§ 12.5 p.m.
§ Lord Hesketh rose to move, That the scheme laid before the House on 18th November be approved [7th Report from the Joint Committee].841
§ The noble Lord said: My Lords, I beg to move. I trust that your Lordships will find it convenient if I also refer to the Farm Businesses Specification Order 1987 and the Agriculture Improvement (Amendment) Regulations 1987 at the same time since together these three instruments make up the capital grants element of the Government's farm diversification grant scheme.
§ As your Lordships will know, this scheme is the alternative land use package of measures, known as ALURE, which was announced in February by the then Minister of Agriculture, Fisheries and Food, my right honourable friend Michael Jopling. The proposed grant scheme we have before us today provides for grants for capital investments in diversified activities on farms. We also intend to complement the capital grants by assisting farmers through grants for enterprise feasibility studies and marketing costs. We are at present seeking powers to do this in Clause 1 of the Farm Land and Rural Development Bill, which reaches Report stage today.
§ The debates we have had on that Bill have already shown the extent of your Lordships' interest in encouraging greater diversification of activity on farms. I know that what we are doing here is widely welcomed. The ALURE package was designed to offer new opportunities to farmers by promoting alternative ways of using the land and stimulating additional activity on farms. Under the farm diversification scheme our specific objective is to encourage the farmer to use his undoubted entrepreneurial talents to develop alternative sources of income on his farm and so relieve him from the pressure to continue the upward spiral of surplus production. I do not of course want to imply that diversification will suit every farmer or be appropriate to every location. But the scheme which your Lordships have before you today will provide the pump-priming help needed to encourage some farmers for whom diversification is the right course to invest.
§ There are many business activities open to the farmer with entrepreneurial talents. The present scheme is targeted on, but not confined to, small to medium businesses and focuses on activities which arise naturally on the farm. These include the provision of tourist accommodation of a good standard, including camping barns which provide basic accommodation for walkers; also leisure, recreation, amenity and sporting facilities for visitors and the catering facilities that go with them. Value-added processing of food and other farm products including timber will also be aided, as will craft workshops together with farm shops to sell the products of the farm business. Another important feature of this scheme is that it will for the first time give assistance to businesses involving horses, in particular those concerned with the provision of livery, and in the uplands, stabling for pony trekking.
§ The three statutory instruments before us contain the detailed provisions for the capital grants part of the scheme. The principal instrument—the farm diversification grant scheme 1987—embodies the main requirements and conditions. It sets out who is eligible for the scheme, stipulates that applicants will 842 be required to obtain a plan of their investments before they undertake them and sets the limits of grant available. The scheme is aimed at farmers and the eligibility conditions reflect that. Grant will be available at a rate of 25 per cent. on capital investments up to £35,000. Young farmers will be eligible for a bonus of 25 per cent. taking their grant rate to 31¼ per cent. The schedule of this statutory instrument sets out the kind of work that will be eligible for grant.
§ Another instrument—the Farm Businesses Specification Order 1987—specifies the types of alternative businesses we wish to grant aid under the farm diversification grant scheme. A specification order of this kind is required under Section 28 of the 1970 Agriculture Act (as amended by the Agriculture Act 1986).
§ Finally, the Agriculture Improvement (Amendment) Regulations 1987 give Ministers the powers to terminate the provisions in the current farm capital grant scheme, the agriculture improvement scheme, for grants for tourism and crafts. These grants, as your Lordships will recall, were introduced in 1985. Under the terms of Commission Regulation 797/85 we were obliged to confine them to less favoured areas to ensure that they could be offered only as part of a general farm investment plan and to hold the investment ceiling to £24,000. The new scheme which is being made entirely under national powers offers much more generous coverage. We are therefore anxious to ensure that those with a current AIS plan containing craft and tourism investments will be, if they wish, able to close their plan under the present scheme and transfer to the new scheme. They will need to decide if they want to do so within the next six months. I should also make it clear that the terms of the new scheme have been cleared informally with the EC Commission, which has welcomed it.
§ The Farm Diversification Grant Scheme is essentially a new scheme. I am sure that it will be a useful one. We are starting in a relatively modest way with initial provision for the capital grants of around £3 million a year and a further £1 million for the feasibility and marketing grants once these are available. We hope for a good level of uptake and will be formally reviewing our progress under the scheme in three years' time. The question of the appropriate level of resources for this scheme is obviously one which we shall keep constantly in mind.
