Horticulture

– in the House of Commons at 12:00 am on 14 June 1974.

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4.2 p.m.

Photo of Mr Stephen Ross Mr Stephen Ross , Isle of Wight

I am grateful for this opportunity, even if it is at two minutes past four o'clock on a Friday, to air some of the problems which are facing horticulturists, and particularly glasshouse growers. We were due to have a longer debate on this subject on the Adjournment motion for the Easter Recess, but unfortunately it was surrendered at the last moment and, although in the agriculture debate horticulturists were mentioned briefly by the hon. Member for Mid-Bedfordshire (Mr. Hastings), he was the only Member who referred to their problems. The debate understandably was concentrated on the crisis facing livestock producers. Horticulturists' problems certainly have not become any better since. In fact the situation has deteriorated during the last week.

I hope that we shall have an announcement of help on this subject from the Minister when he returns from Brussels in the middle of next week. I wish him luck in his deliberations in Brussels. I am grateful to him for agreeing to see me on this matter next Thursday, but as he is going to Brussels I hope he will acquaint himself with what aid is being offered to the glasshouse growers of the European Economic Community. Although he has provided a subsidy of 6p on heating oil until the end of this month, for which we are grateful, and a lower subsidy of 4p to the end of the current year, my information is that almost all our colleagues in the EEC, and particularly the Dutch, have been treated more generously.

After some fairly complicated maneuvers I gather that the oil price for the Dutch has been fixed at about 9p a gallon, which is about half the rate applying in the United Kingdom without taking into account the subsidy. Gas prices have been equated at about the same figure. The Dutch growers have enjoyed a grant of £500 per burner for converting to gas heating. I am told that 60 per cent. of growers in Holland have already carried out the conversion.

I am indebted to the Lea Valley Growers' Association for supplying me with its "Newsletter" and to the NFU for the information which it has supplied. In Belgium, for instance, assistance is being offered in the form of capital grants and reduction of VAT. In France we are told that 47.6 million francs has been provided. That has probably been provided through the equivalent of a FEOGA fund, a farm and horticulture development scheme and remission of tax. Germany has had £21½ million provided from funding by separate lander—namely, regions or counties. We are not sure exactly what has happened in Italy. No doubt the present crisis has not helped matters.

I represent a constituency in which a considerable expansion in the glasshouse industry has been actively encouraged to take place by previous Governments over the past 10 years. Growers displaced from the Lea Valley and elsewhere have invested substantial sums in the Arreton Valley, the light intensity and soil structure of which is claimed to be amongst the finest in the United Kingdom. New buildings costing up to £40,000—and goodness knows how much more they may cost as a result of inflation—have been erected. There are now approximately 30 acres which are covered by glass. All the glasshouses are heated by oil. Twenty acres are devoted to tomatoes and cucumbers and the remainder is concentrated on cut flowers, particularly roses, carnations and chrysanthemums. Many are exported and I believe that some go as far a field as Hong Kong.

The advisory services of the Ministry have rightly actively encouraged such development. Up to last year all was set fair for a prosperous future. Then came the crushing blow of the oil price increases. Since then prices have trebled. The Minister's Easter announcement as temporarily conceived was not over-generous. My constituents and growers throughout the United Kingdom want to know where they go next. It seems that there is no long-term plan. There has been no guidance from the Ministry.

Are the growers to turn to coal? I gather that the cost of converting modern oil heaters to coal burning works out at approximately £5,000 an acre. Or are the growers to convert to gas? Will they receive any grant-aid to do so? Is it the case that the Minister is intending to continue the present scheme? If so, will he say so now and guarantee to increase the subsidy as oil costs increase? I suggest that that should be done in the same way as the Dutch have subsidised the increased costs of gas and oil.

The position is that my growers cannot be supplied with gas in sufficient quantities before 1976 at the earliest. Whatever form of heating is decided upon, it must be based on a hot water system and not on hot air.

The glasshouse industry has a total annual output of £72 million. It is believed that some £100 million has been invested in the industry with the aid of the Horticultural Advisory Services during the past 10 years. The industry is extremely efficient and is able to meet all fair competition. All that it needs is long-term assurances. I shall briefly refer to some fairly simple aids which the Minister should consider seriously and which would help the industry.

First, I ask for the removal of VAT on cut flowers. I ask the Minister to persuade his right hon. Friend the Chancellor of the Exchequer to forgo that imposition, which is having a serious effect on the number of outlets that are open to producers. We all know that some small greengrocers used to sell quite a few bunches of flowers but I gather that now, because of the trouble involved in the collection of VAT, they cannot be bothered to do so. Flowers are dear enough already, but they bring some joy into the lives of most of us, and particularly the old and the sick.

