it gives. I suggest that the noble Lord, Lord Gisborough, looks at that bundle of books. I forget what adjective he used but he agreed with the noble Earl, Lord Carlisle. I suggest that they both look at what the Forestry Commission is doing and the advice that it provides. Between 80 million and 100 million visits are made to Forestry Commission forests each year. That does not sound as if the British public dislikes its forests.
Lord Gisborough: My Lords, I am delighted that the commission has learnt how to do it at last. It has taken some time.
Lord John-Mackie: My Lords, it has taken time because the original remit did not include that power
Private forestry has been mentioned. Eskdalemuir has been referred to several times because forestry has been done well there. One has only to go to the forests of the noble Duke, the Duke of Buccleuch, to see what he does or look at the layout of the Scottish forests of the noble Lord, Lord Dulverton, which are all conifers. Criticism of the forestry industry's record on the environment may have been justified 20 or 30 years ago but it is certainly not justified now. However, it continues, as we heard today.
I could spend quite a long time on the points raised by the noble Lord. I have half a page of notes on what he said. However, I have probably said sufficirnt for him to realise that I do not agree with what he said.
I discussed the matter with a private forestry company recently. The company believed that asking for greater acreage from hill land was wrong and that we should rely on higher production from lower, marginal land. That may be the case, but I do not believe that as much land will come out of agriculture as has been suggested.
I do not want to say much more as time is getting on and I am sure that the Minister will want to say a great deal about the Government's plans. I hope that they are good plans. However, there are one or two points that I should like to make. The noble Duke, the Duke of Somerset, was very anxious—like most of us—for long-term investment and continuing expansion for the reasons that I have given.
The noble Lord, Lord Crickhowell, made a point about acid water. The noble Lord, Lord Moran, pointed out where the acid came from. Conifers do not produce acid; they catch the acid rain that is created by the factories of the noble Lord, Lord Crickhowell, in the valleys in Wales. He should concentrate on stopping the factories releasing acid rather than blaming the trees. If rivers near forests collect more acid as a result then we should see that the trees are planted further away.
I should like to thank the noble Lady, Lady Saltoun, for defending the sitka spruce. The noble Lord, Lord Burton, made a point which I missed about wildlife. Perhaps I shall have a word with him afterwards. The noble Earl, Lord Waldegrave, was very clear about what he wanted. The question of
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pests in forestry was mentioned and it is important. The noble Lord, Lord Gibson-Watt, would simply shoot every grey squirrel that he saw. Of course, if you plant beech trees grey squirrels have to go. That applies to the other pests that have been mentioned.
We have had an interesting debate. I hope that the Government have taken note of the importance that we place on forestry and that we shall have a very good answer from the noble Earl.
7.35 p.m.
The Eari of Strathmore and Kinghorne: My Lords, once again the debate has demonstrated the depth of knowledge that resides in your Lordships' House on the subject of forestry. I shall do my best in the time remaining to respond to as many of the points raised by noble Lords as I can.
I wish first to thank my noble friend Lord Radnor not only for calling the debate but also for employing his considerable knowledge to remind us of the early aspirations of those who established the Forestry Commission in 1919 and gave this country its first national forestry policy. I should also like to thank him for setting out some of the many changes that have taken place over the years and for sharing with us his thoughts on the forestry industry today. The noble Lord most ably set the scene for the debate.
Although I speak from these Benches on behalf of Her Majesty's Government I must declare a private interest in forestry in the county of Angus.
I should also like to congratulate the noble Earl, Lord Carlisle, on his maiden speech. He made a number of interesting points, not always uncontroversial but none the worse for that. It was a most interesting maiden speech and I hope that he will return to speak again soon.
My noble friend Lord Radnor made reference to the commission's disposals programme under which it has been asked to sell some 100,000 hectares of forest land over the next 10 years. There is nothing sinister in that. It is not, as has been suggested in some quarters, privatisation by the back door. The commission manages a very large estate at present and since it will be able to acquire land for planting over the next decade it will still be managing a large estate in the year 2000. The disposals programme, which has been running successfully since 1981, will return some of the assets to private ownership in accordance with the philosophy of this Government as well as allowing the commission to rationalise its land holdings to the benefit of its enterprise activities.
My noble friend also mentioned the splitting up of the Forestry Commission. It has been said by Ministers on a number of occasions, and I shall say again today, that the Government have no plans to privatise the Forestry Commission. The commission will continue to have a central role in the development of forestry in Britain. Your Lordships will be aware of the recommendation of the Agriculture Committee of another place that the Forestry Commission should be split up with forestry enterprise being separated from the forestry authority and the forestry authority itself divided among England, Scotland and Wales, On that point

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I can only ask noble Lords to be patient and to await publication of the Government's response to the committee's recommendations.
My noble friend Lord Radnor and the noble Duke, the Duke of Somerset, made the point that private forestry is in need of more government assistance if it is to play a full part. As your Lordships will know, the Government are not short of advice on that subject. Specifically, we have been conducting a full-scale review of our broadleaves policy. We have had a full assessment of the state of the private forestry sector and a number of recommendations from the Forestry Industry Committee of Great Britain representing the whole industry. We have had the benefit of the report of the Agriculture Committee of another place on land use and forestry that followed a wide-ranging investigation lasting two years. The government are giving the most careful consideration to all the evidence that has been laid before them on the direction that forestry should take and on the best means of encouraging forestry investment and achieving satisfactory levels of planting.
Your Lordships will appreciate that I cannot reveal the Government's thinking today. Perhaps we are holding the debate a little early. What I can say is that it is likely that a government statement on the outcome of the broadleaves review will be made before too long. I hope that the Agriculture Committee will be in a position some time next month to publish a report incorporating the Government's responses.
This is certainly a time of change and reassessment. I take the opportunity to restate the Government's strong support for the expansion of forestry in this country and to assure noble Lords that all that has been said in this House today will be noted with care.
