§ 2.45 p.m.
LORD AMHERST OF HACKNEY rose to move to resolve, That this House approves the policy of Her Majesty's Government in respect of long-term assurances for agriculture as laid down in Command Paper 23. The noble Lord said: My Lords, the last time we had a debate on agriculture—more or less a general debate—was on a Motion of the noble Viscount, Lord Alexander of Hillsborough on April 11 of last year, dealing with the February Price Review. I do not think it would be overstating the case to say that on re-reading his speech one could find in it little expression of confidence in the determinations of that Review or in the intentions of Her Majesty's Government—in fact, he ended on a rather gloomy note by quoting the words of Oliver Goldsmith's The Deserted Village:
Ill fares the land, to hastening ills a prey,
Where wealth accumulates, and men decay.
§ He, among others during that debate, asked about the long-term policy for agriculture which was foreshadowed in the last paragraph of that price Review. To-day, we are discussing that long-term policy, and while I could not possibly hope that the noble Viscount will be happy about it, one hopes that perhaps he may see a little hope now amid the gloom. But it is, I think, well to remember that this White Paper shows no radical and drastic change of policy. I do not think that that in itself is any criticism of it. After all, the starting point for the new guarantees is, I think I am right in saying, the determinations of that Review which we were discussing nearly a year ago. Of course, there have been improvements in the methods of the administration of those guarantees, and there are new factors in this Review, but I think that the basic guarantees are on the same basis.
I think the noble Viscount will agree with me that the atmosphere in the industry generally to-day is very different from what it was at that time. Possibly the reason for that may be that that Price Review was not in itself as bad as some people might have led us to believe, and that perhaps the underlying difficulties were not so much the Review itself but a general fear as to the future. I think that the House will agree that this White
Paper has had a good reception throughout the farming industry. I should just like to read one extract from the Farmer's Weekly because, during that other debate, we had read a considerable number of extracts from farming papers, possibly to emphasise another point of view. The Farmer's Weekly of November 30 said:
For years we have been asking for two things, for stability, so that we should know where we are going and for capital resources to implement our progress. Here they are in as full measure as reasonable men should ask for …
We doubt if any other industry can look forward to so long a period of equal stability. A possible, but by no means automatic, cut of 6d. in the pound to cover increased efficiency is a small price to pay for the stability and confidence of a known future.
There are a number of other comments which I could read, but they are all in much the same vein and I will not weary your Lordships with them.
§ This White Paper really divides itself into two parts, the first on the long-term guarantees and the second dealing with the farm improvements scheme. Taking first the long-term guarantees, the White Paper lays down that the total return guaranteed to the farmers, estimated for this year at £1,150 million, cannot be cut by more than 2½ per cent. or 6d. in the £ after adding or subtracting any increase or decrease in costs; and that commodity prices cannot be reduced by more than 4 per cent. in any one year, with a maximum of 9 per cent. in three years for livestock. Also, it alters the timing of the Price Review on crops so that prices are dealt with in respect of the coming harvest instead of that for a year ahead, which will allow the Review to take a much more up-to-date note of any alterations in costs.
§ This part of the Act remedies what was a definite weakness in the 1947 Act as regards future prices. I know that under that Act prices were announced for several years ahead, depending on the type of commodity, but they were at all times unrealistic and I do not think any farmer could possibly have based his production on the prices that were announced at any of the Price Reviews since that Act. He always relied on getting a good deal out of the current Price Review. This difficulty was emphasised as we came into the time of plenty and a freer economy. 256 It still allows a certain amount of adjustment in prices to be made from year to year, which I believe is essential in any scheme concerned with the long-term production of agricultural produce; but, on the other hand, it gives the security necessary to allow the farmer to know sufficiently far ahead as to be able to plan his production on sound lines.
§ Then we come to the second part of the White Paper—the farm improvement scheme, which basically is for a 33⅓ per cent. grant for the provision and improvement of the permanent fixed equipment of the farms of this country. I think this is a most valuable new grant. Many of our farms were built a hundred or two hundred years ago, or even longer, and since that time there has been an agricultural revolution, so that it is impossible to use efficiently, in those old buildings, the labour and equipment of the modern farm. I believe that this grant will be of particular value to the small farmer who does not get the benefit of tax and other reliefs which the large farmer gets. It should therefore be a particular help to him, although, of course, there may be difficulties in some cases about the credit for the part that he has to raise himself. I do not, however, propose to go into that question at the moment.
§ I understand that the noble Earl, Lord St. Aldwyn, is speaking after me, and I wish to make four points on this part of the White Paper. First, I feel it is extremely important that a statement should be made as soon as possible exactly defining the type of buildings and works which may be covered or may possibly be included to benefit under these grants. Then, I feel that there should be some way in which a person can go ahead with the work at his own risk in anticipation of the grant, so that if he does go ahead he will not automatically be excluded from the grant when the scheme becomes law. Because the trouble is that at the moment there is a virtual standstill on farm improvements. I know that one can argue that somebody who was going to put up, say, a barn or something of that kind should go ahead with it, because he would have done so, with or without this scheme; but I think that that is going against the whole of human nature. One cannot expect anybody to go ahead if he feels that by waiting he may possibly be entitled to a grant. I hope, too, that when 257 this scheme is produced the procedure under it will be simple. Its main object is to help the small farmer, and one does not want a long and complicated procedure for qualifying for these grants, involving a lot of tendering, possibly also the employment of architects, and things of that kind. One wants the operation made as simple as possible. I feel, too, that it is particularly important that the scheme should allow for work to be done by the farmers' own labour where that is possible.
§ The second point that I should like to raise is the question of efficiency, because the main idea of this grant is to improve the efficiency of our farms. It may be difficult to define whether or not a certain work will or will not improve the efficiency of a farm sufficiently to qualify for the grant. That point may lead to a lot of argument. On that point I should like to bring to the notice of the noble Earl the question of work study, which I believe should be gone into considerably, for we are now going to put up new buildings and we want to make certain that those buildings really help efficiency and cut clown as much as possible the amount of labour needed on the farm. A tremendous amount of work and research has been put into this work study, as the noble Earl will know only too well. A most interesting paper was read by Mr. Currie at the Imperial Chemical Industries conference on agriculture at Brighton. I feel that it would be a help if those people who have to approve these schemes could go into this subject and be qualified to advise the farmer on that side of the problem.
§ The third point I wish to make is a short plea for horticulture. Horticulture is included, or will be included, in regard to buildings of the type which would be common to a horticultural establishment and to a farm. I am making a plea for the more specialised buildings, such as gas stores, which would be a great help to horticulture. It is a very important industry and it has to meet, probably, a more direct competition than any other side of the agricultural industry. There are certain other things which I think might also be considered with a view to increasing efficiency, such as irrigation and greenhouses, and also the conversion of some of the heating appliances from solid fuel to oil. The latter point is perhaps 258 not very topical at the moment, but possibly it could be borne in mind until a later date, when one hopes that the situation will have changed.
§ The fourth point I wish to make is this. About 57 per cent. of the land of this country is rented land. Therefore a considerable number of the improvements that should be done under this scheme will have to be done by the owners of those farms. I feel that as long as the rents of land remain as unrealistic as they are now (I believe that on the average they are producing a return of about I per cent. on the capital invested), it is difficult to imagine that there will be a tremendous rush to invest more money in improving buildings. That is unlikely when the basic economy is unsound. I know that the noble Earl who is to reply may say that the remedy is in the hands of the owners, and that they can put up rents. But the solution is not quite so simple as that, because under the present system of arbitration rents awarded in those cases are usually very much lower than what one might call the free market value, which I feel ought to be the basis of rents. In my opinion, until something is done on those lines, that side of the policy may be held up; and it is a side which should not be held up because it is an important part of the whole.
§ Altogether, I think that the Government's plan is a very good plan indeed. But it does not, of course, stand alone: there are many other Acts and measures designed to help the countryside and the farmer. To quote only a few, there are the Hill Farming and Livestock Rearing Act, the new Silo Subsidies Act, the Egg Marketing Scheme, the Agriculture (Safety, Health and Welfare Provisions) Act, the new Customs Duties (Dumping and Subsidies) Bill, and the water and sewerage grants. Altogether, these steps amount to formidable programme to improve the lot of the one million people who work in agriculture and others who live in the countryside. This has not been the work of one Government but of successive Governments, though I think the present Government may claim a fair share of credit.
But, of course, the policy has met with a certain amount of criticism. No flags were raised in the offices of the Economist; there was no "Mafeking
Night" in Printing House Square. What I was surprised to read, however, was a short extract from a speech by the President of the National Union of Agricultural Workers. If your Lordships will permit me, I should like to read a short Press report of that speech. After saying that
he regarded some farmers' optimism over the Government's long-term agricultural proposals as completely unjustified",
he went on:
I say deliberately that I think the Government's proposals will lead to a small and impoverished agriculture in the long run … It is clearly the Government's intention gradually to reduce State support to the industry, and British farmers will be expected to compete with low farm prices abroad … If the Government reduced the total value of the guarantees by 2½ per cent., as the new assurances allow, farmers' incomes could be reduced by £29 million in the next twelve months".
That is his opinion, though I personally think it is against the weight of the evidence. He went on to say:
When this obtains is the farm worker to be made the scapegoat, and will the employers try and take it out of him? Farmers really should not get enthusiastic about this Government".
§ I should like to take up the speaker's point as to employers, "taking it out of" workers. Apart from the fact that I think it would be most unlikely that they would do that, under this particular scheme any increase in wages would be automatically allowed as an expense: it would automatically put up the global figure. So I consider that that remark which I have just quoted is completely unjustified, in view of this White Paper. And I do not think it helps at all that there should be this dissension within the industry, when it is essential at the moment that we should try to get the utmost confidence into the industry.
§ By and large, I think that the agricultural industry has responded to the help given, and has a record of which it can be justly proud. Production is high, and it has been steadily increasing. As Sir James Turner has said, it is now saving £400 million in foreign exchange over and above what would be saved at the 1939 level of production. In my view, this is a record of which the 260 industry can justifiably be proud. I think we should congratulate the farmers and the farm workers, and also the "backroom boys" of the industry, who in their research and work connected therewith have done so much to improve yields and the production generally of this country. I do not hold the view that agriculture is dealing with a limited and fixed market. We have in this country a gradually improving standard of living which will in itself create an increased demand for food, particularly for livestock products.
§ In this connection, it is interesting to compare the difference in our consumption of one or two of the main items with consumption in the United States. In the United States they eat per head, 50 per cent. more meat, 70 per cent. more fish and poultry, and 80 per cent. more eggs. I agree that they eat less wheat and potatoes, but by and large I think it shows that there should be an expanding market in this country for the products of agriculture, provided that our agriculture can reduce its costs, produce the high quality goods that will be required, improve its self-sufficiency and cut down the large amount of imported feeding-stuffs and make greater use both of the feeding-stuffs produced here and of the most valuable of all our assets, our grasslands. Although the hope is expressed in the White Paper that this will come about, I cannot see anything that will necessarily cause it to come about. Nevertheless, I believe that this is the line on which we must work. This policy, in the long run, should allow the industry to plan ahead and to modernise its fixed equipment, so that it can use its labour efficiently. By so doing, it can make an even greater contribution to improving the strength of the national economy and the prosperity of the countryside. I have tried to show your Lordships why I think the policy in this White Paper is a sound one and I hope that your Lordships will be able to support this Motion. I beg to move.
§ Moved, to resolve, That this House approves the policy of Her Majesty's Government in respect of long-term assurances for agriculture as laid down in Command Paper 23.—(Lord Amherst of Hackney.)261
§ 3.13 p.m.
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL ST. ALDWYN)
My Lords, I am extremely grateful to my noble friend Lord Amherst of Hackney for moving this helpful Resolution, which I hope your Lordships will accept, and for giving us an opportunity to discuss a subject which I think we all agree is of fundamental importance to agriculture. Some two months have now passed since the publication of the White Paper, and as we dealt there comprehensively with the new long-term assurances I do not propose at this stage in the debate to enlarge upon that part of the Government's new proposals. This will leave me free to say something fresh about a subject which I know will be of very great interest to your Lordships—that is, the farm improvement scheme outlined in the White Paper. Naturally, I cannot give you this afternoon anal details of the scheme—that must await further consideration and discussion here and in another place—but I think that it will be helpful to our debate if I give the details of our proposals so far as they have been worked out at present. To present this clearly will necessarily involve me in the recitation of rather a catalogue, but I am sure your Lordships will be anxious to have these details, and I hope you will therefore bear with me if I sometimes follow this form of presentation.
There can be no doubt about the importance of our proposals in the White Paper for a wide scheme of grants for permanent fixed equipment and long-term improvements of the land. It has often been said, in this House and elsewhere, that agriculture is seriously short of capital and cannot be expected to produce with maximum efficiency without the help of well-designed modern buildings. The Government agree that more money should be invested in permanent equipment; and we hope that these grants will give rise to an extensive modernisation of our British farms over the next ten years.
Following the issue of the White Paper, we have had further consultations with the farmers and landowners; and have also discussed our proposals with the professional bodies concerned with agricul- 262 ture. We now intend, subject to Parliamentary approval of the legislation, to provide grants which, except where grant is also obtained from other sources, will be at a flat rate of 33⅓ per cent. The grants will be subject to certain general conditions, which I shall describe later; and will cover a series of farm improvements which will in the first instance be on the following lines:
Repairs will rank for grant if they are necessarily associated with improvement work, but not otherwise. Horticulture will be eligible for grant on permanent fixed equipment which is common to agriculture and horticulture, such as stores and yards, but not for specialised horticultural equipment, such as my noble friend has suggested—glasshouses and cold storage equipment.
- (i) erection, alteration, enlargement or reconditioning of permanent farm buildings (other than dwelling-houses), yards, loading banks and stocks. Internal fittings will be excluded; with equipment such as grain driers, which are composed partly of a fixed permanent structure and partly of machinery and fittings, grants will be payable on the structure;
- (ii) making and improvement of farm roads and bridges;
- (iii) execution of works for or in connection with the supply of electricity to farms for agricultural purposes;
- (iv) provision of pens and other fixed equipment for use in connection with the sheltering, gathering, marking, dipping, treatment or feeding of sheep and cattle;
- (v) making, restoration, and improvement of permanent fences, walls and gates;
- (vi) provision of cattle-grids, including grids on public roads;
- (vii) provision of means of sewage disposal, other than from dwelling-houses;
- (viii) reclamation of waste land;
- (ix) provision of shelter belts;
- (x) removal of hedges and banks, filling in of ditches, removal of boulders, tree roots and other like obstructions to cultivation; and, finally,
- (xi) claying and marling.
Now for the general conditions. As stated in the White Paper, grants will be 263 available in respect of all equipped farm units that are economic or could be made so with the improvement proposed. As a general rule, we shall assist the equipment of new holdings on bare land only as part of a scheme of amalgamation. Units which do not at present provide a sufficient livelihood will be considered for grant where it is proposed to amalgamate them with other land to form one or more units which will do so. In such cases, 33⅓ per cent. grant will be available towards certain incidental expenses of amalgamation, including legal and surveying charges and compensation for disturbance to outgoing tenants.
Grant will be given only for improvements which satisfy the following tests. First, the improvements must contribute materially for the period of their life to the efficient working of the farm. Secondly, they must be capable of giving a reasonable return, both in profitability to an occupier over a number of years by way of increase, or prevention of decrease, of annual value. In practice, we shall normally confine assistance to improvements with a life of not less than fifteen years; and we shall expect the cost and extent of the improvement, bearing in mind the character and situation of the holding, not to exceed the provision which a prudent landlord might be expected to make or to be disproportionate to the capacity of the unit to support it. Thirdly, the improvements must be sufficient in scope to enable the fullest advantage to be obtained from the capital outlay; and fourthly, we shall not give grant for a permanent building where it would be more appropriate to rely on a temporary building. Grant will be payable to landlords, owner-occupiers, and tenants who must, where this is necessary under the Agricultural Holdings Acts, obtain the approval of their landlord or of the appropriate Minister.
We have considered carefully whether grant could be paid on work begun before the necessary legislation receives Royal Assent and proposals for work have been formally submitted and approved, but I fear that this would not be practicable. We do intend, however, some time after Easter, to reduce to a minimum the delay after the Bill has received Royal Assent, to receive and consider, without commitment, provisional proposals for work 264 under the scheme, and to make inspections. If the legislation receives Royal Assent before the Summer Recess, we intend that formal applications for grant should be accepted from, say, September 1; and if the proposals have been inspected in advance, it should be possible to give them ready approval so that work can start.
Some owners will, I appreciate, decide that building work which is now ready to start should be postponed until the grants are available next autumn. I realise that this may cause difficulties for farmers and country builders which I do not attempt to minimise. But although there are precedents for retrospective payments, there are very real constitutional objections to the giving of grants in respect of work done before Parliament has discussed and approved the necessary legislation, particularly on a major measure such as this. There also appear to be, in this case, very real practical difficulties. The Scheme covers a wide range of buildings and other improvements; and until the Bill has been approved we are not in a position to give an assurance as to which buildings will be eligible and which will not. Apart from the eligibility of particular classes of improvement, we shall need to consider the holding on which they are to be erected and its existing equipment and farming system before determining whether the project qualifies for grant. Again, eligibility for grant is subject to general conditions in the Bill on which we shall need to have full debates.
