§ 4.3 p.m.
§ Lord Lucas rose to move, That the order laid before the House on 13th November be approved [4th Report from the Joint Committee].
§ The noble Lord said: My Lords, the purpose of the order is to make two small changes to the 1987 Home-Grown Cereals Authority Levy Scheme. The authority exists to improve the production and marketing of home-grown cereals and, since 1989, oilseeds. The authority is funded almost exclusively by industry levies which it uses to commission research and development, provide a market information service, encourage the development of UK cereals exports and support food from Britain. Fourteen of its current 16 members are appointed specifically to represent the interests of the levy payers and after consultation with relevant trade organisations. It therefore remains directly answerable to the industry which it has served for over 30 years.
§ The order before us today concerns the arrangements by which the authority collects the levy on cereals. In the first place it concerns the levies payable to the authority by cereal growers and by cereal dealers. Except where grain is sold directly into intervention, cereal grower levy payments to the authority are collected by the first purchaser or dealer. Therefore the levy due from the dealer is a gross figure which includes the grower levy, which the dealer recovers from the grower and an element from the dealer himself.
§ Dealers are permitted to make a small deduction from the gross levy before passing the balance to the authority. This deduction—or commission—is intended to provide the dealers with some recompense for any expenses which they may incur when collecting the 792 grower levy on behalf of the authority. The principal change being made by the order before us today is to reduce from 5 per cent. to 3.7 per cent. the deduction which cereal dealers may make from the gross levy before passing the balance of the levy to the Home-Grown Cereals Authority.
§ The dealer commission has remained at 5 per cent. of the gross dealer levy throughout the life of the 1987 levy scheme. During that period, however, the cereal growers have chosen substantially to increase their financial contribution to the authority's activities whereas the dealers have not. For example, in 1988-89, 78 per cent. of the gross dealer levy came from the growers, whereas in 1996-97 the proportion has risen to 90 per cent. This means that a commission of 5 per cent. of the gross levy now takes a disproportionately large share of the growers' levy contribution. Both growers and dealers recognise the inequity of this situation. hence the present proposal to reduce commission from 5 per cent. to 3.7 per cent. At current levy rates, a reduction from 5 per cent. to 3.7 per cent. would limit commission in monetary terms to approximately the sum deducted by the dealers in 1995-96, the last year before the growers agreed a further substantial increase of 10 pence per tonne in their own levy contribution.
§ The opportunity is also being taken to make a second minor change to the 1987 levy scheme. This will make it clear that the Home-Grown Cereals Authority may instruct persons not employed by it—for example, a firm of accountants—to inspect cereal grower, dealer and processor records on its behalf for the purpose of determining liability for levy. It is clearly not cost effective for a small organisation such as the authority to retain sufficient employees with the required level of expertise to inspect records of levy payers scattered the length and breadth of the country.
§ The order will not come into force until 1st July 1997 which is the start of the authority's next financial year. However, it is being brought forward now because the reduction in dealer commission will obviously have an effect on the actual income which the authority can expect to receive from a given rate of levy. Therefore the authority needs to know what the commission rate will be well before it must finalise and forward to Ministers its financial estimates and levy recommendations for 1997-98. Ministers would normally expect to receive these around Easter each year.
§ Both changes follow extensive consultation with, and have the support of, relevant UK cereal trade interests. I therefore hope that your Lordships will be able to approve this short but useful order which I commend to the House. I beg to move.
§ Moved, That the order laid before the House on 13th November be approved [4th Report from the Joint Committee].—(Lord Lucas.)
§ Lord Carter
My Lords, as a cereals and oilseed grower, I should declare an interest in the order. I believe that the Minister answered the questions that I was going to ask. The change is welcome and agreed by the industry and it is clear that it has no effect on the growers' levy. It cannot be clawed back from the grower because of the way in which the levy is collected.
793 I would have asked the Minister what kind of inspectors will be authorised besides the officers of the authority. However, he said that they would be accountants employed by the authority.
§ On Question, Motion agreed to.