Fifth Standing Committee on Statutory Instruments, &c.


Wednesday 18 January 1989



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The Committee consisted of the following Members:

Chairman: Mr. Norman Hogg

Adley, Mr. Robert (Christchurch)

Allason, Mr. Rupert (Torbay)

Banks, Mr. Robert (Harrogate)

Bellingham, Mr. Henry (Norfolk, North-West)

Carlisle, Mr. Kenneth (Lincoln)

Colvin, Mr. Michael (Ramsey and Waterside)

Davies, Mr. Ron (Caerphilly)

Emery, Sir Peter (Honiton)

Gill, Mr. Christopher (Ludlow)

Home Robertson, Mr. John (East Lothian)

Jones, Mr. Martyn (Clwyd, South-West)

Livsey, Mr. Richard (Brecon and Radnor)

Morley, Mr. Elliot (Glanford and Scunthorpe)

Quin, Ms. Joyce (Gateshead, East)

Ryder, Mr. Richard (Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food)

Stewart, Mr. Andy (Sherwood)

Williams, Mr. Alan W. (Carmarthen)

Wolfson, Mr. Mark (Sevenoaks)

Ms. E. C. Samson, Committee Clerk

3 Fifth Standing Committee on Statutory Instruments, &c. Wednesday 18 January 1989

MR. NORMAN HOGG in the Chair

Agriculture Improvement (Variation) (No. 3) Scheme 1988

10.30 am

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Richard Ryder): I beg to move, That the Committee has considered the Agriculture Improvement (Variation) (No. 3) Scheme 1988. I understad that this is your first time in the Chair, Mr. Hogg.

Mr. John Home Robertson (East Lothian): In Committee. My hon. Friend has been in the Chair in the Chamber.

Mr. Ryder: I have seen you, Mr. Hogg, in the Chair in the Chamber. You grace the Chair in Committee with all the elegance, charm, skill, discretion and experience that you have shown in other jobs that you have undertaken during the course of your busy parliamentary life. I have had the good fortune as a former Whip to have seen you in action in other spheres. I am delighted that you have joined the Chairmen's Panel, first, for the sake of the Chairmen's Panel and, secondly, for the sake of the Conservative party as your great skills are no longer deployed where they can be as powerfully used as they were when you were Deputy Chief Whip of the Labour party. I hope that the Committee will bear with me for a short time because it is important to set out the background to the scheme. The Committee will recall the announcement of my right hon. Friend the Minister on 28 November about changes in farm capital grants. He explained that following a review of the current arrangements we hope to introduce a new grant scheme in February. To prepare for the scheme, the agriculture improvement scheme was closed from the day following the announcement. This statutory instrument enforces that closure for the nationally-funded part of the scheme. The closure of the partly EC-funded part is covered by the Agriculture Improvement (Amendment) (No. 3) Regulations which were laid before Parliament at the same time as this instrument, but which are subject to the negative resolution procedure. We are debating the instrument today because it must be approved within 40 days of making it, otherwise it lapses, thus resurrecting the nationally-funded part of the AIS. The period of 40 days expires at the end of next week. The new farm and conservation grant scheme, which will soon be the subject of a separate debate, must be cleared by the European Commission before it can be implemented. Discussions on it are continuing in Brussels 4 but should be concluded shortly. However, we did not feel it right to delay the 28 November announcement about our intentions until every detail was settled. We concluded that if it became known that we were negotiating a new scheme in Brussels there would be a risk of rumours and uncertainty which would unsettle the industry. It may also have distorted the pattern of activity under the AIS with farmers rushing to claim grants that they feared would disappear. After careful consideration, therefore, we decided that we had no option but to close the scheme with immediate effect. Although that meant us accepting no new applications for improvement plans under the AIS, all those which were already approved or which had been submitted and were awaiting approval were unaffected by the closure. Similarly, investments outside an improvement plan on which farmers can show that they had already committed themselves by midnight on 28 November will qualify for grant. There are a few exceptions to the moratorium. The 45 per cent. grants for the replacement of heated glasshouses will remain in place until the end of November this year, as was announced before the closure. In addition the special grants for improvement of the quality and marketing of flower production in the Isles of Scilly which were introduced from 17 November and debated just before Christmas will continue until the new scheme is introduced. They will then be continued unchanged in that scheme. In addition, under the terms of the instrument farmers who have claims outstanding for eligible work under the nationally-funded part of the AIS will have to submit their claims no later than 31 May. Those with a current improvement plan who are debarred by the rules from submitting such claims during the life of their plan will have one month after the formal termination of their plan to submit those claims. I am aware that the closure of the AIS may have caused problems for some people and I sympathise with those difficulties. If we had announced the outline of our proposed new scheme without closing the existing one, there would have been an incentive for farmers to put in speculative applications for improvement plans to try and secure the grants that we had decided to discontinue or on which the rate may be different under the new scheme. That would have undercut the purposes of the changes and would have led to a rush of expenditure for which we have no provision. We remain determined to keep the break in our grant schemes as short as possible and we are working hard on finalising the details of the new scheme which we look forward to bringing before the House at an early date. I hope that the Committee will find my remarks helpful in its deliberations this morning and I commend the statutory instrument.

