HOUSE OF COMMONS
First Standing Committee on Delegated Legislation
HOME-GROWN CEREALS AUTHORITY LEVY (VARIATION) SCHEME (APPROVAL) ORDER 1996
Tuesday 3 December 1996
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The Committee consisted of the following Members:
Chairman: Mr John Butterfill
Baldry, Mr. Tony (Minister of State, Ministry of Agriculture, Fisheries and Food)
Bellingham, Mr. Henry (North-West Norfolk)
Bermingham, Mr. Gerald (St. Helens, South)
Cann, Mr. Jamie (Ipswich)
Carttiss, Mr. Michael (Great Yarmouth)
Fry, Sir Peter (Wellingborough)
Garnier, Mr. Edward (Harborough)
Golding, Mrs. Llin (Newcastle-under-Lyme)
Jones, Mr. Martyn, (Clwyd, South West)
Jopling, Mr. Michael (Westmorland and Lonsdale)
Knapman, Mr. Roger (Lord Commissioner to the Treasury)
Marland, Mr. Paul (West Gloucestershire)
Moate, Sir Roger (Faversham)
Pickthall, Mr. Colin (West Lancashire)
Stephen, Mr. Michael (Shoreham)
Stevenson, Mr. George (Stoke-on-Trent, South)
Touhig, Mr. Don (Islwyn)
Trickett, Mr. Jon (Hemsworth)
Tyler, Mr. Paul (North Cornwall)
Mr. T. W. P. Healey, Committee Clerk2 3 First Standing Committee on Delegated Legislation Tuesday 3 December 1996
[MR. JOHN BUTTERF1LL in the Chair]
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Tony Baldry): I beg to move, That the Committee has considered the Home-Grown Cereals Authority Levy (Variation) Scheme (Approval) Order 1996 (S.I. 1996, No. 2843). On behalf of the whole Committee, I should like to mark this day as I understand that this is the first time that you, Mr. Butterfill, are chairing a Committee. We all hope that you chair many more in the years ahead. The purpose of the order is to make two small changes to the 1987 Home-Grown Cereals Authority levy scheme, which empowers the authority to raise levies from cereal growers, dealers and processors in order to fund its activities. Both changes are extremely de minimis, and I suspect that the matter has come to the Committee for affirmative resolution only because it involves a levy, albeit in these circumstances a levy that that is being decreased rather than raised. By way of background, I should first explain that the Home-Grown Cereals Authority is a non-departmental public body set up under the Cereals Marketing Act 1965 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 the organisation, Food from Britain. Fourteen of its 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 more than 30 years. Today's order was drawn up after extensive consultation with the industry and has the support of the industry. The order 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 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, including the grower levy, which the 4 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 they may incur when collecting the grower levy on behalf of the authority. The principal change made by the order 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 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, such a reduction 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 lop 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 1 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 affect the income that 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 those around Easter next year. I stress that both changes follow extensive consultation with, and have the support of relevant UK cereal trade interests, who hope that the measure will be enacted speedily. I therefore hope that the Committee will approve this short but useful order.5
Mrs. Llin Golding (Newcastle-under-Lyme): The order is non-controversial. It is reasonable that the total commission paid to cereal dealers for collecting the levy should not rise as a result of the substantial increase in the levy paid by growers. Likewise, it is perfectly reasonable to empower the authority to instruct persons not employed by it, for example a firm of accountants, to inspect records on its behalf. I rise briefly merely to state our support for the order and congratulate the Home-Grown Cereals Authority on its excellent work for Britain. It is proud to be "of' and "for" the industry. The fact that growers have been prepared to increase their contribution from 30p to 40p shows their high regard for the authority. Its valuable work includes research and development, the provision of market information, the promotion of British exports, and increasing the domestic use of home-grown cereals through Food from Britain. Each of those activities works towards achieving sound agriculture and a sound economy. The authority is proud that 25 per cent. of grain produced in this country is exported and that, following the development of high-protein varieties of grain, 80 per cent. of all our bread is now made from British flour. That tremendous achievement has come about partly through the encouragement of agronomic research and development, which has increased the industry's competitiveness, for example, by reducing the use of fertilisers. The industry and the authority are to be congratulated on their progress. I am pleased to give our total support for the order.
