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(a) any sums required for the payment by the Secretary of State of grants, subsidies or contributions under the Act ;

(b) any sums required by the Secretary of State for fulfilling any guarantees under the Act ;

(c) any other expenses of the Secretary of State under the Act ; and

(d) any increase attributable to the Act in the sums so payable under any other enactment ; and

(2) the payment of any sums received by the Secretary of State under the Act into the Consolidated Fund.

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Farm and Conservation Grant

11.9 pm

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Richard Ryder) : I beg to move

That the draft Farm and Conservation Grant Regulations 1989, which were laid before this House on 2nd February, be approved.

With permission, Mr. Speaker, and since they form a single package, I hope it will be convenient to discuss at the same time the Second motion :

That the Farm and Conservation Grant Scheme 1989 (S.I., 1989, No. 128), a copy of which was laid before this House on 2nd February, be approved.

Mr. Speaker : I take it that that is agreeable to the House.

Mr. Ryder : It is only about a month since some of us, including the hon. Member for East Lothian (Mr. Home Robertson) debated in Standing Committee the statutory instruments which closed our previous farm capital grant scheme, the agriculture improvement scheme, to new applicants.

At that time I explained that the new grant scheme, which had been announced by my right hon. Friend the Minister of Agriculture, Fisheries and Food in November, was still subject to discussion in Brussels. I am glad to report that those consultations were successfully completed at the end of last month, thus enabling us to lay the new measures before Parliament for approval. I am also happy to confirm that we have been able to finalise our proposals in very much the form that my right hon. Friend the Minister was able to outline to the House last November.

The proposals are divided into two parts. Under the regulations, farmers will be able to submit investment plans covering all the items set out in the schedule. Under the scheme, they will be able to claim grant on a rather more restricted range of items but without the need to secure prior approval for their investments.

Mr. Bowen Wells (Hertford and Stortford) : I am deeply grateful to my hon. Friend for giving way before he has reached the substance of his speech. Is the House entitled to alter in any way the measures being put before it tonight? If so, would it not have been better for him to bring the regulations to the notice of the House before the negotiations were completed in Brussels, so that the House could express an opinion before they were agreed in the Council of Ministers?

Mr. Ryder : The preliminary negotiations in Brussels have been completed. The final details have yet to be worked out. If any of my hon. Friends wish to raise any matters of substance this evening, I shall consider them later.

Mr. Teddy Taylor (Southend, East) : Will my hon. Friend give way?

Mr. Ryder : No, I want to get on, please.

Mr. Taylor rose --

Madame Deputy Speaker (Miss Betty Boothroyd) : Order. The Minister wants to make progress.

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Mr. Ryder : Except in the case of some horticultural investments, the rates of grant available will be the same under both parts of the scheme.

The highest rates of grant will be for the installation and improvement of equipment designed to prevent pollution caused by farm operations. That will attract grant at 50 per cent. In the uplands, or less favoured areas as they have been designated, conservation work will also get grant of 50 per cent. of the total cost.

Mr. Ron Davies (Caerphilly) : Are the details of the scheme that the Minister is giving us subject to further amendment if his right hon. Friend concludes in his discussions with the EC that the existing details are unsatisfactory? Are those amendable figures or do they represent the scheme as it will be?

Mr. Ryder : They represent the scheme as it will be.

Mr. Teddy Taylor rose

Mr. Ryder : I shall give way to my hon. Friend in due course. Outside the less favoured areas, the rate will be 40 per cent. The items qualifying for grant will include hedges, traditional stone walls, shelter belts, trees for shading stock, stiles and footbridges and heather and bracken control. All those qualify for grant under the agriculture improvement scheme. To them we shall be adding grants for fencing out stock from heather moors and native woodlands to encourage natural regeneration and grants for repairs to traditional buildings.

In addition, we shall be continuing grants for grassland regeneration and reseeding, with associated fencing and liming and fertiliser. Drainage grants, however, will be confined to the replacement of existing systems. All these items will attract grant at 25 per cent. in the hills and 15 per cent. in the lowlands, and will be available only under an investment plan.

We shall be continuing to offer special assistance to the horticultural sector, with grants of 40 per cent. for replacement of heated glasshouses and 35 per cent. for heating systems, and the reinstatement of grants for orchard replanting again at 35 per cent. Slightly lower rates of grant will apply to work done outside an investment plan.