10.36 am

Mr. John Home Robertson (East Lothian): I associate myself with all the important remarks that the Minister made about your previous career in the Opposition Whip's Office, Mr. Hogg, and your newly-started career as a member of the Chairmen's Panel. It is appropriate that you should be chairing this important Committee on agriculture. I know that you take a deep interest in the farming industry and those employed by it in your constituency of Cumbernauld and Kilsyth. The Minister said that he was sympathetic to people in the farming industry who might be affected by this 5 measure. If my recent meeting with the National Farmers Union branch in my constituency is anything to go by, that sympathy is not altogether reciprocated between the industry and the Minister. He rather let the cat out of the bag at the end of his speech when he said that a reason why the Government were rushing to close the earlier scheme was that they did not have enough money in the kitty to pay the claims that might arise from it. This is one of a succession of cuts that have been imposed on agricultural expenditure over the years. The former agriculture improvement scheme was brought to an abrupt end on 29 November 1988. It is worth putting on the record that that is the end of a long era of public support for the infrastructure of the farming industry. Now it has been left in the lurch. The Minister says that there will be a new scheme, but we do not know when it will start, how it will be operated and how much money will be involved. It will be interesting to see what form it takes, but at present no grant scheme is operating. It must be the first time for a long time that such circumstances have prevailed—I suspect since the Labour Government of 1945 introduced this support. The Tory Government are doing away with the scheme even if only temporarily. In the press release and written reply that the Minister gave on 28 November about the closure of the old scheme and the possible opening of a new one, the Government in the opening paragraph characteristically said: "Improved Government grants worth up to £50 million over the next three years to help farmers control pollution were announced today …" That implies an extra £50 million. Perhaps the Minister will be a little more candid and give the full equation. I strongly suspect that the reductions in support will more than outweigh the £50 million. I hope that he will say what the budget will be and how it compares with the previous one. It would be useful if the Minister said something about the continuing discussions in the European Community about the replacement scheme. The old scheme has gone out of the window, but nobody knows what will replace it. Tantalising suggestions were made about the new scheme, but it must be endorsed by the European Commission and the Council of Ministers. We know what the Minister of Agriculture, Fisheries and Food would like to do and are aware of the conservation suggestions that he has made, which we strongly support. It would be helpful if the Minister said a word or two about that. When does he expect us to be able to debate these provisions and what will be in the budget? We welcome the extension of support for environmental improvement. I was especially interested to read the reference in the written reply to the extension of support for the treatment and disposal of slurry and effluent. The Minister doubtless is not aware that I have been involved in long correspondence over the years with his predecessors about a pig farm in the low ground in my constituency. It has experienced an acute problem with slurry disposal which has given rise to much concern in a neighbouring village. The farmer protested that if he were in a less-favoured area, he would receive a substantial grant to deal with the disposal of slurry. There are no pig farms in the less-favoured areas or heather moors of the Highlands. It would not make sense to operate such units 6 at that level. The availability of such grants in severely disabled areas was irrelevant. The areas where the slurry or effluent disposal plants were required tended to be on the low ground, where limited grant support was available. I am interested in the references to support for the regeneration of native woodland. It will be interesting to see how repairs to "vernacular" farm buildings will be defined. What is a vernacular farm building? Presumably we are talking about stone-built structures or pantile roofs. We support the principle, but look forward to hearing more details about it. I suspect that many members of the public reckon that the grant schemes put money into the pockets of farmers who are already being "featherbedded" by intervention schemes. It is important to understand that these capital grants, which have been available for a long time, have gone not into the pockets of the farming industry but into the rural economy. Grant support has assisted investment programmes that almost certainly would not have gone ahead. I make no secret that I had personal experience of these circumstances as a farmer before I became a Member of Parliament. The grant scheme has generated employment in rural areas. Contractors, engineers, small businesses, and people who erect fences and lay hedges have been kept in employment by the direct support and incentive that the grant scheme has provided. That support has been progressively removed, the most graphic example of which is in field drainage. Much of the arable land of the United Kingdom was drained 150 years ago or more. Over the centuries the old tile drains have silted up and they must be replaced. Substantial drainage grants prevented arable land reverting to bog. When the grants were abolished, the blow was softened by an assurance that replacements could be treated as repairs and allowable against tax. That helped some people for part of the time, but a substantial proportion of the farming industry is not paying much tax following the events of the past few years. There is no incentive to redrain land, which means that the old drainage system is collapsing and arable land is reverting to bog in various parts. Some conservationists may say that it is a good idea and I suspect that it is in certain neighbourhoods, but I wonder whether the British public want vast tracts of our lowland to revert to wetland. That is an example of the damaging affect of the withdrawal of public support for that improvement. The capital grant scheme provides a direct injection of support into the rural economy. It has helped to keep a wide range of small businesses in rural areas of Britain alive. Withdrawing it has done damage already. I hope that the new scheme will he as successful as the last one. I should be grateful if the Minister would say something about the new scheme and how the Government are progressing with their negotiations in Europe. I sincerely hope that we shall continue to receive a reasonable level of support to preserve farmland and businesses and, more important, to protect our rural economy and employment in rural areas.