Beyond this, I would impress upon your Lordships that this is a ten-year programme of grants for permanent improvements. If we are to create, with the help of the grants, better buildings and better farms, we need carefully-thought-out proposals from the landowners and owner-occupiers. We ourselves must also give careful thought to proposals submitted, to ensure that they are the best that can be devised from the point of view of long-term efficiency. Therefore, each proposal will have to be inspected by the Ministry's technical staff and discussed with the applicant before it can be approved for grant and work started. I am sure your Lordships would be with me in insisting on this condition and in rejecting the suggestion that people should go ahead with their 265 building plans without inspection in the hope that the work will later be found to be satisfactory and will be covered by the terms of the Bill as finally approved. It is fair to say that many of the projects on which people are anxious to start at once were drawn up before the scheme of grants was announced last November; and I think it is a reasonable assumption that the people concerned were prepared, at that time, to go ahead without the grant.
The House will, I hope, find these arguments compelling, and it is only to complete the picture that I would mention the administrative difficulties of trying to deal with applications for grants before we are ready. As your Lordships will know, the Ministry's local administration is being considerably reorganized, in that divisional offices are being established in the place of existing county offices and new regional controllers are being appointed as from April 1. The Agricultural Land Service, on whom the main burden of inspection under this scheme will fall, is also being reorganised on a two-tier structure, so that between now and April 1 there will be a considerable movement of both people and offices. This re-deployment of our resources will give us a streamlined local organisation far better able to deal with the great volume of day-to-day work that will arise under this scheme. Between May and September there will be much to be done in inspecting proposals and getting them into shape so that the scheme can get off to a really good start after the harvest. When it does get into its stride we expect to be handling in England and Wales alone something like 20,000 applications each year, and this will be a formidable task.
From what I have said, people in the country will, I hope, now know where they stand in relation to grants and will be able to make their plans for the future accordingly. Work that has already been begun clearly cannot in any circumstances qualify for grant, and there is no point whatever in holding up its completion. On other works of improvement owners will have to decide whether to make a start now or to make plans for starting in the autumn when the grants will be available. We shall be announcing later when and how the proposals should be submitted for consideration. There are, 266 however, considerable arrears of repairs and maintenance to be done, and such work will not qualify for grant except in those cases where it is directly associated with an improvement. Owners may well feel that in view of the extra effort that will be required from the building industry once the scheme starts, they would be well advised to spend the intervening months in catching up on repairs and maintenance.
The scheme of grants does not extend to items that are, or may be, assisted under existing legislation, such as the erection or improvement of houses and cottages, farm drainage and water supply schemes and construction of silos and works forming part of a comprehensive scheme under the Hill Farming and Livestock Rearing Acts. There is, therefore, still much work to be done in the countryside, though it will not be affected by this new scheme of grants. For the rest, landlords must, I suggest, look to the next six or seven months as a period of planning to ensure that the fullest possible advantage in the way of better buildings and better farms will be taken of the new grants in the ten-year period for which they will be available. We are prepared to play our part, not only by providing one-third of the cost but by giving positive and practical help it drawing up well-conceived proposals for the improvement and modernisation of our farms and farm buildings.
I think I have said enough to give noble Lords a good deal of matter to discuss this afternoon, and I will not detain the House further by enlarging upon the significance of our proposals as a whole. As your Lordships know, they have been well received. The National Farmers' Union have welcomed them, in the words of Sir James Turner's letter to my right honourable friend,as a sound and satisfactory basis for future confidence and necessary forward planning in the industry.The representatives of landowners also have expressed their satisfaction with the proposals, and in the country generally they have been considered to strike a fair balance between the need, on the one hand, to give confidence to the farmer and to the landowner in planning for the future, and, on the other, to leave scope for the flexibility and economy which 267 are essential if the industry is to respond to changing conditions and if the arrangement as a whole is to be fair to the taxpayer.
My right honourable friend has every hope, therefore, that our proposals will not only promote that confidence which is the necessary basis for investment and development but, because they are flexible and fair, also stand the test of time. I am sure they are the greatest event in agricultural history since the passing of the Agriculture Act, 1947. Indeed, they represent a great act of faith by the Government in both the future and the capacity of the industry in which I am proud to be associated with my right honourable friend.
§ 3.33 p.m.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, I entirely agree with the concluding sentence of the Parliamentary Secretary, the noble Earl, Lord St. Aldwyn. This is a very important day in the history of the agricultural industry. It is undoubtedly the most notable step that has been taken since the passing of the Act of 1947. I would put it a little higher from the point of view of supporters of the Conservative Party, and say that this is probably the largest contribution ever made by the Conservative Party, through their Government, to providing a long-term policy. Any examination of the history of the industry during the last fifty years or more would, I think, demonstrate that. Not that I would for one moment remove much of the credit which, in that period and in the 'nineties, is due to those Governments—mainly Conservative, and possibly with some help from the Liberal Government at one time—who helped the industry with the Agricultural Derating Act, an Act which, in its effect, was long-term, although it seems now to be under cross-fire from various sections of the community.
But to understand how exceedingly keen the farming community has been on getting a long-term policy makes it necessary for us always to keep in mind the history of the industry, and the years of steady effort to recover from the years of depression which followed after the middle of the 19th century and which is so often described by the historian as "the golden age of farming." Certainly 268 the noble Lord, Lord Amherst of Hackney has every right to be pleased that he has been put by the Government—which he has rarely criticised, though he has often pushed for something more to be done—into a position of being able to move to-day this Motion approving a long-term policy.
If we consider a little of the history of the farming industry, we see how farming began to go down and down from the end of the 'seventies, and how the farmers struggled, until, when war came in 1914 and they were absolutely essential, they were organised, helped and subsidised, and when anything else that could be done to try to meet the fierce danger, as well as the economic necessities of fighting that important war, was done. Then in 1920 came the first blow to the hopes of the farmers at that time of being able to keep hold of a long-term policy. The repeal of the Corn Production Act in 1920 was the forerunner of the rising of another great period of depression in the farming industry. It had all the flavour about it that has aroused the ire of the noble Lord, Lord Amherst of Hackney, against the economists. The economists, of course, always want something in the nature of a Geddes Axe applied to anything of which they do not particularly approve. The 1920 policy of the repeal of the Corn Production Act was carried out in the atmosphere of the Geddes Axe operation. But how the industry suffered! And how the workers in the industry suffered!
When the noble Lord quotes to me across the Floor of the House to-day the words uttered by the President of the National Union of Agricultural Workers, I am not surprised that, on occasion, they go quite far in their utterances of suspicion of what may be behind an agricultural policy emanating from Tory sources, because the farm workers have had experience of that in the past. I well remember how, in 1924, when the first Labour Government came into office with fewer than 200 Members in the House, the first thing that it was essential to do, because we could get support from other Parties, was to try to remedy the dire situation of the agricultural worker, who, through the deflation and devaluation policy, had been utterly starved both of food and regular and steady employment. That was the reason for 269 the passing in 1924 of the Minimum Wages Act.
I am quite sure that the noble Lord, Lord Amherst of Hackney, is one of those who feels that a good remuneration is as much due to the organised agricultural workers in the country as to any other section of industrial workers. They are not less skilled, and their contribution is not less valuable. The need, for the sake of the general economy of the country, to keep them on the land, at least up to a certain proportion of the population, means that we ought to face with a reasonable amount of equanimity the problem of paying them a living wage and, moreover, a wage which does not put them in a worse position, value for value, than other industrial workers in the country.
It is a pleasure to see that from 1924, when the minimum wage was first fixed at 27s. per week, we have now arrived at the time when the minimum wage is £7 1s. per week, which probably, in the view of many people, is not nearly as high as it ought to be though it is becoming increasingly difficult for farmers to pay it, unless they are very large farmers with highly organised machinery attached to their farming. That is something which has to be looked into in having regard to the past. Right through the period from 1920 to 1939 the farmer himself went through a terrible and disastrous time under the very kind of policy which this Government brought back after their election in 1951: "Set the people free in all these matters: let them have a 'free-for-all'!" It has not gone quite so far as that in farming, but very nearly.
The price of that policy from 1920 to 1939 was dire and disastrous for the agricultural industry; and not only for the worker, of whom I have been speaking especially, but also for the farmers, who over and over again had bought farms at rising prices from 1914 to 1918 and 1919 and were forced to sell in bankruptcy because they had no protection whatsoever. Farms were bought up by wealthy industrialists and others at as low a price as £10, £15 or £20 an acre, land that could not be bought at anything less than £80, £100 or £120 an acre to-day. That is the story of the farmer, not the worker on the land, as a result of the "free-for-all" from 1920 to 1939. I do not think my facts can be denied.
270 Taking the position which has existed since 1939, I would say that certainly there has been a better basis for organisation than the one which existed when we had to deal with the situation of 1914. The farmers were better organised and the workers were better organised, and the successful contribution made by the farming industry is something the country ought not to be allowed to forget in an historical appraisement of the result of the war of 1939–45. It was an enormous contribution. Then it was determined by a Labour Government that it was essential to have a continuity of controls, especially in view of oar national economic position and the need to control generally, so that we might organise our production for export to meet our needs. We wanted continuity it agriculture so that we could obtain the largest possible contribution to home production, in order to keep as low as might be the imports for which we had to pay dollars. That was the basis of cur Labour agriculture policy. That was what led to the 1947 Act.
The basis of that Act worked, I must say, exceedingly well, although there were some kicks and grumbles sometimes by individual people of standing, who felt that they were brought under some hardship by the control of particular farms because of their lack of the efficiency required by that long-term policy. But the stability of the industry from 1946 until 1950–51 was quite extraordinary. There was restraint and rigid control of prices, and the farmer knew what he was going to get. Of all those I have talked to in the farming community, I have found few who really wanted to experience what is going on now in regard to free markets—very few indeed. Farmers then knew what they had to produce, they knew what they were going to get, and, in the organised policy controlling imports from abroad, they had some idea of what would be the best quantitative production of particular agricultural commodities. All that was exceedingly important.
What has happened since? Ever since 1950–51 the farmers have been pressing and pressing the Conservative Government for a long-term policy. The Government were elected in 1951; they are producing that policy in a White Paper at the end of 1956. As to the statement on Government policy which was made the I other day by, I think, the Prime Minister 271 in a supplementary answer to a Question, I suppose that if they had been working only, as he said then, by trial and error for that period, we must give them at least some thanks for what their labours of trial and error have brought forth. However, they give us now, in this White Paper—and we should like to acknowledge it—the basis of a long-term policy, and in so far as that continues the general basis of the required long-term policy set out in the 1947 Act, we welcome it and hope very much that it will succeed. But, when we are talking about this principle of guarantees, remember how much the farmer, who is shot at by the economists or odd-minded politicians here and there (there are even one or two in my own Party) as being "featherbedded" and the like, and the farming industry have delivered the goods, and how much they have suffered, on the other hand, from the "free-for-all" policy of the present Government since 1951.
I was looking up the figures the other day. I find that the net income available to the industry for 1949–50, after paying expenses but without allowing for the value of the labour of the farmer where he himself works on the farm, was £306 million. I have looked at the latest estimate for 1956–57 and the result of what ought obviously to have been better returns to the farmers for the period between 1949–50 and 1956–57. The British farmer has produced extra food for the country of no less than 9 per cent. in volume during that period, on what was regarded as already a high figure in 1949–51. Yet what is the real result to the farmer as a farmer? The real result, as the estimate for this year shows, is a net return of £299½ million. That is £6½ million less than in 194–950.
I noticed recently that the Chancellor of the Exchequer stated in another place in a reply that the value of money since 1949–50 has decreased by one-sixth. In other words, the farmer is getting a net return in spending power (which includes what would be the remuneration for his personal labour upon the farm as well) amounting in total to about £251 million, instead of the £306 million of spending power which he had in 1949–50. I ask any Member of your Lordships' House to take those facts and study them carefully. Such is the result of a "free-for-all." I notice one or two smiles at that, but 272 noble Lords who smile at it forget the other side of the picture, and that is that the farmer, whilst producing the food, has been forced into increased expenditure all the time upon his capital purchases of machinery and other things of that kind. All his building costs are up, his freights are up, everything is up; and that has been because of the same "free-for-all" policy, helping to relieve the direct taxpayer.
Subsidies on food have been taken off from the consumer; the cost to the consumer has been increased; wages have gone up in all other industries to a far greater extent than in the farm workers' share of industry; yet the farmer has had to meet increased costs, including wages on that scale, while he gets lower prices for his commodities. I say that the farmer has proved, from 1949–50 right through to to-day, his growing efficiency. He has improved quality—although I am quite sure that there is room for still further improvement in quality; he has improved volume, but he has not improved prices, except in temporary bursts in places. The beef producer who was organised had a good deal in regard to his prices for the first few months after freedom had been given to the market two or three years ago; but directly the Government brought in their new basis of assessing deficiency payments—what the farmer calls the "rock 'n' roll", the rolling average—down went the price. I have seen the price descend in my local market from as much as 190s. per cwt. to something like 89s. per cwt., on different days in different periods. That is not much stability for the farmer. He is required to have stability in paying extra wages and all the extra costs created by the Government, but there is no real stability in the market price he is to receive. Even with the long-term guarantee that is proposed now, there is no real comparison with the kind of guarantee of stability, price and occupation that the farmer had in a proper administration of the 1947 Act. That is my considered opinion after a most careful study of the matter.
I should like to say a great deal more but I want to put these things on record for your Lordships to study. They are useful points to study, even if you want to criticise me on some future occasion 273 as severely as did the noble Lord, Lord Amherst of Hackney, when he reminded me, in his usual kindly way, about the debate last April. The general quotation he made from the Farmer's Weekly interested me a great deal. It is typical of the way in which the Farmer's Weekly always responds to the appeal, based on the old typewriting exercise that we used to do:Now is the time for all good men to come to the aid of the party.They are very good at that. But they do let out the idea, now and again, that there are other aspects. I have here a quotation which shows where the trouble has been and what has worried the Farmer's Weekly. Strangely enough, it is from the issue of the same date as the article from which the noble Lord quoted, November 30:The annual and special Price Reviews worked quite well in times of scarcity and rationing. Control ceased to work in a 'free' market and has failed for four or five years to promote effectively the objects of the 1947 Act.Would the noble Lord agree with that? It is from the same source—the Farmer's Weekly. They say thatthe annual Price Review has degenerated into a haggle of uncertain outcome between the Government and farmers, generating only instability and suspicionThat is the other aspect of the views of the Farmer's Weekly.
I have been interested in what the Parliamentary Secretary has said about the capital works programme. We are all glad that he is going to give us the draft scheme in a legislative form as soon as possible. We hope it will come soon so that that section of the Government White Paper will come into operation before September 1. It is leaving it a little late for some of the building work, such as that which is not going to be done by farm labour, and the earlier we can have it the better; then we shall be able to get on with the job on the farms.
But there are one or two questions that I should like to ask the noble Lord who is to reply. There is, for example, a question which was asked on December 28 or December 21—I am not quite sure which. At any rate, the Farmer's Weekly is quoting cases where, unless the Government take great care in their examination of the first guarantee, they will probably exceed the 4 per cent. which is 274 supposed not to be exceeded in the new minimum basis of guarantee. I speak from memory, but the case quoted in the Farmer's Weekly was that of wheat, which, if it were assessed at the minimum price under the guidance of 1956, would be 28s. 3d. per cwt., whereas if a new assessment were made for that year it could not, under the 4 per cent. rule, be less than 28s. 7d., which, roughly speaking, is a difference of 6s. 8d. a ton. Working that out on the basis of a farm producing 100 tons of corn—a medium-sized owner-occupied farm—that would amount to quite a considerable sum and would make a difference in profit. Can we be assured that questions of that kind will be dealt with?
Can we also be assured that in dealing with these guarantees of price everything which really appertains to the costs of the farmer will be taken into account? I am rather nervous about the wording of the White Paper on that point. It refers to "the commodities in question", or some words to that effect, drawing attention to the commodities. Let us, for example, take the case of fuel for machinery and its cost to the farmer. How is that going to be assessed? Is that going to come into the guarantee? I should like a specific answer to that question, if I can have one. The extent to which that will go on is, of course, problematical at this time, but if it were to last, say, from last December until next December (for the period of twelve months), it is estimated that the cost would be no less than £11 million. Then it becomes a considerable factor in the overall examination of the basis of guarantee. It is quite important from that point of view.
I should like to say a word with regard to the £29 million which was mentioned by the noble Lord, Lord Amherst of Hackney. All I say in regard to that is that he must not think it is only the President of the National Union of Agricultural Workers who takes that view of the guarantee. Sometimes I listen to "Farmers' Fare" on the radio, and I hear people talking mainly about things which do riot interest me at all as a farmer, and in such a haphazard way that they are not very helpful. But sometimes I listen to a pertinent and direct comment by a gentleman called Mr. J. L. Charrington. I dare say there are noble Lords who know something about him and his general knowledge of agriculture. I am 275 glad that the noble Lord, Lord Amherst of Hackney, and I read the same things. Mr. J. L. Charrington, in the Farmer's Weekly of December 14, says:Two-and-a-half per cent. does not look much on paper, but when applied to £1,150"—that is the estimated overall income of the farms—it works out at about £29 million in the first year and could be £120 million in a five-year period"—depending of course upon the variations in the percentages that might operate. But that is a very considerable figure, and not a figure that one would welcome with quite the enthusiasm with which the noble Lord would like us to welcome it.
However, I say again, on behalf of my Party—and I am sure those who speak after me will agree—that we welcome the fact that the Conservative Party have been converted to the point of announcing a long-term policy for agriculture; this is the first time that it has happened under a Government of that Party, and it is a great thing. We congratulate them upon it. We wish that, instead of having this basis of guarantees, it were being done on a minimum grant which is presumed every year to decrease until the costs are examined. Nevertheless, we take the scheme as it is and will examine it very carefully as we go on; and "By their deeds after that ye shall know them."
