Meat Industry (Scientific Research Levy)

– in the House of Commons at 12:00 am on 17th December 1965.

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11.45 a.m.

Photo of Mr James Hoy Mr James Hoy , Edinburgh Leith

I beg to move That the Meat Industry (Scientific Research Levy) (Revocation) Order 1966, a draft of which was laid before this House on 1st December, be approved. Let me emphasise, first of all, that this Revocation Order does not mean any change in the Government's interest in or support of meat research, nor that we have given up the idea that the industry should make a proper contribution to this research. It is merely part of the process of changing over from an unsatisfactory method of collecting a levy to a more satisfactory one.

I must say something about the history of the Order which we are proposing to revoke and which was originally approved in draft by the House in February, 1963. It imposed on the industry a levy designed to meet half the capital and current expenses of the Meat Research Institute set up by the Agricultural Research Council. Collection of the levy was linked with the arrangements for making weekly payments under the Fatstock Guarantee Scheme. A small sum—3d. per beast for cattle and ¼d. for sheep—was added to the buyer's bill. Double the sum was then collected from the seller by subtracting this amount from the guarantee payment. This method of collection worked reasonably well when the guarantee system included a provisional rate of guarantee, announced in advance. This provisional rate very seldom needed to be adjusted before being made final. The fact that there was an advance announcement of the provisional rate made it possible to suspend collection of the levy from buyers of certified stock in weeks when the provisional rate was nil.

The guarantee arrangements were changed after the Annual Review of 1964. The system that I have outlined was replaced by the present one, under which the guarantee payment for each week is calculated on the basis of the actual market prices in that week, taking into account any adjustments needing to be made to the guarantee payment under the graduated deficiency payments system. The guarantee can, therefore, be calculated only retrospectively.

The present guarantee arrangements include provision for an end-of-year payment if the guarantee for the year has not been met. It was expected, on the basis of recent experience of market prices and in the light of the outlook at the time, that an end-of-year payment would be made at the end of the 1964–65 fatstock year. It was thought that this would provide the opportunity for recovering from producers their part of the levy in respect of any weeks where a weekly guarantee payment had not been due. So the arrangements for weekly collection of the buyer's part of the levy were continued. In the event, because of an increase in market prices very much greater than could have been foreseen at the time, no end-of-year payment was due at the end of the fatstock year. As a result, some of the money collected from buyers remained in the hands of sellers and did not reach the Agricultural Research Council for use on research.

We have, therefore, been considering very carefully this year whether we could devise any means of preserving the present system. We have reached the conclusion that the only sensible course is to revoke the present Order and collect the levy in a different way. We have made provision in Clause 15 of the Agriculture Bill so that charges may be imposed or payments made by the Meat and Livestock Commission in respect of meat research done by the Agricultural Research Council. This will, clearly, be a much more satisfactory method of dealing with this difficult problem. There will, it is true, be a period during which no money will be collected from the trade for meat research, but I hope it will not he a long one. This interruption will not, of course, affect the total contribution of the industry to this essential research.

The provisions in the Agriculture Bill will apply only to Great Britain. Different provisions will be required in Northern Ireland and these will be announced by the Minister of Agriculture for Northern Ireland as soon as possible.

What I have said so far mainly concerns cattle and sheep. Pigs in Great Britain are not covered by the Order now current, since the Pig Industry Development Authority made a voluntary undertaking to contribute to the Agricultural Research Council an annual sum for meat research equivalent to that which would have been produced by a normal levy. The Government propose to release P.I.D.A. from this undertaking if this Order is made. The new arrangements proposed in Clause 15 of the Agriculture Bill will cover pigs as well as cattle and sheep.

Finally, what do we propose to do about the money wrongly collected from buyers last year and this year? We cannot at the moment precisely calculate the amount involved, but it is a little under £25,000. To collect this money from the sellers now would be very difficult and costly, particularly as a very large number of very small sums is involved. To try to reimburse all the buyers individually would cost even more—probably more than the total sum involved. Any attempt at this stage to collect or redistribute the money would be pointless. What everyone concerned wants is to see this amount of money devoted to meet research.

It is, therefore, proposed that, as a final settlement of this matter, a sum equivalent to the total sum wrongly collected from buyers be paid out of public funds to the Agricultural Research Council to be devoted to meat research. In this way the project for which the money was collected will receive equivalent benefit, and the total obligation of the industry will be reduced by the amount it has contributed.