Perhaps I can now explain the objectives behind our new arrangements, and the considerations which have given rise to them. They follow from an internal review which my right hon. Friend set up last year together with the Secretaries of State for Wales, for Northern Ireland and for Scotland, and the Secretary of State for the Environment, as well as the Chief Secretary to the Treasury. That review was designed to examine how far we needed to adapt capital grants to take account of the very significant changes in agricultural policy which we have seen since 1985 both in the United Kingdom and in the European Economic Community.

In the Community we have taken some important steps towards controlling surpluses and the excessive expenditure they entailed. In the United Kingdom, the ALURE package of initiatives has opened up new opportunities for many farmers and underlined our concern to do more to enhance the farming environment. In particular, we wanted a capital grants scheme which would complement these new policies, target expenditure more effictively,

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provide value for money and not discriminate against United Kingdom farmers. I believe that we have achieved this in the instrument before the House.

I am sure that the House will agree that in present circumstances it does not make very good sense for us to focus capital grants expenditure on the expansion of existing production capacity. Capital grants have played a very important part over the years in helping United Kingdom agriculture to achieve its current level of efficiency. But even the industry's own reaction to the agricultural improvement scheme suggests that farmers are now looking to different kinds of investment. Helped by the structure of grant rates under the AIS, there has been a very marked shift from spending on buildings, drainage and other production facilities towards conservation and pollution control work. Under the new scheme, we intend to promote that reorientation still further.

Concern to protect and enhance the beauty and wildlife variety of our countryside is growing all the time. Increasingly, too, the public look to the farmer as the guardian of the countryside. They recognise that the way he farms will materially affect the character of the landscape and the diversity of the flora and fauna within it. All of us have come to expect a certain standard of conservation management from the farming community. The land the farmers manage is not theirs only, but the heritage of the entire community. What is less often recognised perhaps is the extra cost this can impose on the farmer. A hedge is generally much more attractive than a fence, but a fence can be put in much more cheaply and quickly. It is therefore entirely appropriate that in targeting our capital grant support we should recognise the additional expenditure which environmentally sympathetic management can require from farmers and assist them to achieve something which both they and the public at large want.

The new scheme gives very high priority to conservation. I want to make it clear, however, that this means conservation in its best sense. We are not grant-aiding things simply because they are attractive ; we are also grant- aiding them because they are useful. One of the aims of the new scheme is to enable farmers to manage existing assets more profitably, as well as in ways that will enhance the attractions of our countryside.

That is the thinking behind the three new grants we are introducing for the regeneration of heather moors and woodlands and for the reinstatement of traditional buildings. A neglected or overgrazed woodland is not only a blot on the landscape but a lost opportunity for the farmer. By offering a grant for fencing out stock for a period, we hope to make it possible not only for natural regeneration to occur but for the wood in time to become much more useful as a shelter for stock.

Similarly, we shall grant-aid the regeneration of existing pasture and the renewal of existing drainage systems, to keep the land in good heart. But in line with our approach elsewhere, we shall not grant-aid improvement work to virgin land or moorland. Nor shall we pay grant for new drainage. Assisting the creation of new production capacity at a time when we are struggling--although with increasing success--to master the problems caused by

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surplus production is clearly no longer appropriate. But helping farmers to manage well and sympathetically their existing farm assets is money well spent.

Another important priority under the new scheme deals with the problems of pollution from farm effluent. The pressure on farmers to clean up their act is acute, and rightly so. The farm and conservation grant scheme will offer grants of 50 per cent. in the lowlands for the installation and improvement of facilities for the storage, treatment and disposal of slurry and silage effluent. That is the highest level of grant ever offered in the lowlands. It is also the best rate of grant available anywhere in the Community. That substantial grant increase, as well as extensions to grant coverage to include fixed disposal piping, safety fences, and more help for the intensive livestock sector, is clear evidence of the Government's commitment to dealing with the problems of pollution from farm operations. It also shows again our determination to target assistance where it can do most good, both for the farmer and for the community as a whole.