My noble friend Lord Radnor also mentioned corporate forestry. I see that a case can be argued for encouraging the man in the street, the small investor, to take a stake in forestry through corporate or other means. However, it is a complicated subject involving, among other things, the proper protection of the investor and company tax law. I hope that the noble Lord will bear with me if I do not venture into that area today. However, I have taken careful note of his remarks. I shall pass them on to my right honourable friend the Chancellor of the Exchequer.
The noble Baroness, Lady Nicol, mentioned the greenhouse effect. The Government are very much aware that trees absorb carbon dioxide and thus help to counter the greenhouse effect which is of so much concern to us all. The Government are doing a great deal to help to protect the tropical forests, but developed countries such as ours have a part to play by increasing their tree cover. Our record is a good one. We have increased our tree cover for the past 70 years from 4 per cent. of our land surface to some 10 per cent. today. It is government policy that forestry in this country should continue to expand.
The noble Baroness, Lady Nicol, also commented on the report of the Select Committee on Agriculture on land use and forestry. I have noted the points
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that she has made in support of some of the recommendations in it. Although I cannot anticipate the contents of the Government's response to the wide-ranging report, we hope that it will be published soon.
The noble Baroness also asked how the target of 33,000 hectares of annual planting was arrived at. The Government made a policy statement on forestry in 1980, when planting at the rate of the previous decades —some 30,000 hectares —was seen as achievable and desirable. That figure was raised to 33,000 hectares a year in 1987 as part of a land use review in recognition of the fact that more land was likely to move from agricultural use. Again, that is an achievable aim.
The noble Lord, Lord Mackie of Benshie, expressed concern over some aspects of the industry today and referred in particular to the removal of tax reliefs in the 1988 Budget. It was right for the Government to remove those tax reliefs, although it should not be forgotten that interim arrangements will subsist until 1993. Those tax reliefs have been in place for a great many years and in making the changes the Chancellor acknowledged that the tax system should continue to recognise the special characteristics of forestry, with its very long time cycles between investment in planting and income from selling the felled timber.
However, the Government were concerned that that should be done in a manner designed to provide a simpler and more acceptable system of support and which avoided the previous arrangements under which top-rate taxpayers in particular had been able to shelter income from tax by setting it against expenditure on forestry, while effectively enjoying freedom from tax on the income from the eventual sale of the timber. I accept that the tax provisions resulted in a great deal of planting which might not otherwise have taken place, but increasingly they were seen as anomalous and were a cause of widespread public criticism and increasing conflict between forestry and conservation interests. In other words, it was all leading to a major loss of public confidence in forestry. The forestry industry found itself in a tax straitjacket and it is to the benefit of the industry that the Government have released it.
I am not suggesting that the changes have been without pain. As noble Lords are aware, some tree nurserymen had to burn part of their stock, particularly where they were growing sitka spruce on a large scale, and some forestry companies have lost a great deal of business. Nevertheless, it would be quite wrong to suggest that the forestry industry is in any kind of crisis. Far from it; the industry is now much better placed to expand in ways that will attract a broader measure of public support.
The noble Lord, Lord Mackie of Benshie, referred to planting by the Forestry Commission. It is the Government's continuing intention that most of the new planting should continue to be carried out by the private sector. However, the Forestry Commission has a modest new planting programme of its own —some 4,000 to 5,000 hectares a year. That has mainly been in remote and less fertile areas where afforestation will help meet social and economic needs and in areas where further planting

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will contribute to the rational management of the commission's existing plantations. However, the Government keep the position under review and there nay be a case for considering changes to the commission's programme when it is government policy that specific types of planting should be encouraged.
The noble Earl, Lord Carlisle, referred to forestry in the flow country of Caithness and Sutherland. The peatlands of Caithness and Sutherland are recognised as internationally important blanket bogs and we have obligations as signatories of the RAMSAR and Berne Conventions; but we must not forget the contribution of forestry to the economy of Caithness and Sutherland. Contrary to what the noble Earl alleged, trees grow well in that part of the world. The timber yield is above the average for Scotland as a whole and trees grow there at twice the rate they do in Scandinavia. Planting started in the 1920s. About 60,000 hectares are now planted, supporting a significant number of jobs at present, with more jobs in prospect as the timber matures. Without further planting, at least two-thirds of the existing jobs would be lost and the opportunities for downstream wood processing would not materialise.
The Highland Regional Council working party did a praiseworthy job in producing a land-use strategy for that part of Scotland, a strategy which has the support of all the bodies involved, including the Nature Conservancy Council and the Countryside Commission for Scotland, and which has been endorsed by my right honourable friend the Secretary of State for Scotland. Clearly, a balance can be reached in Caithness and Sutherland between nature conservation and afforestation. I am sure that the necessary good will and understanding now exist to bring that conflict to an end.
The noble Earl was critical of the Forestry Commission's planting practices. It would be wrong to compare past practices, when public perceptions and government policies were so different from today, with present forestry practices. The first generation forests, like Kielder, to which the noble Earl referred, are now reaching the end of their first rotation and the opportunity is being taken to convert those forests of an even age into attractive and more varied landscapes and wildlife habitats, with a mixture of types and ages of trees.
The noble Earl also mentioned the Forestry Commission's disposal programme. The commission has been asked to sell 100,000 hectares of land by the end of the century. The commission itself will decide what is to be sold and will take the opportunity to rationalise its estate and increase its efficiency. The commission will continue to have its own planting programme, so it will still be a major forest manager in the year 2000.
My noble friend Lord Crickhowell raised the point of acidification of water courses in the forest areas. As he will know, extensive research by the Forestry Commission and other organisations is currently under way to assess the extent to which afforestation may increase acidification and to measure the effectiveness of various forest management techniques, including liming, in combating surface
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water acidification. The Forestry Commission has recently published guidelines, prepared with the assistance of the water industry, on the practices to be followed when planting and managing forests in the catchments of streams and river systems.
