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Lord Glentoran: My Lords, I thank the noble Baroness for coming before the House today to present the scheme. The Minister has our total support for the work that MAFF is carrying out elsewhere to fight foot and mouth disease. The industry also welcomes this scheme. Having read Hansard of another place--I have done a good deal of that recently--I should like to probe a few of the numbers and crave the assistance of the noble Baroness.
As I understand it, initially the Pig Industry Restructuring Scheme was to have received £66 million: £26 million for the current year, £20 million for 2001-02 and £20 million for 2002-03. The noble Baroness said that it took some time to get the scheme off the ground but, considering that it had to go through Europe, it was not really that long. I am quite prepared to give the Government the benefit of the doubt and accept that most of the time was taken up in Europe rather than Whitehall. As a result of that, it would seem that the first year's allocation of £26 million, or most of it, has disappeared. I am not quite sure what has happened. We hoped that it would be rolled forward. But I understand that some of the £22 million has been spent on the outbreak of swine fever. I thought that when the assistance for the outbreak of swine fever was set up the money had already been allocated. I am trying to find out what happened to £22 million.
We are now left with £40 million. As the noble Baroness pointed out, it is both an outgoers and an ongoers scheme. I understand that that was part of Europe's insistence that some of the money should be spent on taking capacity out of the marketplace. It was decided that £16 million should go into that side of the scheme. Today, it seems that £40 million is left in the scheme, of which £16 million goes to outgoers. That leaves only £24 million for reinvestment in the industry. I understand that the industry, quite rightly, is more interested in its survival and future than in those leaving. In particular, the noble Baroness will know that many ancillary jobs and businesses are dependent on the successful survival of the industry. Can the noble Baroness assure the House and the industry that the missing millions will be reinstated in year three of the scheme and that the figures I have quoted are something near correct? Having read Hansard of another place, I was not particularly clear on that point.
Perhaps I may turn briefly to the Pig Industry Development Scheme, which, having listened to the noble Baroness's clear explanation, I probably understood even less well. The scheme was set up in agreement with the Government to help the pig industry after the awful diseases and as an insurance against future problems. It started because the Government could come to an agreement of £50 per animal whereas the industry said that it needed £70. The net result is the scheme before the House, with the industry having the power to raise a levy, which in the long-term must be a good thing.
Where does the noble Baroness expect the first year's levy to start at? Although in the legislation there is £1, I do not believe that the industry could even begin to take on a levy of that nature. I should be interested to hear where the Government think the levy will start from. What is the total target for the levy? Are the Government prepared to offer the industry an interest-free loan to get the scheme started? The noble Baroness made some encouraging remarks to that end. I was not absolutely certain whether that
was what she was referring to. Having made those points, I support the Government on both the schemes.
Lord Thomas of Gresford: My Lords, we on the Liberal Democrat Benches very much support the two statutory instruments. I echo some of the points made from the Conservative Benches by the noble Lord, Lord Glentoran. The size of the fund in the Pig Industry Development Scheme is not stated anywhere and yet a quite ambitious programme is set out in the functions of the board that is to be set up by the commission. It is not simply confined to giving emergency aid to those who are affected by restrictions on the movement of pigs or those who are pig producers affected by the incidence of any pig disease. There is an ongoing duty to give financial assistance to pig producers to make structural and other changes to their business premises in order to prevent and/or limit the spread of any incidence of pig disease. A quite expensive programme is to be undertaken. I should be interested to know how much money we are talking about. How long will the levy take to arrive at anything like a sufficient capital sum to fund the rather ambitious functions that the board, under the commission, may have?
Should there be another crisis in the future--let us get over the one with which the noble Baroness is dealing at the moment--how quickly can the board move to process applications for grant? There is a cumbersome collection procedure in making the levy on the slaughterer, who has then to go down the chain to collect it from the original owner of the animal. One wonders whether the machinery is sufficiently flexible to achieve the object of rapid help to farmers when a crisis emerges. I underline the point made by the noble Lord, Lord Glentoran, about the necessity to have a significant fund to get the scheme underway.
I turn to the Pig Industry Restructuring (Capital Grant) Scheme. Can the noble Baroness confirm that the grant payable under the scheme is a one-off grant and not an annual grant, that it is limited to 5 per cent of existing loans as well as future loans and that whether those loans are existing loans or future loans, they must be supported by a business plan? A great deal of paperwork must be gone through in order to apply for the grant. At the end of the day, how much money is involved? Is it £24 million, to adopt the arithmetic of the noble Lord, Lord Glentoran, or is it an open-ended fund? Can anyone apply provided that he or she qualifies? Whatever the ultimate cost, is there a cap on it? Are there future plans for this kind of grant to be included in the agricultural grant, the Comprehensive Spending Review, and so on? Are we looking at something in the short-term or is a permanent scheme being put forward?
Having made those comments, I say again that we very much support the schemes. We very much hope that, after tonight, the noble Baroness will be able to return to her much more pressing duties and conquer the plague that is afflicting the countryside.
