§ Lord Carter rose to move, That the scheme laid before the House on 30th October be approved [29th Report from the Joint Committee].
§ The noble Lord said: My Lords, on behalf of my noble friend Lady Hayman, I beg to move that the Farm Waste Grant (NVZs) (England)(No. 2) Scheme 2000 be approved.
§ I have a strong sense of déjà vu in opening a debate on nitrate vulnerable zones. Ten years ago I served on Sub-Committee D, of the European Union Committee, which produced a report on nitrates in water. That report remains the best and most authoritative analysis of the subject.
§ The Government's long-standing and ongoing commitment to farmers was demonstrated in our strategy for agriculture, Action Plan for Farming, announced on 30th March, in which we recognised that the grant rate under MAFF's farm waste grant scheme should be increased.
§ The current grant rate of 25 per cent is available to those farmers in nitrate vulnerable zones—which I shall hereafter refer to as NVZs—who are required to extend or improve their manure handling and storage facilities as a result of the mandatory NVZ action programme. Those measures, designed to reduce nitrate leaching from agricultural land, came into force on 19th December 1998 in the 68 NVZs designated in England and Wales in 1996 under the EU nitrate directive.
§ Under that directive, farmers are restricted as to the type of, amount and frequency at which manure can be applied to land. That can cause difficulties for farmers who have little or no storage capacity and therefore have to install new facilities.1086
§ In recognition of that mandatory capital investment, the scheme focuses assistance on a range of storage facilities for slurry and other manure. Fixed handling and disposal facilities, which form an essential part of farm waste systems, are also eligible for the grant.
§ Since its introduction in 1996, the take-up of the farm waste grant has been slow. Of the money available for 1996–2000, only £317,000 has been drawn down. That is an average annual spend profile of only 10 per cent. It is likely that the relatively modest grant level of 25 per cent, coupled with the adverse economic climate for farming, has resulted in farmers attempting to make do with their existing facilities and in some cases exporting their surplus farm waste to other holdings.
§ The proposed expansion of NVZs early next year will make it more difficult for farmers to continue with that method of exporting as the number of farmers subject to the NVZ restrictions increases. Those increases in the area of NVZ boundaries, and thus their eventual size, are still being defined, but it is anticipated that demand will increase dramatically for the grant as restrictions are enforced.
§ To assist with that forthcoming capital expenditure, the Government have raised the grant available to 40 per cent on eligible expenditure, up to an investment ceiling of £85,000. That is the maximum contribution permitted under EU state aid rules. The Treasury has given approval for the state aid notification, as notified to the Commission on 18th May 2000. As this is a demand-led grant scheme, it is not possible to ascertain accurately the total value of annual claims. However, through estimate profiles £4.5 million has been profiled for each of the next three years, beginning in 2001–02.
§ The Farm Waste Grant Scheme currently operates in both England and Wales. Following devolution, separate instruments are required in England and Wales, and the new increased grant rate at 40 per cent will be available only in England. The possibility of introducing a similar increase in Wales is under active consideration by the National Assembly for Wales Agriculture Department.
§ This scheme represents real assistance for farmers in NVZs and demonstrates the Government's commitment to balancing the needs of an efficient agriculture industry with the need to protect other water sources from pollution. I commend the scheme.
§ Baroness Miller of Chilthorne Domer
My Lords, we welcome the fact that the Government have increased the level of grant available for farmers from 25 to 40 per cent. However, I should like to ask the Minister about some of the difficulties that farmers are still likely to encounter and whether he feels that the designation of the new NVZs will increase the problem for farmers who currently are unable to afford to enter the scheme.
The new NVZs will of course bring a new tranche of farmers into that geographical area. However, the geographical spread of NVZs will also mean that that 1087 option will not be available to farmers who until now have felt unable to invest in the facilities to deal with their waste and have relied on exporting their waste to an area that is not in an NVZ. The weather has also had a bearing on the issue. Flooding and water-logging in many areas—often the same areas that are vulnerable—has meant that farmers have not been able to carry out their normal methods of spreading waste on the land. Therefore, they have been doubly hit.
I gather that the Government are currently undertaking a study into the costs to farmers which have arisen in NVZ areas due to the new areas of designation. I wonder whether the £4.5 million which the Minister said has been set aside is a final figure. If it is, what will happen to the results of the government study? It is quite clear that the costs to farmers of entering the scheme are not small. Although it is difficult to come forward with an average cost, the NFU has suggested that a farmer might well expect to spend between £40,000 and £60,000. That is the NFU's best guess. If farmers must find 60 per cent of that then, frankly, in the current climate it is not surprising that the take-up is as low as 10 per cent. In these past years it will have been difficult to find that amount of capital expenditure.
Perhaps I may ask the Minister whether MAFF is ensuring that environmental measures are being taken by farmers which may lead to a different way of dealing with this problem rather than expending money on waste facilities? Might those measures also be subject to increased expenditure?Finally, perhaps I may ask what will happen if the £4.5 million which is made available each year is not taken up. The money is intended to deal with problems caused by nitrates. However, if it becomes clear that farmers do not wish to use the grant in that way, what is the possibility of the money being vired over into the over-subscribed Country Stewardship Scheme and Arable Stewardship Scheme, which often deal with the same problem but in a different way that also benefits biodiversity?
§ Lord Luke
My Lords, I thank the noble Lord, Lord Carter, for showing me a copy of his speech concerning this scheme. We on these Benches are grateful that in this case the Government have listened and acted to help our hard-pressed farmers. I am sure that he is right to point to the inadequacy of the previous 25 per cent grant and the fact that very few farmers have taken it up. I am also glad that the Government intend to spread the scheme to Welsh farmers through the Welsh Assembly. I hope that there will no undue delay in implementing that.
§ Lord Carter
My Lords, I am extremely grateful to the noble Baroness, Lady Miller, and the noble Lord, Lord Luke, for taking part in this debate. I apologise to the noble Baroness for not having provided her with 1088 a copy of my speech. I was unable to discover who among the Liberal Democrats was intending to respond to the order.
§ Baroness Miller of Chilthorne Domer
My Lords, I am sure that, as I am known as agriculture spokesman, that should not prove a problem in the future.
§ Lord Carter
My Lords, I stand duly and properly corrected and I apologise. The noble Baroness asked me a number of questions. Of course, one must remember that the grant aid is being increased to take account as far as possible of the difficulties faced by farmers who are not able to export. It is true that they will have to find 60 per cent of the average cost of between £40,000 and £60,000. As the noble Baroness knows, the grant aid is eligible up to a limit of £85,000.
The take-up of 10 per cent relates to the 25 per cent grant. Therefore, we expect that the increase in the grant aid and the legal requirement on farmers to deal with the waste problem will result in a further take-up. One can see that there has been a substantial increase in the amount allocated; that is, £4.5 million a year compared with £317,000 in total which was taken up in the years 1996 to 2000. I am not sure of the answer to the noble Baroness's ingenious question about viring over money to the Country Stewardship Scheme. Perhaps I may write to her on that point.
I am grateful to the noble Lord, Lord Luke, for his acceptance of the order. I commend it to the House.
§ On Question, Motion agreed to.