One thing cheered me up, as I am sure it cheered up the noble Viscount, Lord Bledisloe, who is to follow me: if we can get a perfect guarantee for the future, we may get over some of the difficulties which face us in two directions. The first is that we cannot get the full development of co-operation amongst farmers in their co-operative organisations, trading and developmental, unless we can get a better capital contribution to those societies; and the farmers must have capital from which to contribute it If the losses that have been sustained by so many farmers over the last three years can be made up, there will be some hope.
The second thing is that it will help in the application of the undoubted good intention of this capital grant system for the improvement of buildings if some capital can be restored to those who, 276 after the last three years, just have not the capital "in the kitty" to put down on major schemes. I appreciate that, as a general rule, the Agricultural Mortgage Corporation will be able to supply most of what the farmers propose to put down, but it is not at all an easy thing to plan finance at 6 per cent.; and, so far as I can see, the Corporation cannot do things in any other way, for they raise money on the market from period to period, as required for the loans they need to make. Therefore, when they re-lend it to the individual farmer they have to apply to him the rate of interest operating when they borrow. One finds farmers paying anything from 3½ to 5 per cent., and even up to 6 per cent., on loans, because that is made necessary by the basis of the operations of the Agricultural Mortgage Corporation. I have taken some little time on this matter. I apologise to your Lordships if I have been a little long, but I wanted to put our full case and not to withhold our appreciation of the fact that Her Majesty's Government have joined us, in principle, upon a long-term policy.
§ 4.3 p.m.
§ VISCOUNT BLEDISLOE
My Lords, I feel bound to apologise to the House, partly because I am afflicted with temporary indisposition, and partly because I have to catch a train home within the next half hour. But I should not care to remain altogether silent on such an occasion as this, because I feel, as the noble Viscount who has just spoken has indicated, that this is a very important occasion in the whole economic history of our greatest and most vital industry.
I had the experience, sitting on the other side of the House in 1947, ten years ago, of offering a warm welcome to the 1947 Bill initiated in another place by my good friend, Mr. Tom Williams, whom we all honour. I then described it as prospectively a charter of confidence and enterprise for our great agricultural industry. From that standpoint I have never gone back. I criticised the Bill to some extent at that time because it left out any material reference to the more intensive side of our husbandry, namely: the horticultural industry; and having myself, in my old age, plunged into somewhat intensive horticultural activities, I am more than ever of opinion that horticulture, particularly in areas like 277 my own, where the land is good and opportunity is great, requires from Her Majesty's Government more sympathetic attention than it has had in the past. I say this in passing because only yesterday there was issued the most illuminating Report of the Committee, presided over by my noble friend Lord Runciman of Doxford, relating to horticultural marketing. I was going to suggest that that Report is so important that this House, or at any rate those Members who have had an opportunity of reading it, should not discuss it to-day but should rather leave it to a special occasion, when we can discuss it at our leisure and in greater detail.
I should like very warmly to congratulate my noble friend Lord Amherst of Hackney on the clear and convincing speech with which he submitted his Motion and opened this debate. I would urge upon the noble Earl who succeeded him, as a representative of Her Majesty's Government, that those detailed proposals, about which we were all rather anxious to know more, should be issued, so far as it is possible to be specific, not only to the leading agricultural journals but to the National Farmers' Union and to the Country Landowners' Association. The landowner is, of course, bound to come into the picture on these capital grants and the balance that will have to be made up to implement them. I feel it is most important that the actual and specific improvements which are contemplated should be set out in black and white, and should be made known to the parties most interested, otherwise, I feel sure that the Ministry of Agriculture will be overwhelmed with applications and queries in regard to information. If such steps are taken immediately, the Department will, I believe, be saved a good deal of trouble and embarrassment.
After listening to the speech of the noble Viscount, Lord Alexander of Hillsborough, I should like to take this opportunity of congratulating him, I am sure on behalf of the whole House, on his recovery to health and strength after the very serious operation through which he passed only a few months ago. It is perfectly obvious from his speech to-day that he has been restored to a condition of robustness and vigour which we must all be gratified to find in so ardent a champion of our great agricultural industry.
278 I do not know whether the noble Viscount, Lord Alexander of Hillsborough anticipated that I might have something to say on this subject, but my chief adverse comment concerning the White Paper is that it contains no reference to co-operation. Of course, judging by the history of other nations which have made good in the matter of their husbandry, co-operation has been the economic salvation of the small husbandman in every civilised country of the world. In that respect we in this country have not proceeded to anything like the extent to which we might have done. I still believe that if the small farmer is to prosper in the future, whatever may be done in regard to capital equipment at the Government expense, he himself has to work out his own economic salvation, relying on agricultural co-operation to a far greater extent than he has done in the past.
One particular feature of the White Paper has not been dealt with at any length, though the noble Earl mentioned it rather casually. It seems to adumbrate a great rural revolution in this country comparable with that which occurred in the 18th century, when the Enclosure Acts were passed with a view to the enclosure of commons and the initiation and development of what is now known as "capitalist farming." For my part, I have always regretted, from a social point of view, the fact that these Enclosure Acts were passed. On the other hand, no-one can deny that the result of their passing was enormously to increase the agricultural wealth of this country and, incidentally, to enable out farm animals to be provided with food during the winter months, and our rotation and other systems of husbandry to be carried out in a way which, by reason of the piecemeal fashion in which husbandry was conducted in those days, was previously quite impracticable.
As regards this system of merger or amalgamation, for many reasons, I regret that it is contemplated. On the other hand, I believe that it is inevitable. The whole trend of economy in every industry, including agriculture, today is with a view to maximum and optimum prosperity; and, the development of industrial wealth, amalgamation, and the setting up of larger units of industry 279 have become, to my mind, absolutely inevitable. One reason why I regret this is that the system of smallholdings in this country did, to large extent, enable successful agricultural workers to develop their holdings and business methods, and to gain experience in connection with their holdings which has made them—as I have good reason to know—excellent migrants in various parts of our overseas Commonwealth. For the reason I have just explained, I regret that the system of merger is contemplated, though I am sure that it is necessary from an economic point of view. I hope that it will be courageously and successfully put in hand at no distant date.
To my mind, it is pathetic to see these small units of husbandry in this country struggling along, to see the unfortunate small occupier, notably in Wales, often far worse off than his agricultural worker—for an agricultural worker has a guaranteed minimum of remuneration, and as long as he is reasonably well housed and cared for, he is a member of the body politic who is not very often to be pitied. But his employer is in a very different category. Often these smallholders, operating on a bit of agricultural land of one sort or another, making a very poor living, if a living at all, are in a condition that indeed calls for sympathy. This is a pitiable factor in our agricultural community.
I welcome this scheme, mainly, if not exclusively, on the ground of these improvement grants. As I ventured to say in this House a few weeks ago, we have to recognise two facts. The first is that the fixed equipment of many of our farms is wholly unsuited to a large number of agricultural processes to-day. Secondly, we have to remember that we passed through some forty or fifty years of agricultural depression which ruined not only a large number of efficient farmers but also a large number of unfortunate country squires. The result is that the present generation of agricultural landowners, besides receiving rents which, very often, are wholly inadequate to maintain what buildings and fixed equipment they have, are wholly incapable of carrying out themselves any new improvement schemes such as the Government contemplate carrying out, at least to the extent of one-third, at the public expense. In my view, 280 the provision, at least in part, by the Government, of this capital equipment, is the most enlightened and most far-sighted step for the definite and further improvement of our agricultural industry that a Government of this country have taken for the last thirty or forty years.
I must not be tempted to say much more, but I should like to say, in passing, that I noticed that the noble Earl who is now sitting below me, when addressing the annual meeting of a young farmers' club in the West Country a few days ago, made the remarkable statement that while Government help is one thing, efficiency on the part of the farmer is infinitely more important. With that, I entirely agree. If only we can get our farmers, the rising generation of farmers, properly trained in science, as well as in practice, than, with the help of this capital equipment provided by the Government, presently and prospectively, I cannot help thinking that, at any rate amongst the more enterprising members of the farming community, our British agriculture has a really bright future, and will be able to contribute materially to the national wealth and to better confidence on the part of every section of the British public. I repeat that, for my part, I welcome this long-term policy. I never have been a lover of Government subsidies and guarantees. I only hope that in days to come this new system of capital equipment will render such help quite unnecessary, efficient farmers having, with the help of co-operation and by other means, worked out their own economic salvation.
§ 4.20 p.m.
My Lords, in rising for the first time to address your Lordships, I hope that I may be accorded the indulgence which I believe is customary on these occasions. I am indeed glad that the noble Lord, Lord Amherst of Hackney, has put down this Motion for debate to-day, because I feel that this White Paper contains matter of the utmost significance, and perhaps its importance has not been given the full ventilation it deserves. The reasons are not far to seek. The statement made by the noble Earl, Lord St. Aldwyn in this House was made on November 27, at the height of the Middle East crisis. After that there was the Christmas Recess and since there have been the changes 281 in the Government. All these matters have tended to overshadow this important new agricultural policy. In passing, I hope that I may be in order in saying that I welcome very much the fact that the Minister of Agriculture remains in his office and that the noble Earl, Lord St. Aldwyn, the Parliamentary Secretary, remains in office, too.
The proposals contained in the White Paper have received wide support, and nowhere more than in the agricultural industry itself. Indeed, within a day or two of the publication of the White Paper, the agricultural journals spoke strongly in favour of it. The writer of the leading article in the Farmer's Weekly of November 30 must, I think, never have had so much attention paid to him. I propose, if I may, to quote the first lines of his article, which I think up to now are the only lines in the article which have not been quoted. The writer states:When the Minister of Agriculture made his announcement on Tuesday of this week, it transformed the present situation and the future prospects of the industry.That is strong language from a paper which frequently is sharply critical of Government agricultural policy.
For a good many years now agricultural policy has been to a large extent taken out of the cockpit of politics, by agreement between the Parties, but I think we should do less than justice to the Minister and his advisers and to the leaders of the farming industry if we assumed that this had been attained easily. I think it is no mean feat to have kept agriculture, our greatest industry, above the strife for so long—ever since the passing of the 1947 Agriculture Act. But the Act of 1947 is now ten years old, and I think that the full significance of the proposals in this White Paper cannot be fully appreciated unless we remind ourselves of the developments which have taken place during the last ten years.
These developments fall into three periods. The first began when the Act was passed, largely as an agreed measure. The conditions of the industry, of this country and of the world at large were far different from what they are to-day. Then the demand for agricultural produce was far in excess of the supply, and it was quantity, not quality, that was required; even cost was not a great consideration. In those days, ten years ago, the Government were the sole buyers of 282 agricultural produce, not only home produce but nearly all imported produce as well. The system adopted to implement the first part of the Act and the guarantees contained in it was a system, as your. Lordships know, of fixed prices and individual targets for the review commodities linked generally to the overall target of the 1947 expansion programme. I consider that the Annual Price Review system, which is incorporated in Section 2 of the Act, worked very well in those conditions, and I think that there is no contradiction at all, as the noble Viscount, Lord Alexander of Hillsborough, seemed to imply, between the fact that it worked well in that period and less well in the next period.
The second period of implementation of the Act began some six years later, when the Government of the day were able to bring to an end the buying in bulk of all agricultural produce and to put an end to rationing and control and the fixed prices, which were a necessary part of the system and conditions which up till then obtained. The system during this second period, which has been with us up to the issue of this new White Paper, was a system of standard prices and deficiency payments for both cereals and livestock, with greatly added responsibility to the appropriate boards in connection with milk, wool and potatoes. The fixing of these standard prices and deficiency payments was still, under Section 2 of the Agriculture Act, done by the Annual Price Review. In these later years this Price Review procedure had begun to creak rather alarmingly. Although I do not go so far as to say that: an atmosphere of suspicion and lack of confidence had actually arrived, I think that such an atmosphere was just round the corner. I agree with this famous article in the Farmer's Weekly that in those conditions the system was degenerating into a "haggle." I think that the Minister and his advisers, the farmers and their leaders, and indeed the general public, could only contemplate such a procedure of "haggle" with dismay, for it was the outcome of this annual contest which was going to fix the price the farmers would have to receive and that the public would have to pay during the ensuing year.
So let roe say at once that I think that almost the most important part of this new policy is that, although it has 283 not been possible to eliminate the Price Review procedure altogether, this annual price contest will have a much more limited scope in future. If I may say so, it will be conducted in future under "Queensberry Rules." I do not think it is fair to go so far as to say that gloves will be worn on either side, but I think it is fair and true to say that in future this contest will be confined within a definite ring, and it is that limitation which I think is such a valuable development in this White Paper.
The basis of this part of the White Paper is that the fall in guarantees will be limited. I will not weary your Lordships with all the percentages contained in the paragraphs in the White Paper dealing with this matter, but the essential points are that the guaranteed price for each individual commodity cannot fall by more than 4 per cent. below the year before; and in the case of livestock and livestock products, for which there are good reasons why more generous treatment should be granted, they cannot fall more than 9 per cent. over a period of three years; and the annual total value of guarantees, which will include production grants, will not be permitted to fall by more than 2½ per cent. of the total of the previous year, after adding (this is important, though people sometimes forget it) the cost increases and deducting the cost decreases which have occurred during the period since the previous annual review. These percentage limitations are to remain in force for five years, which I think is important, and we are assured, I believe, that even though the new legislation will not have been passed by next month, the next month's Price Review will work within these percentages.
I think it is well known that the leaders of the industry went into these discussions with the Government out of which this White Paper has arisen with the great hope of obtaining a long-term policy, just as the Departments went into the discussion with the great hope that the Annual Price Review procedure could be, if not eliminated, at least greatly reformed and modified. I venture to suggest that these discussions have been most fruitful, because in one sroke we have in this White Paper the long-term policy that is required and was asked for, and at the 284 same time we have this modification of the annual haggle over the Price Review, which is so valuable. In speaking for a moment of the long-term policy, I find myself in complete agreement with paragraphs 30 and 31 of the White Paper, in which the Government use what are, to me, conclusive arguments why no farmer—and no member of any other industry for that matter—can hope to be given precise instructions as to what he is to produce and what price he is to get for it.
This guarantee procedure which has now been ushered in in this new and third period since the Act does, I think, bring real stability to the industry on which confidence can be based. But stability by itself is surely not enough. For it is absolutely essential that we must continue to improve and develop the farms and the farming industry generally, in order that we may reduce our costs of production. Even before publication of this White Paper, immense strides had already been made in modernising the farms of this country as a result of action by their owners, whether they be owner-occupiers or owners who let them to farm tenants. But, so far, there has been no direct Government assistance for work of this sort, except in the case of the hill farms, under the Hill Farming Act, and the farms that come under what are called livestock rearing areas. Now it is proposed, for the first time, that grants of 33⅓ per cent. shall be available on permanent fixed equipment and for the making of long-term improvements to farms of all sorts and types. This is a new and most valuable departure. The proposals are set out in paragraphs 22 to 29 of the White Paper. I do not intend to go into them to-day, although there are one or two specific points to which I should like to draw the attention of your Lordships, and particularly I would draw attention to paragraph 28.
I was a little surprised to hear the noble Viscount, Lord Bledisloe, saying at first that he was rather sorry about this paragraph, which deals with amalgamations. However, before the noble Viscount finished, I realised that he was not really so sorry as he sounded at first, because he appreciated that in this respect something was necessary. I entirely agree with him that something is necessary. This is a bold departure and a bold step. It is that these grants shall be made available 285 for amalgamating uneconomic units—not necessarily small units, but uneconomic units—and for certain other costs involved in the amalgamation process: those are the words used, although I am not sure what they mean. However, grants are to be made available for equipping and amalgamating uneconomic units.
The amalgamation of uneconomic farm units has never proved easy in this country or anywhere else. We in this country are not bedevilled to the extent that many countries on the Continent are by minute holdings, because, fortunately, we have not the same kind of succession laws and customs as are often in force on the Continent, where, on the death of an occupier, a farm is fragmented into tiny strips, which completely hinders any kind of economic or modern farming. We are not as bad as that; but in the West Country, where I live, there are a large number of small units, and units which are uneconomic. I hasten to say that those two words must not be taken together: a small unit is not necessarily an uneconomic unit, although it may be that sometimes it is uneconomic. I notice in the proposals that there is to be no compulsion, and I am glad of that. However, I hope the Government will keep in mind that at a later date pressure may have to be brought to bear to try to get this part of the policy working, if it has not started to work under its own volition. I hope that it will not be necessary and that it can be achieved by voluntary action.
I am sure that many noble Lords will wish to speak about these improvement grants, but there are one or two points that I should like to make, even after the important statement made by the noble Earl, Lord St. Aldwyn, earlier this afternoon. The matter of delay has already been referred to, but it is of first importance. I anticipate that there will be a great deal of detailed discussion, here and elsewhere, and it is unlikely that these grants will be made available for some time—indeed, I think the noble Earl, Lord St. Aldwyn, said that they would not be made available until September, or possibly later. The effect of this delay, however inevitable, is bound to be unfortunate. It is bound to lead to a pile-up; for I assume that people will not start doing this kind of work when they know that if they wait a little longer they will be paid one-third of the 286 cost. When tins "D-day" arrives, the resources of the building industry—and in this connection it means mostly the small jobbing country builder who is already deeply committed—will be inevitably strained. I hope that this bottleneck will not lead to a steep rise in builders' prices.
