Agricultural Sector (EUC Report)

Earl of Kinnoull Excerpts

Tuesday 22nd November 2016 Lords Chamber

[The Earl of Kinnoull (CB)]

My Lords, it is a pleasure to follow the noble Lord, Lord Teverson, who, as ever, was energetic and interesting. I declare my interests as set out in the register of the House, and in particular as a recipient of EU farm subsidy, both personally and as a trustee of the Blair Charitable Trust.

I also congratulate the noble Baroness, Lady Scott, her committee and their clerking staff on a very thought-provoking and excellent report. I note that all the issues teased out in the report are still very much live following the June vote. It is a wide-ranging report, but I shall make just three points tonight.

The first is in respect of recommendation 4, which would see a scheme that enables farmers,

“to save in times of plenty and withdraw in times of need”.

It was heartening to read in the Government’s response what I certainly interpreted as general enthusiasm, and certainly what seemed to be praise, for the Australian farm management deposits scheme, which goes a good deal further in providing support to protect farming than our own current tax averaging measures.

Of course, there is another volatile business operating in the UK, which has done so for hundreds of years, that is important to Britain and which has an excellent method of allowing participants to save in times of plenty: my own alma mater, Lloyd’s of London. The personal reserve funds system has been successfully in place for decades. I cannot help but think that something closer to this, rather than the tax averaging scheme, would be immensely beneficial to the farming community. It is well understood by the Revenue, and I dare say it is understood by one or two farmers as well. Can the Minister confirm that this analogous and successful situation will be considered when—and I quote from the Government’s response to the report—

“Going forward, the Government will work with industry to develop new arrangements for agricultural support”?

My second point relates to recommendations 7 to 9, which are all about new financial tools. I have spent a lifetime in the City surrounded by financial tools, and therefore I have a pretty clear idea about who often makes the money out of these tools. I am of course very worried about that. I therefore plead that any tools that are dreamed up are very simple. I must say that the vast majority of farm offices will be like ours—ours is in the kitchen and takes place usually on Sunday mornings; it is not well set up for analysis or a complicated financial tool. I certainly would be worried that these tools could be vehicles for egregious profit by the private sector. In other words, we do not want the lions of Goldman Sachs to eat the shepherds of Perthshire.

I observe that there are already two types of volatility to be addressed. The first is market volatility. I feel that the personal reserve scheme, similar to the Australian one and indeed our own Lloyd’s arrangements, would be a very good start for dealing with that. The other volatility relates to natural perils, which is a fancy way of saying storms and floods—another area I have spent a lifetime fiddling around in.

About 10 days ago, the Minister and I had a brief exchange about Flood Re, a new government-backed scheme that provides effective and cheap insurance to private home owners in flood-prone areas. The scheme only started in April this year, and the Minister has reported to the house that 53,000 policies have already been ceded to Flood Re. It is a collaborative system between the insurance industry and government. It is very interesting and, at this early stage, appears to have borne fruit. The noble Baroness, Lady Scott, touched on my second point, but would the Minister agree with me concerning Flood Re, and would he feel that this might be the basis of an approach for the farming community going forward to manage the natural perils risk?

My third and final point concerns recommendation 11. Here, the noble Baroness, Lady Byford, was ahead of me a bit. The recommendation concerns agricultural research. I note again the very warm statements in the Government’s response, and I commend them for that. I am a great believer in research.

This evening, there has been no mention of the forestry industry in the UK, with its more than 40,000 jobs, and adding, as it does, more than £1.7 billion to the UK economy every year. I should say that, only a few months ago, I would have had to declare an interest as a member of the council of the Royal Scottish Forestry Society, but I came off that just over a year ago. This industry, which I love, is greatly threatened by tree disease, pests and the grey squirrel. I have to declare another interest as the chairman of the United Kingdom Squirrel Accord, which consists of 34 UK bodies including the Governments, the main governmental bodies, and voluntary sector and private bodies, and is trying to deal with the squirrel problem. Trees between the ages of 10 and 40 are being killed off by grey squirrels ring-barking trees, and this affects up to 70% of plantations. This has effectively stopped forestry plantations of broad-leaf trees on a commercial basis in the south-east of England. The disease, pest and grey-squirrel issues are examples of issues that we can respond to through scientific research—something that I know the Minister is very well aware of and I have had many discussions with him about it.

So I close by asking the Minister whether he agrees with me about the importance of recommendation 11, and whether he would give some hope to the forestry industry that their case for research money to deal with their threats is under consideration.