HL Deb 24 January 1994 vol 551 cc858-65

6.5 p.m.

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe) rose to move, That the scheme laid before the House on 30th November be approved [2nd Report from the Joint Committee 1993–94].

The noble Earl said: This instrument which came into effect on 1st December 1993, reduces the rates of grant for various investments provided for in the principal scheme as a consequence of the decisions on public expenditure announced in the Chancellor's Budget Statement. But we have also taken the opportunity to make some other minor changes to the grant arrangements which we think are desirable.

The changes to the rates of grant offered under the scheme are as follows. The rate of grant for facilities for handling, storing and treating farm waste is reduced from 50 per cent. to 25 per cent. Grants for the provision, replacement or improvement of hedges, traditional walls and banks, shelter belts, the enclosure of heather moorland and grazed woodland, the burning of heather and the control of bracken are reduced from 50 per cent. in the less-favoured areas and 40 per cent. outside to 30 per cent. and 25 per cent respectively. Grants for the repair or reinstatement of traditional farm buildings are reduced from 35 per cent. in all areas to 25 per cent. in the less favoured areas and 20 per cent. outside them.

But we have not made these reductions in isolation or purely in response to pressures on public expenditure. They have been made against the background of strengthened markets and much improved returns to producers. And we have also taken into account the progress which has been made in reducing the incidence of pollution from farm waste and the development of other, more specifically targeted, vehicles for delivering environmental aids.

Since the F&CGS opened in 1989, more than £149 million has been paid to farmers in the UK, £119 million of which has been for the installation or improvement of waste handling facilities. In Great Britain, around 11,000 farmers (9,000 in England) have benefited from grant on farm waste facilities.

The exceptionally high rate of grant on these facilities, which exceeded normal EC maxima but which we were able to persuade the EC Commission to accept when the F&CGS was introduced, has fulfilled its purpose of stimulating farmers' investment in pollution control. And we have seen the result in a significant decrease in the number of major agricultural pollution incidents.

For those reasons, we think that the time is now right to reduce the 50 per cent. grant rate. However, we are not complacent about the job that remains to be done in tackling water pollution, which is why we are continuing to pay grant on farm waste facilities. In addition to continuing to provide grant aid, we are also providing, through ADAS, free advice to farmers on pollution control and help with drawing up farm waste management plans. Also in selected catchments with particular problems we have asked ADAS to undertake a campaign to promote the use of farm waste management plans.

Since the F&CGS was introduced in 1989, we have significantly developed the theme of assistance to farmers for investing in looking after the countryside. We have done so by putting in place schemes targeted at the specific needs of areas of particular significance. For example, under our environmentally sensitive areas programme we have now designated nearly 30 areas in Great Britain. Moreover, subject to the approval of the European Commission, during 1994 we plan to launch a number of additional measures, including further ESAs, as part of the agri-environment package accompanying reform of the CAP. All ESA schemes offer the opportunity of grant aid to assist in conservation plans at rates which range between 30 per cent. and 80 per cent. Other agencies such as the Countryside Commission, English Nature and the National Park authorities also have in place considerable, and increasing, budgets for grants from which farmers are able to benefit. Against that background, assistance generally at high rates of grant is no longer appropriate. But we have maintained the range of conservation grants originally offered under the F&CGS, albeit at lower rates of grant.

Finally, we have decided to provide additional assistance under the farm and conservation grant scheme in three ways. First, we have extended for a further year the life of the special package of grants available under the F&CGS to growers on the Scilly Isles to deal with the particular problems of bulb and flower production there. Essentially this is a short-term solution while we consider longer-term arrangements for dealing with those problems. Secondly, we have put in place grants to help farmers with the cost of capital works needed to open up new access to farm land by the public. The grants will underpin further assistance for that purpose, for which we will shortly be seeking the approval of the House. Thirdly, we have put grant aid for dealing with poultry waste on the same footing as that for dealing with other livestock wastes.

In summary, the instrument before the House results from a considered review of the F&CGS. We have concluded that the range of grants the scheme offers should be maintained. We are making some extensions to the scheme. But, in recognition of trends in pollution incidents and progress in introducing targeted assistance for conservation, we believe that it is now right to reduce the rates of grant offered under the scheme for such types of investment. I commend the instrument to the House. I beg to move.