At the same time, I must make it clear that, with grants of that order available, there can be no excuse for any continuation of the high incidence of farm pollution that we have seen recently. As to less favoured areas, right hon. and hon. Members who are familiar with the grant schemes will have noticed from the schedules to the farm and conservation grant scheme 1989 that we are narrowing the differential between grant rates in the LFAs and those outside. That will mean small reductions in grant of 5 per cent. and 10 per cent. on most items. For effluent facilities and traditional buildings, grant rates will remain the same, at 50 per cent. and 35 per cent.

Mr. Teddy Taylor : Before the Minister proceeds to tell the House about all the Government's dramatic new grants for heather reclamation, and all the rest of it, will he clarify what appeared to be a misunderstanding in his answers to my hon. Friend the Member for Hertford and Stortford (Mr. Wells) and to the hon. Member for Caerphilly (Mr. Davies)? The Minister told my hon. Friend that the proposals are subject to further review and amendment in discussions with the Commission. I can understand that, yet in answering the hon. Member for Caerphilly, the Minister gave the impression that the proposals before the House have been finalised.

Can the Minister explain why on earth the House is discussing the regulations and scheme tonight, when, under the 1987 structures plan, the Government are obliged to observe the measures now before the House, which have been approved by the Commission? It seems a total waste of time, both of right hon. and hon. Members and of the staff.

Mr. Ryder : The regulations cannot be amended, but I said that if any right hon. or hon. Members wish to make any objections or suggestions, I will be happy to consider them in the course of time. We are not looking to amend anything tonight.

Another aspect of the scheme that I draw to the attention of right hon. and hon. Members is the continuation of enhanced rates of grant for horticulture. Since 1983, we have offered that sector a good deal of special assistance, to help with modernisation to meet fierce--and not always fair--foreign competition. The

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industry has responded well, despite setbacks that some parts of it suffered after the great storm in 1987, and a major reinvestment programme is in train.

The Government want to keep up the momentum, by continuing to offer grants for the replacement of heated glasshouses and for the installation of heating systems. From the end of November, when the current measures under the AIS expire, we shall offer grant of 40 per cent. on glasshouses and 35 per cent. on heating systems. We shall, from the start of the farm and conservation grant scheme, reintroduce grants for orchard replanting of 35 per cent. We have taken the opportunity to simplify and clarify the arrangements for the horticulture sector, as we have tried to do in a number of small but important ways throughout the new scheme.

I said at the outset that we were determined that our new scheme should complement our existing agricultural policies, and it does just that. It removes incentives to surplus production. At the same time, it encourages farmers to make better use of existing assets, and to do so in a way which enhances the attractiveness of the countryside for us all. In so doing, it offers good value for money. It is also closely targeted on those sectors and types of investment which are now clear priorities. Chief among these is the need to reduce pollution. For a small dairy farmer in one of the large catchment areas in the south-west, the cost of installing and maintaining an efficient slurry containment system can make heavy inroads on his income. A Government grant of 50 per cent. towards this necessary expenditure is far more appropriate in present circumstances than a grant for a new building.

By targeting our assistance in this way on essential but costly investments, we are contributing far more effectively to the present and future financial soundness of the industry than some other member states which continue to grant-aid increases in capacity irrespective of whether there are markets for the resulting surpluses. That is why this reordering of our grant priorities has been warmly welcomed as responding closely to the current needs of Britain's farming industry.

11.26 pm

Mr. Ron Davies (Caerphilly) : I wish at the outset to express to the Parliamentary Secretary our understanding of the difficulty in which he found himself in explaining to his hon. Friend the Member for Southend, East (Mr. Taylor) the precise status of the instruments before the House. In our experience, the Parliamentary Secretary is always helpful and courteous in his presentation of measures and when he tells the House that he is prepared to be flexible, that is not so much an indication that he may have got the proposals wrong as a genuine willingness to listen to what we have to say.

When we last debated agriculture, we had to convey to the Parliamentary Secretary our best wishes to his right hon. Friend the Minister who that very day had been taken ill in Brussels when negotiating the latest agreement. I am pleased to note that the right hon. Gentleman has regained his health. I am not sure that he will recover so rapidly from the St. Valentine's day present--indeed, the birthday present--delivered to him today by the National Farmers Union. At its annual conference today the NFU presented the Minister with--

Mr. John Home Robertson (East Lothian) : A brie?

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Mr. Davies : No, not a brie--a unanimous vote of no confidence. Given the way in which the Ministry of Agriculture, Fisheries and Food is being run just now, it came as no surprise when that vote of no confidence was resoundingly passed.