I am sure that we must try to keep this matter simple in its administration. If I may say so, we are dealing here with pigsties and not with secondary modern schools. I hope that we may have some common-sense procedure whereby schemes can be put forward now, even before the legislation is before Parliament, for examination by the officials who will be charged with the administration of this Part of the Act. It will be quite disastrous if the officials are not going to be permitted even to look at the schemes before the last "i" is dotted and the last "t" crossed in the administrative instructions which will have to follow the legislation. The noble Earl said that he will do everything he can in this matter, and we accept that.
There is one other point, not wholly unallied to this, to which I should like to bring passing attention, and that is in relation to the small country contractor. A great deal of this work is suitable to be done by the farmer and his own men or, if the farm is a let farm, by the owner and the estate staff. A great deal of this work can be more economically done without a contractor at all. This raises a difficult point, and one which needs attention, because if we adopt the system of "Do it yourself"—which I am sure in this connection is going to be valuable—we are bound to run up against all sorts of practical difficulties. If you take the line of least resistance and put your work out to a contractor, the matter is simple for everybody: you get your estimate; you submit it to the department; the department approves it; you give the job to the contractor; you pay the Bill; you have the receipt, and you send that to the department. The department compares it with the estimate, and finds that it agrees, and pays the grant. The whole matter is too simple.
It does not need much imagination, however, to see what happens if you have tried to do the work yourself. I have had experience of this under the Hill Farming Act in Scotland. You have to start 287 analysing time sheets—perhaps you do not normally keep time sheets at all. You have to start analysing invoices—and farmers are inveterate buyers for cash and very likely have not got detailed invoices. You have to convince the department that these sheets of asbestos for which you are seeking a grant were actually used on the pigsty, and have not gone into stock or been used on another job. It is a difficult point, but I think it is essential that farmers will have to do this, because there will be a build-up which will strain the contractors. By administrative action we have somehow to get over this and make it possible for self-help.
There is one other point which is difficult, and that is that the farmer's own work is, of course, never eligible for grant. That is an old matter, and it has been raised often before. I make no apology for raising it again now in your Lordships' House because it seems, at first sight, to be unjust; and in my view, it is unjust. But I believe that the Treasury are adamant on this, and always will be—perhaps I should not say "always will be", but at any rate always have been, adamant on this. It is a point that, especially in connection with these grants, wants looking into again now, and I hope the noble Earl will be able to do so. The essence of this whole problem of grants, therefore, especially in the initial periods, when there is this build-up, is that they should be treated with understanding and wisdom, and that the local officials should be trusted and given wide scope to use discretion; otherwise we shall force a lot of work out into the hands of contractors where it need not go, and where it will cost the farmer and agriculture as a whole more.
These points are only details, but I am sure your Lordships will not lose sight of the fact that these long-term assurances have been accepted by the farming industry, and are accepted as giving to the industry a solid basis on which to build an improved and more efficient agriculture, so that prices may be reduced. That, to me, is the remarkable thing. At a time when prices are rising in so many other directions, this whole plan is concerned largely with the amounts by which guarantees can be reduced, in order that the price of the 288 food can be reduced for the people who have to buy it. This is, I venture to suggest, really remarkable, and should surely be a source of the greatest pride to all those who are connected with farming, whether they are farmers, farm workers or landowners. That such a programme for the lowering of costs should not only be accepted but welcomed with enthusiasm, is a fact of which we ought to be proud. In those circumstances, we can surely support these proposals with complete confidence.
§ 4.45 p.m.
§ THE EARL OF DUNDEE
My Lords, I think I am right in saying that not long ago the noble Earl, Lord Waldegrave, was Chairman of the Agricultural Executive Committee of the County of Somerset, a county which I have always admired from a distance, and which I have always loved on the few occasions when I have been privileged to visit it. Somerset is well known for its excellent grass and for the high quality of the livestock.
§ THE EARL OF DUNDEE
The noble Earl, Lord Waldegrave, can speak with great authority and experience on this subject. I am sure that all your Lordships have been delighted to listen to his maiden speech, on which I have the honour to congratulate him. Since the noble Earl has, I believe, been a Member of this House for twenty years, I hope that he is now going to make up for lost time. The high quality of his speech has made us equally regretful that we have never heard him before and hopeful that we may often have the pleasure of hearing him again.
If the price-fixing proposals in this White Paper are carried out, the Government will have done as much as they can be expected to do at the present time for the price structure of our farming community. When Sir Robert Peel established the gold standard in this country 140 years ago, a Member of the House of Commons who sat for the County of Essex proposed that wheat and not gold should form the basis of British currency. He argued that wheat was a much more universally acceptable commodity than gold; and indeed I think that is true of nearly every kind of agricultural product. 289 Under our present managed currency, these annual price negotiations between the Government and the National Farmers' Union have an important bearing on our cost-of-living figure, and on the whole problem of inflation. How delighted all farmers would be if our costs of production could be stabilised perhaps for a period of five years! If that could be done, we could confidently expect to achieve a substantial reduction in the price of food.
I am not going to spend time disputing with the noble Viscount, Lord Alexander of Hillsborough, about the relative merits of a controlled and semi-controlled economy. Indeed, I should have been delighted to agree with everything the noble Viscount said, but for the fact that our farming costs continued to rise just the same at the time when we had all these controls. I am afraid that I cannot see any practical likelihood that the progress of inflation will ever be finally arrested, although we may hope that it will be slowed down a little.
I believe that the Government and the National Farmers' Union have done equally well in agreeing on this flexible arrangement which is explained in the White Paper, and which will, I think, protect equally the public and the farmer, having regard to the long period which must often elapse, particularly in the livestock rearing industry, between the time when the farmer lays out his money and the time when he hopes to get it back. But the White Paper recognises that price fixing is not enough, and that if we want greater efficiency and higher food production without excessive prices we must put more capital into the modernisation of our farming. Until the present century, British farming was plentifully and cheaply supplied with capital by the owners of land. British farming certainly was, and perhaps still is, more highly capitalised and more efficient than that in any other country in the world, but in the last two generations punitive taxation has practically confiscated the entire source of capital from which British farming used to be financed.
Now, in paragraph 21 of this White Paper, the Government, like a good-natured highwayman who has robbed his victim of everything he possesses but does not want to leave him entirely destitute, 290 are proposing to give us back a little of what they have taken away. I certainly hope that this 33⅓ per cent. grant will be spent in the best possible way, but I rather doubt whether the contemplated capital expenditure of £320 million which is mentioned in the White Paper will, in fact, be spent to the best advantage unless there is some revision—it need not, perhaps, be a very great revision—in our attitude towards both the question of arbitrarily controlled rents and also, perhaps, the question of security of tenure. Both those questions are difficult and we ought not to jump to any hasty conclusions about them.
There is a recent publication by the Scottish Department of Agriculture, Volume VI of Scottish Agricultural Economics, which I had meant to bring here to-day. Unfortunately—perhaps your Lordships may think "fortunately"—I have inadvertently left it at home, but I think I can remember the passage which I intended to read to your Lordships. The Department have lately been carrying out a survey of all the buildings and capital equipment on every farm in Scotland, and they have estimated that the total value of all the fixed capital equipment, of every kind, belonging to the owner is about £188 million. They point out that the total figure of gross agricultural rents in Scotland is £5,400 million, which is less than 3 per cent. (about 2.9 per cent.) on the existing capital which is there already.
Of course, that figure of 2.9 per cent. does not represent income received by the owner; it represents only the receipts cut of which he has to pay for maintenance, replacement and the cost of management. I wonder what any of us would think of a modern industrial business which could devote an annual sum equal to only 2.9 per cent. or the whole of its fixed capital assets to maintenance, management and replacement. We should not consider it a very progressive business, and it is not surprising, in view of these figures, that so little capital is now being spent on our agricultural holdings, either in Scotland or in England. Fortunately, a great many of the cattle courts, barns and other buildings which were put up a hundred years ago were so well built that they are still serviceable, and are likely to remain so for a long time; but we do need a great 291 many more buildings and electric power, grain dryers, and other modern improvements of every kind, to enable the farmers and workers to earn better wages and to produce more food, without charging higher prices to the public.
The question of rents is not a simple one. I think it is certainly not a general issue between landowners and farm tenants—indeed, there are a great many landowners who, for various reasons, do not want to raise rents. After the catastrophic depression, due to world causes, which struck British agriculture in the 1870s, and which lasted almost without interruption for sixty years, until the Second World War, there was always a tradition among owners of land that when times were bad rents should be substantially reduced, and that when things temporarily got a little better they should not be increased in a hurry and certainly not by any great amount. Now, since 1940, we have had sixteen years of relative prosperity, but sixteen years is not a very long time, in comparison with the sixty years of adversity which came before it.
There are a great many owners of land who have not yet grown out of the habit of thinking that it is anti-social to try to get more rent out of their farms. One of the most valuable things in British farming is the good personal relations which usually exist between the owner and the tenant. If you have an old tenant who is also an old friend, who is the kind of man who is likely to "jib" at any idea of increasing his rent, and if he does not want any improvements or anything done to his farm, if he is quite happy to go on without modern equipment and is farming reasonably well according to his lights, and earning, perhaps, rather less than an agricultural worker, your natural inclination is to leave him alone, and certainly not to insist on spending a whole lot of capital on which you will not be allowed to obtain any return at all.
On the other hand, there are many farmers now, progressive men, who are not only willing but anxious to pay a very much higher rent if their farm is provided with the most up-to-date modern fixed equipment. But, even so, I think that the highest rents now of the most modern farms in 1957 are still 292 actually less than the rents of those same farms a hundred years ago, in 1857, when costs and prices were not at all comparable with what they are now. And, of course, the general level of rents today, in 1957, is only about half of what it was a hundred years ago. As my noble friend Lord Amherst of Hackney has pointed out, arbiters who decide questions of rent are accustomed to give their awards on the basis of about one-half of what would be obtained in a competitive market if a farm was to let.
I myself have sometimes been criticised for not trying to raise rents, and I should certainly not think of criticising anybody else for not trying to do so; indeed, in some cases it is not to the personal advantage of the landowner himself that the rent should be raised. But I cannot help feeling that it would be to the advantage of the country if the general level of agricultural rents were on a much more realistic basis, because a rent which, without being exorbitant, is in accordance with economic facts, if it is a realistic rent, a competitive rent, is one of the strongest inducements to better farming and one of the strongest deterrents to slackness and a willingness to go plodding on on a low standard of living, protected against misfortune by Government guaranteed prices.
The only method we have at the present time of getting rid of bad farmers is by correction, followed, if necessary, by dispossession by the agricultural executive committees. With great respect to the noble Earl and others of your Lordships who have given valuable service on these committees, agricultural executive committees do not always act with the best judgment in these cases, and in any event the number of farmers who are farming badly enough to justify this drastic and inhuman remedy of eviction is not great enough to make the slightest practical difference to the general standard of farming efficiency in this country. You cannot divide farmers into two classes, those who are bad enough to be dispossessed by an agricultural executive committee and those who are good enough to go on. There are all types of farmers, and all grades of efficiency.
What I think we need for the sake of better farming in this country is not that anybody should be evicted, but that some of the less efficient farmers should be persuaded to retire, like some of Her 293 Majesty's Ministers, a little sooner than they might otherwise have done, to make way for other men who are supposed to be more enterprising. We are all well aware of the large numbers of young, able men, with great skill in farming, who are longing to get a farm but who cannot get one because there are hardly any farms to let in the market. At the same time, we must remember that there are great many old men who are farming very well indeed—perhaps even better than some of the younger men with university diplomas. But I have no doubt at all that in our agriculture to-day there are too few openings for too many good men, and perhaps a little too much security for some men w ho are not quite so good. The question of security of tenure under the 1947 Act is far too big a subject to be raised on a debate on this White Paper, but I think the question of rents and that of security will have to be reviewed in some way, by the Government and by the farmers, if this programme of capital re-equipment on which the Government propose to embark, is to produce the results which it ought to produce, both for the industry and for the public.
§ 5.3 p.m.
My Lords, may I be allowed to add my congratulations to those of the noble Earl who has just sat down on the magnificent speech of the noble Earl, Lord Waldegrave? I think we all feel that he spoke with great knowledge and in a manner that held our attention all the way through. I am sure that we all look forward to hearing him on many occasions in the future.
My Lords, I was most impressed by the provisions which Her Majesty's Government made in the long-term assurances for agriculture announced in the White Paper. It could have been no easy task for a Minister, in a time of economic stringency, to find a way of supporting agriculture, both firmly and fairly, and at the same time find a method of injecing new capital, or encouraging new capital to be brought into the industry. I do not believe that I should be alone in feeling that the assurances that we have been given have exceeded even the wildest hopes of the most fervent optimist. I consider that to guarantee that the individual price of commodities will not decrease by more than 4 per cent. and that the 294 total guarantees will be at least 97½ per cent. of the previous year's price, is an extremely bold step. Taken at a time when food is in relative plenty, I think it is an extremely bold step, and, I must confess, quite an alarming one.
I cannot help feeling that these guarantees as such—I have mentioned this before, but I do so again because I think it is rather important—are designed primarily to assure the farmer of a fair return on his capital and on his work; and the whole crux of the matter must be to reduce our costs. Although these guarantees give confidence to the industry and thereby attract fresh capital, they do not in themselves create a lowering of costs. Our idea must be to get sufficient capital introduced into the industry to enable us to modernise, and thereby to reduce our costs of production. That is why I was delighted to see in these assurances the provision for a 33⅓ per cent. grant on fixed equipment and building. To my mind, that is by far the best way of spending the taxpayers' money, and I believe that it will prove to be a great success. I am surprised to see that Her Majesty's Government consider that the demand will require them to spend only £50 million in ten years, which, after all, is only £5 million a year. I should have thought that the demand would require a considerably greater sum than that.
However, there are two points which I should like to draw to your Lordships' attention and about which I should like to make borne suggestions. Whatever business one is in—whether it is as an individual or as a nation—to be successful one must always look to the future; one must anticipate it and endeavour to keep one step ahead of one's competitors. I should like to suggest to your Lordships one way in which the agricultural industry can do this—namely, by the encouragement of irrigation. There is in this country great scope for irrigation. At the moment it is mostly a novelty. Its capital cost is extremely high. I should like to see Her Majesty's Government show more of the foresight and initiative that they have shown in this White Paper, by allowing a grant on the capital cost of irrigation equipment. It is difficult to generalise on such things, but may I give a very rough idea? It would cost an average or reasonably 295 sized farm to equip itself with adequate irrigation facilities between, say, £750 and £1,000. That is a lot of money, and farmers will not willingly spend that money on such equipment. They will argue—perhaps perfectly rightly—that is may be a wet year and there will be no need for it; or, alternatively, they will say that crops have always been produced in the past without it, and that this would be a rich man's luxury.
I suggest to your Lordships that that point of view may not necessarily be correct. Everything that one grows has as its prime constituent water. Sugar beet consists of about 80 per cent. of water; mangolds, 90 per cent.; grass, 80 per cent.; even barley when it comes off the combine has frequently about 20 per cent of water. That means that for every five sacks of barley that you get off the combine, one consists of water. I often wonder whether one is being sensible to spend a lot of money on fertilisers and to subsidise them in order to encourage their use, or to subsidise and to encourage the ploughing up of pastures in order that we should get the benefit of the humus, if the main requirement, which is water, is missing.
§ LORD HADEN-GUEST
May I ask the noble Earl a question? He did not mention the size of the farm to which he was referring.
I am grateful to the noble Lord for intervening. I did not say that on purpose, because obviously it would depend on how near the farm was to water, and considerations of that sort. The farm I had in mind was one of approximately 400 acres; but it is difficult to give any hard figures, and I am perfectly prepared to be told that I was both extravagant in my suggestion and also not extravagant enough. I give those figures only as a rough guide. Particularly during the last year, we have all seen crops that have been sown but have not germinated for about a month, simply because they have not had the water they required; and when they do germinate those crops never bear the full amount they would normally bear.
Again, we are told that we must increase our quantity and quality of grass by applying nitro-chalk and sulphate of ammonia. One can apply as many such 296 fertilisers as one likes, but without the rain to wash them in and make them work, they represent money wasted. I believe that in the future irrigation will play a very considerable part in our agriculture and that, always provided that farms have access to water, irrigation will become as common as fertiliser sowing is now. There is a tremendous amount of productivity there for the asking, if only we see that our land is watered when water is required. I believe that the loss of production due to the fact that either one has not enough water throughout the year, or that what rain there has been has come at the incorrect time, would be quite considerable if it could be ascertained. I should like Her Majesty's Government to give practical encouragement in this direction, because by retrieving this production which would otherwise be lost, one can gradually lower one's costs.
I will mention to your Lordships one other aspect which I feel is rather important, the selling, or so-called "marketing", of our goods. I want to focus attention on only one particular point. Why is it that the farming community are so completely oblivious to advertising? One may not like advertising, whether in the Press or on radio or television, but nobody disputes its worth. I believe that there is only one aspect of agriculture that is really strongly advertised—milk; and though latterly that advertising has not had the success which some may have wished, mostly due to over-production, it initial success was tremendous. It seems to me fantastic that farmers who wish to sell their goods can be frightened of, and can even complain about, foreign competition and yet refuse to use the one medium which everyone knows encourages people to buy one's goods.
