§ 8.8 p.m.
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington) rose to move, That the draft regulations laid before the House on 13th February be approved [11th Report from the Joint Committee].
§ The noble Baroness said: My Lords, these draft regulations, which apply to Great Britain, further amend the Hill Livestock (Compensatory Allowances) Regulations 1984. They bring into effect the increased rate of hill livestock compensatory allowances for cows and ewes in the less-favoured areas, which the Minister of Agriculture, Fisheries and Food announced on 11th February. Comparable regulations are being made in Northern Ireland. Noble Lords will be familiar with the system whereby financial support in the form of headage payments on beef cows and ewes is given to livestock producers in our less-favoured areas. It is of very long-standing, dating back to the 1940s. Since 1976 this assistance has operated under European Community legislation, currently the EC Structures Regulation 797/85. These payments are designed to compensate producers for permanent natural handicaps affecting farming in the LFA; the objectives being to ensure the continuation of livestock farming in the hill and upland areas, with the aim of preserving the rural fabric by keeping people in these areas and conserving the countryside.
§ The agriculture departments traditionally carry out, each autumn, a thorough going review of economic conditions in the hills and uplands in conjunction with representatives of farming interests. The 1990 review showed that net farm incomes are forecast to fall in 1990–91 by 35 per cent. following a 32 per cent. drop the previous year. In real terms the reductions are 41 per cent. and 37 per cent. This situation arises from a number of factors. These circumstances have imposed considerable difficulties on livestock producers in the less favoured areas and, as noble Lords will know, there is little scope for such farmers to diversify into other areas of economic activity. These farmers make a valuable contribution to the areas by helping to maintain the necessary infrastructure and preserving the traditional landscape of the hills and uplands.
§ The draft regulations will increase the headage rate for cattle in the severely disadvantaged areas to £63.30: the rate will be £8.75 for hardy breed ewes and £4.90 for other ewes. In the disadvantaged areas the rates go up to £31.65 for cattle and to £2.45 for ewes. In total these individual increases represent an average increase of 14 per cent. and amount to an additional £17.5 million for the sector bringing the total expenditure on HLCAs in the United Kingdom per year to about £142 million. It represents a considerable increase in the level of support to farmers 1183 in the less favoured areas and will, I am sure, be welcomed. Around a quarter of the total expenditure will be refunded by the European Community.
§ The rates now proposed have to be looked at against the background of very severe restraints on public expenditure and other demands on the public purse. The rates are a clear demonstration of the Government's commitment to support extensive livestock production in the less favoured areas. We shall be doing our utmost to ensure that payments reach producers as quickly as possible, once the new regulations come into effect.
§ To summarise, the purpose of the regulations is to give extra assistance to extensive livestock producers in the hills and uplands at a time when they are facing considerable difficulties.
§ I commend the regulations to your Lordships.
§ Moved, That the draft regulations laid before the House on 13th February be approved [11th Report from the Joint Committee].—(Baroness Trumpington.)
§ 8.15 p.m.
§ Lord Carter
My Lords, the House will be very grateful to the Minister for her explanation of the regulations. Any money from anywhere at the moment is certainly good news for farming. I was struck by the date on which the announcement was made by her right honourable friend the Minister. It was made on 11th February. Then I recalled that the Minister was speaking to the National Farmers' Union AGM the following day. As Max Miller used to say, "Here's a funny thing"—because exactly the same thing happened last year. The noble Baroness will remember that the Minister made an announcement about the increase in the compensation level for BSE cattle from 50 per cent. to 100 per cent. on the day before he appeared at the NFU AGM. Perhaps I may paraphrase Oscar Wilde: for it to happen one year is a coincidence; if it happens two years running it looks remarkably like news management.
The noble Baroness mentioned that the payment will be arranged as soon as the regulations are approved. But there has been a delay and it seems to have been later each year over the past three years. Perhaps, the Minister can explain the reason for the delay. Having said that, we welcome the increases. They are badly needed to help offset the second consecutive sharp fall in farm incomes in the less favoured areas. We know that farmers in these areas face severe problems as a result of low livestock prices and high interest rates. In addition, the recent adverse weather conditions have added to their problems. Like the Minister, we hope that these increases will help to restore their confidence, which is at a very low level.
The Minister will be aware that there are two problems. In the next review in the autumn of this year will the Government bear in mind the problems of the farmers in the disadvantaged areas—the extended less favoured areas? They have suffered a particularly adverse income trend. There is the point about the 50 per cent. relationship between the disadvantaged area rates of HLCAs and the standard rate in the severely disadvantaged areas—I apologise for the jargon. Is there any chance of a revision in that 50 per cent.
1184 relationship? There is also the problem of the growing impact of the monetary limit on HLCAs of £62.48. I understand that it is some years since this was last altered. The review is perhaps an occasion for the upward revision of that. A growing number of farmers in LFAs are adversely affected. Apart from these points we welcome this increase. I am sure it will be welcome news to the farmers who will benefit from it.
§ Lord Hooson
My Lords, while any help at the moment is of some benefit to hill farmers—and it would be churlish not to welcome it —the 14 per cent. increase in these compensatory allowances must be put against the actual decline in the income of farmers. To say that they are facing serious difficulties is a gross understatement of the true situation in the hill areas these days. They are in a chronic state of depression. In my own country of Wales real farm incomes have fallen by more than 60 per cent. over the past three years. One would appreciate the problems involved if people in any other occupation in this country were to say that their incomes had dropped by 60 per cent. These increases will not in any way enable farmers for any sustained period to continue farming in the hills. I have lived all my life in agricultural areas. I myself farm. I know perfectly well that, if I was not able to subsidise my hill farm from my profession, in no way could it be made to pay.