The noble Duke, the Duke of Somerset, mentioned multipurpose forestry. The way is now much more open for the pursuit of truly multipurpose forestry. That is specifically encouraged by the woodland grant scheme and the way in which it recognises a range of management objectives. More planting is now taking place down the hill on better land, with the use of a wider variety of trees, including broadleaves. The concept of urban and community forests has been well and truly launched with the central Scotland woodland project, with proposals to create three urban forests in England —in Tyneside, south Staffordshire and east London —with more to follow and with the exciting concept of a major new Midlands forest. We must never forget the importance of growing trees to produce timber, but bringing more of the trees closer to the people will offer a wide range of benefits, not the least of which will be an improvement to the environment in which many people live.
The noble Duke also mentioned indicative forestry strategies. The concept has been introduced in Scotland and is to be welcomed. The first strategy has been prepared by Strathclyde region. Others are in preparation. They should be helpful to all concerned, including potential forestry investors, although I should underline the fact that they are indicative and do not amount to planning control of forestry by the back door. We shall also be looking at the position in England and Wales. However, the need for a strategy depends on the likely level of forestry activity in an area. There is no point in drawing up a strategy if little planting is likely to take place.
My noble friend Lord Gisborough referred to a drop in planting and the woodland grants scheme not having proved successful. Inevitably the phasing out of tax reliefs has seen the withdrawal from the scene of those who were investing in forestry simply in order to obtain tax benefits. As was equally expected, we have seen a drop in the level of planting as the industry has been adapting itself to the new system of support, but there is no reason why that drop should be other than temporary. The withdrawal of tax relief was accompanied by the introduction of the woodland grants scheme, offering much higher levels of grant and allowing for a wide range of management objectives in order to encourage multi-purpose woodland management.
While timber production will continue to be one of the objectives, it will not necessarily be the principal objective. It could, for example, be to create a woodland which makes a positive contribution to the landscape and is designed to create a diversity of wildlife habitats.
Applications for new planting under the woodland grants scheme have been coming in at the rate of some 3,000 hectares a month, which is much the same rate as before the 1988 Budget. The scheme was opened in June 1988 and applications to plant

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are approaching 70,000 hectares. We do not know how much of that will convert into actual planting. Nonetheless the interest is encouraging.
The noble Lady, Lady Saltoun, made a strong plea for the planting of more conifers to meet future timber needs and to encourage the expansion of timber-using industries. I think that it can be assumed that most planting will continue to be of conifers because they are the fast-growing commercial species and the bulk of industrial demand is for softwoods. The noble Lady rightly drew attention to the great economic value of the maligned sitka spruce. The growing of more conifers need not prevent us from seeking to encourage the planting of more broadleaves at the same time. It is very much a question of achieving the right balance and using the right trees to meet the objectives of those who are planting them and the requirements of the wood-using industries.
My noble friend Lord Burton asked why the Forestry Commission cannot follow the example of the sensitive wildlife management carried out by the Economic Forestry Group at Eskdalemuir. I do not believe that the Forestry Commission has fallen behind in that respect, as my noble friend seems to suggest. Indeed, it is giving a lead in its approach to the landscaping and wildlife management of forests. The commission is actively going forward with the process of restructuring its older forests such as Kielder, which has already been mentioned. Already many of the older plantations have attained established value for wildlife.
The noble Lord, Lord Moran, reminded noble Lords that it was government policy to operate what amounted to a ban on large-scale planting of conifers on unimproved land in the English hills. He went on to propose that such a ban should possibly be extended to the hills of Scotland and Wales. However, I do not accept that that would be a sensible approach. The situation in Scotland and Wales is very different from that in England, where the policy was introduced to protect the comparatively small areas of unimproved hill land that remained. There is scope for more planting to take place in the Scottish and Welsh hills without significant loss to the environment. Such planting will be needed if we are to meet our planting aims. The Government's objective is a balanced forestry programme and not one that is confined to the lowlands.
A number of noble Lords expressed concern about the impact of forestry on the environment. I think it is true to say that everyone is in favour of planting trees provided that they are the right trees in the right places. That is a subject which is worthy of a debate on its own. I ask noble Lords to bear with me if I do not go too far down that road today. I believe that it is sufficient for me to say that I have listened carefully to all that has been said during this debate and to assure noble Lords that the Government are fully aware of the importance of afforestation being carried out in ways that are sensitive to the needs of the environment. That has been amply demonstrated by the new woodland
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grants scheme introduced in 1988, with its clear emphasis on multipurpose woodland management and environmentally sound practices.
Over the past three or four years we have had a continuous and at times rather acrimonious debate, with high media coverage, about afforestation and its impact on the countryside. Perhaps such a debate was inevitable given the fact that forestry represents change and given the heightened public awareness of countryside matters. A number of necessary changes have taken place, however, in the way in which things are done. It is the Government's hope that major conflicts between foresters and conservationists belong to the past. I have heard it said that in many ways foresters and conservationists are natural allies. I believe that to be so. The Government's position on this issue is that in a changing countryside there is a place for an enlarged forestry estate which, with foresight and care, can add to rather than detract from the quality of the environment.
This has been a good debate which has illustrated noble Lords' great understanding of forestry matters. A wide range of issues has been covered. I hope that I have managed to deal with most of them to your Lordships' satisfaction in the time available. Where I have not been able to do so, I shall write to the noble Lords concerned.
It is the Government's policy that forestry in Great Britain should prosper and continue to expand in ways that will bring economic, social and environmental benefits. Your Lordships' advice on this subject is greatly valued. In conclusion, I thank my noble friend Lord Radnor for initiating this debate and congratulate him on his speech, which revealed an enviable breadth of knowledge about forestry.
The Earl of Radnor: My Lords, we have had a vigorous and extremely knowledgeable debate. It has revealed divisions which perhaps most of us knew existed already. I should like to thank all noble Lords who have taken part. I also congratulate the noble Earl, Lord Carlisle, on his very vigorous contribution. I hope that he comes among us often as I feel that he will make a doughty debater.