Why, for instance, do we not advertise British pork or British bacon? We are all familiar with the advertisements to buy Danish bacon, with the result that many consider British bacon to be of inferior quality. One can easily think of the advertisement, "Buy British Bacon", and could build all kinds of niceties around that. The same applies to butter. Danish, New Zealand and Australian butter is all advertised, but I have never yet seen an advertisement for British butter. The same thing applies 297 to our eggs, beef and lamb. I feel that there is tremendous scope for increasing our sales in fostering the idea that people wish to buy British food. Then I consider that we should endeavour to display our products more attractively. Our British bacon or lamb should be branded as such, and we should be proud of it. Again, manufacturers of butter ought to wrap their products attractively, and not be satisfied with something that is little better than printed greaseproof paper. It is surprising how one can sell a product merely by putting it in an attractive cover or wrapping.
May I ask the noble Lord whether he is keen on advertising abroad or in this country? Does he mean principally advertising overseas?
My Lords, I was thinking primarily of advertisting in this country, to encourage people to wish to buy British products, as opposed to foreign products. But the point is the same, whether one wishes to sell agricultural or industrial goods, at home or abroad. If we want to sell them we must make a determined effort to sell them, and not believe that people will come to us and ask to buy them.
We have had only too clear an instance recently of how our foreign competitors are endeavouring to capture our industrial markets with cars. They are out to capture what markets they can, and if we are not prepared to do the same—and to see that they do not capture our markets—that will surely come about; and we shall be the losers. If we in agriculture encourage people to buy our goods, that will stimulate production and give a healthy atmosphere to our agriculture. I feel that the industry should back up the strong lead which Her Majesty's Government have given us in this White Paper. They have given us support, and we should not be prepared to rest on that support but must be prepared to follow it up and endeavour to create in our industry a confidence that will benefit both those who work in it and those who do business with it.
§ 5.18 p.m.
§ LORD FORBES
My Lords, I should like to add my congratulations to the noble Earl, Lord Waldegrave, who made such an excellent maiden speech. Having myself fairly recently made a maiden 298 speech in your Lordships' House, and also being a farmer, I must confess that I prefer farming under a Conservative Government to making a maiden speech in your Lordships' House.
I welcome, without reservation, the White Paper on Long-term Assurances for Agriculture. This White Paper is obviously the result of a very healthy "get-together" between the Ministry of Agriculture and the farmers' representatives, and it would, without doubt, be ungenerous to offer any criticism at this juncture, as the proposals certainly provide what should be a sound basis for future confidence in the industry. We must not forget, however, that the proposals are, as yet, merely a sound foundation on which to build the future agricultural edifice. If it is built of good mortar, it will assure the future of agriculture; but if the mortar is of poor quality, then I am afraid that agriculture will continue to exist as it does to-day.
There has doubtless been a degree of uncertainty in the industry during the last few years, especially at the time of the Price Review: the farmer has never really known whether his particular type of farming was going to be boosted, or condemned. He has not been able to plan ahead but has had to exist from one Price Review to another. Now, however, things have completely changed, and with the White Paper as a firm foundation there should at least be mutual trust between the farmer and the Government. Surely they have, at least, one aim in common—that is, more output from home resources, something which should not only help the farmers' pockets but should also give relief to our balance of payments, and possibly bring clown the cost of living.
I think it is clear that if we are to meet the challenge of imported food from abroad, and at the same time enable our export industries to compete in the overseas markets, all our food which we grow at home must not only be produced as cheaply as possible but must also be sold to the consuming public as cheaply as possible. I believe that the long-term assurances will do much to bring this about, since Her Majesty's Government seem at last to have realised and acknowledged what a very large part agriculture can play in bringing about an improvement in our balance of payments.
299 The new measures outlined in the White Paper show clearly the Government's intention to support the farmer, and at the same time they give ample evidence of wisdom in the way in which the support is to be given, because it is plain that the proposals, besides helping the farmer, will not be unattractive to the taxpayer. People who are not connected with agriculture are apt to forget—or perhaps they do not know—that the agricultural industry, probably more than any other industry, has to plan ahead. Take, for instance, the case of the dairy farmer. He knows when a young heifer calf is born that it will be at least two and a half to three years before that animal will produce any milk. Furthermore, he knows that it will be even longer before he can make an accurate assessment as to whether the animal is going to be a good milker or a bad milker. A good farmer should always be able to plan ahead, and he cannot do this unless he is confident that the Government will not make any sudden or drastic changes. I believe that at last the farmer has this confidence in the Government.
Having welcomed the general provisions of the White Paper, I should like to say a few words about the implementation of some of the recommendations, especially those concerning the farm improvement scheme or capital grants for buildings. In my view, it is imperative that capital grants for buildings and other fixed equpment should also be of positive long-term benefit to the country as well as to the farmer. In other words, the money to be spent on buildings must be wisely spent, and there is nothing that would more alienate the urban population from the farmer than to see money, especially public money, being mis-spent on farm buildings. Undoubtedly there are many farm buildings in the country that are not only obsolete but also totally inadequate. This is perhaps not surprising, seeing that most of our buildings were erected at a time when labour was cheap and mechanisation barely existed. To-day, mechanisation has largely been forced on the farmer because labour is so expensive. Unfortunately, the farmer often does not get a good return for the money he spends on mechanisation. This, I think, is largely due to the fact that the farmer, having bought his new machines, puts them into 300 what I might call an old factory—old farm buildings which are wasteful and, in many respects, unrewarding.
Paragraph 23 of the White Paper implies that the Government hope that the provisions will lead to a large programme of modernisation on farms throughout the country. I hope that that will be the case. Of course, it is up to Her Majesty's Government to ensure that their present words of wisdom bear fruit. In my view, there are a number of fences to be jumped before Her Majesty's Government can say that they are "out in the straight" in regard to the White Paper. For instance, it has long been realised that, without more capital, the industry cannot function at full efficiency.
In connection with this point, it is sad to look back over the last few years and to note how, in the erection of many buildings, money has been completely wasted. This is disastrous. Buildings have been put up without any planning, and a lot of valuable capital has been wasted. Probably piggeries, more than any other type of building, have had money wasted on them. They have often been built entirely lacking in certain fundamental requirements, with the result that the owner does not get the benefit which he hopes to derive from the new buildings. This is probably due to one of two facts. Either the farmer failed to call in the advisory services that are always at hand, or the advisers themselves lacked some technical knowledge, owing to the fact that in this country we have no research unit for farm buildings. When the farmer builds or reconstructs buildings in the future it is imperative that they should be properly planned. Badly planned buildings can be an extremely bad investment well planned buildings can be, a good investment. A professor of agriculture—Professor Cooper, I think it was—stated the other day that a piggery which could save half a pound of meal in food conversion would be able to redeem itself in ten years. That is an instance of a very good investment.
Our future aim should be to ensure that both new and reconstructed buildings give us maximum efficiency, and to this end it is essential that, when planning is carried out, it should be done, in conjunction with the farmer, by experts who have made a study of the problem, both architecturally and from a works 301 study point of view. The most important thing to remember is that it is not just a question of adding, to existing buildings, bits and pieces here and there, since existing buildings may themselves be quite inadequate, and to add to them would merely be perpetuating an inefficiency. I am certain that there is no worse thing we can do than to increase something that is already inefficient. Proper planning of farm buildings needs a lot of thought and study. I can give an instance. An advisory officer was called in to advise on the replanning of buildings for a forty-five acre farm. This officer spent two days on the job and drew up no fewer than seven possible plans for the farmer. The farmer eventually decided on one of the plans, and the whole scheme was a great success. I maintain that if this advisory officer had not carried out his work in such a painstaking way, it is almost certain that the farmer would merely have added bits and pieces to his farm, and at the end of the clay would still have been left with an extremely inefficient holding.
There is no set plan that will do for all farm buildings. Every farm has its own problems and every one must be settled by individual study by an expert. It is obvious already that a large number of farmers are going to seek the advice of the experts who are available, and the result will be that these advisers will be run off their feet—indeed, I am told that this is already happening. So many inquiries are coming in already that the advisers cannot cope with the work. These farm buildings advisers are "rare birds," because they must have a sound knowledge of practical farming as well as being architects. I consider that the advisory posts in connection with farm buildings will have to be made far more attractive, in order to encourage the present holders of these posts and also to attract those who may think of taking up such work. So much depends on these advisory officers—and much more will depend on them in the future—that we cannot afford to neglect them.
There is one problem that advisory officers have to-day—that is, how they can be certain that they are giving the right prescription for the job. En this country we have no farm buildings research unit, so there is nowhere they can find the highly technical data 302 required. This means that either the advisory officers have to get their information as a result of trial and error with those farmers who are willing to do experimental work—like my noble friend Lord Glentanar, who has clone so much experimental work for the benefit of farmers in the North-East of Scotland—or they have to use the farmers as guinea pigs, in which case the farmers usually know nothing about it. I have already advocated in your Lordships' House that there should be a research unit for farm buildings. I would go further and say that there must be one research unit in England and another in Scotland, owing to the differences in climatic conditions.
It seems odd to me that we have establishments for research into practically every section of agricultural industry except the very heart of the farm, the farm buildings, which are neglected. Practically every other European country has a research unit for farm buildings. In Norway, for instance, the research unit combines teaching with research work. It arranges initial training in the research unit, and, from time to time, refresher courses to which students can return. This means that the research workers are kept in touch with field problems that are brought back by the area advisers, who are always being kept in touch with research work. This is an excellent system, and one that I think might well be copied in this country. From personal experience I have had of the agricultural colleges in Scotland, I have no doubt at all that the staffs of these colleges are to be congratulated on the marathon work they are doing in the interests of agriculture. It is unfortunate, however, that a number of the farmers who most need their advice are usually the last to seek it, and often do not seek it at all.
May I briefly mention one other point—that is, agricultural credit? If it is desired to encourage capital investment in the industry, surely there should be made available for agriculture some sort of national credit institution with reasonably low rates of interest. I think that this is especially necessary just now, when the bank rate is so high. Of course, there should be one proviso before any grant is given: that the application should be scrutinised to ensure that money is made 303 available to finance only sound farm investment schemes. Finally, I believe that the proposals made in the White Paper, if thoughtfully interpreted, should lead to a new era of constructive co-operation between the farmers and the Government.
§ 5.38 p.m.
My Lords, it is getting late and there are still a large number of noble Lords who have indicated their desire to speak in this important debate, so I shall endeavour to be as brief as possible. The noble Lord, Lord Forbes, will forgive me if I do not follow him into the subject of research into the design of farm buildings. I think we should all be grateful to the noble Lord, Lord Amherst of Hackney, for putting down this Motion at this particular time, because any suggestions or comments which are made in your Lordships' House this afternoon may be taken into account by the Government before the all-important Annual Review of Prices, which will be carried out in a month or two under these new arrangements.
I agree with the view which has been expressed by several noble Lords, that this is possibly the most important step which has been taken in agricultural policy since the passing of the Agriculture Act in 1947, and certainly the most important proposals which have been formulated and put forward since the Conservative Government took office in 1951. For those who, both in and out of Parliament, have pressed for some years for longer-term assurances for farmers, it is certainly gratifying to have a White Paper which gives a completely new basis for future planning in the industry. The proposals for the Annual Price Review under modified conditions and the assurance about the total value of guarantees, which is the most important new factor, and the reference to the arrangement for Special Reviews are all, in my opinion, excellent. As has been said before, I do not believe that any reasonable person could have asked for more, and I join with those who have congratulated the Government and all concerned in working out these new proposals. They deserve full appreciation, not only from those engaged in the agricultural industry but also from the nation as a whole.
304 I do not wish to follow other noble Lords in discussing the proposals which are set out in detail in the White Paper, but I should like to refer for a moment to paragraph 3 of the introduction, where we are told that Her Majesty's Government are continuing to discuss various other problems which are associated with these new proposals, particularly credit and related matters and import policy. I am firmly convinced that, unless the Government come forward with proposals to deal with these problems that are at least as imaginative and far-reaching as the proposals dealing with prices themselves, it will be impossible, in the event, for the whole of the scheme and these detailed suggestions, excellent as they are in themselves, to meet with the success that we all hope they will have.
I should like to refer to capital and credit. Various estimates have been made in the last few months of the total amount of capital required by the industry over the next ten years, which is probably about as far ahead as we can usefully look. I think the lowest common denominator is something of the order of £350 million for fixed equipment, with an additional £750 million of working capital. It appears that the Hill Farming Act and the Livestock Rearing Scheme, the housing provisions and various other Government subsidised schemes, together with the new farm improvement scheme, will provide about £100 million of the fixed equipment over the next ten years. That leaves £250 million of long-term and about £750 million of short-term money that will have to be put into the industry in that period. I understand that the general experience of banks is that, on the whole, farmers are, or have been up to now, reluctant borrowers. I suggest that it is not only important that the credit provisions are there, so that farmers are able to borrow, but also that we should create conditions in which they are willing to borrow.
Taking that last point first, I would point out that the willingness to borrow is going to depend on the confidence instilled by the long-term plan—and I will come back to that in a moment or two. Their ability to borrow is, I think, limited at the present time, and I would suggest two points which possibly the Government could take into consideration. The 305 first is that the Agricultural Mortgage Corporation, as at present constituted, will have considerable difficulty in taking a serious part in providing as much as £250 million, or any reasonable part of that, over the next ten years. Its present rate of lending—that is to say, during the last two or three years—is about £1½ million a year. I think it would be possible to overhaul the Corporation so that instead of looking backwards and lending a fixed percentage of the current value of what is generally admitted to be an obsolete unit it could lend against the prospects of a modernised farm and become a forward-looking institution, banking on its repayment and its interest from a modernised and improved holding. In that way, I think it could play an important part in providing the counterpart funds for the various schemes for which the farm improvement scheme is going to provide the 33⅓ per cent. After all, unless the other two-thirds is put up from somewhere, we may get little benefit from the current proposals.
I think it would also be possible to enable the Corporation to make loans to tenants for certain types of fixed equipment, for instance, electrification and alterations to buildings in circumstances where the landlords are reluctant to do it themselves, and enable, the Corporation to have a security on those improvements which will rank in front of the actual freehold of the property and be attached to the occupation. If the tenant changed, or the farm fell in hand, the new occupier, whether landlord, purchaser or new tenant, would take over the liability for the loan which had been put into the farm to make the improvement. I would earnestly request the Government to consider whether something on those lines could be done, or whether, at least, some modification to the existing powers of the Corporation could be made.
On the same subject, but in order to cover a slightly different field—namely, that of medium-term credit—I should like to make a slightly different proposal. There are a large number of enterprises which require machinery or investment in livestock over a period of several years but which are not really suitable for ordinary seasonal borrowing—the fluctuating amount of money required to pay for seed; and fertilisers and which is recouped out of the crops each year. 306 Manufacturing industry has been faced with the same problem, particularly in the export field where we have been competing with Germany, Japan and other industrial countries, and have been required to give up to four years' credit and, in some cases, even longer. That requirement was largely met by the formation of the Export Credits Guarantee Department of the Board of Trade which, by providing a Government guarantee for approved exports to certain parts of the world, has enabled these medium-term financial requirements to be met by the banking system. It occurs to me that it would be possible for the Ministry of Agriculture to have a similar Department which would be prepared to guarantee medium-term loans For agricultural investment which are intended to be repaid over a similar period.
I do not want to delve into any detail on the suggestion this afternoon, but it would appear to be possible for the credit guaranteeing department to guarantee the whole of the farmer's bank account and take the risk equally with the bank, so that there will be no need for the segregation of individual items. I feel that some such measure as this, which would be far-reaching, would enable farmers to enter into these medium-term commitments, which are not so easy to finance at the moment, knowing that they had got somebody standing behind them and would not just increase their own personal risk of bankruptcy—it is often purely a personal risk, and not like that of a company borrowing money—if the project did not work out as quickly or in the way they anticipated.
On the question of farmers' willingness to borrow, I should like to refer to the last three paragraphs of the White Paper, which deal with the long-term policy. I must say here that I am not quite so happy about the proposals as some noble Lords who have spoken this afternoon. I always feel that, in thinking of the long-term policy, we cannot be too often reminded of the broad facts of the situation. Briefly, we are now producing half our food from British farms, and half is being imported. To finance production in this country we are spending £225 million annually. The imports on food absorb 40 per cent. of our export earnings. All the assessments which have been made in recent years indicate that, 307 with the rise of living standards and the natural increase of population, demand is going to go up.
On the importing side, we are really conditioned not only by world prices and the availability of food in other areas, but by our own ability to import in competition with oil, iron ore and all the other raw materials, which, of necessity, have to be brought into this country. In contrast, the amount of food we can grow is much more under our direct control. I most earnestly advocate that, in formulating a long-term policy, Her Majesty's Government should consider whether we cannot be given a plan of the type which the noble Earl, Lord Halifax, asked for in the debate in your Lordships' House last April. He was careful not to ask for a specific plan which told us the exact quantity of the various commodities which were to be produced and the exact price or return which could be expected for them. I think that what he said roughly was that we should know in round figures the quantity of each main product which we intended to grow here, and then arrange to import the balance.
The Government now have complete control over the industry, because, with all the increased security of the new guarantee system, it is still possible, over quite a short period, for the whole of the net profit of the industry to be removed. I am not suggesting that it will be, but it is still possible. I think it is only reasonable that, sitting as they do with that complete control over the future of the industry which is otherwise unprotected, the Government should tell us what the general plan is, because I cannot understand how a farmer, who cannot possibly assess what the nation's requirements are going to be a few years ahead, can be expected to make up his mind if the Government are not prepared to give us even a hint in round terms as to what is expected. I make an appeal for some form of general plan to be produced to give us that sort of information over a period of, maybe, five or ten years.