My hon. Friends and I welcome the opportunity to debate the scheme and we welcome the instruments in broad terms because they show a Government commitment to transfer the emphasis on agricultural capital grants away from increasing production and towards improvement of the environment.

When the Minister announced the scheme in a written answer on 6 February, he said that he had consulted the Secretary of State for Northern Ireland, but I understand that the instruments relate only to Great Britain. Will the scheme be extended subsequently to Northern Ireland or will there be a separate instrument relating to Northern Ireland?

The Government's recent expenditure plans reveal a substantial reduction in spending on agricultural grants. The Minister made some play about the reduction in expenditure from 1987 to the current year. I refer the hon. Gentleman to the expenditure White Paper of January of this year. Expenditure on major capital grants in 1983-84 totalled £217 million. The current year's estimated outturn will be £89 million and next year's £86 million. The forecast for 1990-91 is as low as £78 million. When the thrust of Government support was to increase production, they managed to find more than £200 million for capital grants, but now that the emphasis has moved towards more environmentally sensitive grants the amount has been reduced from £217 million to £78 million. That reflects poorly on a Government who claim that care for the environment is the centrepiece of their policy.

The Minister paid tribute to his debate with my hon. Friend the Member for East Lothian (Mr. Home Robertson) in Standing Committee when the old scheme was closed. The haste with which it was closed suggests a desire by the Ministry to save money, as was revealed when the Minister was challenged in Committee about its sudden termination. He gave something away when he said that it had been impossible to give any warning of the scheme's closure because it "would have led to a rush of expenditure for which we have no provision."--[ Official Report, Fifth Standing Committee on Statutory Instruments, &c., 18 January 1989 ; c. 4.]

Unfortunately that was at the expense of farmers who had prepared improvement plans with considerable effort and at considerable expense and were about to submit their schemes to the Ministry for approval. Would it not have been possible to allow farmers in such circumstances to undertake the works that they had planned--at their own risk--while awaiting the Ministry's announcement about the level of grant that they would attract? A commitment could have been given that such grant would be paid retrospectively, and delays to farmers and contractors at what is usually the busiest time of year for such works could have been avoided.

The transfer of capital assistance from measures which increase production to those that enhance the environment is certainly in the spirit of the times, and is--to say the least--considerably overdue. We particularly endorse the increase in grant payable on the planting of hedgerows and shelter belts in lowland areas from 30 to 40 per cent., and the grants for the restoration of vernacular buildings are also welcome. Can we expect the new-found enthusiasm

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for hedgerows to extend to support for the Hedgerows Bill introduced by my hon. Friend the Member for Wentworth (Mr. Hardy)? There seems little point in giving financial support to the development of hedgerows if the Government are not prepared to take action to support their protection once they have been established. We also welcome the changes in respect of heather burning and the enclosure of woodland and moorland. These measures themselves will increase the value of such areas as wildlife habitats and will help the conservation of wildlife as well as assisting in the better use of those areas for agricultural production. We are also pleased at the increased grant available for bracken control. Bracken is a major threat to agricultural land, and as it is increasing at a rate of 5 per cent. per year it represents a significant loss of such land. I challenge the Minister, however, on his suggestion that enclosure of woodlands would be a major step forward. I think that there will be very little take-up. There will be precious little incentive for farmers in either uplands or lowlands merely to enclose existing woodland. The effect of the measure will be to reduce the amount of land available for grazing, and it certainly will not ensure any profitable crop from the proceeds of forestry, at least within the lifetime of the farmer or his immediate family.

I suggest a course of action that we have pressed on the Minister within the last 12 months--to look again at the provisions of the farm woodland scheme. If he is now providing grant to allow the enclosure of existing farm woodlands, is it not now appropriate to introduce amendments to the scheme so that annual payments available under it will be made available to farmers who enclose existing woodland? Otherwise there will be no financial benefit whatever. Indeed, it will be a financial disbenefit to farmers in disadvantaged areas in the uplands or the lowlands to enclose existing woodlands. We pressed the Minister's predecessor, now the Minister for Local Government, about that in Committee. At the time he said that he was not opposed in principle to such a move but thought that it would be precipitate. To show how strongly we felt, we divided the Committee on the issue and the Government felt sufficiently strongly to defeat an amendment which would have given effect to such payments.

