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Baby Food (Contamination)

3.32 pm

Mr. Barry Sheerman (Huddersfield) (by private notice) : To ask the Secretary of State for the Home Department if he will make a statement on the contamination of baby food.

The Minister of State, Home Office (Mr. John Patten) : It is difficult to imagine the twisted minds that could mount such a vicious attack on defenceless babies.

Of 17 incidents of baby food being reported as contaminatd since 7 April and 11 more reported today, a number have been recognised as examples of deliberate contamination and are the subject of police inquiries co- ordinated by the Metropolitan police. In some cases there have been blackmail demands. It would not be helpful for police investigations if I were to go into greater detail, as I am sure that the House will readily understand.

Wherever such incidents have been reported, immediate steps have been taken by the police, the manufacturers and the retailers to remove products of the kind that have been found to be contaminated from the stores concerned and to warn the public of the risk. The police are giving these investigations the highest priority. Parents and others looking after babies should in the meantime exercise the greatest care in checking both the seals of baby food containers and their contents before feeding children.

Mr. Sheerman : The Opposition share the deep concern felt by the public in general and the parents of young children and particularly of small infants about this horrible campaign which attacks the most vulnerable members of society. The Oppositon want to know whether the Government understand that this is a co-ordinated attack on the food of a vulnerable part of our society and whether the police are taking sufficiently energetic steps to bring the culprits to justice. We need to know in the House whether the reports in the press that this is a very highly sophisticated criminal activity, perhaps of a Mafia style of operation, are true, or if it is, one, off operation. Do the police know whether that is the case?

The House will wish to know whether the powers under the Food Act 1984 are sufficient to allow local authorities to step in and help the police to protect the public from contaminated food. We do not want the inquirers to be embarrassed, but there have been disturbing reports this morning that large sums of money have already been paid to such blackmailers. I hope that the Minister can reassure us both on that point and also that the police and local authorities are protecting young children from contaminated food.

Mr. Patten : First, I am extremely grateful to the hon. Gentleman for his words of support for what the police and others are doing, and for his words of condemnation, on behalf of the official Opposition, for these foul and despicable attacks, which are of a most cowardly nature and against the vulnerable in our society. I am sure that the whole House is united in that condemnation. Secondly, I assure the hon. Gentleman and the official Opposition that the police are, and have been, doing everything possible to investigate these serious threats to individual safety. Thirdly, I and the Government are convinced that the powers available under the Food Act

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1984 are adequate to enable local authorities to assist the police and public safety by ensuring that food sold in shops is fit to eat. I hope that the hon. Gentleman and the House will understand that I cannot respond in detail to the specific questions that he asked about operational matters. The Government are determined to resist all attempts at consumer terrorism in this country.

Mr. Barry Field (Isle of Wight) : I thank my hon. Friend for his statement. I understand that Mrs. Laura Russell, when feeding her six-month -old baby, Chantelle, in Newport on the Isle of Wight on Saturday, discovered a sliver of glass in a jar of Heinz chocolate dessert. The baby was subsequently examined at the Royal County hospital on the Isle of Wight and, mercifully, found to be unharmed. Those events took place on Saturday, but only came to light yesterday. There seems to be a conspiracy of silence over the matter. I understand that, even as I speak, similar products are still on the shelves in the same stores, and available to the public.

Mr. Patten : There is no conspiracy of silence. This afternoon I have given the House and my hon. Friend the full facts as I and the Home Office know them. May I express my horror at the unfortunate assault--for that is what it is--on the child in my hon. Friend's constituency. I am extremely glad that the child suffered no ill effects. No baby or young child has suffered serious injury from contaminated food, thanks to the vigilance of parents.

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : May I, from my side of the argument, support the Government's attempts to resist consumer terrorism? They are entirely right to do so. I hope that the police make speedy progress in bringing the criminals to book so that they get their just desserts in the courts. If this is a long-term problem and the inquiry takes weeks, if not longer, will the Minister look again at the Food Act 1984 to find out whether the Government have powers to encourage local authorities to insist that this small range of baby foods--it is not a vast range of products--are sold with attended across-the-counter service, as opposed to unattended supermarket service? In that way, we can try to give the public some confidence that such events will not happen again.