Moved, That the scheme laid before the House on 30th November be approved [2nd Report from the Joint Committee 1993–94].—(Earl Howe.)

Lord Carter

My Lords, the House will be grateful to the Minister for explaining the scheme so clearly. As regards the aspects to which he referred at the end of his speech, I can say that they are certainly most welcomed by these Benches. I have in mind the increased access provisions, the proposals for dealing with poultry waste and the one-year extension for the Scilly Isles. However, having said that, we are disappointed at the level of reduction in the grants because such grants deal with conservation, the environment, and pollution.

Whenever I speak to farming audiences on the subject of environmentally friendly farming or related matters, I am always anxious to congratulate the Government on the imaginative proposals for the environmentally sensitive areas that they were the first in Europe to introduce. However, they are limited in area. I believe I am correct in saying that 85 per cent. of the country's farmland is outside ESAs.

As a matter of principle, we feel that the capital grant system should be available to encourage farmers to undertake environmental work wherever they farm, and not just in the limited designated areas. Indeed, we had proposals, contained in our manifesto for the last election and still Labour Party policy, for green premia to be available to all farmers wherever they farm so as to encourage them to farm in an environmentally friendly way. Naturally, we are disappointed to see the Government reducing the grant available for conservation and for dealing with the environment and pollution.

I believe that the total cost of the grant scheme is in the order of £74 million. That is less than 10 per cent. of the cost of the set-aside and the arable area payments scheme. Can the Minister confirm that the savings for the first year will be £12 million and that, thereafter, the savings will build up to over £25 million which will represent about one-third of the cost of the scheme? The Minister implied in his opening remarks that this is a Treasury response and one that is not driven by concern for the environment.

On the matter of hedges, the loss of grant for reinstatement is most disappointing. Perhaps the Minister can confirm that there was a pledge in the Conservative manifesto at the last election to protect hedgerows. I should like to know how the proposed change can be reconciled with such a pledge.

It is a shame that we are debating the matter tonight. I understand that later this week—perhaps the Minister can confirm this—the Government's proposed biodiversity plans will be published. I believe that such plans will be in the hands of the Department of the Environment. It will be most interesting to see how the approach from the Ministry of Agriculture—that is, cutting grants for conservation to deal with the environment and pollution—marches with the biodiversity plan.

There was a quotation in yesterday's Observer as regards the targets for the biodiversity system and the various plans to be produced to fulfil the pledges made at the Rio Earth Summit. The article stated: 'How these targets will work within the planning system remains to be worked out by Ministers,' one senior Whitehall source said. 'They could either turn out to be the most significant development in nature conservation for over a decade or a largely unfulfilled wish list'". If the approach to the present grant scheme is anything to go by, it is much more likely that the biodiversity proposal will be that largely "unfulfilled wish list" rather than real improvements in nature conservation.

It would be most helpful if the Minister could say how the farm conservation grant relates to the agri-environmental package. Is it a reduction overall in the total? We all know about the agri-environmental package, but is there any way in which that can make up for the reductions in the farm conservation grant? It would be odd if the Government, on the one hand, under the agri-environmental package, were introducing certain measures but, on the other hand, were reducing the grant on similar measures through the present scheme. How do the changes in this grant scheme relate to the agri-environmental package?

I believe that the variation sends the wrong signal to livestock producers and to conservation generally. It is a pity to reduce at such a severe level the environmental grants which, as we know, have been of great value to farmers who have carried out such work. For individual farmers who wish to install effluent disposal facilities, the extra financial burden could have a very serious effect on the viability of their businesses.

I have long said that pollution is one of the major problems facing British agriculture, especially as regards intensive livestock keeping. It is a pity that such grants should be reduced when this is such an important and expensive matter for farmers to put right. As I said, I believe that the reductions will eventually represent a one-third cut in the grant scheme. That is a great disappointment. Although we will not be dividing the House, I nevertheless express the disappointment that we all feel on these Benches. It is a disappointment that I know farmers also share.