Now that the Minister has accepted the need to provide fencing for existing woodlands, will he consider modifying the farm woodland scheme to allow the payment of annual sums to farmers who follow that course of action? Without such a payment, I suspect that the measure will come to nothing.

Having welcomed the general shift towards conservation, we have to condemn unreservedly the telescoping of differential rates between favoured and less favoured areas.

Mr. Andrew Hunter (Basingstoke) : The hon. Gentleman is rapidly moving away from a point which I had hoped that he would expand, and I invite him to do so. With reference to the grant for repairing and reinstating traditional agricultural buildings, will he explain further, so that we understand his argument fully, whether he is satisfied with the proposals in the schemes?

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Mr. Davies : I shall come to that in a moment. I have been dealing with the farm woodland scheme and I shall return to the question of vernacular buildings later. I suspect that I know the point which concerns the hon. Gentleman and I hope to demonstrate where we stand, although he may not be happy with the position that we have adopted. Turning to the diminution of differentials between favoured areas and less favoured areas, the reduction in the grants payable on hedgerows and walls, slurry handling facilities and shelter belts in the less favoured areas from 60 per cent. to 50 per cent. is regrettable, particularly as it accompanies increases in the grants and grant ceilings applicable to effluent and waste disposal and poultry manure stores which will be a charter for the intensification of lowland livestock production--an issue which concerns my hon. Friend the Member for Clwyd, South-West (Mr. Jones).

Mr. Martyn Jones (Clwyd, South-West) : I am particularly concerned because that part of the scheme means that the incomes of farmers in less favoured areas and upland areas generally will be much less. Money will be transferred from less favoured areas to more favoured areas, which is the reverse of what is intended by these measures.

Mr. Davies : My hon. Friend is right. The provision is socially unjust because it represents a transfer of Government funding from low- income farmers in less favoured areas to the high-income farmers in more favoured areas. If the Minister is not concerned about that social injustice, does he recognise that in general the less favoured areas have the most sensitive environments and care must be taken to protect the environment? I suspect that the diminution of grant will lead to the degradation of the environment in less favoured areas without corresponding benefit in the lowlands.

Mr. Ryder : I am grateful to the hon. Gentleman for raising that point. He rightly mentioned the fact that we have increased the grants for conservation of hedges, particularly in lowland areas; the worst ravages to hedgerows in Britain have been carried out in lowland areas, as the hon. Member for Wentworth (Mr. Hardy) probably knows better than any of us. Precisely because of that, we have altered the grant scheme so that more money can be spent on lowland areas, particularly on hedgerows.

Mr. Davies : At least the Minister understands why we are concerned. We acknowledge and accept that more money is being spent in the lowland areas because of the problem of hedgerow destruction. My hon. Friend the Member for Clwyd, South-West, who represents almost exclusively a less favoured area, raised the particular point that that transfer of resources is at the expense of the uplands. Surely if additional expenditure is to be given for the rejuvenation of hedgerows in the lowlands, that should not be done at the expense of a sensitive environment.

If, as the Minister said, the aim is to reduce the incidence of water course pollution by agricultural slurry, why do not the Government enforce the regulations which already exist, and increase the penalties, rather than handing out more money to intensive producers, to the detriment of farmers in less favoured areas? There was an example of this in my constituency last week. A small industrial concern had been guilty of polluting a river with

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slurry in the summer of last year. That resulted in the devastation of four or five miles of the river Rhymney and the loss of about 2, 800 game and course fish. The firm was taken to court, fined £1,000, and made to pay more than £1,000 costs. That was derisory, given the damage done to the environment and the financial burden imposed on the water authority and the various angling clubs which had to restock the river.

If the Minister wants to protect the environment, why does he not agree to give farmers the additional grants to tackle slurry pollution of water courses but also ensure that the penalties are severe enough to inspire adequate take-up and deal properly with the problem of slurry pollution? If the Conservative party is, as it maintains, the party of law and order, why does it not enforce that law and order in the context of protecting the environment? Why is there not a more rigid application of environmental standards?

Sir Nicholas Bonsor (Upminster) : The penalties mentioned by the hon. Gentleman sounded wholly inadequate, but I should be interested to know what maximum penalty was available to the court.