It is late and I shall not pick up any further points. The situation has been dealt with very well except perhaps for two matters. One point which I think is most important was brought out by the noble Lord, Lord Mackie of Benshie; namely, that forestry is a long-term matter, and governments must treat it as a long-term matter. They have not always done so in the past and it is of great importance.
After hearing my noble friend Lord Strathmore wind up the debate and comment so well on all the matters that were brought before him—and they were many—I must confess that I am still not entirely happy about the situation with the Forestry Commission. I am sure he will understand when I say that I think that the sale of 100,000 hectares in exchange for planting 4,000 hectares a year is not a very good swap.
So far as concerns the environment, I believe that there must be a compromise. I should not go nearly so far as the environmentalists would go. It has been

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brought out again and again that softwoods are of vital importance to the industry—and it is the industry that we are debating. But I want to catch fish and I take absolutely the point about acidification in Wales and indeed in other parts of England. I want to see birds and I see no reason why I should not do so with a little care. I also want general visual pleasure. But I want an addition to the gross national product. I want employment. I want to smell the sawdust at the end of the day. That is very important indeed. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Ticket Touts
8 p.m.
Baroness Gardner of Parkes Baroness Gardner of Parkes rose to ask Her Majesty's Government what proposals they have to prevent the exploitation of tourists and of the public by ticket touts.
The noble Baroness said: My Lords, it gives me great pleasure to have this opportunity tonight to bring this matter of ticket touts before your Lordships' House and to present various points to the Minister for his attention. Ticket touts are not what they were. The image of the casual, cheeky, cloth capped entrepreneur making a little on the side was rot too worrying. Now, the reselling of tickets for many times their face value has become big business, with an estimated turnover of £25 million a year. There is no way for the purchaser of, say, a theatre ticket to differentiate between a reputable or an undesirable place setting itself up to sell such tickets.
No one opposes legitimate business and legitimate profit. However, we must be concerned by the knowledge that there is now criminal involvement, and increasingly so. Forged and stolen tickets are also being sold to unsuspecting buyers. Totally illegally, we see instances of the resale of used tickets, not properly cancelled, bought or collected within a football ground and resold outside to people wanting to get in. Indeed, at the Pilkington game at Twickenham just weeks after the Hillsborough disaster, 3,000 extra people were admitted on that basis. That could have created a great danger. On that occasion the numbers were insufficient to cause danger, but they could have done so.
Corporate entertainment, which is arranged for many sporting fixtures, is sold at one price by the sponsor or arranger of the event and at a quite different price by someone who is making a killing. The money for the officially sold corporate hospitality goes back into the sport to improve standards. In that way it benefits all who wish to take part in the sport. The profit made by other people who have no entitlement to it whatsoever gives no benefit to the sport. It goes directly into those people's pockets. I do not think that anyone believes that he or she is paying VAT, but an element of VAT is included in the original ticket.
Tourists' magazines overseas, in particular in the United States, warn would-be travellers of the high
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price of London theatre tickets. The warning is based not on the actual theatre ticket price but on the artificially raised price that people pay through touts, as we know them, or scalpers, as they are known in the United States.
Until 1985, theatre tickets could be sold only through the Society of West End Theatres. Then the Office of Fair Trading intervened. There was a case before the Restrictive Practices Court: that opened up the market for anyone to sell theatre tickets. The black market—which is all that one can describe it as—is a problem. I was interested to hear yesterday that Wimbledon has a white market. Anyone who does not want a ticket can legally resell it back through the All England Lawn Tennis Club. That is very desirable because it is making more tickets available for those people who legitimately wish to attend.
We all know of the stories of the "Phantom of the Opera" tickets. Normally they cost £22-50: the going rate is £120 to £160 each. On the famous night of Michael Crawford's finale some tickets changed hands at £2,000 each but I believe that that was an exceptional circumstance. However, last year at Wimbledon tickets with a face value of £35 brought £650. That is quite out of line with the aim of getting as many people to see the tennis as possible at a price that is within people's reach.
I do not intend to make this a very long debate because I believe that the issue is very clear cut. However, when I see the name of the noble Lord, Lord Monson, on the list I know without doubt that he will say that there should be an absolutely free market, free for all. That sounds very attractive in theory. But in reality and in the way that the system works now it is not a free market. It is being taken over to too large an extent by a criminal element. Big money has become involved. If there were some system whereby people were licensed to sell tickets they would still be making a profit. It could still be an open market with tickets freely sold. But we would not have tickets being sold and resold for so many times their value.
I should like to refer to a letter that I have from the All England Lawn Tennis and Croquet Club, Wimbledon. I love the title. An Australian such as myself simply refers to Wimbledon; that says it all. However, I was interested because the club had points that it felt were very important and should be considered promptly. It believes that there should be legislation in due course in line with that suggested by Lord Justice Taylor for football. I understand that next year it is quite likely that such legislation will be coming forward. If so, the opportunity should be taken to add to it.
The club believes that there should be guidance to the police to co-operate with, and support, any major sporting event organiser who introduces after consultation a self-help scheme designed to invalidate all tickets sold without a licence from the organisers and banning multiple applications. Much can be done in terms of self help. Now that everything has become computerised and bar coded, it should become fairly easy to identify the source of tickets and where they are going, in particular for sporting fixtures. The club would like to see licensing

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in due course. It is concerned about unofficial corporate hospitality. I have heard from other sources that although official corporate hospitality costs £215, other operators are selling it with lunch for £950. That is vastly different.
However, it has to be appreciated that there is not a free market in the sense that the noble Lord, Lord Monson, would like. It is not a case of unlimited tickets, however many people wish to go. The tickets are very limited in supply. It is a limited market. By buying up large quantities of tickets and reselling them in this way, people prevent others buying an individual ticket and using it as they wish.
Wimbledon is concerned that the championships are coming into disrepute, in particular in the eyes of the many thousands of visitors some of whom are led to believe that Wimbledon itself gives a degree of acceptance to unofficial corporate hospitality. I very much liked its comment that it would like to see the tickets go to true tennis lovers. As one, I certainly support that. I can remember queuing up years ago for standing room when I first arrived in this country. Wimbledon has a magic: people from all over the world wish to go there.
