HL Deb 19 July 1990 vol 521 cc1061-3

6.55 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)

rose to move, That the draft Order laid before the House on 21st June be approved.[21st Report from the Joint Committee].

The noble Baroness said: My Lords, this scheme is presented in accordance with the requirements of Section 13 of the Agriculture Act 1967, as amended by the Agriculture Acts of 1970 and 1986. The order replaces the maximum charges set out in the schedule to the Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order 1988. In doing this, the order increases the maximum charges payable for cattle, pigs and sheep in respect of general expenses, and increases the maximum levy in respect of species promotion payable on cattle and sheep. For pigs, the maximum species promotion levy remains unchanged. There continues to be no species promotion levy on calves, and the maximum general levy on calves remains unchanged.

The species promotion levy is paid solely by producers, and the general levy is shared equally between producers and slaughterers. The actual amounts within these maxima will continue to be determined by the MLC in consultation with the appropriate representatives of the industry. It usually takes several years for actual rates to reach the permitted maxima. Before submitting its scheme to agriculture Ministers, the commission consulted widely within the meat and livestock industry on its proposals for new levy maxima. Agriculture Ministers have consulted the industry separately. In the light of these consultation exercises, I am satisfied that the proposals have the support of the industry because of the overall benefit to the meat and livestock industry.

I should now like to set out the background to the draft order. Customs and Excise has examined the position of the MLC in respect of VAT. The conclusion was that the MLC's levy fell within the VAT system. In technical terms, it constitutes a financial consideration for a taxable supply of services. This means that as from 1st September this year VAT will be charged on MLC levies. As a consequence, the MLC will be able to recover the VAT it incurs on its purchases (inputs) against the VAT charged on its outputs. Levy payers registered for VAT will also be able to recover from Customs and Excise the VAT charged on the levy to the extent that it is attributable to their own taxable expenses.

The main purpose of the draft order is to allow the MLC to increase its levies to take account of the payment of VAT from 1st September. Otherwise there would be a significant fall in the revenue of MLC after payment of VAT, leading to a cutback in its activity.

As far as levy payers are concerned, I have already mentioned that the VAT they pay will be recoverable from Customs and Excise.

The maximum rates specified in the draft order would also provide some scope for the MLC over the coming years to increase its levies (in particular the species promotion levies for cattle and sheep) over and above what is required because of the VAT changes. This reflects the views of the relevant species promotion councils, and any actual increase would be put in place in full consultation with industry representatives.

The draft order would exempt from the levy certain livestock brought into the United Kingdom from other member states. This is necessary to meet our Community obligations. I would stress that it is a very limited exemption. It is confined to animals which have been fattened here for relatively short periods. The numbers involved are extremely small, and the effect on MLC income will not be significant.

The raising of the maxima has the support of both the industry and Ministers, and I ask your Lordships to support the Motion. I beg to move.

Moved, That the draft order laid before the House on 21st June be approved. [21st Report from the Joint Commit tee].—(Baroness Trumpington.)

Lord Gallacher

My Lords, we on this side of the House, thank the noble Baroness for breathlessly explaining the order and its purpose. I immediately give her the reassurance that we are in support of it. Indeed, we have very little to say about it.

I was gratified to learn from her introduction that there had been full consultation both by the Ministry and by the Meat and Livestock Commission with the 13 representative bodies who have an interest in these matters, and that there was unanimous agreement in favour of the changes which the levy proposes. Such unanimity in the meat industry is, in my experience, a rare occurrence. We should be grateful that the industry is so wholeheartedly behind the commission in the increases now proposed.

I had a note from the commission which gives me the gratifying additional information that the species promotion levy, which is included in the order, is likely to remain at those rates for the next three years. If that should prove to be the case, it will be a source of gratification for those called upon to pay the species promotion levies.

I note what the noble Baroness said regarding the decision by Customs and Excise to vary the rulings regarding VAT. One must accept the fairness of the variation. Again, the MLC is apparently satisfied with it. In my dealings with Customs and Excise I always believed in an arm's length relationship and the maximum disputation of everything which it proposed. That led on occasion to some very valuable concessions under de minimis and other rules which I never fully understand but which ultimately were beneficial to us. However, I am assured by the Meat and Livestock Commission that what is proposed will be to its advantage rather than to the reverse. To that extent is would be wrong of me to criticise unduly the Custom s and Excise based on experience which may be sadly out of date. That said, we support the order.

Baroness Trumpington

I am extremely grateful to the noble Lord, Lord Gallacher, and apologise for my breathlessness. I thank him for his welcome.

On Question, Motion agreed to.