Mr. Davies : That was the subject of some discussion between the research department of the Library and myself before this debate, so I can answer with some authority. The provisions were laid down in the Control of Pollution Act 1974, which determined that grade 5 penalties would apply. Those penalties were last confirmed by order pursuant to the Criminal Justice Act 1982, which fixed the maximum penalty at £2,000. In the case that I mentioned, I could see no extenuating circumstances which might have led to the 50 per cent. reduction in the fine handed down. Nevertheless, the maximum would have been only £2,000, which is still negligible. Now that the Government have taken the first financial step to ensuring that there is no need for the pollution of water courses by slurry or farm effluent, they must rigorously apply the control of pollution regulations.

Next, there is the abolition of the 35 per cent. feed rule. The old regulations required that any applicant for assistance under one of these schemes had to provide 35 per cent. of his fodder from his own holding. That requirement is being abolished. That may encourage new entrants to farming--particularly people who start with small livestock units--but it will also encourage more intensification. Will the Government commit themselves to tackling the worst sort of intensive units, such as the beef lot owned by Frans Buitelaar Farms Limited? That unit is situated in an area of outstanding beauty in Lincolnshire and recently excited a great deal of press comment because of its pollution of the water table and defiance of local planning regulations.

I should like to quote briefly from an article in Adscene of January- February 1989, the current issue. It describes that feed lot in Lincolnshire. I am sure that hon. Members who follow these matters will be aware of the case. Adscene describes what was seen : "Each feedlot contains around 100 cull cows, bought in from all over the country. In the lots they are fed a sloppy mash mix made from waste vegetable matter, poultry manure, spent brewers grains etc. and in this way they put on a little extra flesh before slaughter in Mr. Buitelaar's nearby slaughterhouse. The lots are surrounded by earth banks five metres high

At the end of September Anglian Water Authority were successful in their case against Frans Buitelaar Farms Ltd.

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The latter were fined £1,000 with £700 costs for allowing effluent 15 times the strength of raw domestic sewage to run into tributaries of the Salmony Beck."

That is, I believe, the consequence of the abolition of the 35 per cent. feed rule, and we really must press the Government to ensure by administrative means that the abolition of that 35 per cent. feed rule will not lead to an increase in the number of intensive units and will not lead to the sort of abuses of the environment that we have seen in that particular instance.

Producers in the less-favoured areas will suffer as a direct result of these changes--most directly by the reduction in the levels of grant for working the LFAs themselves. If, as the Government claim, the level of expenditure is to remain the same under the new scheme as under the old, how can the decrease in rates in the LFAs and the increase in rates elsewhere result in anything other than a decrease in the amount of grant aid to the LFAs themselves? It cannot, so we must take these changes as a signal of declining support for agriculture in the marginal areas.

At a time of particular debate about the future of the uplands and the balance of support between the prosperous south and east and the more marginal areas of the north and west, it is a matter of real concern to us on these issues, which are not usually the subject of disagreement between us, that the Government are now signalling that they are withdrawing support from the extensive regimes in the marginal uplands and are prepared to give increasing support to the intensive regimes in the intensively farmed lowlands.

The scheme will also impact on the marginal areas in another way--through the price mechanism, the importance of which the Government never tire of reminding us. If capital grants to intensive livestock producers are increased, their costs of production will decline. This will increase the competition facing upland livestock rearers, which will drive down the prices that they receive. So livestock producers in marginal areas face the prospect of reduced capital grants and declining incomes. That is a development that we must condemn.

I ask the Minister to monitor very closely the take-up of the new grants in vernacular buildings--a point that the hon. Member for Upminster (Sir N. Bonsor) raised in his intervention to me. As I have already said, we welcome the principle of restoration using traditional materials, but we fear that the level of grant proposed will nowhere near cover the increased costs of such building methods, and I am conscious of the fact that pressure in areas such as those that the hon. Gentleman represents are particularly acute. If this turns out to be the case and those grant levels are too low, will the Minister undertake to review the situation?

While I can understand the Government's desire to limit this grant to farmers who derive most of their income from farming so as to avoid financing barn conversions, for example, by yuppy or nouveau riche landowners, if their intention is the maintenance of our rural heritage I fear that this exclusion will limit still further its efficacy. The Government must therefore monitor the take-up very carefully to ensure that not only have they got inclusions rightly balanced with exclusions but that the grant limits are set at an appropriate level.

