Rate rise means misery for farmers, say Tories

05 June 1998

Rate rise means misery for farmers, say Tories

By Martin Hickman, Press Association

YESTERDAYS rise in interest rates will pile more misery on hard-pressed farmers, the Conservatives claimed in the Commons.

Michael Jack, Tory agriculture spokesman, accused ministers at question time of being “complacent” over the effect of the 0.25% rise in borrowing on farm incomes.

Lib-Dem Charles Kennedy asked whether it was sensible to withhold further help from farmers following the release of a recent survey that showed many farmers were so poor they were claiming social security benefits.

Mr Kennedy spoke after Tory backbencher Desmond Swayne (New Forest W)
urged the Government to raid Chancellors Gordon Browns “war chest” to
help – “whilst we still have a farming industry”.

Elliot Morley, junior agriculture minister, told MPs that several profitable years for farmers before the BSE crisis meant almost half of farms had no borrowings with the banks at all.

In any case, he told the House, the Conservatives had opposed the creation of the agri-monetary compensation scheme when they were in power, the same scheme they are now demanding money from.

Raising the issue, Mr Swayne told MPs: “The fact is that farming incomes have fallen by well in excess of 40% and today farmers have been hit again by a sixth rise in interest rates.”

He claimed: “Those who cant afford it any more and want to get out have been devastated by the abolition of retirement relief for capital gains purposes – and all this time we know that the Chancellor is building up a war chest for the next election.

“Can you ask for some of that now – whilst we still have a farming industry?”

But Mr Morely hit back by saying the Government had helped the hardest-hit sections of the industry by providing £85 million worth of aid for the sheep and suckler cows. He said it was wrong to suggest that Government was withholding money that belonged to farmers, reminding the House that taxpayers would have to pay 71p in the pound if the Government ventured to Brussels to ask for agri-monetary compensation.

“As far as other aid is concerned, you might like to ponder on the fact that there was an enormous overspend in relation to BSE and the aid given to renderers by your previous administration. Some of that money could have gone towards the farmers.

Mr Kennedy said that “well-researched and well-documented” evidence in Farmers Weekly showed farmers were now having to make claims for Family Credit, Income Support and other benefits.

“Is this not a very sad indictment on the present plight of so many in the farming community?” he asked.

But Mr Morley replied: “In relation to surveys of farms and farming, because of the exceptionally three good years of farm incomes nearly 50% of farms have no borrowings at all with the banks.

He said the Government “fully recognised the concerns of industries providing services to the farming industry over the strength of the pound.

“There is no denying that a rise in interest rates is bad news for many sectors. On the other hand it would be even worse news if there was a rise in inflation or if the present strength and well-managed stewardship of the economy was challenged,” he said.

“The economy of this country is being managed for the long term, and not for the short term, as happened under the previous administration,” he added.

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