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Column 739what they have been saying over the past week. They say that ownership of the Scottish electricity supply will be transferred back to Scotland. The Minister tonight and the Secretary of State tomorrow had better tell the House and the Scottish people exactly how they will ensure that the ownership of the Scottish electricity industry will be in the hands of Scots immediately after privatisation and will remain there.
It is interesting that the Secretary of State for Energy did not mention a golden share. The phrase did not cross his lips. Over the past few days we have heard many rumours and much speculation from the Scottish Office about golden shares. Golden shares can only be about ensuring that the companies do not fall into foreign hands, but the Government do not consider England to be foreign. [ Hon. Members :-- "Do you?"] No, I do not. As the Secretary of State and the Scottish people own and run the Scottish electricity supply industry, the Secretary of State for Scotland must give guarantees that the industry will remain in Scottish hands, but he cannot do that. The chairman of the SSEB, Donald Miller, has said that there are not sufficient funds among Scottish investors to purchase the Scottish companies. How on earth will the Government ensure that the Scottish electricity supply industry, at present controlled by the Secretary of State, will remain in Scotland? I do not think that they can. They have no means of ensuring that, whether through a golden share or whatever. Therefore, we are likely to see the Scottish electricity supply industry, which the Scottish people want to see in the hands of Scots, passed from Scottish hands into the control of others. We do not want that.
If the Scottish companies must be privatised, the Secretary of State must ensure that they are and will remain viable and that prices do not rise. The Secretary of State for Energy and Conservative Members keep saying that competition will force down prices, but Donald Miller is on record as saying that as a result of privatisation prices in Scotland will rise. The Government must tell us how the Scottish industry will remain viable.
Unlike England and Wales, Scotland generates more electricity than it needs and at present it sells electricity to the English boards. If it is not to make a loss, and we do not want to see Scottish power stations, particularly coal burn stations, closing, it will have to sell much more of its over-capacity. We must sell much more if we are not to see dramatic price increases and many people being made redundant. As we shall have to sell much more, the interconnector between Scotland and England will have to be improved to ensure the passage of supply. Who will pay for that? Who will raise the cash to ensure that that interconnector will be put in place quickly? It is a searing indictment of the CEGB and the Government that the interconnector has not been upgraded in the past few years. In the first few years, Scottish boards may well be in serious difficulties because of that, and they will not be able to sell sufficient power to England.
The question that we must ask is, who will be paying for the interconnector? If the Scottish boards are left to pay for it, the price of electricity to Scottish consumers will increase because they will have to find the money to pay for that. If the CEGB or the new local companies in England are to pay for it, they will have to increase prices. Or are the Government to pay for it? Can we have a clear statement from the Government as to whether they will pay?
Column 740Finally, because this is much more of a problem in Scotland than in England and Wales, we must know who will bear the costs of decommissioning. Donald Miller has made it clear that if the Scottish boards are left to carry the full cost of decommissioning the nuclear power stations, they will be "unsellable". Those were Donald Miller's words, not mine. Again, the Government must make it clear exactly how they will make the companies sellable.
Opposition Members believe that there is no need for privatisation. The electricity supply industry is efficient. It serves a social and economic purpose. Competition will not be introduced as a result of the legislation. The Bill is wrong in principle and will be wrong in practice. I ask my hon. Friends to vote against it.
The Minister of State, Scottish Office (Mr. Ian Lang) : My hon. Friend the Member for Worcestershire, South (Mr. Spicer), the Under- Secretary of State for Energy, will reply to tomorrow's debate, so perhaps it will help the House if I now reply to some of the points that have been raised. I shall deal first with the points raised by the hon. Member for Glasgow, Cathcart (Mr. Maxton), who repeated the complaint of Opposition Members, that we have heard much of in Scotland in recent weeks--that there should be a separate Scottish Bill.
It is an interesting doctrine that, because the Labour party is opposed to a piece of legislation, it wants two Bills on that subject so that it can oppose the legislation twice. Perhaps that is to conceal the differences that may exist between Scottish and English Opposition Members on this issue ; but, on reflection, that is unlikely, as no differences on this matter could exceed the differences that already exist within the Scottish Labour party on almost every issue facing us today.