The club is genuinely concerned about the increasing use of strong arm methods and the theft and forgery of tickets by the criminal element now involved to some extent in this business. It is concerned that such activities will become even more prevalent as the number of tickets available is further reduced following the changes required of the championship to meet the new safety at sports ground requirements. Until I received this letter I had not appreciated that Wimbledon was going to lose space rather than gain space, as other sporting activities are often able to do. Because of the safety requirements there is a loss of revenue and of the number of seats. Presumably the price of the tickets will have to be increased in order to offset that. There is a loss of standing room for 2,000. The club points out that the championships do not attract violence. I am sure that everyone is impressed by the orderliness of those waiting patiently in long queues outside Wimbledon. I hope that the championships never will attract violence.
The club plans to introduce a self-help scheme this year aimed at invalidation of any ticket sold on. It believes that if the police give support to the scheme it could work well. Ryder Cup tickets have been dealt with in the same way, there being a refusal to allow any to be sold on. The scheme was challenged in court and upheld.
Several courses of action can be taken immediately. First, all tickets should have printed on them the face value. A code of practice exists recommending that, but it is not mandatory to print the price on the ticket. If the ticket shows a price of £10 but someone is asking £150, at least it would be purchased with full knowledge and awareness.
The problem affects not only overseas tourists. It is of great concern to everyone in the country who wishes to obtain tickets but cannot. If one knows the price of a ticket one also knows the mark-up that is being asked. At present one can obtain totally different prices from two different theatre agencies.
Secondly, there must be proper cancellation of used tickets. There should be no way in which people can use a ticket to enter an event and then send it out to be re-used. Tickets must be properly cancelled by being stamped, defaced or torn in order that they cannot be re-used.
I should also like to see local authority licensing. This has been effective in the United States. Ticket touts were doing big business in New York. However, when licensing was introduced they were cleared out to New Jersey. When licensing was introduced in New Jersey, they were cleared out to another state. Now they look to Britain and to London as an easy target. They are moving here because we have so little control.
All noble Lords appreciate that the legislative programme is crowded. I believe that it would be appropriate to add such provisions to legislation already being discussed. No one, including myself, wishes to see more legislation than necessary. However, ticket touting is becoming out of hand. It damages the tourist business and often defrauds innocent people who wish to enjoy a sporting event or show. I hope that the Minister will at least assure the House that the matter is under serious consideration. I am sure that many organisations which are worried about the recent developments will be happy to provide the Government with all the evidence that they have collected.
8.13 p.m.
Lord Jenkins of Putney: My Lords, the noble Baroness is to be congratulated upon raising the Question and I support her from this side of the House. There is a mistaken philosophy which, until recently, was popular on her side of the House. Except for a few remaining cases, the notion that the market is the be-all and end-all of everything and can do no wrong is being shed even in government quarters.
Ticket touting is now completely out of hand. Until 1985 the ticket tout was the odd man out and could be regarded as a kind of sporting vagabond making a bit on the side. However, in 1985 the agreement reached between the Society of West End Theatre Managers and the leading ticket agencies was outlawed as being a restrictive practice. That had a disastrous effect not only in relation to the theatre. The view was taken that if that was a restrictive practice there could be no restrictions anywhere. The floodgates were opened not only in the theatre but particularly in sport. The inevitable result was that what had been controlled became totally uncontrolled.
Ticket touting is now an established racket with a turnover of millions of pounds a year. The noble Baroness said that it was £25 million but I believe that that is the minimum. It is one of the many unacceptables faces of capitalism. The rake-off is enormous. A £35 ticket for the men's final at Wimbledon is being sold for £950 including lunch. It is a mark-up of criminal dimensions —
Lord Graham of Edmonton: There is no such thing I as a free lunch!
Lord Jenkins of Putney: My Lords, tickets for "Phantom of the Opera" have a top price of £22-50 but regularly sell on the black market for between £150 and £160. That is ridiculous, is it not?
Great damage is being done and tourists are being exploited. When they are sold inferior tickets at inflaled prices they gain a wrong impression about the price of London entertainment. Some of the agencies are verging on criminal behaviour and they defraud clients by selling non-existent or forged tickets. The enormous profits readily available now appear to be attracting robbery and violence to a scene already of doubtful legality. The law must be strengthened, as was recommended by the London Tourist Board.
There must be licensing and the Government can be assured that, if they take such a measure, they will enjoy universal praise, which will be a nice change for them. Such legislation is now widespread in the United States. There the illusion that the market needs no control is confined almost exclusively to the incorrigible Professor Milton Friedman. Perhaps that view is shared by the noble Lord. Lord Monson —we shall see.
Restrictive practices which prevent exploitation, whether of the employee or the consumer, are necessary if capitalism is not to degenerate into unbridled greed and then into crime. Most people are aware of that and I hope that the Question will receive the positive, affirmative and encouraging Answer that it deserves. I am happy to support the noble Baroness and I hope that she will receive the affirmative Answer that she so richly merits.
8.19 p.m.
Lord Monson: My Lords, it was significant that the Question appeared on the Order Paper on a day when there were also two short debates. The first dealt with the chaos prevailing in the market for rented farmland, which led to the virtual drying up of that market, as a result of governmental interference in arrangements freely negotiated between willing lessee and willing lessor. No doubt on the strength of my sitting where my noble friend Lord Harris of High Cross normally sits, the noble Baroness twice in the course of her speech attacked my speech with great vigour before I had even begun.
It is true that I believe in the primacy of the market. As my noble friend Lord Marsh said earlier today, the market always wins out in the end. However, I believe in it not for abstract ideological reasons but for pragmatic ones. I hope that when the noble Baroness has heard what I have to say she may agree that there is some merit in some of the points that I make, just as I intend to endorse strongly one particular suggestion of hers.
