Column Number: 003
Fourth Standing Committee on Delegated Legislation
Thursday 3 April 2003
[Mr. George Stevenson in the Chair]
Farm Waste Grant Scheme 2003
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): I beg to move,
That the Committee has considered the Farm Waste Grant (Nitrate Vulnerable Zones) (England) Scheme 2003 (S.I., 2003, No. 562).
It is good to see you in the Chair this morning, Mr. Stevenson. We look forward to your firm guidance of the Committee.
The Government's long-standing and ongoing commitment to farmers was demonstrated in our strategy for agriculture, the action plan for farming of March 2000. That included—among a range of other measures—the commitment that the Government would do everything we can, consistent with our legal responsibilities, to minimise the extra burdens of new nitrate vulnerable zone designations on farmers. Extending the farm waste grant scheme beyond April 2003 is entirely consistent with that commitment.
Under the EC nitrates directive, farmers in NVZs are restricted in the type and amount of manures and slurries that can be applied to the land, and in the frequency with which they can be applied. We appreciate that that can cause difficulties for farmers who have little or no storage capacity and that the expense of compliance is an issue. The NVZ action programme for England acknowledges that the minimum standard of storage should ensure that there is sufficient storage capacity to cover the closed periods, which on shallow or sandy soils apply to applications of slurry, poultry manures and liquid digested sewage sludge, except where environmentally acceptable disposal routes are available. The closed periods apply to shallow or sandy soils between 1 August and 1 November—a 3-month period—and to non-grassland between 1 September and 1 November.
Extension of the NVZs following implementation of the Nitrate Vulnerable Zones (Additional Designations) (England) (No. 2) Regulations 2002 from 8 per cent. to approximately 55 per cent. of the land area of England will require many more farmers to upgrade their existing manure storage facilities or install new ones. In recognition of that, it is proposed that the farm waste grant scheme, which was due to close on 17 April this year, should be extended in England until October 2005. The scheme makes grant available to cover 40 per cent. of eligible expenditure on works required to implement the action programme measures. That is the highest grant generally allowed under EU single market rules, and it is higher than many other countries are providing.
The scheme focuses assistance on a range of storage and fixed handling facilities, such as facilities,
Column Number: 004
including safety fencing, for the handling and storage of manure, slurry and silage effluent; fixed disposal activities for slurry and silage effluent; and facilities other than roofing for the separation of clean and dirty water where those facilities reduce the need to store slurry. Grant is available to farmers in NVZs on eligible expenditure up to an investment ceiling of £85,000 per business. Farmers with land designated in the first round of NVZs who have been complying with the action programme measures since 1998 remain eligible for grant.
Since its introduction in 1996, uptake under the scheme has been relatively low: there were only 58 claims between 1996 and 2002. That is owed to a number of factors, including swine vesicular disease, foot and mouth outbreaks, and the ability—of which many farmers take advantage—to export manure to farms outside NVZs. The extension of NVZs in England will make it more difficult for farmers to continue to export manure, as the number of farmers subject to the NVZ restrictions increases because the area has been increased.
As this is a demand-led grant scheme, it is impossible to forecast accurately the total number of annual claims, but £3.8 million has been profiled for each of the next three years, commencing from 17 April 2003. Based on previous claims, it has been calculated that that will be sufficient to cover the newly designated NVZs, and new claims from farms in the original zones that are no longer able to export their manures. However, the regulation contains a provision to close the scheme in the event of funds being exhausted before the closing date.
The scheme restricts grants to
''fixed disposal facilities for slurry and silage effluent'',
although it has been suggested that the Government should extend the scheme to support the adoption of specialised application machinery, such as band spreaders and shallow injectors. Storage is a specific measure in the action programme that stems directly from the directive. Improved application equipment would not provide a direct solution to the restrictions in the action programme.
Spreading is frequently undertaken by contractors rather than by individual farmers. That is a growing trend: the farm practice survey 2001 indicated that 38 per cent. of farmers who had manure or slurry on their farms, including arable farms that imported manures, used contractors. The need for more specialised machinery could accelerate that trend, which suggests that extending the FWGS to cover individual purchases of machinery by farmers is unnecessary. There are environmental benefits, but such equipment is more expensive than conventional tackle and it cannot be accommodated in the budget.
The FWGS currently operates in both England and Wales, but the extension of the scheme will only apply in England. In addition to achieving compliance with action programme measures in NVZ areas, farmers who install such facilities may help to reduce other forms of agricultural pollution that can arise from manures, for example, phosphorous pollution,
Column Number: 005
microbiological contamination of watercourses and ammonia emissions to air.
The scheme represents real assistance to farmers in NVZs and demonstrates the Government's commitment to balancing the needs of an efficient agriculture industry with the need to protect water sources from pollution. In that sense, the provision is also useful as grant support for the agricultural sector. The scheme also helps the farmers who have been included in the new designations. The amount of resources made available will cover the projected demand for this facility.
Mr. James Gray (North Wiltshire): Welcome to the Committee this morning, Mr. Stevenson.
The next time a constituent tells me that MPs lead glamorous, exciting lives and are overpaid, I shall tell them that I was in Committee Room 11 at 8.55 am discussing the proper disposal of farm waste slurry. None the less, I am glad to be here because the issue, although unglamorous, is important to many farmers in my constituency and throughout England.