There are differences between some of the provisions in the Bill relating to Scotland and those relating to England. However, they reflect the distinctive characteristics of the electricity industry in those countries, sensitively recognised, which presumably is what Opposition Members would wish. They do not reflect any difference in the underlying philosophy. The Scottish industry has much in common with that south of the border. Therefore, it is entirely right and logical, in provisions on issues such as safety, security of supply or regulation, where there is much that is the same in the two countries, that there should be one Bill to avoid duplication. We should put the Bill in its proper perspective. It privatises 15 undertakings in one piece of legislation. In 1947, the then Labour Government nationalised not 15 but 561 different undertakings throughout Scotland, England and Wales--in one Bill. Fifty-three Scottish undertakings--53 centres of Scottish enterprise and decision-making--were wiped out. The control of their activities was taken south to the Central Electricity Authority, which was established in England by that Labour Government, along with 500 more from England and Wales. So let us hear no more humbug from the Labour party about wanting more than one Bill, when we are bringing the Scottish industry back to Scotland.
The hon. Member for Cathcart complained that five Conservative Back Benchers from Scotland have not been present. I should point out that 40 of his Back Benchers from Scotland are not here either, including, for much of
Column 741the debate, his hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) who will open the debate for the Opposition tomorrow. My right hon. Friend the Secretary of State for Energy made it clear that the Electricity Bill will enable the guiding principles and aims set out in our White Papers early this year to become reality.
The Bill marks a turning point in the history of the electricity industry. No longer will there be cosy arrangements between public sector bodies, which mask the real costs of running the industry and provide no incentives for customers and employees to invest in the industry's future. We shall be shaking free the shackles of State control, providing new opportunities for competition and making the electricity industry subject to the rigours of the private sector. My right hon. Friend the Member for Selby (Mr. Alison) rightly pointed to the extent of competition that is to be introduced by the Bill. One of his examples was the access of major industrial users in England and Wales direct to the generators--
Mr. Maxton rose --
Mr. Lang : No, I shall not give way, because I am replying to a point raised by my right hon. Friend the Member for Selby. I am happy to reassure my right hon. Friend, who asked whether the Bill provides cover for that purpose, that it does and that that will be achieved through the licence arrangements for which clause 7(2) provides the powers.
My right hon. Friend also asked about Drax being protected in terms of the costs for fitting the fluid gas desulphurisation plant. I must say that, while the details are still under consideration, I assure my hon. Friend that our aim is to ensure that stations fitted with fluid gas desulphurisation equipment will not be disadvantaged in the running of the merit order. My right hon. Friend referred to the dramatic improvement of 75 per cent. in productivity at Selby and pointed to the coal to Drax being delivered at the rate of 38,000 tonnes a day, to which Lord Marshall said that the power station was inextricably linked, when he prophesied a bright future for it. Coal can have a bright future in the electricity generating industry, provided that it is competitive. The hon. Member for Midlothian (Mr. Eadie) suggested that coal was in fact cheaper than nuclear power. That is not the case in Scotland. The SSEB's recent all-in cost figures showed nuclear at 1.9p per unit compared with fossil fuel at 2.4p per unit.
Mr. Eadie : What about the billions of pounds of capital debt that the SSEB has built up? The fact is that the Government are now considering writing that off to assist privatisation.
Mr. Lang : The position of the debt in the SSEB and the North of Scotland Hydro-Electric Board will be dealt with when it comes to flotation, and the Government will consider to what extent that debt should be converted into equity or debentures in order to maximise the return to the taxpayer. Therefore, the hon. Member for Midlothian does not have a strong point there.
Column 742To those who said that coal was not guilty as a pollutant, I say that that may be true in Scotland, where to a large extent low-sulphur content coal is used, but I hope that they welcome the desulphurising equipment now being installed in power stations at a cost of £1.6 billion. As my hon. Friend the Member for Bristol, North-West (Mr. Stern) said, nuclear energy in this context will be environmentally preferable.
Coal can be competitive. Indeed, it is precisely that fear of competition presented by the Bill that causes hon. Gentlemen who represent coal mining constituencies to express their anxieties so readily.