The noble Baroness asked what plans Her Majesty's Government have to prevent the exploitation —and that is the key word —of tourists and the public by ticket touts. I do not defend the ticket touts who use the strong arm tactics to which the noble Baroness referred. Law abiding ticket touts may be capable of annoying members of the public, at any rate the more hypersensitive among them. However, those touts acting within the law are not
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capable of exploiting the public except on the very rare occasions when they manage to corner in advance every ticket on the market so that all potential customers have only one source of supply; namely, a tout.
Even in those unusual and, I venture to say, improbable circumstances, it is doubtful that exploitation is taking place because, although the noble Baroness spoke about criminal elements —and they may exist—we are not talking about latter-day Harry Limes peddling penicillin in an up-dated version of the devastated, war-torn Vienna of the late 1940s. We are not talking about a black market in necessities but about a black market in luxuries. Those who are willing to pay excessive prices for tickets on the centre court at Wimbledon, the Cup Final or an Andrew Lloyd Webber musical suffer no serious harm or deprivation. They have the option of switching to another, albeit less popular, show or sporting event or even staying at home and watching television or engaging in some other indoor pursuit.
Always providing that they are acting within the law, the touts fulfil the useful, indeed Thatcherite, function of bringing supply into line with demand —a point made by the honourable Member for Billericay, Mrs. Theresa Gorman. In a sense touts can be compared with jobbers in the City of London, although with one essential difference which understandably irritates people; that is, that whereas the jobbers take risks and accordingly can lose money if they happen to misjudge the market, ticket touts very rarely lose money. As the noble Baroness said, they make a killing. They are not left with unsold tickets on their hands.
Why do they make a killing? Because the wares which they have for sale tend to be grossly underpriced in the first place. If that were not so, the ticket tout would hardly think it worth the risk. One reads—and the figures I have are slightly different from those already quoted this evening—that people are prepared to pay £130 for good stall seats at "Phantom of the Opera" with a face value of £22-50. I think that such people are raving mad, as I think are people who are prepared to pay several hundred pounds for a 20-minute flight on Concorde over the English Channel. But after all, it is their money. If the pleasure they derive from a short trip in Concorde or two or three hours at "Phantom of the Opera" is worth to them a three-digit sum, so be it. It is none of our business.
Surely the solution is to let the initial price of the ticket reflect the demand just as the price of old masters, Impressionists or first, second, third, fourth or fifth growth clarets reflect the ebb and flow of demand, and let a due proportion of the additional profits made by increasing the prices be paid over to the Treasury in corporation tax to the benefit of the rest of us.
This may not be totally germane but conversely let us see prices for an unpopular production —whether stemming from a bad review or otherwise—be sharply dropped to the extent necessary to fill the theatre. For example, let us say £5 for a good stalls seat or 50 pence for the upper circle. That is where I wish to endorse what the noble Baroness suggested as regards printing the price on the face of the ticket.

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After all, everybody likes a bargain and this would help to shift unwanted tickets. Of course it is also right that those paying over the odds should know what is the face value of the ticket, because the market cannot function effectively without both buyer and seller being fully informed.
Your Lordships may ask whether or not that may benefit unduly corporate customers since companies can entertain clients on expenses at Wimbledon, Wembley and the West End, to the detriment of private individuals. This may well be so. In that case it is up to the government of the day to alter the fiscal system so as to redress the balance in favour of the private individual.
Where there are potentially, say, 2 million people anxious to see a spectacle at which only 100,000 seats will be available over a two-year period, there must be rationing of some sort. There is no alternative. After all, you cannot issue a coupon which gives a person the right to see part of "Phantom of the Opera" between 7.25 and 7.30 p.m. on a Tuesday in September 1994. There must be rationing. Everybody cannot go. There can be rationing by price, or by queuing—in other words by a first come first served system, which can be rather hard on the elderly or the housebound. There can be rationing by lottery, or there could even be rationing, as suggested by the noble Baroness, by identifying, by a means as yet undevised, who is and who is not a true tennis lover. I suggest that ultimately rationing by price is bound to prevail given the temptation to which those first in the queue or successful in a lottery will be subject if the face value of tickets is kept artificially low in relation to the overall demand for those tickets.
Therefore if one wishes to eliminate the unsavoury type of ticket tout one must encourage the promoters to get their prices right in the first place.
8.27 p.m.
The Earl of Winchilsea and Nottingham: My Lords, I apologise to the House because my name is not on the list of speakers. I indicated my desire to speak in this debate but due to an oversight or problem my name was not included.
I am most grateful to the noble Baroness for raising the subject this evening. I wholeheartedly support everything she said. I should like slightly to widen the subject matter to include a problem which is strongly allied to this; that is, taxi touts. Those people are not licensed Hackney drivers but are private hire drivers who station themselves outside our mainline railway stations and airports. In collusion with hotel staff they carry on their activities in selling tickets to the unsuspecting overseas tourist or indeed a member of the general public.
That lamentable practice completes the evening for an innocent person who is out for an evening's entertainment in London. He is subjected to a rip-off operation throughout the evening. Those members of the hotel staff who are in collusion with the taxi drivers then take their share of the ill-gotten gains. I do not profess to have an answer to the problem except perhaps to offer a suggestion that the activities
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of those people be posted on a suitably sized notice prominently displayed in West End hotels and theatres to warn people of that activity. That may just have a warning effect.
8.30 p.m.
Lord Ponsonby of Shulbrede: My Lords, speaking almost at the end of this Unstarred Question it is perhaps difficult to avoid repeating what has already been said but I shall try to do so in so far as is possible. I should like, first, to thank the noble Baroness, Lady Gardner of Parkes, for introducing the debate and deciding that this was the subject she wished to discuss on this occasion. As one who has long been involved with the work of the London Tourist Board it gives me particular pleasure that she should raise the subject this evening.
The noble Baroness and other noble Lords pointed to bad examples of touting, and it would certainly be possible to add to what they have said this evening. However, before doing so I should like to say a word with regard to the needs and desires of tourists generally and not specifically overseas tourists. When tourists visit a city they want value for money; they want to see a clean city and do not want to feel that they have been ripped off. Those are some of the things that they hope will accompany their visit to a particular city.