I should like to make one other comment on the last three paragraphs. We are told that the policy is "to achieve maximum economic output," and in another sentence "what the consumer wants at a reasonable cost," and further 308 on, "maximum economic and efficient production". I find it difficult to know just how that is going to be decided—what is economic and what is a reasonable cost. The tendency, of course, is always to compare the cost of producing something in this country, then to take the import price for the same commodity and make a direct comparison. I should like to suggest that this gives the most misleading answer. First of all, we are operating under conditions where there is an artificial rate for the pound and dollar exchange. We have the most elaborate system of exchange control legislation, and stringent regulations. Those are necessary only because if we did not have them the exchange rate would be something different. Therefore, to take the rate which we have fixed for a number of other reasons, and convert import prices directly on that basis, I suggest does not give the comparative figure which is required if you are going to decide, on that basis, how much food is to be grown in this country.
May I make one other comment in that context? The imported article can be paid for only from the net earnings of the export trade of this country. It makes no contribution to our taxation or to the general level of the economy and the activity of the economy. Anything which is produced in this country bears its full weight of taxation—taxation which is levied on the petrol which is consumed in the tractor, the contribution which the workers make to the National Insurance Scheme, and all the other forms of indirect taxation. It is part of our gross national product upon which the whole of our prosperity depends and upon which the welfare of our country is supported. Therefore, as a matter of fact, I maintain that at an equal price at the port as compared to the farm gate the home grown product is cheaper to us. I am trying to make that point because I think that in determining what is the maximum economic production and what is a fair competitive price these points should be taken into account and it should not be done on this simple arithmetical comparison.
Lastly, and arising out of that, I should like to say that perhaps a long-term plan, such as I have indicated, rather than the long-term policy, would be highly desirable to complete the picture which the 309 Government have given us in this White Paper. Also it would be sounder to base the estimates of what we should grow in this country on our own internal economic system. Looking at what prices and costs are reasonable to bear in this country, and what amount of resources in terms of labour and capital investment we can put into the industry—looking at it from our own point of view and, if necessary restricting imports; and I would go as far as using physical controls on imports (the United States does so, France does so, and Germany does so)—I think it will be extremely difficult for us to get a satisfactory long-term plan which will meet the real requirements of the country unless we are prepared to take that step.
§ 5.57 p.m.
§ THE EARL OF BUCKINGHAMSHIRE
My Lords, like previous speakers, I wish to support the noble Lord who moved this Motion. The noble Viscount, Lord Alexander of Hillsborough, mentioned the difficulties which farming went through, not only between the wars, but before the First World War. I regret to say that I have not the long memory of the noble Viscount the Leader of the Opposition, but I can recall some of the difficulties that farming went through between the two world wars. There is no doubt that recently farmers have been getting restless about the position that farming was reaching. There is no doubt, either, that since this new farming policy was announced, it has give a great boost to farming in general. Certainly farmers that I have spoken to have all welcomed the step that is being taken.
We had a general announcement by the noble Earl, Lord St. Aldwyn, as to when this assistance should be available, and to what the grants would apply. His point about the availability of the grants will be disappointing to many, but I think we can understand that it is difficult to make those grants more retrospective than they are likely to be. The noble Earl, Lord Waldegrave, referred to this point, and I should like, in passing, to add my congratulations to him on his maiden speech. There is no doubt that this delay will cause difficulties in both the farming industry and the building industry, but the noble Earl gave us some encouragement by reminding us that we could get 310 on with repairs and maintenance. We can certainly help the building industry.
What I should like to ask here—and perhaps the noble Lard who is to reply may be able to give me an answer—is this; as the Government will consider provisional proposals, when will the Bill that is to implement these proposals be introduced? My own feeling, and, I am sure, the feeling of many of us, is that the sooner the Bill comes in the better, because we can then get on with the job. It is most important that we should get this Bill as soon as possible. The noble Earl who spoke for Her Majesty's Government listed a large number of types of building that would qualify. There is one further point I should like to ask about, and perhaps the noble Lord who is to reply will be able to supply the answer. Do grain stores come into this category for grants? I feel that point is an important one. The question of storing grain is becoming more and more urgent every day. Obviously, it would be a great relief to a number of people if we knew that grain stores would qualify.
I have heard it suggested that the minimum amount for a job to qualify for the grant is £100. It would be interesting to know if that is so. It would also be interesting to know if there is to be a maximum and, if so, what the amount of that maximum will be. That is working on the lines of the housing grants. I may be wrong—I hope I am; but it would be interesting to know. We have heard this afternoon that tenant farmers will be able to apply for these grants. I should like to get this matter quite clear—and perhaps the noble Lord who will be replying will emphasise this. I understood the noble Earl to say that the tenant farmer will be able to get this grant, on condition (if I may put it this way: these were not the words the noble Earl used) that he takes his landlord with him. I think that that is a point which was made by the noble Earl who spoke on that matter. I think it is very important that the tenant farmer should take his landlord with him; otherwise, we may get into great difficulties.
I am sure that one of the points in this White Paper that we welcome is the fact that both electricity and roads are to be eligible for this grant. I should like to raise another point. At present we do get a grant for water supplies, but it 311 is only 25 per cent. Am I am asking too much that Her Majesty's Government should consider raising that grant and bringing it into line with these other proposals of 33⅓ per cent.? I would remind the Government that some years ago that grant was 50 per cent, but was then reduced. I conclude by saying how much I personally welcome these proposals, and I give the noble Lord who moved this Motion my full support.
§ 6.4 p.m.
§ LORD WISE
My Lords, my first and very pleasant duty from these Benches is to congratulate the noble Earl, Lord Waldegrave, on his maiden speech. I listened to that speech with very great interest, and thought that he was telling us many things that needed to be told. He did not entirely agree with Her Majesty's Government on some aspects of the position. I hope that he will, certainly on agricultural or any kindred subjects, speak to us again, and will not leave it for another twenty years.
At this stage, I do not want to make a long speech, but I want to make it clear that, although there have been only two speakers from these Benches this afternoon, it is not through any lack of interest in agriculture: we are all determined and anxious that our agricultural industry shall succeed, and that farmers and workers shall have a fair reward for their labours in supplying the bulk of our foodstuffs here. But I feel that I should also from these Benches make one or two comments on what has been said by noble Lords opposite. Naturally, the Government are entitled to all the flattery they can get from the noble Lords behind them, but there are one or two things upon which I think we should join issue with them.
The noble Lord, Lord Amherst of Hackney, coming from Norfolk, made what I thought was an unnecessary attack upon the President of the National Union of Agricultural Workers, because I can assure him—and he will probably agree with me—that there is no body in this country which has done more to keep the peace in agriculture and to look after the interests of the men who work on the land than the President of the Union. In my view, the President was right—I read his speech: We both take the same papers—in drawing attention to the £29½ 312 million. It may be, as he said, that the farmers will suffer a decrease of £29½ million in the first year. I do not know what they are going to suffer in the next year, or the year after, or the year after that; but it may be £29½ million in the first year. If they suffer a decrease in their incomes, they will then be perfectly justified, if the agricultural workers make a claim for an increase in wages, in referring to this decrease in their own incomes. So the decrease in farmers' incomes which may arise under the provisions of this White Paper may have an effect upon the earnings of the workers. It may easily be so, because the workers are leaving the land to a certain extent, and it may be because of the unsatisfactory wages conditions.
The noble Earl, Lord St. Aldwyn, gave us full details about the improvements, and I was glad to hear them, because I think it right that we in this House should hear them before they are published. I hope the publication of what he said today will ease the minds of various people as to what the improvements are likely to be. The noble Earl, Lord Buckinghamshire, raised the same point that I was intending to raise with the noble Earl: is there any limit, up or down, to the amount which may be spent on a scheme? Is there a bottom or a top in regard to the money which any scheme can have?
§ LORD WISE
Yes, that is what I mean. That is what I was getting at—either a bottom or a top.
The question of cheap loans has also been raised by the noble Lord, Lord Forbes, and I am inclined to agree about the possibility of the Government working in some scheme of agricultural credits, because my experience of the position after the First World War, when farmers were borrowing money at 6 per cent, 7 per cent. or 7½ per cent. interest, in order to purchase their farms, was that that was the ruination of many farmers. Mortgage interests were terrific, and they were not able, therefore, to put into their productive efforts money which they spent in mortgage interests. It seems to me that the Agricultural Mortgage Corporation and the Lands Improvement Company are bound, at this particular point, 313 to charge heavy rates of interest for the loans that they make. If that is so, then I think the farmers are going to be a little scared of carrying out the improvements which are envisaged in this White Paper.
The noble Lord, Lord Amherst of Hackney, expressed the opinion that these improvement loans were likely to help small farmers. It has been suggested that smallholders in this country are possibly now earning less than their workers. I cannot, for the life of me, see how a smallholder is to find the 66⅔ per cent of capital which is required for the improvement to be carried out. He gets his 33⅓ per cent. grant from the Government. Where is the rest to come from? If he has the rest, it is, of course, coming out of capital which he should be using in the cultivation and production of foodstuffs. The noble Viscount, Lord Bledisloe, looked in vain for the subject of cooperation in the White Paper. I looked in vain for the word "stability" in the White Paper. Support was mentioned: the propping up of the industry might have been mentioned; but the key words upon which the Agriculture Act, 1947, is founded, the stability of the industry, are left entirely unmentioned in this White Paper.
The noble Lord, Lord Melchett, referred to the concluding paragraphs of the White Paper dealing with long-term policy. I entirely agree with him. I think that in those paragraphs the Government are dodging the issue; they are dodging their obligation which is to supply the foodstuffs necessary for the benefit of the population. How can a farmer in Scotland, or a farmer in Wales, or a farmer in East Anglia, decide, as it is suggested he should decide in these concluding paragraphs, what in the national interest he should grow? What should be grown and what should be produced in this country is something upon which the Government must give a lead. In these particular paragraphs there is no possible lead from the Government as to what is required for the benefit of our people I know that we object to being told that we have to grow so many acres of barley or wheat, but we look for a lead from and the co-operation of the Government in this respect. I hope that that will be forthcoming.
Many noble Lords opposite have referred to the long-term nature of the 314 proposals. If noble Lords will look at paragraph 18 they will find mentioned the term of four years. There is uncertainty as to what may happen at the end of those four years. What shall be done is in the hands of the Government. Four years is not a long term; it is not the span of a Government if it continues in office for its allotted life. I was hoping that the long-term plan of the Government would have been extended in certainty, if I may use those words, and would have been for a longer period than four years.
With regard to the White Paper, I am afraid that I stand absolutely unrepentant on the question of stable prices for our commodities. This White Paper perpetuates exactly what we are suffering from at the present time—the uncertainty of our markets and of our prices. So far as the industry is concerned at the moment, guaranteed prices and assured markets are a fiction and not a fact—the noble Lord shakes his head but I will prove in a moment that they are a fiction. What we farmers want is to know that for what we produce we shall receive fair payment. All other industrialists do. Every person who produces anything says. "That shall be the price." Not so in farming. We are dependent upon the whims—I do not quite know what other word to use—of other people who fix our prices for us. These prices go up and down, as I will prove in a moment, in an extraordinarily stupid and uncertain manner. The system of deficiency payments and individual guarantees, of rolling averages and whatever you may like to call them, is failing dismally.
I am certain that the failure which has been experienced during the last year will have cost the Government a pretty penny when the bill comes to be reckoned up. Administration has been costly; there has been a heavy charge upon the taxpayer by reason of the high deficiency payments which have had to be made, and, what is as important to my mind, there has been a low price for our agricultural products. Doubtless excessive profits have been made by dealers and others who go into a market at Christmas time and pay extraordinary prices for cattle, no doubt in order to get relief in regard to their income tax position.
To my mind this White Paper does not deal with the crux of the matter at all; 315 it simply carries on. It eases the situation year by year, but the same thing applies, and there is no possible guarantee of what we shall get for our products. The noble Lord shook his head a moment ago when I was saying that there was no certainty in anything at all. Let us look at the fluctuation of prices. I have picked at random two cuttings from the journal which has been mentioned many times this afternoon—it may not be recognised by the greenness of the paper—but at any rate here are market reports in regard to cattle. I am interested mostly in the decline of prices of cattle. I have here reports of October 22 and 24. One says:Prices for fat cattle continued to drop last week. On an average lightweights"—I want to deal mainly with Grade A light-weights—fell by around 5s. per hundredweight, but heavyweights showed a much steeper decline.That was in October. The report goes on:Increases of 1s. and 2s. per hundredweight occurred at Hereford and Lancaster, and 9s. at Penrith. At Bury St. Edmunds there was an exceptional leap upwards of 23s. for lightweights.That is one week. In the next week you get the same sort of thing—namely:Prices of lightweight cattle continued to drop in a minority of Monday's markets.This was in November.
So the game goes on. Week by week and market by market, prices rise and fall. If, therefore, the farmer meets a bad market, as it is possible for him to do, he does not obtain the guaranteed price. So that your Lordships may see what we suffer from, I have one or two pieces of information. Here are the prices at Banbury market, which the noble Earl will know is a very big market. On November 22, Grade A lightweights averaged 97s. per cwt. On November 29, they were 96s.—they had gone down 1s. On December 6, they had gone up to 102s. At the Christmas market they naturally jumped up to 129s. or 130s.; but for those periods during November and the beginning of December they were dropping steadily from round about 100s. down towards 90s.
Then let us look at Norwich. On December 29 they averaged 148s. per cwt., which, on the week, was a rise of 316 28s. per cwt. Who, in the farming industry, can hope to plan his business on happenings of that kind, when a similar beast in one week makes 28s. per cwt. more than it would have made in the previous week? Now prices have jumped and I see that last week it was 141s. at Banbury and 143s. at Kings Lynn. Imagine the position of the man who has got rid of his fat cattle at the bad end of the year and sees these prices rise. He does not gain by the deficiency payments because he is shillings out, for as the price rises, so the average increase in the deficiency payment decreases. Yet as he sold his cattle on a bad market, he suffers.
Here is another example of what is, in my view, the stupidity of the markets and where we ought to start dealing with this problem. I have here particulars of two pens of similar lambs, taken out of the same flock with the same hurdles and just run in—not sorted. One pen was graded out at 52 lb. each, the other pen of similar lambs was graded at 50 lb. each. Anybody who thinks seriously about it would have thought that of those lambs from practically the same flock and practically the same in weight and grading, the 52 lb. lambs might have made perhaps 2s. more than the 50 lb. lambs: but such was not the case. The 52 lb. lambs each made 14s. less than the 50 lb. lambs; therefore, if one price was right, the other price was wrong. The long and the short of it was that somebody got hold of lambs possibly at a price cheaper than the proper price. One came out at about 3s. 1d. a lb. and the other at 3s. 7d; yet they were similar lambs, little different except in weight. How can a farmer, when he takes his cattle, sheep or lambs into the market, expecting a fair price, put up with that kind of thing—to go home and find that somebody else has had his lambs at 14s. a head less than they should have paid? I could go on to various other things, but I want to come back to the position when we used, as in war time, to send our stock to market. We did not need to go ourselves to the market because we knew the stock would be graded satisfactorily and weighed and sold at a controlled price.
EARL ST. ALDWYN
My Lords, if I may interrupt the noble Lord, may I ask how he proposes to have these absolutely 317 controlled prices when at certain times there is more than the market requires? At the time of which he is speaking, in war time, there was a shortage and rationing. Does the noble Lord want to go back to rationing and complete control right the way through? If so, will he please say so?
§ LORD WISE
My Lords, had the noble Earl not jumped up, I was just coming to that point. If Her Majesty's Government can decide, with the co-operation of the Farmers' Union, on various factors which have to be, taken into consideration in regard to guaranteed prices and deficiency payments, then Her Majesty's Government can decide, in co-operation with the Farmers' Union, what should be a fair price for a fair beast, according to weight and grade. If that can be done in regard to the guaranteed price, then the controlled price can be fixed, just as we used to have it. Her Majesty's Government do it now with sugar beet. The price is fixed and payment is made for sugar beet and the grower knows exactly what he is going to get according to the percentage of sugar (the noble Earl laughs; I do not know exactly how they arrive at the percentage of sugar but I will leave at that) and according to the dirt tare. There the producer is batting on a certain wicket, but he is not on a good wicket in regard to livestock or cereals.
During the last few days we have heard of the new payments in regard to wheat. I believe the first payment was 4s. 6d., which was on the standard price of wheat. Here the price is being fixed according to the month in which is sold and according to the standard price of wheat, which was 27s. per cwt. in that particular first period. With a difference of 4S. 6d. the price might average out at about 22s. 6d. per cwt. For the second period the price fixed by the Government is 29s. and the payment is a fraction over 6s.; and, in effect, the average for that week is still about 22s. But, so far as I can see, if the Government pay 4s. or 4s. 6d. for one period, then, in the ordinary accepted sense of things the merchants should be paying more for their wheat in the second period when the price becomes some 29s. or 30s. But I am not certain that they are paying more, and that is what I object to. I do not want to weary the House longer, but I am certain in my own mind that, whatever you do in regard 318 to this White Paper, whatever you do in regard to what you describe as your long-term policy for years, sooner or later, in order to ensure stability and fair shares for the agricultural industry, you will have to go back for a period to controlling the price the producer receives for his commodity.
EARL ST. ALDWYN
Before the noble Lord leaves that point, do I understand that he is against this White Paper?