Mr. Hardy rose --
Mr. Lang : I shall not give way, because the hon. Gentleman has not been present during the debate, and I have many points to which to refer.
The hon. Member for Aberdeen. North (Mr. Hughes) raised the question of wider share ownership. I must say to him that, far from discouraging wider share ownership, the Bill will be one more opportunity to increase share ownership in Scotland and throughout the United Kingdom.
Mr. Robert Hughes : It has failed in the past.
Mr. Lang : It has not failed in the past. In Scotland since 1979 the number of individual shareholders has doubled. This is an opportunity for consumers and for employees in the Scottish industry to gain access to ownership of part of their industry.
It was my hon. Friend the Member for Birmingham, Northfield (Mr. King) who drew the analogy with buses and told us of the success which had been achieved by deregulation and privatisation. When we announced our plans to privatise buses in Scotland, the hon. Member for Garscadden said that the measure was not wanted. Yet the next day the newspapers were full of pictures of employers seeking anxiously to establish themselves as candidates for employee buy-outs. That is the enthusiasm that exists in Scotland for ownership of the private bus sector.
The Bill will bring about effective change and improved performance in one of our most important and dynamic industries. The cost-plus era for the electricity consumer will come to an end, and I am happy to reassure my hon. Friend the Member for Rochford (Dr. Clark) of that. Decisions about the supply of electricity will be driven by customer needs. The director general will promote competition--the best guarantee of customers' interests. He will oversee prices and protect customers' interests where natural monopolies remain. Security and safety of supply will be maintained. Customers will get new rights and not just safeguards ; and all who work in the industry will be able to have a direct stake in their future, with new career opportunities and freedom to manage their affairs without Government interference.
Opposition Members are aware of the benefits which will flow from our proposals, even though they dare not admit as much. Instead, they resort to idle and misplaced speculation about higher electricity prices, which have absolutely no foundation in the facts. My hon. Friend the Member for Erewash (Mr. Rost) was right to say that the competition of new entrants to the generating industry was beginning to introduce downward pressure on prices.
Column 743Many of my hon. Friends have drawn attention to the benefits that the Government's proposals will bring to electricity consumers, to the industry and its employees.
The hon. Member for Sedgefield (Mr. Blair) predicted price rises-- predictions made, of course, before the Bill was
published--although that did not make much difference, given his contribution today. In his predictions he included price increases that had already taken place. He then added a dividend figure for investors, overlooking the fact that the industry already makes a return on its assets, which will form the basis of that dividend, even though that return is below the rate of return proposed by the Labour Government in 1978.
The hon. Gentleman also added a wholly speculative figure, unfounded in fact, for the fossil fuel levy. He ignored the fact that we are already paying for nuclear generation and that the purpose of the levy is to maintain that level of generation and to make the costs transparent.
Perhaps the hon. Gentleman was at his most sickening when he referred to the heating costs of the poor. Apart from all the extra heating allowances that the Government have introduced in the past nine years, the hon. Gentleman seems to have forgotten that, between 1974 and 1979, prices under the Labour Government rose by 180 per cent., a real terms increase of 20 per cent. In the past five years, under the Government, prices have fallen by 9 per cent. in real terms in Scotland and by 8 per cent. in England and Wales.
Mr. Robert Hughes rose --
Mr. Lang : No, I shall not give way.
The hon. Member for Sedgefield was notably silent on whether or not his party is still committed to phasing out nuclear energy, given the increased costs of some 30 per cent. that would result. He asked us why we should privatise ; the debate has been permeated by contributions from the Labour party asking why we bother. That is typical of the inert, negative and complacent attitude that the Labour party adopts to such important economic issues. Why bother? If we had not bothered to fight inflation it would still be averaging more than 15.5 per cent., as it did under the Labour Government. If we had not bothered to turn our attention to the state of the economy, unemployment would still be rising, following its doubling under the Labour Government. Industrial relations would still be at their worst ever and probably the IMF would still be running the country. It is precisely because we have bothered that public expenditure is now under control and falling. It is because we have bothered that taxation is now down, unemployment is falling and, in terms of manufacturing productivity, we have moved from the bottom to the top of the league. It is because we have bothered that we have had seven years of sustained growth and rising prosperity. It is because we have bothered that so many of the nationalised industries are now viable, successful and revenue-generating in private hands. Mr. Maxton rose --
Mr. Lang : No, I am sorry : I shall not give way.
