Examination of Witness (Questions 160
- 179)
TUESDAY 29 FEBRUARY 2000 (Afternoon Sitting)
RT HON
NICHOLAS BROWN
160. You have now produced a Forestry Strategy,
is this going to fit within that?
(Mr Brown) It supplements and reinforces it by providing
this continuing income stream.
Mr Öpik
161. On the question of retirements, and I know
this has come up before in the House, what has put you off successfully
producing a retirement scheme?
(Mr Brown) If I have one regret in all this it is
the fact that we have not been able to make a rational use of
the permissive element for an early retirement scheme. I would
really have liked to have done that. We have examined all ways
of making it work. I am the leading enthusiast for it in the Department
and I am convinced that we cannot do it without incurring an enormous
deadweight cost or devising a scheme which would be very fair
to some and incredibly unfair to others. We have looked at whether
you can focus it on tenant farmers only, for example, because
they do not own the asset, and we have had legal advice to the
effect we could not do that because their circumstances are not
so different from those who own small family farms. To break it
down by sector and make it available for people in one sector
or one part of the country and not others is discriminatory. So
the only way you could do it is to have a very large scheme which
would incur an enormous deadweight cost. We really have tried.
I have struggled long and hard on this because, on the face of
it, it seems like a fair way to at least offer the option to some
people in what has been quite a deep crisis in terms of farm income;
the third year of depressed farm incomes.
162. What sort of price tag does that sort of
scheme have on an annual basis?
(Mr Brown) I think the figure from memory is £40,000
over two years. I think that is what the regulation requires.
If I have that wrong, somebody can shout.
163. And UK-wide what is the price tag to the
Government?
(Mr Brown) It depends how you devise the scheme. You
could devise a scheme which was so narrow that only some could
apply and that is either being unfair and probably open to challenge
in the courts—because you would have to explain why you
discriminated and made it just for the hill farmers, for example,
or just for the livestock farmers, for example—and the legal
advice is that some of these options would be too discriminatory,
or you could have a very large scheme which would have a very
large take-up and it would not get the outcome which the public
purse is paying for because there would be a lot of deadweight
cost as people did what they were planning to do anyway and you
would also reshape people's planning as they tried to fit within
the terms of the scheme. There is also a likelihood that as older
farmers went others would take their place and the actual economic
circumstance you were trying to address, underpinning the rationale
for the early retirement scheme, would not have been reached.
164. We have talked about bed blocking in other
places, there is a kind of farm blocking going on at the moment,
would there not be a case for looking at a partial scheme? I accept
the point that one has to be careful about discrimination, but
even a partial scheme would ease some of that pressure and help
people out of the farming industry who desperately want to make
space.
(Mr Brown) I know, and particularly some of the medium-sized
farms are in economic difficulties and what we are trying to do
is devise measures to get the business through, replacing the
farmer, and you could spend money which does not necessarily bring
that outcome.
165. Not necessarily but, as you say, it is
something you would like to look at?
(Mr Brown) I have tried very hard to get the early
retirement scheme to work for all the points you have made—the
idea that older people who have given their life to it, particularly
tenants whose only real savings are tied up in the flock typically
on the hillside and the value of that is depressed in the current
market conditions. There is a pretty good case for saying, "Can't
we do something to help?" The truth is, we have not been
able to devise anything which would do that, so I thought it better
to tell the House of Commons that bluntly. Other Agriculture Ministers
in Wales and Scotland—I am not sure about Northern Ireland,
whether they got that before it went back to the Westminster Government—have
come to the same conclusion, they are equally reluctant. It is
better to tell people bluntly that that is the case so you do
not get people waiting for a scheme because the rumour in the
market place is that it might come on stream later. It is better
to be truthful now and say that.
166. As you know, this Committee has in the
past suggested a linkage between retirement and new entrants which
at least enables us to tackle two issues at once. What is your
view on that? Is that something you are going to revisit?
(Mr Brown) No. There is not going to be an early retirement
scheme because we cannot make one fit within the rules and nor
could we devise one which gets anywhere close without a huge deadweight
cost, which is the real obstacle to it. Similarly, the Young Farmers
Start Up scheme, which is the other scheme we have not made use
of under the regulation, also has a huge deadweight cost. The
best way to encourage young people into farming is to make sure
they are in an economically rational business which will give
them a decent return on the money they have invested and the hard
work they are putting in, and giving anybody who calls themselves
a young farmer a £15,000 one-off start-up grant does not
achieve that. It is better to spend the money on converting farm
businesses to something which is closer to the market place or
on the training schemes and the marketing and processing schemes
we were discussing earlier, which is why I am keen on having a
young person's element to all of these schemes. I think that is
a better way forward.