Further, I ask the Minister to bring back the lime fertiliser subsidy. That would be generally welcomed by the agricultural industry. I do not believe that the return of that subsidy would offend the common agricultural policy.

Other matters which I should have liked to mention include the import subsidised tomatoes from Ireland and the cheap cucumbers which are coming here from Romania, but it is the cost of oil that is the main source of worry. Time is short. It is probably already too late to do anything before the end of next season. An announcement is therefore needed now.

In a letter to me, the county secretary of the local NFU said: Our members are not asking for anything more than their European counterparts will receive. All they want is fair competition and some idea of what the Government want them to use as fuel for their glasshouse heating. We have just has a short debate on Concorde, but at this critical time we must get our priorities right. It is more essential to pay attention to the needs of our farmers and growers, otherwise we may be facing starvation in the years ahead.

4.11 p.m.

Photo of Mr Roland Moyle Mr Roland Moyle , Lewisham East

We are all grateful to the hon. Member for Isle of Wight (Mr. Ross) for his initiative in raising the subject of the future of the horticulture industry. As he said, we were to have had a lengthy debate on horticulture on the day before the Easter Recess, but the announcement made by my right hon. Friend of the help we were to give to the industry removed the desire of the House for a debate on the subject. In consequence, we have waited until today to talk about it.

Horticulture is an important part of our agricultural life. The horticulture industry's output as a whole is valued at more than £400 million a year, and the glasshouse sector, to which the hon. Gentleman specifically referred, accounts for almost one-quarter of that. There is no tendency for the Government or anyone else to underestimate the importance of the horticulture industry and the glasshouse sector of it to the country's economy. The Government are no less appreciative of the value of all parts of the industry in providing the consumer with its varied produce and making a significant contribution to import saving than is the hon. Gentleman.

The hon. Gentleman raised the question of the glasshouse subsidy and asked what is happening on the Continent and how we see the future. The Government treated seriously the representations made by the hon. Gentleman and other hon. Members on both sides of the House about the effects of increased oil prices on the economy and on the industry. As I said, my right hon. Friend announced on 11th April that it was proposed to introduce a temporary subsidy—it is important to bear in mind that it is temporary —to assist growers to adapt to the sharp increases in fuel prices which occurred in the autumn of last year and the spring of this year. That announcement was received by representatives of the industry with considerable satisfaction. The subsidy has been set at a reducing rate of 6p a gallon until the end of this month and 4p a gallon from the end of this month until the end of December. I cannot stress too vigorously that it is intended as temporary relief to the industry to enable it to adjust its costs and practices in the light of increased fuel costs. There is no intention of extending it beyond the end of this year.

Photo of Mr Stephen Ross Mr Stephen Ross , Isle of Wight

The hon. Gentleman is concentrating on the word "temporary". This worries me, because I understand that even now Dutch growers are paying only about half the cost of fuel. It may be slightly more than that, but it is certainly less overall than we are paying. I understood also that the relief was to continue to the end of 1975. As the Minister is going to Brussels, this is an opportune time to ask him to make sure that we are on an even keel with producers on the Continent so that we do not have unfair competition from them.

Photo of Mr Roland Moyle Mr Roland Moyle , Lewisham East

I will come to what is going on on the Continent, but it may perhaps be said that Dutchmen propose and Commissioners dispose.

We are advising industry that it must look at methods and must adjust techniques to take care of the situation as far ahead as we can in terms of high fuel costs. We have no intention of providing Government assistance beyond the end of this year. This means that horticulturists will have to adjust to oil costs. This depends to a large extent on the price of the product, over which growers have little control, and on the level of imports.

I am sorry that I have no information about the situation in Belgium, but we watch the situation on the Continent closely. The key point about the Dutch situation is that the Dutch are in a favourable position in providing fuel for their horticulturists. They have a large supply of natural gas—not from the North Sea, but in the province of Groningen—and can readily take advantage of that gas and make it available to their horticulturists. Their regime is not a subsidy as such. They adjust their natural gas price to the oil price of four quarters earlier. This may not prove to be so much a subsidy on natural gas users as a slight disadvantage to those who use oil burners. This is probably the major aim of the policy which they have adopted.

The Dutch have stepped up connection grants—grants given when one switches from oil to natural gas. We in this country also provide connection grants for those who use natural gas. The price of natural gas in Holland has not yet reflected the major increases which took place in the price of oil in the autumn last year and in the spring of this year. Those increases are still to be felt by the Dutch.