Before we bothered, those nationalised industries were a drain on the taxpayer. They were inefficient, uncompetitive and lacking in investment. With electricity,
Column 744as with the other industries, there are more benefits to come, following even on the efficiency that has led to the fall in prices in real terms in the past few years.
We have bothered because we care. It is because we have bothered that the failures of the Labour Government are our successes as well as the promised successes of the future.
Our proposals will push electricity costs downwards by ensuring that a competitive environment is created within a Great Britain market for electricity. We shall improve the quality and timing of major investment decisions. The hon. Member for Sedgefield complained about 80 per cent. over-capacity at the time of nationalisation. In Scotland, present over- capacity is not 80 per cent., but 100 per cent. That has been caused by nationalisation and public ownership. Our proposals will enable larger electricity customers to contract directly with suppliers of their own choice. I do not accept the problem that the hon. Member for Wandsbeck (Mr. Thompson) identified regarding the use of the grid. We shall create new opportunities for private generators to contract with public electricity suppliers or direct with large customers. We shall require public electricity suppliers and transmission licence holders to offer fair terms for carrying electricity generated.
As well as promoting competition, the Government's proposals combine the benefits of security of supply with enhanced consumer rights. The proposals will ensure that, in England and Wales, the electricity consumer continues to benefit from diversity of supply by requiring each public electricity supplier to purchase a specified minimum amount of non-fossil fuel generating capacity. In Scotland, the substantive investment already made in non-fossil fuel generating capacity makes such a requirement unnecessary for the foreseeable future.
We have made clear our intention to create a modern, competitive industry throughout Great Britain in which the public will have a major stake and which will be responsive to the needs of customers. Privatisation of electricity will offer real benefits and new prospects for the customer, the employee and the economy as a whole. We believe that privatisation of the electricity industry will provide new and exciting opportunities. The Bill represents a major step forward in the Government's privatisation programme. Privatisation of the electricity industry will be good for the consumer, the taxpayer, the industry and its employees and the economy as a whole.
Our proposals will secure even greater efficiency in the provision of a service that is vital to the future economic prosperity of this country. They will provide new opportunities for ownership by consumers, employees and financial institutions, so that they can acquire a stake in one of our most modern and important industries-- It being Ten o'clock, the debate stood adjourned.
Debate to be resumed tomorrow.
(1) this House do meet on Thursday 22nd December at half-past Nine o'clock ;
(2) notwithstanding the provisions of paragraph (2) of Standing Order No. 17 (Questions to Members), no Questions shall be taken, provided that at eleven o'clock Mr. Speaker may interrupt the proceedings in order to permit questions to be asked which are in his opinion of an urgent character and
Column 745relate either to matters of public importance or to the arrangement of business, statements to be made by Ministers, or personal explanations to be made by Members ; and
(3) at half-past Three o'clock Mr. Speaker do adjourn the House without putting any Question, provided that this House shall not adjourn until Mr. Speaker shall have reported the Royal Assent to any Acts agreed upon by both Houses.-- [Mr. John M. Taylor]
Mr. Simon Hughes (Southwark and Bermondsey) : I wish to present a petition on behalf of more than 4,000 people who are worried about the South East Thames regional health authority's plans to close the physio- therapy schools at Guy's hospital in my constituency and at St. Thomas's hospital in the constituency of the hon. Member for Vauxhall (Mr. Holland), who supports the petitioners, as I do. The two schools of physiotherapy are rightly renowned for their excellence. The number of signatories to the petition and the amount of correspondence received not only by me and the hon. Member for Vauxhall but by many hon. Members pay tribute to the reputations of those schools in the eyes of their present and former students. Quite apart from the wisdom of closing two schools with a proven record to set up a new and untried department on the south coast, the petitioners are worried that this relocation can do nothing but increase the acute shortage of physiotherapists in London, where already 12.8 per cent. of posts are unfilled.