Mr. Patten : I thank the hon. Gentleman for his support for our stalwart attempts to ensure that this country never gives in to consumer terrorism and the hijacking of food shops and stores up and down the land, which would have a destabilising effect. The Government are determined in all circumstances to resist that. The hon. Gentleman makes an interesting suggestion about the workings of the Food Act. We are convinced that the Act contains adequate powers for local authorities, environmental health officers and others to investigate any suggestion of food being unfit. I shall certainly draw the hon. Gentleman's interesting suggestion to the attention of my right hon. Friend the Home Secretary.

Mr. James Hill (Southampton, Test) : Does not my hon. Friend agree that these are crimes of magnitude and should not be trivialised in any way? Will he confirm that, if a baby were to die during this present epidemic of pollution of cans and jars, the police would treat such an event as murder, and that the provisions of the courts would be correspondingly increased?

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May I make two useful suggestions? First, food of this type should be displayed in a prominent part of supermarkets under the eyes and ears of those who work at the cash registers and in the reception areas. That will mean that people cannot sneak behind the display counters and do their work.

Secondly, warning notices should immediately be placed in all supermarkets that deal with these types of food telling people to be vigilant and saying that those tampering with products should be reported to the management as soon as they are spotted. Such signs would increase the vigilance of customers and staff in all these supermarkets.

Mr. Patten : My hon. Friend is right to say that the charges that could be laid by the police--it would be their decision--could range from assault up to attempted murder, punishable by life imprisonment. The most severe penalties are available to the courts, should such charges be laid. I am sure that the food manufacturing industry, which has an excellent record of health, safety and hygiene in manufacturing baby foods in this country over many years, will have listened carefully to all the advice given to it.

There is no evidence of any of these foodstuffs being contaminated during the manufacturing process--hence, what my hon. Friend has said is right. It is up to retailers and others to exercise maximum vigilance in the stores where these foodstuffs are sold. I am sure that they will listen as carefully to my hon. Friend as I did when he gave excellent advice on the radio this morning.

Ms. Joyce Quin (Gateshead, East) : Although I appreciate that it may be difficult to divulge a great deal of information at this stage, since different brands of food and different types of containers have been found to be affected in different parts of the country, will the Minister assure us that he will consider providing the maximum possible information in the circumstances to consumers, who are very worried about the problem?

Mr. Patten : We will certainly make available to consumers all the information that we have. I have given all the facts this afternoon. A range of products made by two manufacturers have been affected.

Mr. David Martin (Portsmouth, South) : I welcome very much what my hon. Friend has said. I am sure that all sane people will agree that we must never give way to such blackmailing campaigns.

My constituent, Mrs. Murphy, is quite convinced that the seal on the pineapple dessert that she bought had not been tampered with. We need to allay the fears of those who believe that the production process, as well as the opportunities that arise for contamination on the shelves, should be thoroughly investigated. I hope that my hon. Friend will consider that, too.

Mr. Patten : I thank my hon. Friend for the first part of his remarks, and I pass on my sorrow, through him, to his constituent for her experience. I am extremely glad that the child is safe and well. I do not want to go into details of police investigations, but I can tell my hon. Friend that, on the information given to me as late as this afternoon, the police have no evidence of contamination during the manufacturing process, and considerable evidence of contamination at a later stage.

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Rev. Martin Smyth (Belfast, South) : We welcome the Minister's statement and assure him of our support for his stand against consumer terrorism in Northern Ireland, where shops have been affected.

Can the Minister shed any light on the allegations that considerable sums have already been paid out for blackmail? Have funds been supplied through insurance companies such as Risk Control to allow firms to deal with such matters? Surely that, in itself, will encourage such campaigns?

