HL Deb 14 February 1991 vol 526 cc218-22

3.32 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington) rose to move, That the scheme laid before the House on 15th January 1991 be approved [7th Report from the Joint Committee].

The noble Baroness said: My Lords, your Lordships may recall that the farm diversification grant scheme, or FDGS, was introduced in 1988 with the purpose of providing pump-priming assistance to farmers who wish to diversify into non-agricultural profit-making enterprises on their farms. Grant is available at 25 per cent. on investments of up to £35,000. So far just over 3,000 applications have been received in the United Kingdom and of those over 2,100 have been approved. That means that the scheme has stimulated over £40 million of planned investment in diversified activities.

We chose with care, and after extensive consultation, the types of enterprise which would blend well with the farm business and fit comfortably in the rural environment. The final choice of activities seems to have been a good one with the whole range of eligible activities being taken up by enterprising farmers. However, there have been some wide variations in the level of uptake between different enterprises. Of course, that is to be expected where the availability of resources, location of the farm and available labour will to some extent dictate the type of enterprise embarked upon. Since the start of the scheme, 45 per cent. of all applications have been in respect of the provision of tourist accommodation. That covers the provision of bed and breakfast accommodation, permanent caravan sites, camping sites, conversion of traditional barns for camping and the restoration and conversion of redundant farm buildings to provide self-catering accommodation in cottages, chalets or flats. The average grant-aidable investment for tourist accommodation is currently £28,000, compared with £26,000 for the scheme as a whole. However, the expected profit of about £3,000 per annum is the lowest rate of return by far for any enterprise covered by the scheme.

These are essentially pump-priming grants but we have to stop priming the pump before we flood the market. That particular form of diversification has proved so popular with farmers that it no longer needs the extra stimulus of grant aid and can now develop in line with market forces. It has been an attractive investment because it is more familiar to many farmers and offers capital appreciation as well as income.

The Government have therefore decided that the scheme should be altered to concentrate the available resources on those types of enterprise which yield better rates of return to farmers. The instrument before us therefore removes, with one exception, all types of tourist accommodation from the list of enterprises eligible for capital grant under the FDGS.

The exception to which I have just referred is that of bunkhouse and camping barns, which are a relatively new concept designed for the hardy walker and cyclist. They are, in effect, stone tents offering protection from the weather, basic cooking, washing and toilet facilities, and nothing else. As their name implies, they are created by the simple, relatively inexpensive conversion of traditional farm buildings, often well away from the farmstead. Because they are usually linked in "chains", with people spending just one night in each, they require a considerable amount of planning and marketing and the overall success depends upon completing all the links in the chain. That, we feel, justifies the continuation of grant-aid for that type of accommodation.

The fact that we shall no longer be offering grant towards capital investment in tourist accommodation does not mean that we do not think it a worthwhile investment. Each farmer must take a commercial decision as to what is the best investment for the circumstances of the particular farm. Because it is important that farmers evaluate their investments and market them properly we are keeping our grants for feasibility studies and marketing on the current range of tourist accommodation. It is our hope that more farmers will take advantage of that admirable aid.

I stress also that all other grants under the scheme will continue to be available. We shall also, of course, be honouring our commitment to pay grant to those farmers whose plans for tourist accommodation have already been approved and to those whose applications were received before this instrument came into force. I commend the instrument to your Lordships. I beg to move.

Moved, That the scheme laid before the House on 15th January 1991 be approved [7th Report from the Joint Committee].—(Baroness Trumpington.)

Lord Gallacher

My Lords, I thank the Minister for explaining the purpose of the order. She confirmed the information already made public in a news release from her ministry on 15th January last. Having read that release, and having listened to what she said this afternoon, I am reminded of part of the old adage, "Thrice blest is he who gets in first", because in another place as recently as 13th February (col. 490) in reply to a Question her ministerial colleague said that, to avoid a deadline rush, there had been no specific consultations with organisations about the changes. The NFU regrets the cut in support, as many farmers say that bed and breakfast accommodation in the farmhouse is the best possible alternative.