Our officials have held a meeting with all the main interests concerned at which it was agreed that the proposals provide a reasonable means of dealing with the present situation. The proposals have also been circulated in writing and no adverse comment has been received. I therefore confidently recommend this Order to the House. A system which originally seemed to provide a simple method of collecting this levy has become unworkable because of changes in the guarantee scheme wholly unconnected with it.

Everyone agrees that the present system cannot be modified to operate satisfactorily and that the continuing collection of money from buyers that is not properly due should cease as soon as possible. What is needed is a new scheme of collection not subject to the difficulties of the present one. We propose, when the necessary legislation is in force, to introduce such a new scheme, based on a thorough study of the practical problems involved.

11.53 a.m.

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , North Cornwall

I am grateful to the Joint Parliamentary Secretary for being so frank about the situation. The Government have got themselves into a mess in the past year and he was quite frank about the reasons. I introduced this Order in 1963 and then this seemed to be a reasonable method of levy and of collection. There was a running rate of deficiency payments and the forecasts made this process easy.

Then, as the hon. Gentleman said, in 1964 the method of paying deficiency payments to producers was changed. The collection of the levy then became more difficult. The Ministry knew from the end of the 1964 fatstock year that the position was becoming impossible but it has taken all this time for it to make up its mind to revoke the Order. One could understand that delay if it were a question of consultation and of finding some new method whereby the money could be channelled into meat research.

What is difficult to understand is why the levy was allowed to go on being paid by the buyers during this period. On 12th July, in reply to a Question from my hon. Friend the Member for Tonbridge (Mr. Hornby), the Joint Parliamentary Secretary, the hon. Member for Enfield, East (Mr. John Mackie), gave the amount which had been paid by buyers of meat to the producers. Of course, the producers themselves were not contributing and the money therefore was not reaching the meat research establishments. As a result of this, there has been a certain amount of bitterness among those who have been paying their portion of the levy. They have been wondering how long the Ministry would continue allowing these payments to go on. I repeat that the Government knew that this situation was arising at the end of the 1964 fatstock year. They knew it on 12th July, as was made clear in that Answer.

One can criticise the Government for not taking action earlier to revoke the Order. It is an almost incredible position in which money is paid over to producers by buyers who are getting no benefit out of it. I am sure that the whole industry will be grateful for the statement that the Government are to make a contribution of £24,000 direct to the Meat Research Association. That is a good thing to do and I am sure that it is the right solution. But surely it is not only the sum of £24,000, which is the short-fall, that is involved. That sum in fact is only half the levy. It arose from the buyer's 3d. on beef carcasses and a smaller amount on sheep and lamb carcasses. What about the 3d. from the seller? The two contributions from buyers and sellers together should make £48,000 to £50,000. and it is this sum that should be paid by the Government to the M.R.A. and not £24,000.

We should press the hon. Gentleman on this issue because this total sum is the amount of levy which the Research Council has been short of. I hope that the hon. Gentleman will be able to look at this again and see whether the total sum could not be made up. Then there is the position of the buyers who have been paying this money to the producers. In effect, this has been a bonus "buck- shee" payment to the sellers of beef and lamb carcases.

As the hon. Gentleman said, in Clause 15 of the Agriculture Bill, provision is made for a new system of levy by the Meat Commission and presumably that money will be voted for research, quite properly. But the fact remains that this money under the 1963 Order has been paid for the purpose of research. It has been put into the pockets of the producers, however. That, of course, is no reflection whatever on them. Nevertheless, that is what happened. It would be only fair if the hon. Gentleman gave an assurance that the buyers who have paid £24,000 to £25,000 should have that amount taken into account when the levy is being raised in the initial period under the new Bill. They have overpaid this amount. They have paid it "buckshee" to the producers, and it is only right that, because of this administrative muddle which the Government have allowed to continue beyond what I think is reasonable, they should have this amount taken into account when the levy is being based.

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

Would not it be easier for the producers to repay what they have been overpaid?

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , North Cornwall

This point was covered to a certain extent by the Joint Parliamentary Secretary. If a reasonably satisfactory method could be found by which 6d. per cattle carcase could be repaid to the butchers, I think that this would be a fair way of doing it, but I am sure the Joint Parliamentary Secretary will agree that the administrative details and the difficulties involved in doing that would far outweigh the benefits of getting the money paid back.