It is not our intention to divide the House this evening because we are broadly in sympathy with the spirit of what the Government have introduced. I hope that I have been

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able to show, however, that although we accept it as a small step in the right direction we have considerable reservations about the practical application of these schemes, particularly on the uplands, particularly the question of woodland management, and particularly the incentive that it will give to the development and encouragement of intensive agricultural systems. That is something about which we have grave reservations. I hope that, as the Minister suggested in his opening speech, there will be amendments, improvements and modifications to the scheme in the not-too-distant future. 11.49 pm

Sir Charles Morrison (Devizes) : I go further than the hon. Member for Caerphilly (Mr. Davies). I am not broadly in favour of the scheme ; I am strongly in favour of it. I congratulate the Minister and the Ministry of Agriculture, Fisheries and Food on introducing it. The hon. Member for Caerphilly referred to his doubts about the value of enclosing woodlands by fencing to protect them from livestock. He believes that the grant will not be taken up unless an adjustment is made to the farm woodland scheme. I am not averse to favourable adjustments being made to the farm woodland scheme, but I do not think that it is necessary here. The enclosure of areas of grazed woodland can be of considerable benefit. The fencing of woodland can result in a large amount of natural regeneration. Furthermore, the development of undergrowth can be of great value to wildlife. Enclosure that results in totally bare woodlands becoming much more alive areas can be of considerable benefit. Woodlands will benefit from the grant.

Mr. Ron Davies : I accept that there will be considerable environmental improvement and that there may be other benefits, such as shelter for wildlife and natural regeneration that may lead to a timber crop in 20 to 50 years' time. My doubt is that there will be no economic incentive for the farmer for fence off areas of woodland. There will be no cash return, unless the sporting rights can be let. The amount of land that is available for grazing will be diminished. Unless provision is made to compensate the farmer for the loss of income from that land, he will not fence off his woodland.

Sir Charles Morrison : I take the hon. Gentleman's point. I agree with him that there will be no cash return, although I do not believe that the loss to the farmer will be very great. However, there will be an ultmate return to the farmer, in the sense that by fencing off his woodland he will improve the capital value of his land. I accept, nevertheless, that that is a long-term matter.

I note that the regulations are introduced under sections 28 and 29 of the Agriculture Act 1970. I welcome the emphasis in the schedule on the provision, replacement or improvement of hedges and shelter belts and on burning heather and bracken control. Bracken control will be of enormous benefit to the upland areas. Over the years more and more land has been taken over by bracken. The spraying and control of bracken will be of benefit to livestock, particularly sheep, and also to wildlife. The enhanced grants for bracken control are very much to be welcomed.

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I want to refer in particular to paragraph 4 of schedule 1 which relates to the

"enclosure of areas of heather moorland or heathland with fencing protecting the areas from livestock."

Again, in principle, I welcome very strongly the introduction of the grant for that purpose. There is no doubt that fencing on heather moorland will be of very considerable benefit. It will not so much protect areas from livestock all the time but will enable such areas to be rested from grazing by livestock for part of the time. In fact, there is no reason why a reasonable sheep stock should not graze heather moorland from mid-May to mid-October or perhaps a little earlier, depending on the part of the country. During that time, to a very considerable extent, the sheep live on the grasses that are growing among the heather. The damage done to the heather is done during the winter months, and it is very important, if possible, to remove the sheep or at least reduce their numbers very considerably during the winter months when the damage is done to heather. Equally, in upland areas of Scotland--of course, the regulations cover Scotland and Wales--fencing can rest heather areas from excessive grazing by red deer. So, in general terms, I welcome that aspect of the order.

However, I have no doubt that, in drawing up the regulation my hon. Friend will have taken account of the 1970 Act and of section 17(1) of the Agriculture Act 1986. Perhaps the House will bear with me for a moment while I remind hon. Members of what that subsection says : "In discharging any functions connected with agriculture in relation to any land the Minister shall, so far as is consistent with the proper and efficient discharge of those functions, have regard to and endeavour to achieve a reasonable balance between the following considerations--

(a) the promotion and maintenance of a stable and efficient agricultural industry ;

(b) the economic and social interests of rural areas ;

(c) the conservation and enhancement of the natural beauty and amenity of the countryside (including its flora and fauna and geological and physiographical features) and of any features of archaeological interest there ; and

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