§ Finally, I should like to say something about a point which I know is of concern to a number of your Lordships. This is the relationship between grant for diversification and planning consent for a diversified facility. The vast majority of facilities which can be grant aided under this scheme will require planning permission. The responsibility for getting that permission rests with the farmer though ADAS now offer a chargeable service designed to assist farmers seeking consent for the redesign and change of use of farm buildings. Whether farmers use that service or not clearly we are concerned to ensure that grant is not paid on facilities where the farmer has failed to observe his statutory obligation to obtain planning permission. We have set in hand detailed arrangements to cover this. First, where a farmer 843 submits an application for approval of an investment plan he will be required to sign a declaration that he is aware of the need for planning permission. At the stage where the plan is approved he will receive a formal approval document from the ministry telling him, amongst other things, that it will be a condition of payment of any grant that he has obtained the necessary planning consents and that when he subsequently claims payment he will need to provide a copy of that consent. These arrangements will be introduced under paragraph 8(2) of the main scheme.
§ I must apologise to your Lordships for going into detail on these arrangements but I was anxious given the extent of concern about this aspect that the position should be quite clear. I commend the Farm Diversification Grants Scheme to your Lordships for approval.
§ Moved, That the scheme laid before the House on 18th November be approved. [7th Report from the Joint Committee.]—(Lord Hesketh.)
§ 12.15 p.m.
§ Lord John-Mackie
My Lords, first, we must thank the noble Lord for being quick to give us so many details on this matter. On one occasion I ticked off the noble Baroness for giving us too many details, but on this occasion that is what we have been looking for. We thank the noble Lord again for doing it so well.
I was intrigued about one point the noble Lord made. I do not quite know how he put it, but I think he said that the scheme might take farmers' minds off producing too much cereal and so forth. However, I am not too sure about that point because I think they are all looking to increase and augment what they are getting from cereals. The noble Lord mentioned that they are prepared to give £3 million a year for the first year and £1 million for the feasibility study. It seems a rather curious proportion:£1 million for feasibility studies—which are really only looking at the situation—and only £3 million for actually doing the job.
First and foremost I must declare an interest because I am a farmer and I have a diversification scheme on the board at present. We naturally welcome the scheme. As the noble Lord said, farmers are certainly in need of other sources of income, not only because of two bad harvests—and there is another in the offing certainly in the eastern counties—but also because we are being squeezed. Our costs are continually going up. Although some prices have remained fairly good this year, they can in no way make up for the reduction in yields and the enormous costs we incurred this harvest in respect of drying and so on. That applies not only to cereals but also to potatoes and sugar beet.
However, on looking at this—and it is a very long document—we find that there are two pages of interpretation; a page on deciding who is eligible; half a page on plans; nearly half a page on restrictions; and more than a page on grants themselves. Then there is another page on various items, including half a page on reducing or withholding the grants; two and a half pages of a schedule and, finally, two-thirds of a page explaining it all. There are 10 pages in all.
844 The noble Lord said that ADAS was well briefed to help farmers. Well it will certainly have to be well briefed because I do not know how farmers are to be informed of all those details. When I arrived home last night my wife was looking at a programme dealing with excuses for using bad language. If, on the other hand, the son of the soil has to read this in order to understand whether or not he should diversify, I should think that less than half way through his language would be excusable.
My noble friend Lord Carter very humbly assures me that there are agricultural consultants knocking around who would be willing to help. However, with due respect to him I had hoped—but the Minister has knocked my hopes down—that ADAS would be providing a free service for this but he has said that they will have to pay for it.
After those few general kindly remarks I should like the noble Lord to enlighten me on a few points, although he has, indeed, touched on one or two of them.
I start first with the planning scheme. As the noble Lord mentioned, this scheme comes under various sections of various Acts. Planning schemes were mainly for farm buildings and for a period the only restriction was on size. Schemes were free from planning. Will that apply to the current situation?
If one looks at the list of what can be done, a great many of those items are for agricultural purposes. On page 2 one can see what is eligible. I should have thought that quite a lot of those items would come under the old Act and would be free from planning. However, if that is not so, there is yet another burden for the son of the soil, because getting planning permission is no joke these days especially if one happens to farm in the green belt as I do. Therefore, I hope that there will be considerable assistance as regards the question of planning.