Mr. Patten : I know that the hon. Gentleman, with his long experience in his constituency and in the Province, with its troubled recent past, will appreciate that it is sometimes less than helpful not only to give information about police investigations, but even to speculate about them. I hope that he will foregive me if I do not answer his question more fully than that on this occasion. I thank the hon. Gentleman for his support, and I thank the whole House for its determination to ensure that the country never gives in to consumer terrorism.

Mr. Anthony Nelson (Chichester) : It is right that my hon. Friend should play no part in spreading alarmist fears, but, with respect, does he agree that his statement should have gone a great deal further in showing the risks to parents and consumers? In particular, as most of the incidents appear to have taken place in the south-east and, to a lesser extent, in the midlands, is this a regional problem? Is it isolated to certain types of food? What should people be looking out for in jars and cans and what measures can they take--for example sieving their contents--to prevent any risk to their children?

Mr. Patten : I welcome my hon. Friend's question and the opportunity that it gives to provide the information that he thinks would be helpful. First, the incidents are far from restricted to the south-east. They have occurred in the north-west, Cheshire and possibly Lancashire. Secondly, I can give a complete list of the forms of contamination which my hon. Friend might find of interest, as would parents. Contamination has included the insertion of glass splinters, pins, broken razor blades and, on one occasion, caustic soda.

The advice that I gave the hon. Member for Huddersfield (Mr. Sheerman) is good advice : parents should take the greatest possible care to check the seals of containers. Thereafter, they should take the greatest possible care to check the foodstuff before it is served to their child or children, and that includes looking at and smelling the substance to make sure that it is pure.

Mr. Roger Stott (Wigan) : Is the Minister aware that I agree with everything that he has said about this appalling state of affairs, and that I am grateful for what he said earlier--that there is no evidence of the source of the contamination being the factory but that contamination takes place beyond that, either in the shop, in transit, or wherever? I am sure that what he has said this afternoon will be welcomed by many thousands of my constituents who work in Heinz's factory in Wigan.

Mr. Patten : I am grateful to the hon. Gentleman. Firms such as Heinz and Cow and Gate have an excellent record, recognised worldwide, in food hygiene and safety. I can only repeat that the police have no evidence of contamination during the production process.

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Mrs. Maureen Hicks (Wolverhampton, North-East) : Is it not hard for the House to comprehend that sick people in our society, for the sake of a cause, would risk subjecting innocent babies to lethal injury? Thank God that there has been no real tragedy to date. Will the Government monitor the situation carefully and reassure those anxious mothers who now fear buying any baby foods that every possible action will be taken on their behalf?

Mr. Patten : I can assure my hon. Friend that--most importantly of all--the police, the Home Office, the Ministry of Agriculture, Fisheries and Food--my right hon. Friend the Minister of Agriculture, Fisheries and Food is present--and the Department of Health are doing everything possible to ensure that all avenues are included. Several Hon. Members rose --

Mr. Speaker : Order. This is a private notice question. I shall call one more hon. Member.

Mr. Max Madden (Bradford, West) : Is the Minister entirely satisfied that the seals to which he referred during the exchanges are in all cases adequate? It would seem that we need urgently to consider the sealing of such products so that customers can be entirely confident that the products have not been tampered with.

Mr. Patten : I cannot give a straight answer to that question because I have not examined all the seals, nor do I, alas, have exact evidence of the different sorts of seals used. I do know that the police are convinced that, under most circumstances, the seals woud have had to be broken to admit the contaminated objects, liquid or substance. In the meantime, it is important for parents and those who care for children to be as vigilant as possible.

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Agriculture Council (Price Fixing)

3.48 pm

The Minister of Agriculture, Fisheries and Food (Mr. John MacGregor) : With permission, Mr. Speaker, I would like to make a statement on the outcome of the Agriculture Council dealing with this year's price review.