Baroness Carnegy of Lour: My Lords, when the Minister comes to reply, can she clarify how
devolution is working in respect of the two instruments? She said in relation to the Pig Industry Restructuring (Capital Grant) Scheme that the Scottish Executive is devising its own scheme. I understand that to be the situation. However, in relation to the Pig Industry Development Scheme, she said that the Welsh Assembly had already agreed to it. But she did not say whether the Scottish Executive had agreed. Is that agreement still to come? Does the order have to wait until the Scottish Executive has agreed before it can be brought into force? I may have misunderstood the position, but it is better to be clear about these matters.
Baroness Hayman: My Lords, perhaps I may reply to the noble Baroness, Lady Carnegy, first. I may not have been absolutely clear. The Pig Industry Development Scheme is for Great Britain only. The SI requires the consent of the Scottish Executive, which is already recorded in the SI. The Welsh Assembly has approved the scheme subject to EU state clearance, but it is recorded in the SI.
Continuing with the Pig Industry Development Scheme, I shall try to clarify the position. The noble Lord, Lord Glentoran, asked me about the levy. The initial levy will be set at 20p per pig. An upper limit has been set, but the initial levy will be set at that figure. On that basis, and on the basis of the market operating as it did before the recent events, it will take around 20 months to collect the required funding for the initial use of the fund; that is, the top-up payment to those payments from government funding that have already been made under the Pig Welfare (Disposal) Scheme. Some £4 million needs to be raised to achieve that.
The noble Lord, Lord Thomas of Gresford, asked how we will collect the levy. That will be done through the system established by the Meat and Livestock Commission. The commission has been deeply involved in the formulation of the scheme and in the consultation. It has set up a collection system and it is happy that it can be administered without any unnecessary bureaucracy.
The noble Lord, Lord Glentoran, asked me about the possibility of making available a loan with regard to pump priming the Pig Industry Development Scheme.
Lord Glentoran: My Lords, I asked about the possibility of an interest-free loan.
Baroness Hayman: My Lords, we must consider two issues here. First, the noble Lord may be aware that we have in place an existing, limited fund called the Aujeszky's Fund, which I mentioned in my opening remarks. The trustees have already put in an application to use it for up-front payments. Once the scheme is fully operational and the board--which will make decisions about future use--is in place, either the board or the MLC may wish to consider seeking a commercial loan in order to build up the development scheme and so allow early payment of moneys to eligible producers. An interest-free loan from government to finance the fund would constitute yet
another state aid and thus would require Commission clearance. The delays that that would cause have been made clear tonight. It would not be an effective way in which to get an early payment to producers.So far as the future of the fund is concerned, I should point out that setting it up has proved to be a complicated business. Fairly wide parameters have been built in to cover what it aims to do. That was very much related to the primary legislation under which it has been set up. We have made it clear that the agreed first use is the £4 million top-up payment of the government-funded Pig Welfare (Disposal) Scheme. Once that commitment has been met, it will be a matter for the board of the Pig Industry Development Scheme to decide how the fund might be used.
Perhaps I may turn now to the Pig Industry Restructuring Fund and try to make the position clearer than perhaps was achieved in another place. However, the matter is not without complexity. I shall respond to some of the questions rightly asked by the noble Lord, Lord Glentoran, as regards the funding of the scheme.
The noble Lord knows that three tranches have been made available, totalling £66 million over the three-year funding period for the scheme. However, because of the difficulties in obtaining commission clearance, which was not secured until the end of December last year, the £26 million allocated for the year 2000-01 will not now be spent on the Pig Industry Restructuring Scheme. My right honourable friend undertook to ensure that that money would go to the pig industry. That has now taken place and, in the main, the funds have been spent on dealing with the classical swine fever outbreak in East Anglia.
Any remaining sum from that £26 million, which will be at least £3.9 million, will be carried forward into the financial year 2001-02 and spent on the Pig Industry Restructuring Scheme. In addition, the Minister has announced that the £20 million allocated to the scheme for 2002-03 will be brought forward to be used in 2001-02. That means that we shall have a total budget of £44 million in the next financial year. That is in recognition of the fact that we shall be opening a second tranche of the outgoers' scheme in case more people wish to take it up. In fairness to the applicants already in place, we have closed the first tranche.
The noble Lord rightly will ask me what will happen in subsequent years. Additional funding for future years takes us into the next spending review. For that reason, I cannot make any commitment, except to say that, in general terms, the Government are determined to ensure that the scheme meets its objectives. The noble Lord will understand that we cannot make commitments about the next tranche. However, as I have said, we are bringing forward the funds from the year after this one in order to make more moneys available.
As regards the method of application, the aid provided is based on a sealed bid, put in by the applicant, giving a figure for how much is required per sow place for him or her to leave the industry. All
sealed bids will be opened at the same time and the bids will be measured against a set of value for money criteria that have been agreed previously. Outgoers 1 closed for applications on Friday, 2nd March and sealed bids will be opened later this week. It is hoped that the successful applicants will be informed by the end of March. However, we recognise that a number of pig producers who had intended to carry on in business may now be thinking again as a result of the foot and mouth outbreak. That is why we have decided to open an Outgoers 2 scheme from 12th March. The cap is in the form of the funding that will be available each year for the scheme.I hope that that answers the questions put to me by the noble Lords, Lord Glentoran and Lord Thomas of Gresford, and the noble Baroness, Lady Carnegy of Lour. On that basis, I hope that the House will agree to the Motion.
On Question, Motion agreed to.
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