HL Deb 28 May 2002 vol 635 cc1231-4

8.6 p.m.

Lord Whitty

rose to move, That the draft order laid before the House on 10th May be approved.

The noble Lord said: My Lords, the Horticultural Development Council is an executive non-departmental public body that is funded by a statutory levy on growers of horticultural produce and which commissions near market research. The council was established by the Horticultural Development Council Order 1986, under the provisions of the Industrial Organisation and Development Act 1947. The main function of the council is to commission research and development on behalf of the horticulture industry. The order excludes apples, pears and hops, for which separate arrangements apply. Mushrooms were added to the order when it was amended in 1990.

The purpose of the amendment order is to make the necessary changes to take account of the Treasury's instructions relating to the Whole of Government Accounts—WGA—project. The move to WGA for government departments and NDPBs, such as the HDC, entails a standardisation of accounting years for those parts of government. Currently, the HDC accounting year runs parallel with its levy year; that is, from 1st October to 30th September. To facilitate consolidation of the accounts, WGA requires that departments and NDPBs have an accounting year ending within three months of 31st March. For the sake of clarity and administrative efficiency, the HDC wishes to maintain common accounting and levy years, with both years commencing 1st April. As the dates applying to levy years are stipulated in the Horticultural Development Council Order, the legislation must be amended.

In simple terms, the change will be effected by introducing a six-month levy period commencing on 1st October of this year and running until 31st March of next year. The next levy period will be from 1st April 2003 to 31st March 2004, and subsequent levy periods will be for 12 months commencing 1st April.

We also considered that it would be appropriate to make some minor changes at the same time. These are: an amendment to the description of "processing" in the interpretation section of the order to clarify the processing costs to be deducted from the value of a grower's sales when calculating liability for levy; clarification of the fact that the rates payable on a rateable packhouse are eligible for deduction from business turnover when calculating liability for levy; clarification of the fact that aquatic plants are also liable for levy—again, levy is already being collected from growers of those plants under an existing category, and this provision is for clarification; and clarification of the fact that all herbs, not just edible ones, are liable for levy.

Therefore, the most significant changes to be made by this order are in connection with the change in the levy year. However, in terms of the industry, that will have no adverse effects on levy payers and we shall not be asking them to pay anything extra in the way of levies. The overall amount of the levy will be no different; the only difference will be in the timing. As I explained, there will be a six-month and a 12-month levy.

In relation to the six-month levy period, levy payers will be assessed on sales as shown in their accounts for the calendar year 2001. The six-month period will mean that growers will pay only half the levy that would have been due under the old system. For the year commencing 1st April 2003, the levy will be calculated on sales in the calendar year 2002, and the same will apply in subsequent years. I hope that that clarifies the situation. I commend the order to the House.

Moved, That the draft order laid before the House on 10th May be approved [30th Report from the Joint Committee].—(Lord Whitty.)

Baroness Byford

My Lords, I thank the noble Lord for proposing this statutory instrument. There are some 400—or, rather, 43,000—full-time and part-time workers in the horticulture industry. I must get my figures right. I am sure that earlier I referred to 600 vets because I never dreamt that there were 6,000 of them. The horticulture industry is very important to us. It is an unsubsidised part of the business. During the season, it employs some 10,000 casual workers.

In accepting this draft order, we appreciate that basically it does two things. First, it moves to 1st April the date on which the accounting year starts. We do not have any difficulty with that. Secondly, it ties up the earlier legislation to include new items, such as herbs and aquatic plants.

I have two brief questions, one of which the Minister touched on. First, do I presume that Article 4(a), which alters the principal order, will allow the levy to be deducted from total turnover and that, therefore, it may result in a saving to growers? I am not absolutely clear on that point. Perhaps the Minister could say a word or two about that paragraph.