Last week's Council, at which I represented the United Kingdom, was devoted almost entirely to the Commission's proposals for agricultural prices and related measures for 1989-90. After a whole week of negotiations, agreement was finally reached on a compromise package in the early hours of the morning of Saturday 22 April. The package represents a very satisfactory outcome for the United Kingdom. It meets our key objectives of respecting the February 1988 European Council conclusions, in particular not weakening the stabiliser mechanisms ; and of ensuring a fair deal for United Kingdom farmers which improves their competitive position. The Commission confirmed, at the completion of the negotiations, that the 1989 budget for CAP guaranteed expenditure would be respected and that expenditure in 1990 would be well within the financial guidelines.

So far as the United Kingdom is concerned, I obtained a substantial devaluation of the green rate at which support prices in ecu are converted into sterling. It will reduce United Kingdom monetary gaps generally by one half, and completely remove the monetary gap, and therefore the monetary compensatory amount, for beef. At my insistence, the discriminatory element of the Commission's original proposal, which envisaged dismantling only one third of the gap, was completely removed. Overall, this has a significantly favourable effect on MCAs from the United Kingdom point of view.

The devaluations will take place at the beginning of 1989-90 marketing years and will improve our farmers' competitive position relative to those in other member states. In themselves, they should increase United Kingdom producer incomes by about £155 million in a full year, when all the effects have worked through.

The changes to green rates for the United Kingdom and other member states represent a further significant step toward the complete dismantling of monetary gaps, and hence MCAs, by 1992--certainly by the end of 1992--for which I have been consistently pressing. Turning to other elements of the package, a major breakthrough was achieved on the levels of milk co- responsibility levy. From the 1989-90 marketing year, no co-responsibility levy will be charged on milk produced in the less-favoured areas, and the levy on milk produced outside those areas will be reduced by 0.5 per cent., to rates of 1 per cent. for producers of up to 60,000 kg per year, and 1.5 per cent. for other producers. Most important, it was agreed that this is the first step towards complete elimination of the levy, and the Commission undertook to propose a further step for 1990-91. I have always opposed co- responsibility levies as a mechanism for CAP reform, and have constantly pressed for their reduction and subsequent elimination, so this development is greatly to be welcomed. The cost of the changes will be met by a 2 per cent. cut in the intervention price for butter and by management measures. Moreover, following my pressure, it has been agreed that the

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Commission will examine the administration of the co-responsibility levy for cereals and will submit any appropriate proposals. The Commission will also study the functioning of the milk quota system, and I will be pressing for that to include the question of greater flexibility in the transfer of quotas.

Community prices for sugar will be reduced by 2 per cent. this year. This is considerably less than the Commission's proposal for a 5 per cent. cut, and reflects the concerns expressed by member states, including the United Kingdom, about the effect both on Community producers and on the suppliers of cane sugar from the African, Caribbean and Pacific countries. As a condition of my agreement, I secured a comitment to safeguard the position of Community refiners of cane sugar.

In addition, the support prices for field beans and for a number of Mediterranean products will be reduced, and the stabiliser mechanism extended to cauliflowers and apples. Basic support prices for other products will remain unchanged in ecu terms, but the prices actually applied are liable to be cut automatically, under the stabiliser arrangements, if output exceeds a given level. In addition, there will be a reduction in the period of intervention for cereals and oilseeds, and lower monthly price increases for those commodities and for protein crops.

The existing definition of double-low rapeseed--sometimes called double- zero rapeseed--has been extended to 1990-91. I pressed for this delay, which is of importance to our growers, as commercially viable varieties able reliably to meet a lower definition in United Kingdom conditions are not yet available.

During the Council I took a further opportunity to raise yet again the importance of taking early and effective action to combat fraud in the CAP.

The settlement keeps within the budgetary limits, extends the stabiliser mechanisms, further improves the competitive position of United Kingdom farmers, and has only a very small effect indeed on the retail price index. Overall, therefore, it is a good settlement for United Kingdom interests.

Dr. David Clark (South Shields) : I welcome the Minister's success in obtaining abolition of the co-responsibility levies in certain areas and reductions of those on the MCAs. Equally, I welcome the review of the milk quota. I urge the Minister to try to ensure that this is done as speedily as possible, because we really must avoid too much uncertainty creeping into the dairy sector.

