HL Deb 19 January 1995 vol 560 cc809-17

7.4 p.m.

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe)

rose to move, That the scheme laid before the House on 29th November be approved [3rd Report from the Joint Committee].

The noble Earl said: My Lords, we are today debating a short instrument which withdraws the grants available to farmers throughout England, Scotland and Wales for waste handling facilities from the Farm and Conservation Grant Scheme.

Before I explain the function of this instrument I should like to describe briefly the current capital grant arrangements, so that the change may be seen in context. These arrangements, referred to generally as the Farm and Conservation Grant Scheme (or F&CGS), were composed of two parts. The first, the Farm and Conservation Grant Scheme 1989, provides for one-off investments. The second, the Farm and Conservation Grant Regulations 1991, provided grant for investments undertaken in the context of an improvement plan and implemented the UK's capital grant measures under EC legislation. I should perhaps say at this point that until late last year it was mandatory to run a scheme under the EC regulation. The obligation was withdrawn following a proposal by the European Commission and this part of the scheme lapsed on 31st December 1994.

The instrument we are debating today, the Farm and Conservation Grant (Variation) (No. 2) Scheme 1994, which came into effect on 30th November 1994, removes the grant assistance for facilities for handling, storing and treating farm waste. We also introduced, at the same time, the Farm and Conservation Grant (Amendment) Regulations 1994, which remove that grant assistance under the improvement plan side of the scheme. The reason that we have two instruments is to ensure uniformity between the two parts of the scheme then in force.

Although the plan side of the scheme is now closed to new applicants, those farmers who submitted plans for approval before the deadline of 30th November 1994 will still be eligible for grant. We will also accept claims under the non-plan side of the scheme for waste handling measures where the claimant can demonstrate that there was a commitment to provide the facilities before 30th November.

Our decision to withdraw farm waste grants was taken against a background of an extremely demanding public expenditure round. But we feel also that the time is now right for farmers to accept the full responsibility for the costs associated with waste handling facilities. When the scheme was introduced in 1989 the then Minister of Agriculture announced a provision of up to £50 million over three years for waste handling facilities, in recognition of the need to tackle the problem of farm waste pollution. In fact since the scheme's inception over £150 million has been paid in grants to farmers in the UK for the installation or improvement of waste handling facilities, representing a total investment of about £300 million. In England and Wales 11,500 farmers have benefited. This clearly shows that we have succeeded in getting the message across to farmers that they needed to improve their efforts on pollution control. Even more significant is the fact that in 1988, the year before the scheme was introduced, there were 940 serious agricultural pollution incidents. In 1993 only 63 major incidents were reported.

Farm waste grants should not, however, be seen in isolation. While they have been withdrawn, free pollution advice and help in the preparation of farm waste management plans continue to be available. We have made widely available to farmers the codes of practice for the protection of soil, water and air. These give good practical advice and guidance on how to avoid pollution. Moreover we are continuing to invest around £2 million per year in research programmes designed to produce results to help farmers manage farm wastes. Furthermore it is our intention to provide assistance for waste handling measures in any area which is designated as a vulnerable zone under the EC nitrate directive.

Although grants for waste handling facilities have been withdrawn, grants for conservation items such as the provision, replacement and improvement of hedges, traditional walls and banks and the repair or reinstatement of traditional buildings continue to be available under the Farm and Conservation Grant Scheme. We will be providing around £8 million for these grants in Great Britain until February 1996 when the Farm and Conservation Grant Scheme will expire. We are currently reviewing the integration and focus of environmental schemes in the context of the transfer of Countryside Stewardship from the Countryside Commission to my department. We will consider how best to take forward assistance to farmers for planting and laying hedges and restoring stone walls and so on in the light of that review.

In summary, the instrument before the House results from a considered review of the F&CGS. In recognition of trends in pollution incidence we believe that it is now right to remove the grants offered under the scheme for waste handling and storage. I commend the instrument to the House. I beg to move.

Moved, That the scheme laid before the House on 29th November be approved [3rd Report from the Joint Committee].-—(Earl Howe.)

Viscount Addison

My Lords, I trust that we are all aware that the farming community is subject to ever increasing pressure to become more sensitive to environmental concerns and indeed statistics show that it has risen to this challenge very well in recent years. The number of pollution incidents caused by agriculture has declined significantly and more and more farmers are taking their environmental obligations seriously. I fear that the clement weather of last year may indeed have created a false sense of security as regards lowering risks in certain areas.