Farmworkers who are employed at the moment are very often in a better situation than the farmers themselves. I know many farmers whose income is actually nil at the moment. They are farming by kind permission of the banks. The banks themselves have to be careful that they do not foreclose, otherwise they could create a tremendous depression in the agricultural industry. This situation is also reflected in the fact that 6,000 farmers have left the land in the United Kingdom during the past year. Many of them were in hill areas. For example, unemployment in the county of Gwent increased by 28 per cent. in the past year. In Brecon and Radnor unemployment increased by 25 per cent. In my own county of Powys—I am talking about the Montgomeryshire part—unemployment increased by 48 per cent. It is generally believed that the larger proportion of this increase is to be attributed to agriculture. I know very good farmers who have had to dispense with the services of men who have been with them for many years simply because they could not afford to pay them the wages.
I was told today about a farm in Montgomeryshire which is run by the two sons of a family, together with one employed worker. The sons have had to try to eke out a living by pursuing other occupations in the evenings such as driving lorries for long distances, and so on.
The situation facing agriculture in the hill areas is very difficult. The Government have not properly addressed the size and acuteness of the problem. I believe that the problem is more acute in what may be described as the hill areas than it is in the extensive moorland areas. That is due to the headage payments. I have always had extreme doubts about the long-term advantages of such payments. The system ought to have been worked out in a different way. However, I 1185 do not believe that this is the right time to suggest the total scrapping of the system. One has to do the best that one can.
It is important that the Government should address the problem of the future existence of communities in the hill areas in a determined way. I was brought up on a farm; I remember my parents speaking to me about the depression of the 1920s and the 1930s. I attended an agricultural college in Essex, far removed from Wales, in my early teens. I recall that Henry Ford had taken over land in that area—some of the best land in England—which he had bought at £15 an acre. He transformed the farming in the region because he was able to invest a great deal of capital. That was just before the outbreak of war when farming took an upturn.
However, since the depression of the 1920s and the 1930s agriculture has not experienced anything like the present conditions. It therefore behoves the Government, and the people of the country generally, to appreciate the fact that this is a most acute problem and that the most devastating social consequences will result unless it is tackled head on. The increase of 14 per cent. is a pittance compared with the real problem facing agriculture in these areas.
§ Baroness Trumpington
My Lords, I thank the noble Lord, Lord Carter, for his kind remarks. He asked me two questions. He asked first why there had been a delay in introducing the 1991 scheme. Secondly, he asked why there were not larger increases for producers in disadvantaged areas.
We are acutely aware of the importance of HLCA payments to the producers in our less favoured areas and we distribute claim forms as early as we can. This year we encountered a very difficult legal problem over the interpretation of a new rule adopted in Brussels. Under this rule HLCA payments to individual producers are restricted to a maximum of 1.4 livestock units per hectare. But we had to consult with the European Commission on the detailed implementation and unfortunately it took time to resolve all the problems. We could not, of course, distribute the scheme literature without telling producers how the new ceiling would operate. But as soon as those difficulties were resolved, we made special arrangements for the claim forms to be printed and distributed as quickly as possible. The claims are now being returned to our local offices and payments will start as soon as the new rates have received parliamentary approval.
As regards the second question of the noble Lord, Lord Carter, I know that there is a strongly held view 1186 that producers in the disadvantaged area should receive payments at a higher rate than the 50 per cent. of the SDA rate that has been obtained since the DA acquired LFA status in 1985. It is a point that we look at very carefully in the course of each year's autumn review. Our conclusion this year was that the differential should remain at 50 per cent. There were two main considerations. First, available resources are limited. More in the DA would therefore mean less in the SDA. Secondly, under the EC rules, the headage rates have to be fixed according to the severity of the permanent natural handicaps. Farming conditions are clearly less severe in the DA and our judgment is that the 50 per cent. differential remains appropriate. But I can assure the noble Lord, Lord Carter, that we will look at this matter again in the course of this year's autumn review.
I turn now to deal with the remarks made by the noble Lord, Lord Hooson. Of course, I am well aware of the general situation as he described it. We fully understand the problem. I submit to the noble Lord that a 14 per cent. increase is a very substantial help. Hill farmers will also benefit from special LFA payments under the ewe premium scheme. I listened most carefully to the points the noble Lord made about the future of hill farming. He should be pleased that we have been able to find this extra money. He should also be pleased to note that about 65,000 livestock producers in the United Kingdom are expected to benefit from HLCAs in 1991 at a total cost of about £14.2 million. It is a step in the right direction and a very substantial step, bearing in mind what I said to the noble Lord, Lord Carter, about the extreme financial constraints from which we are suffering in a general way this particular year.
I would not want the noble Lord, Lord Hooson, to leave the Chamber tonight believing that we were not aware of the problem. I can assure him that we are doing everything we can both from an EC and our own point of view to make payments to those whom we wish to see continue to farm in the less favoured areas and in the severely less favoured areas. I commend the measures to the House.
§ Lord Carter
My Lords, I believe that the Minister said that producers would benefit from HLCAs in 1991 at a cost of £14.2 million. Am I right in thinking that she meant to say £142 million?
§ Baroness Trumpington
Yes, my Lords; that is correct. I have to say for the sake of my own pride that the typing in my brief is incorrect.
On Question, Motion agreed to.
House adjourned at twenty-eight minutes past eight o'clock.