The Minister emphasised that the recent EC price proposals kept within the budget requirements laid down at the February 1988 summit. I cannot understand why the Minister takes credit for that. My understanding of the Prime Minister's statement to the House on 15 February 1988 is that those restrictions were legally binding, so the Minister and his colleagues had no option but to keep within the relevant financial disciplines. Will the Minister confirm that that legally binding requirement stands?

To what extent does the Minister believe that we managed to remain within the financial guidelines because of the greenhouse effect and of the drought in the United States, as opposed to careful management by the Commission? To us, that is a key point. About two thirds of total Community spending has been on agriculture. At last year's Brussels summit, it was agreed that that proportion would be reduced. Will the Minister say by

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how much the review has reduced the amount of spending on agriculture as a percentage of European funding as a whole? The Minister stated that, as a result of the review, prices for farmers will increase by more than £115 million. Bearing in mind the fact that Britain already faces high inflation and that food prices are creeping up, will the Minister say by how much he estimates that the agreement will increase prices in the shops? That matter concerns a great many people.

The Minister referred quite rightly to fraud. As he and I both know, between 10 and 20 per cent. of the CAP budget is lost through fraud. The Minister has been strong on rhetoric but weak on support. Those are not my own words but the sentiments expressed by Lord Cockfield when speaking in another place-- [Laughter.] Right hon. and hon. Members may laugh, but Lord Cockfield was the Commissioner dealing with the matter, and I suggest that he knows considerably more about it than right hon. and hon. Members opposite.

What action is the Minister taking to put his own house in order? He will recall that it is more than three months since the director of the serious fraud office, John Wood, revealed that he was close to completing inquiries into two significant cases of agricultural fraud in Britain involving EC moneys. Will the Minister confirm that those cases exist in reality and say when definite action may be expected? Intertwined with the EEC price review have been general discussions on the general agreement on tariffs and trade. I know that the right hon. Gentleman has hurried back from an important conference in the United States where he discussed that matter. Will the Minister explain how the price review will aid our discussions in GATT? If trade protection is cut and the resulting high food prices, consumer taxes and Third world destabilisation are all to be tackled, we must ensure that the latest review is helpful to that process.

Mr. MacGregor : I am grateful to the hon. Gentleman for his opening comments and for his welcome to many parts of the package. The milk quota review really concerns the functioning of the milk quota and does not apply to the future of the milk quota system after 1992. I, like the hon. Gentleman and all dairy farmers, am anxious that that matter should be discussed in the Council at an early stage, so that our farmers will know the way ahead in the 1990s. I have pressed for that many times, but it was not right to raise that matter in these price negotiations. The review will be about the functioning of the system. I hope, as I made clear, that we shall secure changes in transferability and greater flexibility. There will be an early report, because the Commission has undertaken to report on that aspect by the end of July this year.

The hon. Gentleman is entirely right to say that we have to operate under legally binding limits, which certainly affect the climate in which the discussions take place. However, it is right that we should ask the Commission each year, at the end of our negotiations, to make it clear that we have fully met those legally binding limits. If there is any risk of over-running them, we would need to have a joint meeting with ECOFIN. As I have said, clearly we are well within the limits.

The hon. Gentleman is right to say that the drought in North America has had some impact on Community

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expenditure this year. It is also important to recognise that the stabilisers are having their effect, too, and that, without any question, the impact is already coming through. Indeed, as a result of those negotiations we are well below the legally binding guidelines for both this coming year and the year after. That is a very good outcome.

The hon. Gentleman asked by what percentage the proportion of total Community spending devoted to agriculture had been reduced. We are actually still working out the precise figures, and pehaps I can let him have that information shortly. He also asked about the impact on consumers, and I am pleased to tell him that the outcome of these negotiations, which is favourable to our farmers, has virtually nil impact on the retail price index--at most, one twentieth of 1 per cent.

