Fur Farming (Compensation Scheme) (England) Order 2002

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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mr. Elliot Morley): It is very nice to see you in the Chair this afternoon, Mr. Winterton.

We have had the debate on the principles behind the Fur Farming (Prohibition) Act 2000. This order relates to provisions for compensation. Sections 1 to 4 of the 2000 Act set out the offences that relate to fur farming and the enforcement of the ban. The Act also includes a winding-down period until 1 January 2003, which allows for stocks of animals to be run down, notice to be given to employees and arrangements to be made for future employment and the future use of land on which mink are kept. That, together with the payment of compensation for certain categories of loss, is to ensure that the ban is fair in all respects.

As I said in Committee, we are trying to be fair. The queries about the previous statutory instrument were purely technical. There has not been any change in the main thrust of the compensation provisions. We recognise that the ban may render certain assets of a business of little or no value. The provision for compensation, together with the winding-down period, ensure that the ban is fair in all respects.

The Government consulted the industry and took its views into account in formulating the compensation scheme. We also asked independent consultants for advice on the structure of the scheme and on what would be regarded as fair. The order sets out the full details of the compensation scheme required under section 5 of the Fur Farming (Prohibition) Act.

In essence, the scheme provides for loss of income, calculated as four years' net income averaged over the last five years of trading; that commitment was given in Committee. It also provides for any loss sustained

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on assets such as specialist buildings and equipment that cannot be reused or resold or which can be resold only at a loss; and for wastage of livestock over the winding-down period, payable on a sliding scale depending on when the farm closed. The closer the closedown date is to the date of the ban coming into force, the lower the payment will be. That reflects the additional income that can be earned by deferring the closedown. That point was made in Committee.

The time limits were fixed to allow winding down before the first cut-off date and were published some months beforehand. Therefore, the lower payment is not a penalty. In addition, the matter was explained at consultation meetings that took place before the cut-off date. The purpose of a winding-down period is to minimise losses. If losses are minimised, compensation arrangements will be affected. That point was made clearly.

Contractual liability will be taken into account if a fur farmer is unable to supply fur under a pre-existing contract because he has closed down as a result of the ban. As the hon. Member for Mid-Norfolk (Mr. Simpson) said, the cost of clearing asbestos contamination from the land will be included, as well as miscellaneous business closure costs such as redundancy payments. Interest and contributions towards claimants' professional fees will also be paid. All those commitments were given in Committee, and I am glad that they have been honoured in the statutory instrument.

Fur farmers may close down their business any time after 23 November 2000, when the Fur Farming (Prohibition) Act received Royal Assent, and before 1 January 2003, when the ban comes into force, without losing eligibility for compensation. Fur farmers who incur losses as a result of the ban will be able to submit claims for compensation. The detailed procedures for doing so are set out in the order.

There will be two stages to the process. In the first stage, fur farmers will write to the Department for Environment, Food and Rural Affairs to state their claim to eligibility for compensation. DEFRA will determine whether the application is eligible and, if agreed, will immediately make an interim payment to the farmer. Again, that commitment was given in Committee. The second stage is for those who have been deemed eligible to submit a detailed claim for compensation. DEFRA will make an offer of compensation, which will be paid to the fur farmer once it is agreed. There is an appeal procedure if they are not satisfied with the offer.

The scheme is very fair, and commitments that were made in Committee have been honoured. The Government must strike a balance between the interests of taxpayers and those of the people who are affected. After the consultation, the scheme came to more than the Government originally envisaged and, I am sure, less than some fur farmers envisaged. However, that is in the nature of trying to strike a balance that represents the interests of both parties. I believe that the statutory instrument achieves the right balance.

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Mr. Bill Wiggin (Leominster): The Minister has not addressed the issue of the different varieties of mink and the more valuable subspecies for which compensation will be paid.

Mr. Morley: In drawing up compensation we are guided by independent consultants and the amount reflects that guidance.

4.50 pm

Mr. Simpson: Can the Minister give us the figures produced by the independent consultants, Brown Rural? If they are in the public domain, I should be interested to see them.

We have drawn from the Minister the fact that the Government have decided on a compensation scheme that meets their definition of fairness, that a number of fur farmers will not be adequately compensated and that a line has been drawn so that fur farmers who have had their livelihoods taken away by ParliamentóI emphasise thatówill not be fully compensated. That sets a bad precedent and may lay the Government open to a challenge in the courts. Governments in general have frequently legislated, laid down levels of compensation and then found that the courts take a different view. The Minister has decided to be judge and jury and to exclude the Lands Tribunal, which is disappointing.

Throughout our debate, the Minister tried to emphasise the fairness of the order but has fallen below his own high standards. It is a pity, not only for the individuals whose livelihoods are affected, but for Parliament that he is setting a precedent that may be used in future legislation if Parliament decides that it disagrees with other sectors of farming and decides to close them down. The Minister has failed to convince the Opposition that the order is fair and reasonable.

4.52 pm

Mr. Morley: The comments of the hon. Member for Mid-Norfolk included a technical error. However, I start by saying gently that those of us who have been in the House for some years remember that the previous Government closed down some businesses with no compensation whateverónot a penny. We are trying to be fair and to honour our commitments in debate.

The hon. Gentleman is wrong in saying that fur farmers do not have the option of going to the Lands Tribunal. We have gone further and made it clear that they have the option of going either to the Lands Tribunal or to arbitration. That was asked for in Standing Committee and we conceded it. We are trying to be fair. We have taken independent advice and have not changed it. The matter went to consultation. The scheme was amended after consultation with farmers and representations from the National Farmers Union. That was fair and reasonable.

If the scheme were challenged, some of these matters would be sub judice, but I always try to be open and transparent, and if I am advised that it is sensible to write to the hon. Gentleman with the information he requests, I shall attempt do so.

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Question put and agreed to.

Resolved,

    That the Committee has considered the Fur Framing (Compensation Scheme) (England) Order 2002 (S.I. 2002, No. 221).

Committee rose at six minutes to Five o'clock.

The following Members attended the Committee:
Winterton, Mr. Nicholas (Chairman)
Ainger, Mr.
Bradley, Peter
Colman, Mr.
Ellman, Mrs.
Green, Matthew
Khabra, Mr.

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King, Ms Oona
Morley, Mr.
Perham, Linda
Pound, Mr.
Simpson, Mr. Keith
Swayne, Mr.
Wiggin, Mr.

 
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