There would be the difficulty of tracing the payments which had been made to individual producers. There would be the difficulty of getting the money from them. If an individual producer decided that he would not repay the money, there might have to be a court action to collect it. Many administrative difficulties would be involved, and, as I say, such a scheme would not be worth while.

The simplest way of dealing with this is to take this factor into account when the rate of levy comes to be arranged under Clause 15 of the new Bill, if it becomes law. If this is done, the buyers who have paid their portion of the levy for something which has not been carried out will not feel that they have wasted £24,000.

I welcome the Government's action in revoking the 1963 Order. I think that this should have been done earlier, and I think that arrangements should be made to ensure that those who have paid this £24,000 are given some special consideration later on. I welcome the Government's announcement that they are prepared to pay £24,000 direct for meat research, but I think they should consider again whether to pay £48,000 because this is the total amount of the levy which is lacking and which, if the scheme had been working, would have been paid.

12.3 p.m.

Photo of Mr Geoffrey De Freitas Mr Geoffrey De Freitas , Kettering

We all agree about the importance of meat research. It is a particularly valuable type of research, and in the last two years the industry, which is a most adaptable one, has made good use of the results of research.

Research in the meat industry has been financed in a certain way in the past. As I say, the industry is adaptable and ready to accept new ideas. The fact that it welcomes the importation of the Charollais breed, in spite of the allegation that to do so was against our interests because we are predominantly exporters of stock, shows how adaptable the industry is, and there must be no falling off in the research on meat.

I did not understand the figures given by the hon. Member for Cornwall, North (Mr. Scott-Hopkins), and I should like my hon. Friend the Joint Parliamentary Secretary to put the matter quite simply. Can he guarantee that although the levy money will no longer be available for meat research, other money will fully make up that deficiency so that there will be no gap? Can he guarantee that there will be no falling off in the money devoted to meat research?

12.5 p.m.

Photo of Mr James Hoy Mr James Hoy , Edinburgh Leith

Perhaps I might deal first with the last point made by my hon. Friend the Member for Kettering (Sir G. de Freitas). I said in opening that we were going to make this money available for meat research.

The hon. Member for Cornwall, North (Mr. Scott-Hopkins) is an awkward chap at times. He tends to exaggerate even on the smallest issues. He talked about the awful amount of money involved. This is just not so. The 1963 Scheme was introduced by the hon. Gentleman, and the modification which took place in 1964 was a result of agreement with all concerned. It so happens that the payments were going to be retrospective, depending on what happened, but meat prices moved to such an extent that it did not become workable. That is all that happened, so let us not exaggerate the position.

The hon. Gentleman talked about bitterness among those who had contributed this sum of £24,000. The sum collected from each person is so infinitesimal that it would cost more than that to try to repay it.

Photo of Mr James Hoy Mr James Hoy , Edinburgh Leith

I agree that the hon. Gentleman said that, but if he follows that by saying that people feel miserable about it, he does his case no good.

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , North Cornwall

I think the hon. Gentleman will accept that if one overpays £24,000 to someone else one is entitled to feel bitter about it, whether the individual payment is large or small. I am surprised that the hon. Gentleman is adopting such a cavalier attitude, and is regarding £24,000 as a minor matter. It is a considerable sum to any association.

Photo of Mr James Hoy Mr James Hoy , Edinburgh Leith

I am not treating it as a minor matter. All I am saying is that it is not true to say that there is tremendous bitterness among those who have contributed to this sum. Under the present scheme, this money would have had to be paid in any case. It so happens that because of the way in which meat prices have moved the other partner has not had to make this contribution. During the weeks of nil guarantee payment, no levy contribution was legally due from anyone. The Order is quite clear on this.

Although the scheme makes it necessary to collect from buyers in case there should be a guarantee payment for the week in question, it does not follow that a contribution is due from the sellers. That is why we thought that in justice to the Agricultural Research Council this sum of £25,000, which had already been collected, should be made up, and the Council should not be penalised by losing it. This sum had been contributed, but the expense of collecting it would be so great that it would cost more than that, and I was glad to hear the hon. Gentleman say that he welcomed the Government's solution to the problem.

The Government decided that, to ensure that the Agricultural Research Council would not be any poorer because of the situation which had arisen, they would make a payment of £25,000 to the fund. I think that this is a reasonable thing to do, as I am sure that the House will agree. It was because of that that I had pleasure in moving the Order.

Question put and agreed to.

Resolved, That the Meat Industry (Scientific Research Levy) (Revocation) Order, 1966, a draft of which was laid before this House on 1st December, be approved.