The petition concludes :
we wish to express our extreme concern at the proposals adopted by South East Thames Regional Health Authority, to close the schools of physiotherapy at Guy's and St. Thomas's Hospitals. We believe this will result in a deterioration of the standard of patient care currently available in the region, and further exacerbate the existing shortage of staff in the capital.
Wherefore your petitioners pray that your honourable House will note our concern and seek to oppose these proposals.
That is my wish and that of the petitioners and the hon. Member for Vauxhall.
To lie upon the Table.
Column 746Hormone Products (EC Ban)
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Maclean.]
Mr. Ken Hargreaves (Hyndburn) : The EC Council of Agricultural Ministers agreed in December 1985 to pass directive 85/649, which banned the use of hormone products for fattening cattle throughout the EC from1 January 1988. The decision provoked a storm of protest, not least from the British Government, and I am grateful that our Government have been the strongest and most consistent opponent of the ban in the Community. Unfortunately, the British Government's attempt to challenge the ban in the European Court of Justice was not successful.
The immediate consequences of this total ban are very serious for international trade. It will prohibit the sale to EC markets of meat from animals which have been treated with hormones, whether for therapeutic reasons or for growth promotion. This will include all imports of meat and offal from third countries such as the United States of America. The meat processing industry in the EC is dependent on imported offal since the EC does not produce sufficient to meet its requirements, and consequently the ban will put at risk not only 45 jobs at Wirral Foods in Great Harwood, in my constituency, but over 300 jobs in the tongue canning industry in other parts of the country, if it is imposed after 31 December.
My constituents at Wirral Foods are grateful for all that is being done by their energetic production director, Mr. Brian Quinn, by Mr. Richard Burdekin, managing director of Rea Valley Canned Meat Ltd. and by the Government in pressing the Commission to try to resolve the trade problems created by the hormone ban in the general agreement on tariffs and trade and through bilateral discussions with the United States. It is always sad when jobs are lost and hard-working people are thrown out of work. However, it is nonsense when jobs are lost because of an unnecessary ban which, far from safeguarding the health of the consumer--which is supposed to be the justification for the ban--may put health at risk.
Meat from steers properly treated with hormones is often found to have lower hormone levels than meat from bulls and cows that are not treated at all. It is also leaner and thus considered safer. There is no scientific or medical evidence to suggest that the banned hormones are harmful in any way. The United States and the Common Market have used licensed growth- promoting hormones without any problems for over 20 years. All scientific and medical evidence proves that the licensed hormones oestradiol 17 beta, progesterone, testosterone, trenbolone and zeranol used in the correct manner are entirely harmless, and most third countries including the United States are still using them.
The five hormones that I have mentioned have been declared safe by a committee of the international food and health organisation Codex Alimentarius, which is made up of representatives of 134 countries, and funded jointly by the United Nations Food and Agricultural Organisation and the World Health Organisation. At the time of the ban, a committee of independent scientific experts set up
Column 747by the European Community was about to report that there was no danger whatever in the controlled use of hormones. The European Parliament passed the resolution without waiting for the report, and the Council of Ministers abruptly dismissed the committee of scientists before the report could be published, thus effectively supressing it.
That was a splendid example of the "I've made up my mind, don't confuse me with the facts" syndrome. This confirmed that the ban was introduced for political reasons, to reduce the beef mountain, to protect certain continental farmers from British and Irish competition, and to pander to a vociferous and ill-informed minority.
The scientists were so outraged by the action of the Council of Ministers that they came together at their own expense at Warwick 12 months ago and stated openly and unanimously that there was no risk at all to human health in eating meat treated with approved hormones.
Perhaps I could put the matter in a more understandable context. One litre of beer has the same hormone content as 100 kg of meat from an implanted steer ; one tablespoon of soya bean oil has the same hormone content as 1,650 kg of meat from an implanted steer ; and 1 kg of cabbage has the same hormone content as 2,000 kg of meat from an implanted steer.