The Minister will be relieved to hear that we do not object to the statutory instrument on principle. The grant scheme is worthwhile and we are delighted that it is being extended for an extra two years. However, it will not surprise him to hear that I have some difficult questions for him. He has alluded to some of them in his speech; but he might like to give some thought to the others before he winds up. I pay tribute to the National Farmers Union, especially the excellent Mr. Barney Holbeche, who prompted some of the questions on which I shall press the Minister.
We welcome the grant: it is useful and, thanks to the extension of the NVZ areas, more farmers will use it. We are, however, unhappy about the principle of extending NVZs from 8 per cent. to 55 per cent. of the acreage of England. That is unnecessary, we do not agree with it and we argued against its being done. Now that is in place we cannot do anything about it, but the Government should finds ways to compensate farmers for the extra costs that they will have to bear as a result of that extension.
Only 40 per cent. of allowable costs will be agreed in non-less favoured areas, but 50 per cent. is the maximum in less favoured areas. Would it not be sensible to allow 50 per cent. of the total cost in NVZ areas? That seems a sensible relaxation to which the Government might agree and I hope that the Minister will consider doing so. After all, we are not talking about the total cost of buying the equipment, creating the slurry pits and so on; the farmer still has to come up with 60 per cent. of the cost. The equipment is not free, and in the current state of agriculture, 60 per cent. of what might be quite a large capital investment in a farm will still be a lot of money. Perhaps the Minister will think it sensible to allow the scheme to meet 50 per cent. of total costs in NVZ areas, as in less favoured areas.
Secondly, we are concerned that the opportunity has not been taken to include under the scheme new technology that promises important environmental
Column Number: 006
benefits for farms. The Minister alluded to the issue, but I am not entirely convinced by his comments. The Government have limited the grant to fixed equipment, but we think that there is a case for broader scheme that allows payment for the more advanced slurry application machines now available. I was delighted to learn that the machines place slurry on or just below the soil surface with an application known as trailing hose, trailing shoe or shallow injection. They avoid covering the leaves of crops or grass with slurry and allow application at times when crops can make maximum use of the nutrients, and thus reduce the risk of leaching into watercourses, which of course has significant environmental benefits.
A pilot DEFRA initiative to assist farmers in acquiring the equipment has proved successful. There is an opportunity to build on that success by allowing farmers to buy such machinery with the grants. The Minister says that that would not be a direct solution to the problem, but I am not certain what he means by that. Our problem is that farmers are not allowed to apply slurry to the land in NVZs, although they can in other areas. Allowing them to buy equipment that injects slurry under the surface of the ground, so that there is no detrimental environmental effect, would be a direct solution to the problem.
The Minister argued that nowadays contractors do much of that kind of work. That may be so—it is true of a great deal of farm work of all kinds. Obviously, it would not be correct to allow a contractor a grant to buy the very expensive equipment needed to carry out the work, but we were not suggesting that. We are suggesting that where contractors are not used and where the farmer has enough land to make it worth while buying the equipment and he has considered doing so, he should be allowed to apply for a grant under the scheme to buy that more complicated and advanced equipment, which would dispose of slurry in an environmentally friendly way. That would achieve the aims of the EC directive, and is environmentally friendly and helpful to farmers. I entirely accept the Minister's point about contractors; I am just not sure that I accept his point about a direct solution. The idea seems eminently sensible, if not absolutely direct. I hope that the Minister will give further thought to that.
My third question is about how the scheme will be funded. Schedule 4 seems to contain a bizarre innovation, in that it says that the scheme will run only until such time as the money runs out. There is no mention of how much money is involved, although I see in the helpful explanatory notes that it will be £3.8 million per year—the Minister also alluded to it in his speech. That sum is presumably to cover the lifetime of the scheme until 2005, but who knows what will happen beyond that?
There is no mention in the instrument of how much money the Chancellor of the Exchequer will devote to the scheme. It would be strange if we considered a statutory instrument with no idea about how much money will be spent on it. Presumably, the scheme might become a target for an avaricious Chancellor of the Exchequer who wants to save money. That will not necessarily happen between now and 2005, but
Column Number: 007
presumably the scheme will presumably continue thereafter. It is strange to set a precedent of having a schedule that says, ''We'll allow the grant, but it will stop when the Chancellor turns off the tap.''
We are told that the scheme will cost the Exchequer £3.8 million a year. Given that there is a maximum grant of £85,000 per application, there is, according to my basic arithmetic, a possibility of no more than 38 successful applications per year. We know that there were 58 between 1996 and 2002, but by the Minister's admission, that was an extremely and surprisingly low number. It was low because he had not yet extended the NVZs. Given that they have now been extended from covering 8 per cent. to covering 55 per cent. of the acreage of England—a sixfold increase—one presumes that number of claims made will also increase sixfold. By my quick reckoning, that would take the number of applications from 58 to some 320 or 330, perhaps more. Presumably, the Minister wants to make good use of the scheme. He will organise publicity telling farmers that the scheme is open to them and that the Government do not want farmers to use their slurry in environmentally unfriendly ways—he will plead with them to apply for the grant. Therefore, extrapolating from the figures available, we have to imagine that there may be 500 or 1,000 applications.