Lord Beaumont of Whitley

My Lords, I welcome the way in which the Minister explained the proposed variation to the scheme, although I cannot welcome its effect. He explained it very fully and frankly, but there was one statement he made that I slightly beg leave to doubt. Along with the noble Lord, Lord Carter, I see the hand of the Treasury behind the variation to the scheme more than any other department. In my view, the victim is not so much the farmer. To a certain extent I accept the explanations given by the Minister and in another place that perhaps overall and taking everything into consideration the farmer may be better off. However, the countryside and the environment will suffer. That is what the Minister should be defending, not the issue that his honourable friend in another place defended, namely, whether or not the farmer will be worse off. He should be concentrating on whether or not the countryside will be better or worse off. I believe that it will be considerably worse off. The wrong targets have been chosen. It is possible that the variation to the scheme was prepared in a hurry. A botched up solution has been found.

The problems posed by the CAP are, as we all know, absolutely enormous, and set-aside is a botched up solution just this side of a disaster. The cuts in the agricultural support which are embodied in this provision, and carried out in other measures by the Government, should be made against the arable area compensation for rotational set-aside, which is an extremely expensive way of achieving not very much. Instead of that, the target which has been chosen tonight will embarrass the Department of the Environment when it publishes its biodiversity plan. I entirely agree with the noble Lord, Lord Carter, in that I too look. forward very much to seeing what will emerge in public about what will undoubtedly be a major. interdepartmental wrangle. But the moral of the departmental wrangle is that we would be better off with a straight one between agriculture and the environment and not one which was governed by the Treasury.

The Government have declared their support for enhancing conservation and fighting pollution. Where, I ask them, is that support tonight? Of course we welcome the measure which applies to the Scilly Isles. We find nothing to be excited about in the measures dealing with poultry waste and we would be more excited about access if it had not already been pledged as part of the commitment to the European agricultural environment programme in August. It is difficult to see whether this is just a repetition of that or whether it involves something separate. We certainly join with the noble Lord, Lord Carter, and his Benches in thinking that this is a fairly disastrous provision and that it is a great pity that it is not seemly that we should divide against it. However, there are certain questions which both the noble Lord and I have asked and which I hope the Minister will feel he can answer.

Lord Hylton

My Lords, I hope that I shall be in order in saying a few words about the subject of the conversion of existing farmland, particularly corn-growing land, to organic methods. I say that because this has a strong bearing on both the conservation of soil and the conservation of wildlife. I have in the past declared in your Lordships' House my interest as a farmer and I do so again today. Perhaps I should add that I happen to be a symbol holder for cereals of the Soil Association.

I wish to draw the Government's attention to what happens when a given acreage now producing corn grain by conventional methods is converted to organic methods. When looking at this question it is important to take into consideration a four or six-year period, or indeed a longer period if anyone wishes to do so. I say that for rotational reasons. Let us assume that a given acreage at the present time is producing continuous cereals. If that is the case and if organic methods are then adopted, there will, over a four or six-year period, be an immediate reduction in production of 50 per cent. That arises because half the land will be taken out of cereal production and will be turned over to grass crops or other break crops. That is what happens in phase one, as it were.

Over the same period of time there will also be a very marked reduction in cereal yields. There will probably be a change from an annual production of three or four tonnes on the old conventional methods to a new production of one-and-a-half or two tonnes per year on that part of the organic system devoted to the cereals. If one takes these two kinds of reduction together, one finds that, over time, they amount to a reduction of the order of 75 per cent. of the grain that was being produced on the land affected. I believe anyone would recognise that as being significant. If we compare that position with a slightly different situation where, at the present time, cereals are being produced in conjunction with other break crops such as potatoes, sugar beet, oilseed rape or legumes—all of which occupy quite considerable acreages—we shall discover that these break crops are often used only at rare intervals during the long course of production of cereals—perhaps one year in five, two years in 12 or sometimes even for a smaller fraction of the total time.

Let us assume that 10 acres were producing 40 tonnes a year under the conventional methods involving considerable inputs of chemical fertilisers and pesticides, and sometimes growth regulators. When the conversion to the organic system has taken its full effect, those same 10 acres will be found to be producing something of the order of 10 tonnes per year. In addition to the reduction in output there is a quality gain in the cereals produced that is perhaps particularly noticeable in the nutritional value of the organically produced cereals. Therefore there is a great deal to commend this kind of conversion to the Government and to the European Union generally as regards their desire to reduce surpluses of cereals, grain mountains and other such phenomena.