The Farm and Conservation Grant Scheme has contributed much to this process by giving farmers a real incentive to invest in the substantial cost of installing or improving waste handling facilities. For this reason the news that the Government have decided to abolish totally the capital grants for effluent disposal has been received with considerable dismay by the farming community and in particular by those involved in the livestock sector. With. the incentive removed, there can be no doubt that farmers will be less able to meet the expense of installing and improving the necessary pollution control facilities.

While I welcome the Government's commitment to the reintroduction of some form of assistance for effluent disposal when the nitrate vulnerable zones are formally designated next year, I remind your Lordships that the nitrate vulnerable zones will cover only a relatively small proportion of agricultural land—some 650,000 hectares out of a total UK agricultural land area of approximately 18.5 million hectares. Pollution incidents can occur in any part of the country and adequate controls are needed on all agricultural holdings to guard against such incidents. The Government's policy of confining environmental assistance to particular areas should not be at the expense of the wider countryside.

7.10 p.m.

Lord Beaumont of Whitley

My Lords, as we have heard, the scheme has been a good one, as long as it has lasted, and it has had considerable beneficial effects. As the noble Viscount, Lord Addison, said, the number of agricultural pollution incidents has fallen—from roughly 4,000 to roughly 3,000 over a period of five years. However, that is still a significant number of incidents and those which are attributable to dairy and beef enterprises probably amount to about 66 per cent. of the number involved. There is still, therefore, a major problem of disposal of animal waste as opposed to other sources which might cause pollution. I understand that the National Rivers Authority has concluded that poor containment of slurry or silage liquors and spillage when storage areas fail are the main problem.

The impact of excessive organic materials on aquatic habitats can be variable. The noble Viscount, Lord Addison, spoke from the farmer's point of view but I wish to talk more about the nature of conservation. Sudden inputs of organic materials can kill large numbers of fish and other animals. Long-term, diffuse inputs may cause slower but still significant changes in habitats and biological communities.

The scheme is one of a series run by MAFF which offer incentives to farmers to maintain and, where appropriate, enhance management of the countryside. Included in them are environmentally sensitive areas and schemes recently introduced under the Agri-Environment Regulation 2078/92. What the Government have been doing is all good stuff. However, it appears that now we have a situation where savings are being made, probably without the necessary attention being paid to the damage that might be done.

In the current review of environmental land management schemes, will the Government address the role of the Farm and Conservation Grant Scheme as a whole? In view of the still significant number of recorded agricultural pollution incidents, the high uptake of waste handling grants and the opportunity to review the effectiveness of the scheme in the context of all schemes, we suggest that the Government continue to offer those grants until such time as they cease to be effective.

Now that provision of grant aid for waste handling facilities is being withdrawn, what steps do the Government intend to take to ensure a continued downward trend in the number of agricultural pollution incidents? That is a very serious question, to which we need a direct answer if the order is to be accepted. What assistance, if any, is now available to farmers to install waste handling facilities? Would the Government consider reinstating financial assistance under the Farm and Conservation Grant Scheme for waste handling facilities on a discretionary basis where financial hardship could be proved? It seems to me that that last point is very important; in the present agricultural climate, there will be farmers who cannot afford to do what needs to be done. If that is so, from the point of view of the farmers themselves, the health of the countryside and the health of the wildlife, the farmers must be helped.

7.15 p.m.

Lord Carter

My Lords, I wish to thank the Minister for his usual lucid exposition of, I am afraid, a rather disappointing order. From what he said about the impetus behind it, it is clearly Treasury driven. I understand that the order was approved in the other place only 10 minutes ago, so we shall not have the benefit of looking at their deliberations. However, on this side of the House we take it extremely seriously, as may be seen from the presence of my noble friend Lord Peston in full fig.

What I find hard to understand is that, in the explanatory note attached to the order, we see that, as the Minister said, the order varies the farm and conservation grants and complies with Article 12 of the European Council regulation on improving the efficiency of agricultural structures. It is a little hard to know how a scheme which removes the provision for payment of a grant in respect of facilities for handling, storage and treatment of agricultural effluent and waste and related fixed disposal facilities actually improves the efficiency of agricultural structures. Perhaps the Minister will comment on that when he replies.

We are, of course, aware of the reduction in the grant rate over four years. From 1989 to 1993 it was 50 per cent. for a year, from 1993 to 1994 it was 25 per cent. and it is now to be removed altogether. It would be helpful if when he replies the Minister could expand a little on the Government's intention, which he mentioned, to deal with the nitrate vulnerable zones in 1996.