On the question of eligible persons there are two points that I should like to make. It would seem a pity to exlude a young man, whose father may have died quite young, and who had to take over at the age of 20 or 21. There is quite a lot of that happening. It would be a pity to exclude him because of his age and likely lack of experience before he could satisfy paragraph 3(1)(a)(iii) on this subject. I should hope that in cases like that one could appeal and help such a young man of that age.
Furthermore, paragraph 3(1)(b)(ii) says:the said person representing the said body submits on behalf …What does the "said body" cover? Is it any corporate or co-operative body? Many farmers, like myself, run their businesses as a small limited company and therefore there could be complications.
Perhaps I may mention my own position. My son and I own equal shares in a small company that owns the business. He manages the farm and would thereby qualify. I, on the other hand, am the tenant and would need the landlord's permission. I mention that because the eligibility paragraph is very important and could lead to a lot of difficulties. I hope that the noble Lord will look into these difficulties because the question of the landlord's permission is very important as we still have a great many tenants in this country at present.
845 There is the question of what is virtually a means test of farmers' earnings relating to half their incomes. None of us likes means tests. However, I suppose that there is no other way of dealing with the matter. I do not like the idea of people having to produce details of their incomes and so on. We have plenty to do to satisfy the income tax authorities without having to satisfy the Ministry of Agriculture, Fisheries and Food.
I have another question about the amount of the grant. It relates to the 31.25 per cent. grant to a young farmer. My son is less than 40 years old. He is virtually the farmer. He will succeed to the farm when I go. He will obviously be excluded. That may apply to far more cases than one would think. I happen to know of another two similar partnerships. That point needs to be looked at.
I think that I have said plenty. It is an important subject. We give the scheme our blessing. We hope that the Minister will take note of the points that I have made.
§ Lord Carter
My Lords, there are some points of detail which we should like to put to the Minister. However, I shall not detain the House. The first point relates to paragraph 3(3) on page 3 which relates to the required arrangement between the contractor and the occupier if there is application for grant. It provides that the requirement is that there should be an agreement for seven years. That is extraordinary, because as the Minister will know, a large area of land is now farmed on a contract basis. If grant aid is to be allowed to partnerships which can be determined on one day's notice, if the partners agree, it is extraordinary that there should be the requirement that a contractor should have an agreement which runs for seven years. I should be grateful if the Minister would explain that point.
Another point concerns paragraph 9 and the arrangements for young farmers. Under paragraph 9(3) the applicant for grant has to be the sole owner or the sole tenant. That would seem to exclude all the share-farming arrangements which are of course now exceedingly common among young farmers. It is a pity that they are excluded by the requirement for a sole ownership or tenancy. I should be grateful if the Minister would deal with that point.
I wish to reinforce the point made by my noble friend Lord John-Mackie that under paragraph 9(4)(b) there is a requirement that all the partners of a partnership should be less than 40 years old to receive the enhanced rate of grant aid. That would seem to exclude many farming partnerships where the father is over 40 and the son under 40.
The Minister mentioned planning. If the farmer has to apply for planning permission to satisfy the requirement for grant will the planning fees be eligible for grant aid? It is a shame that the scheme does not provide for higher rates of grant in designated areas; for example, in national parks. As the Minister will be aware, farmers in those areas invariably face higher costs, usually for environmental reasons, and yet it is in those areas where the need for farmers to diversify is greatest, 846 and where the ability to generate capital for new projects is least. Farmers in those areas would seem to have a special case for extra grant aid.
What criteria will the ministry use for the allocation of grant? As I understand it, the scheme is cash limited. Will the allocation be on a first come, first served basis up to the budget limit or will there be some employment aspect related to the number of jobs created?
My last point is that it would be helpful if, as farmers, we knew the relationship of all the schemes that are now, or soon will be, on the statute book. There are the diversification grants, the woodland grants and these grants. We should like to have some explanation of how they will all fit together so that the farmer can plan ahead.