The ministry's news release to which I have referred says that the change is designed to concentrate grants upon enterprises yielding the highest returns to farmers. The Minister confirmed that view this afternoon when she said that bed and breakfast (tourism, as it is called) currently yields a return of only 10 per cent., though there is capital appreciation on the converted building. I should like to ask the Minister, first, how those rates of capital return are calculated. For example, 31 per cent. is quoted as being the rate of return on craft shops and 39 per cent. on farm shops. To one whose capital is so very modest, those returns seems fantastic. I should be grateful if the Minister would tell me, or write to me if she cannot reply today, whether the figures quoted in the news release are actual figures or merely notional figures devised by the consultants to whom she referred.

The feasibility study and grants for the employment of marketing agents are to continue for all types of farm tourist accommodation. As the order now restricts grant to simple hostel-type shelters known as camping barns and bunkhouse barns (further defined by the Minister this afternoon), I wonder whether marketing agents in that context are still necessary. If they are necessary, why are the fees to be paid to them under the scheme (which she says is a pump-priming scheme) to continue as generously in the future as they have done in the past?

Can the noble Baroness also say, on the general issue, whether her ministry thinks that, when, on the advice of the tourist promotion bodies in this country, providers of other types of tourist accommodation are nearly all trading up, the bunkhouse will really appeal to any but a small minority of people? In those circumstances, far from priming the pump, we may be witnessing the decline of a scheme which, on the basis of the noble Baroness's own figures, clearly made a material contribution at an important time in helping farmers to diversify. In spite of the remarks I have made and the questions I have asked, we shall not oppose the order this afternoon.

Lord Tordoff

My Lords, it was not my intention to intervene but I see that most of my farming friends on these Benches have gone back to their northern fastnesses. They have no doubt done so in order to to lay fresh straw on the floors of their camping barns and bunkhouses.

Today is St. Valentine's Day and many in your Lordships' House who have read the Evening Standard this week will be anxious to know the answer to a very important question: has anybody found a rhyme to go with "Baroness Trumpington"?

Baroness Trumpington

My Lords, I shall answer the noble Lord, Lord Gallacher, first. I thank him for his rather lukewarm welcome to the measure. He referred to the rates of return: they are taken from farmers' own forecasts when putting in their plans for investment. The noble Lord may be interested to know that the present total grant commitment within the UK is £11.2 million, of which £5.2 million has so far been paid to farmers.

Nobody has mentioned it this afternoon but this was considered to be an unfair grant when dealing with small hotels because it puts them at a great disadvantage. That was another reason why we took this step. Grant is available under our Farm and Conservation Grant Scheme for the renovation of traditional farm buildings which are and will be retained in agricultural use. In addition, in rural development areas in England grant may also be available from the Rural Development Commission for the renovation of traditional farm buildings. Grant is still also available for buildings in connection with other enterprises under the FDGS.

I believe that we must continue to maintain our feasibility grants, even though, as the noble Lord is aware, the uptake has been poor. I think that farmers are foolish not to take advantage of this facility before embarking on various enterprises. Finally, I look forward to receiving a Valentine from the noble Lord, Lord Tordoff, even though it is late in the day!

Baroness Phillips

My Lords, the Minister may not have this information, as it concerns her description of the stone building for which the grant would be permitted. It took me back to when I lived and worked on a farm and my pigs had better accommodation than seems to be suggested for the individuals who wish to spend nights in the barns. For example, what are the facilities for lavatories and washing? One would not be permitted to put up a building of another kind for people staying overnight in a town. Perhaps the Minister will explain whether the accommodation would be suitable in every sense, although it is only for one night.

Baroness Trumpington

My Lords, the bunkhouse and camping barns are a relatively new venture in a different sector of the market. There is a need for more investment in it, to establish chains of suitable night stops which can be marketed as a package to walkers and others on this kind of holiday. It is also a means of preserving old barns—something which is greatly to be sought after.

I am not quite sure why the noble Baroness queries the simplicity of the arrangement, since, when one is young and active, walking through the hills and dales in the summer, if one can get a good meal and can wash, one is usually too tired to care about anything else.

On Question, Motion agreed to.