I ask the Government to think rather more seriously about this process than they have in the past. I hope that by what I have said I may have been able to dispel a little ignorance which may exist in the minds of certain Ministers, and which I am fairly sure exists in the minds of a good many of their official advisers. I hope the Minister will be able to comment on what I have said tonight. I am well aware that he and I have been in correspondence on this subject in the past and he has been helpful. However, I believe there is still a way further to go.

Earl Howe

My Lords, I am grateful to the noble Lord, Lord Carter, for his welcome for the enhancements that I outlined in the farm and conservation grant scheme. It is something of a disappointment, however, bearing in mind some of our recent exchanges across this Table, not to find the noble Lord arguing the Government's case throughout. Somehow, though, the alliance seemed too good to last. Notwithstanding that, I think it is appropriate that I should expand a little on my earlier remarks.

Five or six years ago the instruments available to the Government for delivering our environmental policy in the sphere of agriculture were limited in number. We were really only just beginning. However, we have now reached the point where our policy—although in many important respects still delivered to the generality of farmers—can also be delivered in a much more refined and targeted way where the need is greatest, across several government departments and within a much larger overall budget. In a very real sense, therefore, the order we are debating this evening reflects not a diminution of government support for the environment but the exact opposite. It is part of a much broader picture.

I think, too, that it would be wrong if schemes like the farm and conservation grant scheme were not reviewed in this way from time to time in response to actual events. Even a 25 per cent. grant represents a considerable measure of assistance. As I outlined, we are building enhancements into the scheme.

Grant aid is, of course, only one means of delivering the Government's environmental policy. Advice and regulation are the other two prongs of the policy. The Government's commitment to the countryside should. not be doubted.

The noble Lord, Lord Carter, mentioned a figure of £74 million as the cost of the farm and conservation grant scheme. I do not recognise that figure. The true figures are as I mentioned in my earlier speech. The budget for 1994–95 throughout Great Britain is £40.6 million, compared with £39.7 million in the current year, reducing in the subsequent two years to £31.7 million and £31.4 million respectively. To answer another question posed by the noble Lord, that represents a reduction from the previously planned totals across Great Britain of £9.02 million in 1994–95 and £20.67 million and £21.17 million in the following two years.

The noble Lord, Lord Carter, and the noble Lord, Lord Beaumont of Whitley, mentioned the Government's biodiversity plan. Naturally I would not wish to anticipate tomorrow's announcement of that plan. I believe that both noble Lords will find much in it to welcome, but I should like to emphasise that it is but the start of a process. It represents an important new initiative.

The noble Lord, Lord Carter, asked about hedgerows. The problem of hedgerow neglect has already been tackled in part through the hedgerow incentive scheme which we launched in July 1992. That scheme is administered by the Countryside Commission. The Government have allocated £5.3 million in the three years ending 1995–96 to provide grants for the management of important hedgerows. In 1992–93, the first year of the scheme, 411 agreements were made, resulting in grant aid over the next five years for the management of 602 kilometres of hedgerow. The scheme is closely co-ordinated with the MAFF farm and conservation grant scheme. The Government are committed to legislating to protect hedgerows when parliamentary time permits. There is no question of dropping our commitment to legislate unless new data of which I am not aware show that the need to legislate has now receded.

The noble Lord, Lord Carter, asked about the funds available for the agri-environment package as a whole. In Great Britain, the figure—which is the more helpful figure to give rather than that for England alone—for the current financial year is £33 million. The figures for the following two financial years are £58 million and £93 million respectively. I can tell the noble Lord, Lord Hylton, who advanced some detailed arguments in favour of organic farming, that nothing in this evening's order should be taken as a diminution of the Government's commitment to the agri-environment package. As he will know, we had a useful debate on the subject of organic farming just before Christmas. I take note of the points he made this evening.

I believe that that covers most of the questions posed this evening. I hope that the House will be able to approve the order, which should be looked at in the context of a commitment to the environment throughout the Government which is rising, in financial as well as other terms.

On Question, Motion agreed to.