§ Lord Stanley of Alderley
My Lords, before my noble friend replies, I am afraid that I have one or two queries. The first is an easy one. It relates to the means test. What happens if the farmer incurs loss and he has £100 in National Savings? Is he means-excluded from the scheme? My second point follows those made by noble Lords opposite on planning. If the process requires planning, is it possible for the Government to look carefully at whether the two departments (planning and the Ministry of Agriculture, Fisheries and Food) could get together so that the schemes could be taken together rather than go forward with the ministry and then have to obtain planning permission afterwards? That seems to be a waste of time.
I wonder whether my noble friend would look into the position with regard to highways. I notice that we are allowed grants for roads, but often the result is that we are not allowed them because the highway authorities stop them. Will he look at that point sympathetically so that we do not make a great deal of bureaucratic work and have double planning?
Lastly, are the Government going to review the scheme and, if so, how and when? It is an interesting scheme, and I feel that it should be reviewed regularly. I welcome the scheme.
§ Lord Hesketh
My Lords, we have had a useful although sadly short debate about the scheme. It is timely that your Lordships should have the opportunity to consider it on the same day as we are taking the Report stage of the Farm Land and Rural Development Bill. All our cards are now on the table, and I am sure your Lordships will have found the debate a helpful indication of the kind of approach we plan to follow when we come to introduce the scheme for feasibility and marketing grants. Once that is in place we shall have what I am sure your Lordships will agree is an attractive package designed to help the farmer through from the initial stage of planning a new enterprise to the capital investment needed to get it started, and, finally, to the effective marketing of the goods and services of the new business.
I welcome the wide-ranging support expressed today for encouraging the creation of diversified on-farm businesses. Debates in the House just over a year ago were instrumental in encouraging us to 847 come forward with Section 22 of the Agriculture Act 1986, under which the scheme is being introduced.
The initiative has borne fruit more quickly than may have been expected at the time. I am sure that we are all delighted that that has been proved possible. Nonetheless, a number of noble Lords have asked questions or expressed doubts on some aspects of the scheme. The noble Lord, Lord John-Mackie, mentioned the structure of the relationship between the £3 million and the £1 million. All schemes must have a structure, and that is how it started out. If there is a need for change in the future it will no doubt possibly be reviewed.
No one claims that the scheme will result in an end to the cereal surpluses but the key lay in the first words that I said. It will remove the pressure to try to create more. That is what, in many different ways, we are trying to work at.
I shall bring the comments made by the noble Lord, Lord John-Mackie, about the encouragement of bad language in a government document to the attention of my noble friend the Minister. I point out to him that not all the items covered require planning permission. Only in cases where there must be statutory planning permission will planning permission be required.
With regard to the ease of planning, which the noble Lord also mentioned, I draw his attention to the revised Department of the Environment Planning Guidance Circular 16/87 to local authorities issued in May this year. It emphasised the need to foster the diversification of the rural economy. It points out that many commercial and other activities can be carried on in rural areas without causing unacceptable disturbance. It states that proposals for reusing buildings whether in the countryside or in the green belt should not be rejected unless there are specific and convincing reasons that cannot be overcome by attaching reasonable conditions to planning permission.
The noble Lord also referred to tenant farmers. Landlords will not be obliged to give consent. That is a matter best left to settlement between the two parties, but I am sure that all Members of your Lordships' House are aware that with the tougher world of the agricultural industry at the moment, most landlords will be trying to help their tenants rather than stand in the way of any progressive thoughts which at the end of the day essentially will protect their own investment.
The noble Lord, Lord John-Mackie, also drew our attention to the case of the 21 year-old farmer. We have to have some form of requirement, but we are trying not to be unreasonable about conditions. Many young men started work with their fathers on farms at the age of 15. They will have five years' experience when they are 21.
The noble Lord, Lord Carter, drew my attention to contractors and share farming. I will have to write to him on those points.
The noble Lord, Lord Stanley, also drew our attention to the situation with regard to the highways. I shall draw the points that he made to the 848 attention of my right honourable friend, as he suggested.
With regard to planning fees and the eligibility for grant, professional fees for the preparation of applications for grant will be met, but planning fees will not. The noble Lord, Lord John-Mackie, also raised the point concerning ADAS advice. General ADAS advice on diversification will be free, but only when more detailed projects are required will ADAS start charging fees.
This has been an interesting and useful debate. I am grateful for the opportunity to clarify our thinking on diversification I am happy to commend once again the Farm Diversification Grant Scheme 1987 to your Lordships for approval.
§ On Question, Motion agreed to.