This particular problem was first brought to my attention rather vividly when I attended a meeting of the American Bar Association in Chicago some years ago. Members of the American Bar were due to visit London the following year and great efforts were made on that occasion to sign people up for their visit. I recall that there were lots of forms to be filled out by Americans for tickets for West End theatre seats. We noticed that the price was expressed in dollars, but when we started to work the prices out we realised that they were around three times the price of the sterling value of a theatre ticket at that time.
Lord Monson: My Lords, the noble Lord has put his finger on it. He said "sterling value" but he meant "sterling price". Value and price are two different things, are they not?
Lord Ponsonby of Shulbrede: My Lords, if the noble Lord wishes I will say "sterling price". However, the point is that that was more than just a booking fee, which in a sense every visitor expects to be added to the price of his ticket. A booking fee may be 20, 30 or even 40 per cent. but not several times the price of the original ticket.
Major and popular events are subject to monopoly supply—this may already have been said. There is not an expandable supply. As we know and as the noble Baroness pointed out, the needs of safety led to a decrease in supply at certain sports stadiums and for all I know in certain theatres.
The noble Lord, Lord Monson, said that law-abiding ticket touts were not capable of exploiting the market because people could go elsewhere. However, they exploit the market for their personal benefit and not for the benefit of the

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industry as a whole. Very often they also escape paying tax.
Noble Lords referred to particular aspects of ticket touting. I fear that it is something which appears to affect almost every quarter of the entertainment business. I have a quotation which has not been mentioned this evening so perhaps I may read it. It concerns rugby football. In the Newcastle-upon-Tyne Journal, and repeated in many other newspapers, Dudley Wood, secretary of the rugby union, said:
"Already, we cannot send tickets out for our internationals through the post. We have to use private vans. The police do not have adequate powers to combat what is a growing industry, a criminal industry.
In Scotland at the weekend police were able to arrest touts because they did not have a trading licence".
The Daily Express said:
"Wood said the law was different in Scotland and a police spokesman told him that six touts, who had £16,000 on them, were arrested at Murrayfield on Saturday".
That related to the recent match at the end of March. It would appear therefore that the law in Scotland is slightly tighter and possibly easier to administer than this area of law in England, because that could never have been achieved on this side of the Border. The noble Baroness asked for licensing to be considered. If we brought our law more in line with Scotland we may move some way in that direction.
The other matter referred to was the problem of unofficial corporate hospitality —that is where a tent or temporary building is erected outside a site and people are provided with a package at some great price. Noble Lords quoted such large prices as £950 for lunch, a ticket and hospitality. The real iniquity of such a scheme is that those operations probably go through without tax being charged or paid but the profit from the operations goes into private hands, whereas the profit from official operations goes back into the industry. By allowing that unofficial hospitality one is depriving the industry of some of its much-needed funding.
The noble Baroness, Lady Gardner of Parkes, spoke of crime syndicates in New York being replaced by the judicious introduction of licensing. I only hope that when the Minister replies he will be able to promise that the Government will seriously consider the introduction of a licensing system so that anybody found selling a ticket could be asked to produce a licence in the same way as any street trader when selling his wares can be asked to produce a licence to show that he has the right to sell those wares.
Lord Monson: My Lords, I am sorry to interrupt the noble Lord again, but is he suggesting that someone who wants to sell their ticket and advertises in The Times should also need a licence?
Lord Ponsonby of Shulbrede: My Lords, that is a very interesting question. One often sees in The Times individual tickets advertised by people who wish to sell them. He is suggesting that a way round a licensing system may be found if people are able to advertise through the press on that basis. I think that that is something which should be looked at. If
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it is a way round a licensing law, then it is not something which is acceptable.
The licensing system we need should be administered by the local authority under regulations laid down by the Secretary of State. That is possibly the only way in which we will be able to tackle this problem. If when the Minister replies he feels that the Government are not in a position to move to a licensing system, I hope that what the noble Baroness and other noble Lords have said this evening will make him feel that his department should hold an inquiry into the matter.
8.40 p.m.
Lord Strathclyde: My Lords, it has been a pleasure and of great interest to listen to the views of all who have spoken tonight, particularly so because noble Lords obviously have an enormous amount of experience on this issue and also a certain strength of feeling and variety as to how we should go ahead. However, I feel that the subject is essentially a complex one and I should like to deal with all the points that have been made, or at least as many as possible.
First, it is most important to decide exactly what the law currently states. Ticket touting—that is, as normally understood, the sale of numbers of tickets for an event at more than the set price for commercial gain—is not an offence as such. However, there are some aspects of current legislation which have a bearing on the matter. Under the Consumer Protection Act, a code of practice for traders on price indications was introduced in March 1989. This recommends that those selling tickets should show the face value of the ticket so that customers can ascertain the profit margin and at that stage decide whether they are getting value for money. Although contravention of this advice is not an offence in itself, it is factor that could be taken into account in any proceedings deciding whether an offence had been committed.
The noble Lord, Lord Ponsonby, mentioned the law in Scotland. I know that the noble Lord has a great deal of experience and knowledge of this subject as he was president of the London Tourist Board. Perhaps I may explain more fully exactly what is the situation in Scotland. Section 55 of the Civic Government (Scotland) Act 1982 makes it an offence for anyone touting for business (or attempting to buy a ticket) to cause annoyance. The burden of proof for an offence under this Act is high. The injured party must report to a policeman that he has been offended, importuned or insulted by another person. The person who committed the offence is then in breach of the Act if he does not move on, having been told to go by the police. This legislation does not affect the sale of tickets through an advertised address and so it is relevant to only part of the activity of touting. It also has little to do with permits, as the noble Lord suggested it might.
Criminal activity per se, such as acts of violence or fraud, are punishable under the normal existing criminal legislation, as are various acts of disorder or obstruction. My noble friend Lady Gardner referred to stolen or forged tickets and used tickets.