The capital grants have obviously been a great help in the livestock sector and have helped many livestock farmers in all areas of the UK to install and improve pollution control facilities to meet their environmental obligations. They have been an important incentive for farmers—I speak from experience here, having heard from a number of farmers—to make a serious contribution to reducing pollution risk, and they have contributed to a significant fall in the number of pollution incidents caused by agriculture.

The figures which the Minister quoted of grant aid of £150 million relating to a total expenditure of £300 million and the fact that the number of incidents dropped from 940 to 63 from 1989 to 1993, illustrate the size of the problem and how quickly it could get out of hand again. That is put against a small saving of the order of £8 million in 1995–96. It would be helpful if the Minister could indicate the actual savings to public expenditure from the ending of the grant scheme.

We are debating the Environment Bill at the moment and obviously we are all aware of the anxiety that there is about pollution and the general wish to enhance the environment. It seems to be an odd way 'to go about meeting that public anxiety with what I believe is a fairly small saving in public expenditure. Ending the grant scheme will undoubtedly reduce the incentive for farmers to invest in proper effluent storage and disposal facilities. I am sorry to say that if, as a result of the order, there is an increase in agricultural pollution incidents, the Government must bear their share of responsibility for those incidents.

7.18 p.m.

Lord Crickhowell

My Lords, I fully share the aims and objectives of the Chancellor of the Exchequer to produce a strong economy and reduce public expenditure. I have sat through too many public expenditure rounds not to be sympathetic to the problems that inevitably flow to individual departments. However, in a sense it is a little ironic that we should be debating this scheme in the middle of our discussions on the Environment Bill. I felt that I must stay behind in the Chamber to hear the Minister put the scheme forward, bearing in mind the huge importance for the environment of the expenditure that has taken place in recent years because of the existence of the grant scheme.

The trouble with farm pollution is that it is particularly lethal. When it occurs, it has a devastating impact upon the water environment. There have been many cases and when they occur they could wipe out the ecology of large stretches of our rivers. The problem will not go away. Farmers will continue to need to produce new storage facilities. Indeed one of the problems is that old storage facilities both become out of date and deteriorate, and sometimes they become dangerous. The whole business is now extremely costly. I had responsibility for agriculture in Wales for nearly eight years. I represented a constituency with almost more milk producers than any other. So I understand the problems of the farming industry and I know the difficult times through which it is going, as does my noble friend the Minister.

There can be no doubt at all that there will be a reduction of investment in this very desirable preventive work. I can understand that that may perhaps be necessary for a short time, but I have been warned as to the effects by a number of people whom I have met. Only two or three weeks ago I met a consultant who advises farmers on the Welsh border who told me that in his view for a time it would bring investment of this kind almost to a standstill; he feared very greatly as to the consequences.

I hope therefore that the Government will look very carefully at what happens. I hope that in the course of the next 12 months they will take the advice of the NRA, and after that of the new environment agency, about what the impact may be. If there is a deterioration, or if the voluntary investment that they hope for does not take place and the environment is threatened, I beg my noble friend to keep an open mind, and to be ready to come back and look at the matter again.

As I say, I entirely understand the need for this measure. I do not wish in any way to challenge the Chancellor's objectives. We have all as Ministers had to make this kind of saving. It is not with any sense of criticism but with a sense of concern that I utter these words. I fear that there will be a consequence, and I believe that before very long the Minister or his successor will have to come back with some revised scheme.

Earl Howe

My Lords, I am grateful to all noble Lords who have spoken for the points that they have raised. Perhaps I may turn first to the remarks of my noble friend Lord Addison and the noble Lord, Lord Beaumont, who made similar points. Both expressed their disappointment that the grants have been withdrawn. The noble Lord, Lord Beaumont, asked whether we might consider reinstating the grant, either on a discretionary basis or more generally. Even my noble friend Lord Crickhowell asked me to keep an open mind about doing that.

As I have explained, farm waste grants have been available for something like five years. That, we feel, has been long enough to allow farmers generally to have an opportunity to apply for grants. Many of them have done so. The number of serious incidents—which is a telling measure of how the industry is responding to the threat of pollution—has dropped considerably. Farmers are now much more aware than they were. But we recognise that farmers in nitrate vulnerable zones will face an essentially new situation. For that reason we believe that it is reasonable to provide a special dispensation and extend the provision of grant for those farmers. I shall comment on nitrate vulnerable zones in a little more detail in a moment.

The noble Lord, Lord Beaumont, asked what the Government would still be doing to address the threat of pollution. We have a comprehensive range of measures to tackle pollution. First and foremost there are the farm waste storage regulations, which set minimum construction standards for new or substantially altered farm waste storage installations, and indeed existing ones which the NRA considers present a significant pollution risk. There are penalties for non-compliance.