Secondly, Article 8 of the order refers to "saving". As the noble Lord will know, I am always very keen on saving. However, from the draft order I did not understand what the saving referred to. Is it a legislative saving or is it a saving to the producer? The three lines of Article 8 do not explain who will gain what in relation to the saving. I wonder why it is included in the draft order. The Minister has already suggested that payments that are due this year cannot be paid because the statutory instrument does not come into effect until April next year. I was a little floored by those two articles. I should be grateful if the Minister could advise me.

Finally, we on these Benches believe that good research is most important. It is vital for the future of the horticulture industry and obviously we want to see the industry have a successful future.

Lord Livsey of Talgarth

My Lords, I am grateful to the Minister for bringing forward the order. In particular, I believe that it is very important that the Horticultural Development Council is able to pursue its strategies in the interests of the horticulture industry. As the noble Baroness has just said, research and development are vital. So far as concerns investment in R&D, we certainly need to keep abreast of competition on the Continent and, indeed, much further afield. That point needs to be reviewed continuously.

There is considerable growth in the horticulture industry and there has been a vast increase in imports of fruit and vegetables. It is absolutely vital to develop our own industry and, at the same time, remain competitive. We all know that the supermarkets now trawl the world for horticultural produce. Indeed, consumers expect to have on the shelves of supermarkets fruits and vegetables which, until just a few years ago in the UK, we expected only seasonally. In terms of the environment, the importance of food miles is also very important. We need to ensure that we grow as much horticultural produce in this country as we can and that we market it as efficiently as possible.

The question of the levy and, in particular, the inclusion of herbs is very interesting. I wonder whether the Minister has received any objections to the fact that herbs will be liable for levy. Given the increasing growth of herbs and, indeed, the development of holistic medicine and things of that nature, I wonder whether any representations have been made in that respect. I believe that the situation is probably different in relation to aquatic plant growers. I would not have anticipated any objections in that respect because such growers are closely related to what goes on in garden centres and so on. I gather that watercress growers are supportive of the order.

So far as concerns the levy, I believe that the change to the accounting year is acceptable. However, I point out to the Minister that, judging the efficiency of some enterprises, the crop years do not necessarily coincide with the levy years. Speaking as someone who, during my career, has been involved in farm management and horticultural management accounting, it is important that the costs relating to the growing and the output of the crop arise in the same accounting year in order to gauge the efficiency of the enterprise. An interesting question arises in that respect, but I am sure that the farm management economists and horticulture economists have sorted that out.

The industrial-type processes involved in packing, canning, freezing and so on are now taken care of in Article 4(b) of the draft order. I believe that the clarification of the definition of "processing" and "processing costs" provides a useful description of what goes on.

The provisions contained in the draft order seem logical. Certainly, having been in conversation with the NFU horticulture department, there appear to be no significant objections to it. Therefore, I am very happy to welcome the order.

Lord Whitty

My Lords, I am grateful for the support from both Front Benches for the accounting change and for the other clarifications. In respect of the references to aquatic plants and herbs, the position is one of clarification rather than a change of classification. In fact, aquatic plants were levied under the old system but, for the sake of clarity, we believed that we should make clear that that was the case. Likewise, in relation to herbs, edible and medical and other non-edible herbs were levied. But, again, it is a question of clarification., and we have not received any representations from herb growers.

In relation to Article 4(a), to 'which the noble Baroness referred, again, a clarification is provided. Instead of referring to "such preparation", the order will relate to what takes place in the packhouse. It is intended that that should clarify what one sets against the total. One takes off the turnover in relation to the appropriate level on which the levy is paid. In other words, the amendment is not intended to bring about a change in either direction; it is intended to clarify the situation.

With regard to Article 8, which concerns saving, I cannot say that this is entirely clear to me either. However, the intention is to ensure that no interpretation can be made which suggests that any change to the levy arrangements takes place prior to the new levy arrangements coming into effect. In legal terms, that is known as "saving". It does not relate to any saving in the levy or the cost to the growers or HDC but simply protects the legal position. It is a legal measure.

On Question, Motion agreed to.

[The Sitting was suspended from 8.19 to 8.25 p.m.]