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The law already acts where there has been theft or forgery. Used tickets are something which the individual sports grounds themselves must take into account and endeavour to stop, as indeed they have been advised to do in the report of Lord Justice Taylor to which I shall refer shortly.
There have been many calls for the Government to legislate further to restrict touting. Unattractive though this activity may be in many respects, there are, however, dangers inherent in restricting what many would see as legitimate commercial activity in perhaps unduly limiting the scope of genuine ticket agencies to operate.
I now refer to the specific issue of football where Lord Justice Taylor has recommended that ticket touting outside football grounds should be made an offence. He makes clear in his report, however, that he considers the case of football to be unique in that he believes that the activities of touts are relevant to the public order problems that have beset football. His recommendations are being considered by my right honourable friend the Home Secretary.
In general, however, I must say that I believe that the main responsibility for reducing the scope of the ticket tout to operate must lie with the organisers of major sporting and other entertainments. It is the ease with which tickets can find their way on to the black market that leads to many of the difficulties that we have discussed this evening. There are many measures which organisers can take to control the issue of tickets and I know that, on occasions, they attach great importance to doing so as they usually wish to ensure that the people who obtain tickets are the genuine fans who sustain a sport.
I was therefore very interested to hear of the scheme which the PGA used last year to prohibit the resale of tickets at the Ryder Cup. My noble friend Lady Gardner of Parkes referred to the scheme. The PGA and its approved ticket agency issued tickets which were valid only if issued by themselves and successfully obtained an injunction against a company which was advertising tickets. These tickets, by being sold other than through the approved outlet, were thereby invalid and the sellers were potentially defrauding their customers.
I think that that example shows that a legal remedy therefore exists at present for organisers of major events to take action to establish control of these events and ensure that the tickets go to those whom they wish to attend. I understand that the authorities at Wimbledon are looking at the possibility of a similar arrangement for next year's lawn tennis championships. I welcome the fact that the Wimbledon authorities have seen that the solution to the problem, if they feel they have one, lies firmly in their own hands. I know that my right honourable friend the Home Secretary is looking in detail at the PGA scheme and its further implications. I shall certainly convey to him the views that I have heard tonight.
My noble friend Lady Gardner and the noble Lord, Lord Ponsonby, referred to the high price of theatre tickets that are advertised abroad. It was a delight to hear the noble Lord, Lord Monson,
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intervene with a breath of fresh air. If someone can manage to sell tickets overseas at a price, that is thoroughly enterprising; but I must ask why the West End theatres themselves are not involved in selling tickets overseas and obtaining the price that they want rather than letting private entrepreneurs do it for them.
The noble Lord, Lord Jenkins of Putney, offered me, rather seductively I thought, universal praise if we were to introduce legislation on this matter. I am not certain that legislation would actually work. My noble friend Lady Gardner and noble Lords opposite suggested licensing. I do not believe that licensing would work. It is not a solution. We would have to divide individuals from corporate entities that might be indulging in this operation. It would mean even more work for local authorities which already have difficulties in carrying out their existing duties and I am not sure that it would be entirely fair to those people who legitimately want to set up and sell tickets.
The noble Earl, Lord Winchilsea, said that there should perhaps be signs in hotels to warn people of taxi and theatre ticket rip-offs. That is, essentially, probably a very good idea if people need to be warned.
The noble Lord, Lord Ponsonby, said that unofficial corporate entertainment deprived industry of its funding. Again, I feel that the solution to the problem —if the industry feels that there is a problem in that money is deing diverted to other sources—is for the industry itself to act and endeavour to provide that the supply of tickets goes to the right kind of people so that they receive the return rather than the middleman.
In all of this discussion I feel that there is one fundamental problem —that is, that ticket touts, or whatever we choose to call them, provide for a demand. There will always be that demand. I carried out a certain amount of research this morning. If I had wanted to see "The Phantom of the Opera" this evening I would have had to pay between £125 and £195 for a ticket. However, at least I had the choice of going this evening and if I did not want to pay I could not go. As it happens, the show has already started and I am still here.
Perhaps I may sound a note of caution to those who seek legislation. The reason why London theatre tickets are so expensive when sold by a third party is their ease of supply, and because of the theatre's popularity. I would not wish to be here answering to a debate, promoted perhaps by the same people, about complaints that visitors were not coming to London because they could not get tickets by legitimate means because they had already been previously sold. That is always a danger of government muddling, if I may borrow the words of the noble Lord, Lord Monson.
I think the situation that we have at present is essentially a good one. The sports, cultural and entertainment promoters themselves can help solve the problems by being more particular to whom they sell tickets. I suspect that that is the problem in the long term.
Lord Jenkins of Putney: My Lords, I wonder whether the noble Lord would at least consider making a recommendation to his right honourable friend that the provision under the Consumer Protection Act be changed to a regulation so as to give it statutory functions and make it more possible to issue proceedings with a chance of succeeding.
Lord Strathclyde: My Lords, I am certainly happy to pass on that request to my right honourable friend the Secretary of State. I would just make one point about the code of practice and whether it should be made statutory. The recommendation is that the price be put on the face of the ticket. I think that most people already do that. But if a person is willing to spend £100 on a ticket, I suspect that whether the ticket originally cost £10, £15 or £20 is probably irrelevant.
Lord Ponsonby of Shulbrede: My Lords, I apologise for getting up again before the noble Lord sits down,
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but I do not think he answered the point which both the noble Baroness and I made, that if he was not prepared to consider legislation perhaps he might consider an inquiry into the problem.
Lord Strathclyde: My Lords, I do not really think an inquiry is needed. There has not been a great deal of fuss about this matter. Certainly, neither I, as Minister for Tourism, nor my department has received a single letter from an individual complaining about ticket touts or about being ripped off or exploited. I know the anxieties of the London Tourist Board, but I suspect that the best way to deal with the problem is to talk directly to the promoters and make sure they understand that there may be a problem in the way that they issue tickets.
House adjourned at seven minutes before nine o'clock.