10.45 am

Mr. Ryder: I shall do my best to answer the questions asked by the hon. Member for East Lothian (Mr. Home Robertson). He began and ended with the implication that my right hon. Friend the Minister has closed the AIS because the Government have insufficient money to pay 7 claimants. That is not true. Indeed, demand under the AIS has been below the provision set by the Treasury. I should lay that myth at the outset. The hon. Gentleman said that there was disappointment in Scotland about the new scheme, but representatives of the forming community—certainly the NFU and the Country Landowners' Association—have generally welcomed the new scheme. They have raised one or two specific queries about the effects of the closure, but have accepted that much investment work will be covered by improvement plans that were in existence at the end of November or work under the national scheme that had already been committed. The CLA and NFU pointed out that the gap between the two schemes will cause some farmers to postpone essential improvements, possibly at the risk of failing to deal with farm pollution. They suggest continuing the AIS for controlled investments or allowing farmers to register such investments prior to the new scheme or claiming grant afterwards. We do not have the powers to pay grant on any expenditure incurred before the new scheme has been approved by Parliament and comes into operation. Although we regard a moratorium necessary to ensure an orderly transition from one scheme to the other, we are trying to keep it as short as possible to minimise inconvenience, especially over the winter months when many undertake the work embraced by the schemes about which we are speaking. AIS applications submitted before 29 November will continue to be approved. Non-plan grant can be claimed up to 31 May 1989 in respect of expenditure incurred before the closure. The hon. Gentleman asked, understandably, what the new grant scheme would cover. I should like to go into this, but it will be the subject of a separate debate, so I shall be careful about what I say. I cannot spell out the details as they are still subject to negotiation with the Commission. I am pleased to report that those negotiations are coming to an end. My right hon. Friend the Minister has already announced the general objective of our proposals. We intend that the new scheme will concentrate on pollution control and conservation, while continuing a range of production items. There will be additional help for lowland farmers to instal facilities for storage, treatment and disposal of slurry and silage effluent. Three new conservation grants, which have been mentioned by the hon. Gentleman, to encourage the regeneration of native woodlands and heather moors, and the repair of traditional farm buildings, but not dwelling houses, will be introduced. Conservation items, such as stone walls, hedges and shelter belts, will be carried forward into the new scheme. Grassland regeneration and associated investments, which are of particular concern in the hills, 8 will continue, as will grants for the replacement of heated glasshouses. I am pleased to say that we will reinstate grants for orchard replanting. The hon. Gentleman also asked about the EC dimension. The closure orders have been formally submitted to the European Commission for its approval as required under EC provisions. We understand that the Commission is content with that, provided that a new scheme is introduced quickly. I promised the hon. Gentleman that I would go into as many of the details as I could of the new scheme. I cannot go into all of them because they are still the subject of negotiations with the Commission. He quoted from the press release issued by my right hon. Friend on 28 November. Page 2 states: "First, I intend to increase the assistance we offer to lowland farmers to instal facilities for the storage, treatment and disposal of slurry and silage effluent. Grant rates in the lowlands will be significantly improved and the coverage extended, for example, to include fixed disposal piping and safety fencing. I have agreed with my right hon. Friend, the Chief Secretary"— these are the figures that the hon. Gentleman wanted—

Mr. Home Robertson: I already have them.

Mr. Ryder: The hon. Gentleman may have them, but he asked me what they were. My right hon. Friend continued: "I have agreed with my right hon. Friend, the Chief Secretary, a provision of up to £50 million over the next three years on these grants. This compares with £17 million spent in the first two years of the AIS. Reducing the incidence of farm pollution must be a top priority for the industry. By these means the Government will be further assisting farmers in tackling the problems."

Mr. Home Robertson: The Minister said that the scheme compared with the £17 million spent in the first two years of the AIS. Is that spent on these subjects or on the entire AIS?

Mr. Ryder: On these subjects. My right hon. Friend continued to talk of conservation grants, national parks, horticulture and orchards, although no figures were given. Until we have negotiated with the Commission, I cannot give those figures, but as I have stressed already they will be the subject of a separate debate. We hoped to combine the two debates on the closure of the scheme and the introduction of the new scheme being negotiated in Brussels but unfortunately, negotiations in Brussels have taken longer than we hoped and it is not possible to do so. I have promised to bring the new scheme before the House as soon as possible, not only because it is important to debate it properly but because it is important in the winter months for farmers to know what grants they will be entitled to under the new scheme.

Question put and agreed to.

Resolved, That the Committee has considered the Agriculture Improvement (Variation) (No. 3) Scheme 1988.

Committee rose at six minutes to Eleven o'clock.



Hogg, Mr. Norman (Chairman)

Banks, Mr. Robert

Carlisle, Mr. Kenneth

Colvin, Mr.

Gill, Mr.

Home Robertson, Mr.

Quin, Ms.

Ryder, Mr.