MAFF has published the codes of good agricultural practice that I mentioned. Those are available free. They give advice to farmers and growers on how to plan and manage the disposal of farm wastes to avoid pollution.

Free pollution advisory visits are still available from ADAS. Farmers can choose between a general visit covering advice on pollution related matters or assistance in the preparation of a farm waste management plan. Those are still proving very valuable to many farmers.

MAFF works closely with the NRA in targeting selected river catchments for intensive farm waste management plan campaigns to encourage farmers to draw up their own farm waste management plans. One should not omit to mention the penalties that are available in magistrates' courts for the pollution of water courses which act as a considerable incentive not to do any such thing. The maximum fine is £20,000.

Finally, MAFF has an extensive research and development programme in place to tackle the problem of farm waste pollution.

The noble Lord, Lord Beaumont, asked about a review of the farm conservation grant scheme. All conservation grants will be reviewed as part of the wider review of environmental schemes. Naturally we will keep the position under close scrutiny.

The noble Lord, Lord Carter, asked what the savings will be from withdrawing waste grants. I can tell him that the expected savings in the United Kingdom in 1995–96 will be £8 million; in 1996–97 £17 million; and the same figure, £17 million, for 1997–98.

My noble friend Lord Crickhowell expressed his fears for the future of investment in waste handling facilities by farmers now that the grant has been withdrawn. I can assure my noble friend that we will keep a very close eye on the number of pollution incidents that occur and the way in which farmers respond to what is undoubtedly an ever present threat.

A base-line study was carried out three years ago in order to determine the extent of the agriculture pollution control problem in Britain. A follow-up study is now under way which will evaluate whether there has been any change in pollution risk. It will assess to what extent the waste grants that are offered under the Farm and Conservation Grant Scheme have contributed to any change.

The withdrawal of waste handling grants under the Farm and Conservation Grant Scheme should also be seen in the wider context of public expenditure plans, as I have mentioned. UK domestic expenditure for agriculture in cash terms, is due to rise from an anticipated £1,080 million for the current financial year to £1,100 million for 1995–96. Within this we have shifted resources and although farm waste grants are withdrawn, over the next three years we are able to provide £43 million for measures to assist farmers in the six Objective 5(b) areas in England. Measures include assistance for processing and marketing produce, including the marketing and promotion of speciality food products with a local image, the development of novel agricultural produce and farm-based tourism—measures which I am sure noble Lords will consider to be as important as we do, and which reflect our wish to target assistance towards areas of specific need. That is a theme that underlies much of the agri-environment programme. In that context the noble Lord, Lord Beaumont, made particular mention of ESAs.

One such example of targeting is the nitrate vulnerable zones. Although, as I mentioned, grant assistance has been withdrawn under the Farm and Conservation Grant Scheme throughout the UK we shall restore the provision of assistance for waste handling measures in any area which is designated as a vulnerable zone under the EC nitrate directive. The proposed designations in Scotland, England and Wales have been the subject of a public consultation exercise, and the responses are currently being considered. It is expected that the designation will be made some time later this year, followed by regulations to apply in the zones at some point before the end of 1999. This means that in a certain number of clearly defined areas farmers will be facing more explicit restrictions, with a view to reducing the impact of nitrate on water there. These restrictions are likely to include manure limits expressed as maximum amounts of nitrogen per hectare, together with periods when manure may not be spread. This means that the farmers concerned will be facing new restrictions and they may have to improve their waste storage and handling facilities in order to be able to comply. It is in recognition of these additional obligations that we intend to provide those farmers with assistance in the form of eligibility for grant aid.

Lord Carter

My Lords, I am obliged to the Minister for giving way. Does he have any idea of the grant level that may be applied in those areas? Up until November 1994 it had been reduced to 25 per cent.

Earl Howe

My Lords, I would like to help the noble Lord but unfortunately no decision has yet been reached. Discussions are in hand to determine the most appropriate way to provide assistance for items of this kind in NVZs. I am afraid that we are some way away from reaching a conclusion.

Pollution risks have become more widely recognised over the period in which farm waste grants operated—a period during which I believe government help was more than generous. It is pleasing to record that the number of farm pollution incidents over the same period has declined. I feel confident that farmers will continue to respond responsibly, even though grant aid is no longer available.

On Question, Motion agreed to.

Baroness Trumpington

My Lords, I beg to move that the House do now adjourn during pleasure until 8.5 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.31 until 8.5 p.m.]