Mr Öpik: I think that is a pretty clear
answer.
Mr Todd
167. Have you done any comparisons with what
other EU states have done on early retirement schemes because
it is often available elsewhere?
(Mr Brown) That is true. Some of them have it as a
national measure and had it anyway, so of course they are carrying
that forward in their submissions for their rural plan. I only
know this through anecdotal evidence, I have not got other people's
plans—
168. Can we get them?
(Mr Brown) We will be able to in time, I guess, because
once they are approved by the Commission—
169. They become public documents?
(Mr Brown) I assume so, yes.
170. Because ours is a public document now.
(Mr Brown) Ours is, yes, that is for sure. It is the
only one I have got direct responsibility for. However, the ministers
do discuss these things amongst themselves, there is real interest
in what we have put forward on degressivity and our model of modulation,
but there is also a discussion about which measures are being
used, and the countries which are using early retirement schemes
are those which have always had them as part of their national
farm support measures.
171. Two quick points. Firstly, would you accept
that the replacement of one farmer by another, which is one of
the objections, because essentially this will happen anyway so
why should the state intervene in the process, may if accelerated
by the financial incentives actually improve competitiveness because
you may get a more skilled farmer or someone who is more prepared
to tackle a particular opportunity in the market place?
(Mr Brown) Or you may just give an extra sum of money
to facilitate the transference of a family farm from the older
member of the family to a younger member of the family, something
which would have happened anyway.
172. Indeed.
(Mr Brown) Is that a proper use of public money, is
the question you have to ask. It is pretty difficult to justify.
173. It is difficult to justify that particular
example, it is easier to justify an example in which you transfer
a farm from a farmer who is 60 years old and running out of steam
and the will to tackle opportunities in the market place to someone
who is new and is looking at other opportunities.
(Mr Brown) These are essentially private sector transactions.
I think the use of public money needs to be focused on the objectives.
I think it is right to use public money to purchase environmental
benefits, I think that is defensible and people like to see that
done, it is transparent and it does not distort the trade. I think
the same is true of the market orientated measures which are facilitated
under this regulation. But to have a broadscale early retirement
scheme for farmers which effectively supplements the social security
system is going to have a huge deadweight cost, as I said before,
and it is pretty difficult to justify in terms of the economic
outcome.
174. But would you accept that what we have
at the moment is a lot of older farmers locked in by low stock
values who are saying, "We cannot possibly retire now because
the stock is worth nothing"?
(Mr Brown) That was the case before. You are right,
more work needs to be done on why the average age of farmers,
which is 57/58, has been sustained at that level for some time.
175. But they are not going to retire at the
moment because they cannot see any possible gain from trading
in their assets, so a state scheme might accelerate the process.
(Mr Brown) The large farm businesses tend not to be
owned by single individual owners, they tend to be incorporated
in limited company structures. The medium-sized farms tend to
be family farms and time after time after time I get asked when
I visit them, "Should my son go into this business? I have
worked hard and I want to leave it to him, but he does not want
to do it. What advice should I give?"
176. What do you say?
(Mr Brown) I tend to sit and go through the pros and
cons depending on what business they are in. I also start off
by saying that I never lecture people on how to run their individual
businesses. I think it is something that comes ill from a politician.
Mr Hurst
177. Thinking about the objectives for judging
the success of the rural development regulation, are you able
to give us an indication of when the objectives may be determined
and the kind of evidence you will be looking at?
(Mr Brown) The answer to that is soon. I am sorry
I cannot be more specific. I am in discussions with others at
ministerial level and with officials. Whether they will be totally
objective is quite hard to say because some of the things we are
trying to do are on the environment side, as we explored earlier,
but it will be as good as we can get.
178. Do you know the kind of areas you will
be looking at?
(Mr Brown) I would rather not preempt the eventual
outcome. Clearly density of wildlife or birds, for example, is
one possible measure and it is that sort of thing we are looking
at. They are not true tests in a completely objective sense because
other factors can intervene that are nothing to do with the countryside
stewardship measure, for example.
179. You would not be able to say that 500 lapwings
equals ten corncrakes, would you, Minister?
(Mr Brown) That puts the problem very well. That is
exactly what it is. Incidently, I do not say that to disparage
the use of bird numbers as an appropriate measure because I think
it is an appropriate measure. We have to remember that it is not
an absolutely objective test.
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