Every day, a pregnant woman produces as much oestrogen hormone as is found in 1,350 tonnes of meat from an implanted steer. If she ate half a kilogram of meat from a steer implanted with an approved hormone, should would increase the hormone content of her body by three millionths of 1 per cent. It has been calculated on the basis of figures from the World Health Organisation that a child weighing 30 kg could eat more than 112 tonnes of meat per day without any risk from hormones, natural or implanted. However, such a child might be at grave risk from indigestion.
It can well be argued that the real risk to health comes not from the use of these natural hormones, but from the danger that the banning of licensed hormones will lead to a black market in illegal unlicensed products. Unlike the licensed products, these illicit substances pose a serious health risk to the consumer, since their constituents, the method of application and the dosage are totally uncontrolled, and the presence of these illicit products in meat is almost impossible to detect by existing testing methods. The only way to control the situation is to allow supervised use of those growth promoting hormones known to be safe, thereby extinguishing the need for a black market.
Since the announcement of this debate, I have received a letter from the National Farmers Union that confirms that the hormone growth promoters used by British beef producers before the national ban on their use, implemented on 6 December 1986, were the five substances I referred to earlier. The letter goes on :
"The NFU does not want the hormone ban lifted, rather it wants it amended so as to include a positive list of products that have been proven safe. These could be then made permissible for EC beef producers to use. We consider this position to be entirely consistent with the need to safeguard public and animal health, whilst at the same time ensuring legislation is based upon scientific evidence. We envisage that such a list would probably include the five products oestradiol 17 beta, testosterone, progesterone, trenbolone, and zeranol, once they undergo testing to satsify the European and national authorities that they pose no threat to health." That seems to be a positive way forward.
Column 748I hope that, even at this late stage, the efforts of my right hon. Friend the Minister of State for Foreign and Commonwealth Office to have the one-year exemption extended will succeed. That would give a little extra time to find a way out of our crisis and perhaps allow common sense to prevail.
It is depressing that the dispute should have reached this stage, but we cannot sit back and wait for United States retaliation, which will surely come if the ban goes ahead, and with it the loss of even more jobs in this country. I hope, not least for my constituents at Wirral Foods, that the Government will continue to do all in their power to persuade the European Commission to be reasonable, and act now to ensure that a ban which is unnecessary, will lose jobs, and increase the risks to health, is not imposed.
I hope that, at the very least, as a result of this debate, someone from the European Parliament who supported the ban will respond to the invitation from Brian Quinn of Wirral Foods to explain it and justify it to his employees, who are to be deprived of their livelihood, because up to now, European Members of Parliament have failed to do so.
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Donald Thompson) : The Government have a great deal of sympathy for the views expressed by my hon. Friend, the Member for Hyndburn (Mr. Hargreaves). Successive Ministers of Agriculture, Fisheries and Food have argued most forcefully in Brussels against a hormones ban. We believed, as we still do, that a ban is quite unjustifiable on any scientific grounds. Moreover, it would interfere unreasonably with supplies of meat and offals from countries outside the EC boundaries, many of which continued to authorise the use of hormone growth promoters. I shall not here rehearse the full history of the hormones ban, since my hon. Friend has covered much of this ground, but I should perhaps recount the main events since they demonstrate the strength of our opposition to the ban.
In 1981, the European Council initially adopted a directive which, among other things, instructed the EC Commission to undertake a scientific study of the five substances commonly used as hormone growth promoters. That was done in a working party chaired by Professor Eric Lamming of Nottingham university. The working party was able to report favourably quite quickly on three of the five hormones. It needed further information on the other two and so a report on these two substances was somewhat delayed.
In the interim, however, the European Parliament reported in favour of a ban on all five. As my hon. Friend has explained, the EC Commission did not wait for the final report of the Lamming working party, but proposed to the Council that a ban on all five substances be adopted. The Government protested most strongly to the Commission about this proposal and about its treatment of Professor Lamming and his working party. However, the matter was considered by the Council of Ministers in December 1985 and the proposal for a ban was adopted by a vote conducted by written procedure.