§ LORD WISE
I am not in favour of deficiency payments. I want to know exactly what I am going to receive for the article I produce. I do not want to be mixed up in two or three different cheques for the same item. I think it is not beyond the wit of man to devise such a scheme as I suggest. There is just one further small point which is troubling some of us in Norfolk, as the noble Earl will know, and that is the export of fat cattle to France. I do not see why we, as consumers, cannot have an opportunity of consuming all our home products. Now we export home products to France and we import from the Argentine—that is to say, from the dollar area. To me it does not make sense.
§ 6.31 p.m.
§ LORD WALPOLE
My Lords, at this late hour I do not intend to take up much of your Lordships' time, but I felt that I could not let the occasion pass without supporting Her Majesty's Government and expressing my thanks to them for producing what promises to be a milestone in the history of British agriculture in the form of the long-term assurances set out in the White Paper. It was last April that I had the honour of addressing your Lordships for the first time during a debate on agriculture, and I then put forward a plea for a long-term policy. I would not for a moment claim the credit for initiating the idea—as the noble Viscount, Lord Alexander of Hillsborough, said this afternoon, it has been put forward since about 1951—but I like to feel that I at least had a share in it. It is always easy to criticise Her Majesty's Government, but I find it a pleasant task to-day to congratulate all those who have clearly taken a great deal of time and trouble in formulating these assurances.
An aspect which appeals to me particularly—and I am sure I shall be voicing the opinion of a large number of farmers 319 when I say this—is the one set out in paragraph 11, whereby the guarantees fixed at the annual review will relate to the immediately succeeding harvest, instead of the harvest of the following year. This, to my mind, is a great step forward, because, in the past, the Price Review referred to the next harvest but one, and by the time that was reached the situation, it was more than likely, had completely altered and the price structure was quite out of date.
Now, at the risk of sounding ungrateful, I am going to ask Her Majesty's Government whether they will do something else. I am going to ask them whether they will take immediate steps to rectify a matter which I consider nothing less than a national scandal. I refer to the attestation scheme, and I would urge the Government to press forward with this scheme with the utmost rapidity. We have been told, encouraged, and even threatened, that we must increase our efficiency. In paragraph 30 of this White Paper on long-term assurances it says, and I quote:In present circumstances the Government's responsibility is to provide the conditions in which an efficient industry can operate with confidence in the future and that will continue to be a major Government objective …I consider that to have one's cattle attested is of paramount importance, more especially with regard to the health of the nation. To produce milk and beef of the best quality is only what the public expect, and rightly so. Those of us who have had our herds attested run the grave risk of infestation from cattle on neighbouring farms, and those who sell their high quality milk to the Milk Marketing Board have it thrown into the pool with disease-ridden milk, where it is subjected to the indignity known as pasteurisation. Why, if I may ask, all that unnecessary expense? Is it a wonder that a large amount of the free milk which is supplied to our schools remains undrunk? I am fully aware that there are already areas in this country which are attested, and that plans for the whole country are going forward—but much too slowly. I have heard it said that it will take ten years. That, I consider, is too long. Half that time, or even a quarter of it, is long enough, and now that the Government have announced terms for the Farm Improvement Grant Scheme, it should be given top priority.
320 We are told that the production of liquid milk has now reached the limit of demand, and that surplus milk will have to be sold for processing at a greatly reduced price. I think that this matter should be tackled immediately and that those farmers—and they have had, after all, ample warning—who do not and will not (some, indeed, never intend to) become attested, should have their licences removed and they should transfer their attentions to some other branch of farming. I believe that in this way the milk situation would be greatly relieved and immeasurably improved.
§ 6.38 p.m.
LORD STRATHEDEN AND CAMPBELL
My Lords, I am wholeheartedly in favour of the scheme of long-term assurances. I will not weary your Lordships by repeating the large number of arguments which have been produced in their favour and which I have gradually crossed off my notes. There is one point, however, which I should like to mention. There has been so much praise of the assurances that I rather wonder whether, possibly, they are not expected to do almost too much. As I have said, I wholeheartedly agree with them as a long-term policy, but they cannot deal with the quick and unexpected falls in prices, as is shown in the White Paper itself, in paragraph 19, which deals with the Special Reviews which are still to be kept in being for this purpose. Special Reviews I do not like either, because they savour too much of a hand-to-mouth method; but until complete stability can be arrived at—which is almost impossible—these Reviews will, I imagine, have to be continued. That was shown especially in the very rapid, and nearly disastrous, fall in cattle prices, which was put right by the Special Review of last year. I hope that a Bill dealing with the dumping of cattle in this country, which I believe is now going through another place, will at least help to put that matter right.
Turning to the second part of the White Paper, which sets out the farm improvement scheme, there are two points I should like to put to my noble friend who is to reply. The first deals with electricity, which is included in paragraph 25. I rather wondered, when my noble friend said that fittings would not be eligible for grants, whether under 321 "fittings" he included, for instance, electric motors, which are of the greatest importance. Their importance is shown by some figures which I have from Scottish Agricultural Economics which, I would say, with apologies to my noble friend Lord Dundee, I have brought with me. These figures are remarkable. In 1942, there were 4,600 electric motors on the farms; in 1954, there were 17,000, and in 1956, 21,500: so that their importance is undoubtedly realised by the farming industry. I would say that they are fixed equipment and I hope that my noble friend will be able to include them in other parts of grain-storing equipment as being eligible for grant.
EARL ST. ALDWYN
My Lords, may I ask my noble friend whether, as a landlord, he would be prepared to provide electric motors for his tenants?
LORD STRATHEDEN AND CAMPBELL
My Lords, I think my noble friend will agree that that would depend on the type of lease; but for some tenants I say frankly, No; I would not. Another thing which my noble friend mentioned was that Her Majesty's Government were continuing the grant for the construction of silos. I should have thought that the introduction of these long-term improvement schemes provided a good opportunity to amalgamate some of these individual grants, especially the smaller ones. It takes the farmer a great deal of time and research to find out what particular grant covers any particular improvement, and I thank it would be a great easing if something on these lines could be done.
Before sitting down, I should like to endorse what my noble friend Lord Forbes said about the work done by the agricultural colleges in Scotland. I know about this work, because I have the honour to be President of one of them. Their field workers do an enormous amount in advising and helping, and to my knowledge a great deal of use is made of these people by farmers who seek expert advice. I am quite sure that these long-term assurances will have a great effect on the general confidence in agriculture, and I wish them all success.
§ 6.44 p.m.
§ THE EARL OF LONSDALE
My Lords, no one in any sphere of agriculture can do anything but approve of the 322 broad principles of the long-term assurances which have been put before us, and, as a farmer, I would associate myself with the public expression of gratitude of Sir James Turner to Her Majesty's Government for producing these long-term assurances. I am sure that they have increased the confidence of the agricultural community in our present Administration. Our present agricultural learn are to be congratulated on their achievement, and also for not having been "reshuffled." and for being left with us to look after a sphere with which they have dealt so capably.
The fundamental importance of the commodity guarantees can be found in paragraph 18, which sets out the particular and general assurances as regards percentages until 1962–63. In effect, farmers now have the "green light" for planning for five years ahead, which, whilst I agree that it is not a long time in which to plan, is certainly better than no time at all, as we had in the past. Now, subject to minor alterations in the economics of the production of any particular commodity, prices are to be steady. The noble Viscount opposite talked of wheat being altered in one year by 6s. 8d. a ton, disregarding cost changes. As a farmer, I should not object greatly to a difference of 6s. 8d. a ton in the selling price of my wheat. I think it is worth rioting that the total guarantees cannot be reduced, disregarding cost changes, by more than £29 million in any one year and that, equally, the value that has been set on the increased efficiency of agriculture is £25 million a year; so that even if the guarantees are reduced by their maximum amount the reduction is almost covered by the farmers' increasing efficiency.
The farm improvement scheme is certainly a bold attack on the problem of worn-out and inadequate fixed equipment on so many holdings, though it only touches the fringe of the problem of the less economic small farms. In my part of the country, in Cumberland and Westmorland, the system is essentially grass farming, where the chief product is milk, with livestock coming afterwards; and most of the farms in these two counties are family holdings not employing much paid labour. Whilst we welcome the long-term assurances, there is some reserve and even, in some cases, apprehension. As I 323 say, by and large our farms are occupied and worked by families. They range from good fertile farms, in the lowlands and valleys, to the cold and damp high-lying places in the Pennine and Lake District fells. Most rely on milk for the greater part of their income. It is just such farms as these that are the problem farms in British agriculture. Long-term assurances hardly touch this problem. Many families operate on the borderline between a reasonable standard of life and poverty. In many cases, occupiers live in something that is hardly known in England nowadays, in grinding poverty. I could take your Lordships to some farms in Cumberland and Westmorland which are a disgrace to the country.
We have heard that, nationally, we are over-producing milk; we are producing more than the consumer can drink or will drink. Unfortunately, there is great anxiety in the minds of small producers for whom it is not economic, or not desirable, to turn to anything else. I have heard it suggested that they should turn more to pigs and poultry, but we have also heard that this country is already producing as many pigs and as much poultry as it can afford to import feeding-stuffs for.
What is the future for so many of these small family farms? Disregarding highly specialised and intensive smallholdings, small family farms—that is, farms under 100 acres—represent about one-third of the holdings, and a quarter of the acreage of England and Wales. If we are to accept a net income of £500 a year as a justifiable reward to a family farmer for his labour and the capital he employs, it is true to say that about 40 per cent. of them (these are from the Cambridge University research figures) have a net income of less than £500 a year. That, as I say, includes both their labour and some interest on the capital they have in their businesses. In my experience, while many of them are probably credit-worthy, most of them have not the capital to add to the fixed equipment on their farms. While there is a new farm improvement scheme, and the other continuing capital grant schemes—I am talking of the Livestock Rearing Act Scheme, which is as important in the North as this scheme will be—I do not think that much capital will be spent on 324 small farms. So there will be little done to make them more productive through equipping them with labour-saving buildings. I think that, as usual, it is the bigger and richer farms which will benefit most from the capital improvement scheme.
Small farms have a great value nationally, from the social point of view, although I do not think there is any greater production per acre, and certainly not per man and per unit of capital, than on the larger farms. But they do keep the countryside populated, directly, or indirectly, through the shops, merchants and rural industries whose services, as small farmers, they need to employ. But, most important, particularly in livestock areas, these family farms have a certain amount of surplus members of their families—extra sons they cannot employ at home—who often go out as paid labour on other farms. They are, without exception, trained comprehensively on family farms as highly-skilled general workers and excellent stockmen, of whom too few are to be found nowadays.
Long-term assurances qualify the grants to small farms. Paragraphs 26 and 27 of the White Paper suggest that grants should go only to "economically viable units". I should like to know what an "economically viable" unit is. How can it be decided whether a farm can yield a net income of £7 1s. per week, or whatever the agricultural wage may be at the time? The only Government publication that touches on this problem that I have seen is the Mid-Wales Investigation, which deals only with Welsh upland farms. They recommend that a whole-time farm should be able to carry 500 hill ewes, or an equivalent number of stock. I know farms where there are, perhaps, only 200 hill ewes, and nothing else, but where the farmers make a reasonable income. It will be interesting to see how it is to be worked. These paragraphs about the "economically viable units", and those dealing with the aid to amalgamation, fill many of these proud and independent farmers with a good deal of apprehension. I would ask the Government whether they think the farm improvement scheme is going to help small farmers to inject capital into their fixed equipment to any considerable extent.
325 The solution to the problem, as I see it—and it is widely recognised—is that more independent, vigorous and intensive farming should be practised on many of these small farms to increase the output per acre and per man, and thus give a larger margin of profit. This requires improvement to fixed equipment to provide for the saving of labour. It requires a good deal of education of some of the older and more set small farmers. I suggest that, rather than employing theoretical, college-trained advisory officers, as the advisory services so often do, and sending out circulars and giving the farmers highly technical advice, which they may well not understand, if they could employ a number of these farmers' sons who are scouring the country looking for farms, which it is impossible to obtain, due to the shortage, who could give sound practical advice, they would achieve much more. Some amalgamation is obviously necessary, and probably a 40-acre farm is small enough, if the land is good. But many farmers augment their incomes from other occupations: in some areas it is mining, and in others it is taking in holiday-makers and lodgers in the summer. I think it would be an interference with freedom if there were ever a question of compulsory amalgamation of these small farms, or, for that matter, of any others. But it is encouraging that there is some move towards amalgamation.
Practically speaking, if these farms are to become more intensive, what product can they produce more of? As I have said. I think pigs and poultry are "out" and it gets back to grass and milk. The increase in milk production on small farms can be only at the expense of production on larger farms. I know that it sounds arbitrary, but I think it would be logical to encourage larger farms to produce more beef and rather less milk; to pay a differential price for milk, paying substantially more for small daily wholesale deliveries and rather less for large daily wholesale deliveries. It would give the small farmers a boost to increase their milk production, and would discourage large farms from producing even larger quantities of milk and encourage them to produce more beef.
So far as capital is concerned, I agree with what has been said by many other noble Lords, that the agricultural loan 326 companies to which recourse is advocated, are an expensive source of capital, particularly for a small farmer. The interest rates are high; and not only that: the initial charges for obtaining the loan are considerable by the time the lawyers have prepared the documents and everything else. For the small farmer to get a loan of £500 it might cost him another £50, £60 or £70. If there could be low-interest-rate Government loans to agriculture expressly for fixed equipment, I believe that it would help these small fanners. Incidentally, it would also give a certain amount of Government control over credit for fixed equipment. After all, there is a precedent for this: there are forestry loans for tree planting. As I say, the Government would do a great service, and would achieve surprising results, if they would tackle the problem of these small farmers. These small family farmers number a third, or at least 100,000, of the agricultural holdings in the country, comprising upwards of 6 million acres.
We have had a Royal Commission on Commons which has investigated a much less essential agricultural problem. Commons cover only 2 million acres. If the problem of the small farmers—and it is a serious problem—is little understood, why not a Royal Commission to look into it from its social as well as its economic aspects? To conclude, I welcome these long-term assurances as being a real contribution towards the achievement of a stable, highly productive and less dependent agriculture, but I do ask Her Majesty's Government to do more to tackle the serious and urgent problem of the small family farmers.
§ 7.3 p.m.
My Lords, I beg to support my noble friend, Lord Amherst of Hackney, in his Motion, and n doing so to congratulate Her Majesty's Government and Her Majesty's Ministers on behalf of the farming community for this bold measure which they have outlined to us in the White Paper we are discussing this evening. I should also like to express our congratulations to Her Majesty's Minister of Agriculture, Fisheries and Food in another place on his reappointment, and to my noble friend Lord St. Aldwyn, in your Lordships' House, on his reappointment in Her Majesty's Government. To the 327 farming community, I am quite certain that this is a symbol of confidence and continuity that we wish in these times, and it is most popular that they have been so reappointed.
In the course of this lengthy debate in your Lordships' House, we have heard a maiden speech by my noble friend Lord Waldegrave which I am certain will be remembered and re-read many times in the future. We have also heard a speech from that grand old man of agriculture, my friend and kinsman, the noble Viscount, Lord Bledisloe. I support what he has said and what the noble Viscount, Lord Alexander of Hillsborough, has said with regard to cooperation. Her Majesty's Government may be able to advise farmers to see whether they cannot do something more in the line of co-operative societies in the near future. I am certain that something will have to be done in this direction if we are to compete with the farming community in European countries and on the other side of the Atlantic, which have been developed to such a tremendous extent.
It should not be forgotten, I feel, that if a farmer does not wish to take a gamble, he can put his stock at the disposal of the Fat Stock Marketing Corporation—something on the lines of a "Co-op"—and receive a price which he knows in advance. That is a trend, and possibly a successful trend, and Her Majesty's Government have indicated, not only in this White Paper but in other publications, that they will support all such co-operative ventures of all the marketing schemes and organisations, in order to give that stability which the farming world so much desires. I believe that, with this confidence, stability has come much closer as a result of this White Paper.
I bring only one point before your Lordships this evening. I feel that the landlord is a much maligned person in these days. I must say that I have an interest, but I feel that I speak on behalf of many thousands of conscientious and hard-working landowners who are endeavouring to do the best for the holdings of land which they possess. In 1938, the landowner had invested some £800 million capital in land and equipment. By 1953, that investment had 328 increased to £1,850 million. That is largely due to the decrease in the value of money. I do not think it could be argued how that figure is arrived at, but I should say that the capital value of the land and the buildings may be claimed to have roughly doubled. But the interest, as we have heard already this afternoon, is under 1 per cent. on that sum.
Equally, the tenant is becoming a senior partner in this agricultural partnership. In 1938 his capital invested was £448 million. In 1953, we find that he invested £1,615 million, very nearly equal to the landlord's share. The tenant is given an increasing slice of the agricultural prices cake year by year. He is able to reap the benefit of the guaranteed prices and the supports about which we have been speaking this evening. But there is no such increase to the investment income which the landlord is able to receive; yet, at the same time, his costs are directly dependent upon the rules and decrees of the wages boards which equally affect the tenant.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
I am most interested in this. To enable us to get a better view of this matter, could I ask the noble Earl whether he has obtained figures of the increase in rents from landlord-owned property in the same period, and how it comes about that, if there are reasonable increases in rents, the return is still only 1 per cent.? I am not criticising; I am simply anxious to get information.
I believe that rents have very nearly doubled since 1938. I have found the reference, and it has been given as 1 per cent. on the capital invested. That is the income to the landlord. It would seem disparaging to say so, but figures can be made to prove almost anything. There is a reference for it, and I will give it to the noble Viscount.