Mr. Michael Jopling (Westmorland and Lonsdale): I congratulate you, Mr. Butterfill, on the distinction of chairing a Committee for the first time. I hope that you will continue to do so for a long time and perhaps eventually succeed to sitting in the Chair in the Chamber. I shall risk irritating the Committee intolerably by making a few short remarks. I am a farmer and I declare my interest as a cereal grower. This affair brings back waves of nostalgia because 32 years ago this month I made my maiden speech in the House on the Cereals Marketing Act 1965. I have in my hand a copy of the Bill, which I was holding as I made my maiden speech all those years ago. I had the good fortune to find my maiden speech fairly easy to put together, because the year before I was elected to the House I was the north of England representative on a National Farmers Union working party, which was set up to try to re-organise cereals marketing in this country. We sat for nearly a year and produced a report. Shortly afterwards, Christopher Soames, the then Minister, endorsed it and said that, on the re-election of a Conservative Government in 1964, 6 that Government would put into law. However, the unmentionable happened and Fred Peart took Christopher Soames' place under Mr. Wilson's first Administration. One of the first Bills to be put before the House in 1964 was the Cereals Marketing Bill, which is why I made my maiden speech just two months after I was elected. This matter brings back waves of nostalgia because I am within a few months of making my final oration in the House of Commons. I wish to ask the Minister just one question,. He may recall that the Home-Grown Cereals Authority was the first of a new generation of marketing authorities set up after the war and in the years before the war. Previously, we had organisations like the milk marketing board and the potato marketing board, which had the power of being the first sole buyer if they so wished. If the potato board had reserve powers for buying surplus potatoes off the market. The Home-Grown Cereals Authority was the first of a new "breed", which, unlike the milk board, was not necessarily a compulsory sole first buyer but which had, hidden somewhere at the back of the Bill, a reserve power to buy cereals if the bottom dropped out of the market. That is why it was originally set up, although those reserve powers were never invoked. Shortly after that, Mr. Peart introduced legislation to set up the Meat and Livestock Commission, which was very much along the lines of the Home-Grown Cereals Authority. The Meat and Livestock Commission, however, had no reserve rights whatever to buy meat—quite rightly. We moved away from that, but both the cereals and the meat and livestock bodies were set up also to provide market information. That is what the cereals authority still does. The Minister will agree that that is the purpose of the levy. I hope that the Government will not lose sight of the importance of making good market intelligence available to farmers. Market intelligence is arrived at principally through the cereals marketing authority, and the levy allows that to happen. All that I want to say—I am taking a long time to say it—
Mr. Paul Marland (West Gloucestershire); Never mind, enjoy yourself.
Mr. Jopling: I am enjoying myself. I hope that the Government will ensure that the levy is kept high enough to provide adequate market intelligence for the farming industry, because we do not wish to return to the period before 1964–65, when the quality of market intelligence with regard to cereals marketing was sparse and second-rate. I hope that the Government will assure us that they will not try to force down the levy if that would lead to an inferior standard of market intelligence in the future.
Mr. Baldry: I can respond speedily by saying that market intelligence will remain a major function of the authority. 7 Mr right. hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) sells himself short. He told us about his maiden speech but not about the time when he was Minister of Agriculture, Fisheries and Food. If my memory serves me correctly, he was Minister when the House passed the Agriculture Act 1986, and I have a feeling that my honourable Friend the Member for West Gloucestershire (Mr. Marland), who is sitting behind me, may have been his parliamentary private secretary at the time. So we have in our midst some living history. The Agriculture Act 1986 brought up to date the Cereals Marketing Act 1965. It reformed the levies, extended the Act to new cereals and other crops, constituted the Meat and Livestock Commission, abolished the Eggs Authority, and constituted and set up the organisation, Food from Britain. Much of what my right hon. Friend spoke about today he achieved in that Agriculture Act. 8 What we have now—the Home-Grown Cereals Authority—is an organisation of the industry, paid for by the industry. As the hon. Member for Newcastle-under-Lyme (Mrs. Golding) accurately and fairly described, it achieves an enormous amount. That is largely based on ensuring a decent levy and decent market intelligence. The whole Committee and the House have cause to be grateful for what my right hon. Friend the Member for Westmorland and Lonsdale achieved in reforming those various measures when he was Minister during the passing of the Agriculture Act 1986, which amended the Cereals Marketing Act 1965.
Question put and agreed to.
Resolved, That the Committee has considered the Home-Grown Cereals Authority Levy (Variation) Scheme (Approval) Order 1996 (S.I. 1996, No. 2843).
Committee rose at sixteen minutes to Eleven o'clock.
THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:
Butterfill, Mr. John (Chairman)
Jones, Mr. Martyn