The Government contested this directive on a number of grounds in the European Court of Justice. In its
Column 749judgment, delivered earlier this year, the court did not address itself to the issues of scientific justification or the impact on supplies of meat and offal from third countries. It did rule in the United Kingdom's favour, however, on a purely technical irregularity in procedure. The directive was annulled as a result but the Council of Ministers proceeded at once to re-adopt the initial directive. The United Kingdom Government again voted against the directive and once more forcefully rehearsed their objections to it.
It will be clear to hon. Members, as my hon. Friend has said, that the Government have been a strong and consistent opponent of the ban. My hon. Friend also referred to the real risks of a black market in hormones developing in the wake of the ban. The Government have always recognised that, if products acknowledged to be safe are banned, there is a real risk that producers denied access to them would be tempted to turn to dangerous options. We have consistently warned our Community partners of this risk.
I know that the ban on trade and on the availability of supplies of beef and beef offals to United Kingdom manufacturers, especially ox tongues for canning, is of the greatest concern to my right hon. Friend the Minister. My hon. Friend will know that I have met many of those who are concerned, especially those who run Rea Valley Canned Meat Ltd, which has taken in hand the task of bringing all the serious and difficult matters to our attention. They are especially serious for those whose jobs and livelihoods will be affected by any such ban.
As I am sure the House is aware, the United States made it clear at the outset that it regarded the hormones ban as an unjustified barrier to trade and that it was not prepared to attempt to comply with the Community's requirements. This has had two most serious consequences. First, Community manufacturers are to be denied access to United States supplies of beef and beef offals. My hon. Friend has already made clear the damaging impact that this would have for some of our meat manufacturers and particularly for those specialist producers of canned tongues who rely so heavily on United States supplies.
In the second place, the United States has threatened to take retaliatory action against some $110 million-worth of EC exports from 1 January 1989. There is therefore a real risk that we shall find ourselves drawn into an escalating dispute at the very time when we and others are pressing for the liberalisation of international agricultural trade.
Over the past two years, we have consistently urged the European Commission to find a solution to the dispute with the United States either within the framework of the GATT arrangements or through bilateral discussions. I
Column 750am sorry to say, however, that neither of these avenues has yet produced a solution. The Commission has shown little flexibility in the GATT and has consistently resisted any procedural move to allow an assessment of the scientific basis of the ban. The Americans continue to insist on such a scientific assessment.
Unless some last-minute progress can be made, which of course we continue to urge, it now seems inevitable that there will be a disruption of United States supplies next year and that United States trade retaliation will follow. An escalating trade war could spill from this narrow, but wide enough, issue. I can reassure my hon. Friend, however, that we shall not cease to press for a compromise in the dispute, and particularly one that allows access for United States supplies. We shall continue also to press the argument that EC policy should be firmly based on scientific evidence.
I should say a further word about the availability of supplies for United Kingdom manufacturers. Although it now seems inevitable that imports from the United States will be disrupted from the end of the year, contrary to what my hon. Friend has feared, imports from all other traditional suppliers to the Community, with the exception of Canada, will continue. At its meeting last week, with our support, the standing veterinary committee approved the guarantees offered by some 25 countries and voted to continue to accept their exports. There are still difficulties to be overcome ; some countries have been approved on a provisional basis only. I am hopeful that the technical problems can be resolved, and that more widespread conflict and trade disruption can be avoided. I know that there are severe difficulties in turning from United States supplies to other sources, but I believe that the decision to continue access for Australian and New Zealand supplies in particular will prove of some comfort to United Kingdom manufacturers.
Finally, let me sum up the Government's position on the hormones ban, which closely accords with the views expressed by the National Farmers Union to which my hon. Friend referred. We have consistently opposed the ban, and continue to believe that the prohibition on the five substances in common use worldwide is unjustified. We have consistently argued that the policy on hormones should be based on science and not on expediency. We have consistently worked to find a solution to the dispute with the United States, and to the problem of disruption of supplies for United Kingdom manufacturers.
My hon. Friend has done a great deal for his constituents, and for those of his colleagues on both sides of the House. I can reassure him that we too shall continue our efforts on all those fronts. Question put and agreed to.
Adjourned accordingly at twenty-two minutes past Ten o'clock.
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