But £225 million is the price which the taxpayer is paying to the farmer as a subsidy. That relates to the year 1954. That is the extent to which agricultural goods are being provided for by the taxpayer. The net profit on farms during 1954 has been given as something in the region of £224 million. It can be argued that the taxpayer is just about providing the net profit which the farm holding is 329 earning. Of course, that is not quite accurate for every single case; but, nevertheless, it is most remarkable that as the subsidy upon agriculture rises, so in exactly the same proportion does the net profit rise year by year. That has been so since the Act of 1947. It seems that there will be a great chance for Her Majesty's Government, when they bring a Bill before your Lordships, to find some ways and means by which the small landlord—I am not talking about great landed estates; I mean a landlord with, perhaps, 400 or 500 acres split up into three or four different farms—will be able to take advantage of the rising prosperity that will be derived by the agricultural industry as a result of these moves. I am not absolutely confident in the Customs Duties (Dumping and Subsidies) Bill which is also referred to. I hope that when this Bill comes before your Lordships it will be possible To make quite certain that a fair market price in the country of origin really is a fair price in this country when the goods arrive here. Overseas, there are families who work on the land from dawn until, dusk. They enjoy working there. Their produce is sent to a "co-op." and it is then sold in bulk to importers in this country. It may well be a fair price in the land of origin, but is it a fair price when finally it turns up here, where our wages and costs are very largely controlled from year to year?
Lastly, I hope that the noble Lord, in replying, will be able to give an assurance that the protections that are now becoming possible against that dread disease, foot-and-mouth disease, will be carried out with all urgency. It is a premium of some £800,000 every year to carry out the slaughter policy of Her Majesty's Government. That policy may be right; it may be wrong. Other countries are finding great: success with new serums, most of which have been developed and, they say, approved in our own Pirbright Centre. I hope that it will be possible to show that foot-and-mouth disease in the near future can be abolished, and that that is the policy towards which we are working. I beg to support my noble friend Lord Amherst of Hackney in his Motion and, in so doing, to thank Her Majesty's Government and noble Lords who have contributed to the debate to-day.
§ 7.13 p.m.
§ LORD CHESHAM
My Lords, I think the debate has clearly shown that the House approves the Government's efforts to provide a stable foundation for our home agriculture, and that we have succeeded in that object. Consequently, I am the more readily able to express my own hope that your Lordships will accept this Motion, and to express my thanks to all those who have spoken in support of it, in some degree or other. Most noble Lords, as I have said, have spoken in support, although many of them have had some qualifications to make on many subjects. Your Lordships will, I feel, forgive me if, at this hour, I do not try to touch on every one of those subjects and answer every question which has been raised; otherwise we should be here for a very long time. But I will do my best.
I particularly welcome the support of the noble Earl, Lord Waldegrave, in his most notable maiden speech. If I may, I should like to call it the intelligent support which he gave to the Motion in a most capable and well-thought-out speech. He has shown himself to be well up to the rather high standard of agricultural debate in your Lordships' House. We hope that he will continue to speak thus for a long time. I even find a little encouragement from the remarks made by the noble Viscount, Lord Alexander of Hillsborough. I know that he is much too good an agriculturist to view a measure like this and damn it with faint praise, but he will forgive me if I put it this way: that he rather praised it with faint damns. To find those damns he had to go well back into the past. He gave us a diverting survey over the last forty or fifty years. I know hat he will forgive me if I do not follow him in this, because, so far as my colleagues and I are concerned, our eyes are on the future.
§ LORD CHESHAM
My noble friend Lord Amherst of Hackney referred to a point which I should like to emphasise. The proposals set out in this White Paper are a development and not, as was suggested, a change of policy. The Government have repeatedly pledged their support for the principles of Part I of 331 the Agriculture Act, 1947, and have promised that any changes in guaranteed prices will be made only gradually, to enable farmers to adjust their plans. Fears remained that sudden changes in the guarantees might be made after any Annual Review, and we were very anxious that there should be confidence in the future. We therefore set about the task of allaying these fears by strengthening the Agriculture Act at points where experience had shown that it was weak. Consequently, the proposed assurances are merely the implementation of promises previously made.
Your Lordships will remember that the Act provides for the fixing of crop price guarantees at each Annual Review for the harvest of the following year, and for the fixing of minimum prices for livestock and livestock products some two to four years ahead. In practice, however, the minimum prices so determined have not proved effective, because there has been no mechanism for taking account of changes in circumstances, and particularly cost increases, between the time when the minimum prices are determined and the time when they become operative. Our new assurances set a limit to the reduction that may be made, year by year, in the guaranteed prices for each commodity, which should be much more effective in keeping the minimum guarantees up to date. In fact, the minimum assurances will be related year by year to prevailing levels of guarantees, which will have been determined in the light of all relevant factors, including movements in costs. Moreover, they will also extend to crops, as well as to livestock and livestock products.
Further, the assurances on individual commodities are, of course, accompanied by a general assurance which limits the scope for reduction in the total value of the guarantees following any Annual Review. This again will serve to reduce the element of uncertainty that is inseparable from the holding of a Review each year. It has been said that these assurances still leave room for a substantial reduction in the total value of the guarantees. This is a point that the noble Viscount made. Of course, this is quite true, unless—and this is a most important qualification—there has been a significant increase in costs since the last Annual 332 Review. If there has been a substantial increase in costs, the minimum assurances may well mean that the total value of the guarantees must be increased. If there has not been such an increase, it would clearly not be right to rule out any possibility of a significant reduction in the guarantees.
The farmers' leaders have fully recognised, as do we, that scope must be left within reasonable limits for a so-called "under-recoupment" of costs. The limits that we have set for this purpose are, in fact, very reasonable, bearing in mind the many factors that have to be taken into account at a Review, such as production and marketing requirements, exchequer liability and increasing efficiency. But even if our consideration of all the relevant factors led us to decide to reduce the total value of the guarantees to the minimum allowed by the assurances, the effect on the industry's net income would be a great deal less than that reduction. This is because the industry's net income will always reflect the benefit of increasing efficiency and any other factors tending to increase that net income. The farmers' representatives also agreed with us on the level at which these minimum guarantees should be fixed. In doing so, they recognised, as I am sure your Lordships have, that there must be room for the Government to discourage expansion of particular products if output is in excess of marketing needs, while perhaps encouraging the production of others.
I should like to direct your Lordships' attention, however, to one way in which the two aspects of our long-term assurances act upon each other. For any individual commodity we may reduce the guaranteed price in any year to 96 per cent. of its level in the previous year—the 4 per cent. which the noble Viscount mentioned. Assuming, however, that there have been no cost decreases since the last annual Review, we cannot make this reduction for all commodities, because we are bound to maintain the total value of the commodities and production grants at 97½ per cent. of their value in the current year. There can be no doubt that these assurances together represent a very real limitation on any action that the Government would take on an annual Review, and should be a real source of confidence to the industry as a whole.
My Lords, the time is now approaching for the next set of annual discussions with 333 the farmers' representatives. It would be improper for me to speculate to-day on the possible outcome of these discussions or to enlarge on the problems which are bound to be raised, although I am going to do my best in a moment to answer the questions that the noble Viscount put.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
On the general question, may I say that I am much obliged for the detail of the reply; in fact, I must congratulate the noble Lord on the obvious joint Treasury and Ministry of Agriculture phraseology of the reply. But when you come to consider these annual Reviews and the special circumstances, could we be assured, having regard, for example, to our difficulties in beef and in milk, that all the relevant circumstances will be taken into account? If you are losing money on milk to a great extent, because of the degree to which it is going into manufacture, will you take into account the fact that at the moment the New Zealand farmer gets 357s. for his butter while the present market price of New Zealand butter in London is 262s.? The same point applies with regard to Argentine beef. If you are going to deal entirely with internal cases and not take into consideration these other relevant factors, you may depress further and further ahead the whole situation of the farmer. I am anxious to know that these things are going to be taken into account.
§ LORD CHESHAM
My Lords, I am fortunately able to make the answer quite short—namely, Yes; all relevant factors will be taken into consideration. I was going on to another point that the noble Viscount made, but before doing so I want to repeat and make perfectly clear that, although the new legislation on long-term assurances could not possibly be brought into operation in time for this year's annual Review, nevertheless the Government will regard themselves as bound by these undertakings at the Review.
The noble Viscount expressed some uneasiness on the subject he has just mentioned—that all increases in costs experienced by farmers will be taken into account in calculating the minimum total of the guarantees. He mentioned particularly the question of fuel. As I have said, cost increases will be calculated for this purpose in the same way as they have 334 been calculated for annual Reviews in the past. They will, of course, relate to the cost of production of the guaranteed commodities and not all agricultural commodities. The wide range of items that are taken into consideration may, I think, more conveniently be seen from the table which is attached to the White Paper that was issued after the last annual Review. Of course, these items would include fuel.
The noble Viscount then asked a question on the subject of the price of wheat. He asked whether the price of wheat for the 1957 harvest will be increased to bring it within 4 per cent. of that for 1956. I think that was the gist of the noble Viscount's question. The answer is, Yes. The Government have said that at the 1957 Review they will observe the assurances that they have given. They will, therefore, have to look again at the prices for crops at the 1957 harvest; and the price of wheat, and incidentally the price of rye also, will have to be increased to at least 96 per cent. of the price in 1956. I think that answers the noble Viscount's question.
The noble Earl, Lord Waldegrave, mentioned the point about doing work on one's own farm and the difficulty of extracting the costs from one's records in order to prove them to the Ministry. I should like to say, quite briefly, that the Ministry is now engaged in working out a simplified procedure which will make it easier for the farmer to extract his costs. The noble Lord, Lord Amherst of Hackney, was one of the first noble Lords to mention credit. He had some worries in regard to that matter, as had several other noble Lords. As was said in the White Paper, the Government have obtained an assurance from the Agricultural Mortgage Corporation, the Scottish Agricultural Security Corporation and the Lands Improvement Company, that in general no credit-worthy owner may expect to find it difficult to raise a loan at current interest rates to cover the major part, if not all, of his share in the cost of an approved scheme. There are similar facilities under a scheme for agricultural development loans administered by the Ministry of Agriculture in Northern Ireland. With the undertakings given by these institutions, I think there ought not to be any reasonable cause to fear that a shortage of long-term credit will obstruct the progress of sound schemes.
335 Apart from the credit institutions, a good deal of finance is, I think, provided privately by local people—landlords, to a certain extent. Although I have no figures available, there is good reason to feel that private mortgages account for quite a high proportion of credit available to owners, and I should like just to mention that the grants we are talking about are themselves, in effect, a rather cheaper form of credit, in that an owner who is to put up a barn, shall we say, in having to pay interest on only two-thirds of the cost of it, is in fact obtaining the full value and paying only the interest on two-thirds, which has the secondary effect of reducing the interest rate to him.
§ LORD CHESHAM
My Lords, that was what puzzled me. I could not make out how a man could lose the interest on one-third when it was being provided for him.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
May I put it in this way? It is usually recognised that if one has a certain amount of capital out at interest and decides to put it into a venture as a new investment, in order to get some help from another quarter, until that new venture begins to pay, one is losing the current interest that one would have had on (in this case) the two-thirds capital invested in something else.
§ LORD CHESHAM
My Lords, I certainly would not accept the argument that many people are going to find two-thirds of the cost of a capital project merely in order to get one-third off the Government just because it is available—which is rather what the noble Viscount implied. I should have thought that if a man was going to spend money on a barn he would presumably be satisfied 336 that that course would pay him better than leaving the money out at interest. Exactly the same thing applies to the grant.
§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, the man sacrifices the immediately-invested interest and invests as a whole, in the hope that his investment in that will bring him back a better return.
§ LORD CHESHAM
I do not know, but perhaps the noble Viscount would care to continue that discussion outside your Lordships' House.
§ LORD CHESHAM
The final point I wanted to make on the subject of credit was to those noble Lords who have advocated the idea of some national credit institution. I can say that ideas on these lines are being examined by my right honourable friend at the present time, with the National Farmers' Union. My noble friend Lord Forbes, who unfortunately has had to leave, had many points to make on the subject of planning, and I readily agree with him that we must take steps to see that the improvements for which the grants are payable are sound, properly planned and up to date. I had hoped that what was said by my noble friend Lord St. Aldwyn would show that we mean to do this.
Probably the main brunt of the advisory work will fall on the Agricultural Land Service, although no doubt there will be owners who will continue to rely on their own resources where these are available. The Agricultural Land Service are fairly well equipped to meet these requirements. They have always been able to devote a large share of their time to technical building problems and economic aspects of land management. They include among their members a specialised group of officers, farm buildings advisory officers, who can act also as consultants when the work is not so straightforward. A great deal has been and is being done through the publication of leaflets and bulletins to make available to owners the best modern practice in regard to farm buildings, and I feel sure that many owners will have no difficulty in getting from official publications the answers to all their first questions; and when the time comes to go 337 more deeply into the matter the advisers will be available.
The noble Lord doubtless knows of the Agricultural Improvement Council, which is responsible for keeping under review the process of research investigation into agricultural problems and costs, and that the results are disseminated as widely as possible. The Agricultural Improvement Council has a Land Management Committee, under the chairmanship of my noble friend the Duke of Northumberland, which is charged with the special task of covering estate management problems. It is implied in this Committee's terms of reference that it has a general responsibility for seeing that the advisory work of the Agricultural Land Service is effective; and the Committee is important agent for ensuring that any inadequacies of the system for disseminating information are remedied. On the subject of research, the noble Lord also knows, I think, that we are in process of setting up a standing inter-departmental committee to review the work in this sphere, which is already in progress, and to make suggestions for additional subjects for inquiry. I hope that this committee will be meeting early next month.
As matters stand at present, we are inclined to think that the best way to make progress with farm building and research is to press on with, and expand, the work which is being done at the various institutions, rather than, as the noble Lord suggests, setting up a central research establishment specialising in this particular sphere. I do not, however, rule out the possibility of setting up such an establishment, or establishments, at some time in the future, and the noble Lord's suggestion will certainly be borne in mind.
My noble friend Lord Buckinghamshire inquired when the Bill was likely to appear. Quite briefly, I can say, "As soon as practicable." Its progress will no doubt be subject to the exigencies of Parliament, but the intention is to have it quite soon. The noble Earl also asked me whether grants would apply for such buildings as grain stores. I am glad he did so, because he has put his finger on one of the most fundamental aspects of an efficient agriculture. The answer is: Yes; in certain circumstances they will. The stores must, of course, satisfy the test which my noble friend has already 338 described. There is a wide variety of grain stores, from massive permanent installations to others which are at least transportable, if not actually portable; but the main thing is that the grant will apply in certain cases to be judged on the conditions which my noble friend has described.
The noble Earl, Lord Buckinghamshire and also the noble Lord, Lord Wise, inquired about top and bottom limits to the grant. It is intended that schemes costing less than £100 should not be accepted, but I do not think this will cause a great deal of hardship, for not very much will be excluded by that restriction. There cannot be many long-term improvement schemes that will cost less than that sum. At the other end, there is no intention of imposing an actual maximum limit to avoid substantial payments to individuals. If the work is worth doing, and completely satisfies the various conditions of the Bill, it will be accepted for a grant, whatever the cost; but naturally there will be practical considerations—for example, the amount that can reasonably be spent on the improvement of a particular holding. In any case, the test of the action that a prudent landowner would reasonably take could also be held to work equally well in preventing cases of excessive expenditure.
The noble Lord also asked me about water supplies. The Bill will not deal with existing grants for water supplies. The water supply grant of 25 per cent. is not comparable—at least not directly comparable—to the 33⅓ per cent. grant, The water supply grant is paid already at two rates: 40 per cent., when water comes from a private source, and 25 per cent., when it comes from a public source. In the latter case, the apparently low rate of grant is lather deceptive, because it leaves out of account the direct Exchequer assistance which is given to the water undertakers for mains extensions in rural areas.
Lord Wise asked about cows going to France. I will quickly answer his question. Those cows which go to France are of low grade and not acceptable to the market here, while Argentine beef which is imported is of higher grade and, therefore, acceptable. The noble Lord, Lord Stratheden and Campbell, inquired about electric motors and he answered his own question. He said that they would definitely not be included; and he was right.
339 He also raised a point about the silage grant, asking whether it should not be amalgamated. The grant will be available very soon—in fact, approval of schemes can be obtained now. If it were amalgamated it would be delayed by having to wait for the rest of the necessary legislation. Lord Bathurst mentioned foot-and-mouth disease, and I assure him that that problem remains very much in the forefront of all our minds.
To your Lordships, as a whole, I would say that I am quite sure that the House fully appreciates the deep significance of the developments in Government policy which we have been discussing to-day. The progress made by the industry has already been great. I believe that an even greater future lies ahead if the industry can realise the possibilities inherent in our steadily increasing technical knowledge. All this depends upon the confidence and energy of the individual farmer and landowner. The grounds for confidence which we have provided should enable them to get on with the job, without constantly looking over their shoulders; and the extra money we are providing for farm improvements should enable them to have the tools with which to get on with the job.
§ 7.44 p.m.
§ LORD AMHERST OF HACKNEY
My Lords, I should like, first, to thank the noble Lord, Lord Chesham, for the full reply which he has given to this debate. I think he has covered almost all the questions which have been raised. I would also thank the noble Earl, Lord St. Aldwyn, for the full statement he made on the capital grants; it will certainly be most helpful to everyone. Then I should like to add my congratulations to the noble Earl, Lord Waldegrave, on his well-informed maiden speech, and to express my gratitude to those of your Lordships who have taken part in this debate and the hope that the House will accept this Resolution.
§ On Question, Resolution agreed to.