Larger users in Holland get the industrial rate but—if I may put it in this slightly complicated way—the smaller of the larger users may get a lower tariff. So far as we can see users of oil burners can claim 2p per gallon on what they use and can borrow money to buy oil at a low rate of interest, about 5 per cent. That amounts to another 2p per gallon. That does not compare favourably with the level of subsidy on oil which we were providing for the first six months of this year and compares only with what we are doing for the second six months.

The French are providing about £4 million, and we calculate that it will be paid out on heated glass. This will apply for the first six months of 1974, and for the second six-month period no arrangement has been made. That compares with our subsidy of £4½ million in the current year. The Germans are paying £6½ million for glasshouse growing and fodder drying. We are unable to sort out the amounts of subsidy between glasshouse growing and fodder drying, but mostly the subsidy will go to glasshouse growers.

The Dutch, the French, the Germans and ourselves have submitted proposals to the Commission that this action be allowed, and the Commission has probably decided only today what exactly it will allow. I am not in a position to announce what the Commission has decided to allow, but such preliminary calculations as we have made in our Ministry lead us to believe that our subsidy will be able to go ahead until the end of the year as planned by us. That is the general position. We shall look into the question of converting more of our growers to using natural gas, but I am afraid that the position there is that the gas available from the North Sea is already committed to various buyers. Therefore, I suppose that there will have to be increased capital investment in the North Sea if increased supplies of natural gas are to be made available to our horticulturists. This will take time.

Horticulturists will have to do their sums in respect of their own installations and livelihoods, and work out whether they should stick to oil, wait for natural gas or perhaps convert to coal. They will have to watch the market, work out what will be best for them and do what they can to help themselves. The subsidy is merely temporary interim relief to allow the industry to adjust to the situation it now faces.

We take the hon. Gentleman's point on VAT. He is no doubt aware that a producer who pays VAT on his flowers can apply to the Customs and Excise to have the VAT repaid. At least there is that help.

The best thing I can say on the lime subsidy is that I, along with the great majority of the British public, have been told by the President of the National Farmers' Union that we are to reintroduce the subsidy. No such announcement has been made about the general fertiliser subsidy. I think that the hon. Gentleman was a little off-beam when he said that these subsidies did not offend against the Common Market regime. I would not say that what we do would ever offend against the Common Market regime, but I would say that there are some ways of being less offensive than others. I suppose that the lime subsidy is a way of being less offensive than others against the rules.

I am sorry that the hon. Gentleman did not raise the question of Irish tomatoes. Our assessment is that the improvement in the transitional amounts as a result of the European Court's decision on Irish tomatoes is not likely to afford any increased competition to our growers and tomato marketers in this country.

We are very grateful to the hon. Gentleman for raising the topic. I hope that some of the information I have given——

Photo of Mr Stephen Ross Mr Stephen Ross , Isle of Wight

Many growers and horticulturists who read reports of this debate will be rather unhappy with the hon. Gentleman's reply. Nobody likes being subsidised, farmers and horticulturists least of all, because they feel that they should get their return from the market. Horticulturists are extremely efficient producers, and they faced up to the competition from the Common Market very well. They were going places when the oil crisis hit them.

Will the Minister please think again about guidelines over the next two or three years? I take the point that we may be able to turn to gas or coal, but it is a hard decision for producers to have to make when they have just installed expensive, modern oil-burning heaters, with Government financial assistance. It will cost about £5,000 an acre to convert, and no grants are being offered. It is an enormous decision to have to make, and it may well prove to be wrong, when we are told about the abundance of North Sea oil that we shall have shortly.

We have had a rather dismal answer. Further consideration must be given to whether guidelines can be provided for horticulturists on what they are to do in the next two or three years, when we all hope that subsidies will no longer be needed.

Photo of Mr Roland Moyle Mr Roland Moyle , Lewisham East

I should not like the hon. Gentleman to leave the debate with the thought that there will be no long-term guidelines for horticulture. That was not what I said. I said that as far as we can see there will be no long-term subsidy for fuel costs for horticulture. That will come to an end at the end of this year.

I shall take back to the Ministry the point the hon. Gentleman has just made, though I shall not be able to give a great deal of thought to alternatives because I am departing for another office on Monday. But I shall certainly ensure that the hon. Gentleman's message is referred to the Ministry, and we shall think about it.

Photo of Mr Stephen Ross Mr Stephen Ross , Isle of Wight

I am most grateful to the hon. Gentleman.

Question put and agreed to.

Adjourned accordingly at twenty-five minutes past Four o'clock.