I reject entirely the view that I have been weak on support in asking for actions on fraud. I have raised this matter very regularly in the Council since I became Minister, orginally with little support from other Ministers. I am pleased to say that that support is growing almost by the month. On this occasion, four Ministers specifically spoke strongly in favour of the actions I was recommending. There are three sorts. First, I asked the Commission to look into the allegations made in the European Parliament recently about butter expenditure, and to report. Secondly, I asked for an action programme on the Court of Auditors' report and recommendations on intervention and various aspects of the existing system. I was given a very good timetable of proposals due to come in front of our Council soon from the Agriculture Commissioner. I am satisfied that he treats this matter with as much seriousness as I do.

Thirdly, I floated the suggestion that in future, when we are looking at major changes to any proposal or at any new proposal, in addition to having a report on the financial consequences, we should have from the Commission a report on how any new proposal would be controlled, administered and made fraud-proof. I hope that that suggestion will increasingly get support. To me, for the future, that is one of the major contributions the Agriculture Council can make in reducing fraud.

Finally, on GATT, it was timely that I was in the United States in the last two days, both because it came immediately after the outcome of the Geneva discussions on what is effectively the mid-term review of the Uruguay round of GATT, and also because it came immediately after the completion of the price negotiations. I was able to tell my American counterpart that, through the price review, we have fully met the commitments that we have undertaken in the Geneva round of discussions. The stabilisers have been honoured. In fact, we have taken the process of reform further in some directions, and the outcome is totally consistent with our position in GATT. For that reason it was welcomed in the United States. Certainly the atmosphere this year is very different from what it was last year. I hope that we will now be able to work constructively together on the latest stages of the GATT Uruguay round.

Several Hon. Members rose--

Mr. Speaker : Order. The House will be aware that we have a ten- minute rule Bill after this statement and a very long list of amendments to get through before Third

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Reading of the Social Security Bill. I ask for brief questions and for hon. Members not to repeat questions that may have been asked before.

Mr. Alick Buchanan-Smith (Kincardine and Deeside) : I assure my right hon. Friend that what he has achieved, particularly in relation to MCAs and the milk co-responsibility levy, will be enormously welcomed by the agricultural community, some sections of which are extremely hard pressed at present. However, can he give some indication of the timetable he expects--I know it is difficult to predict in Common Market negotiations --in relation to the review of milk quotas and also for the final removal of the co-responsibility levy?

Mr. MacGregor : This year we have done well with the timetable, because we have reached decisions rather earlier than usual. We will be getting a review of the functioning of the milk quota system by the end of July. I will certainly be pressing for early action to follow up proposals that I hope will be made. We have a commitment to make further progress next year on the co-responsibility levy on milk, and I assure my right hon. Friend that I share his view. One of my main objectives next year will be to make much further progress on this levy ; I should like it removed altogether.

Regarding my right hon. Friend's point on MCAs, I think it is worth giving relevant figures to the House, because they demonstrate the substantial progress made in removing the unfair competition elements that existed in the last two years through the MCA system for our farmers.

Let us compare the figures for February 1987 with today's figures. In crops, the negative MCAs have dropped from minus 32.8 to minus 2.6. In milk they have dropped from minus 31 to minus 1.8. In eggs and poultry they have dropped from minus 28.3 to nil. In pigmeat they have dropped from minus 27.2 to nil. In beef they have dropped from minus 24.5 to nil. We have taken a major step forward in ensuring fair competition for our farmers.

Mr. Geraint Howells (Ceredigion and Pembroke, North) : May I thank the Minister for looking after the interests of dairy and beef farmers? Can he give an assurance that, in the next round of negotiations, he will look after the interests of sheep farmers? Having said that, I am afraid that the majority of those involved in agriculture will not consider this a very good settlement. The Minister mentioned a figure of £155 million. I am sure that he is aware that the industry now pays £800 million in basic interest rates and borrows £6,450 million, the highest amount ever. Will he give an assurance that he will do all that he can to help agriculture in its fight to put an end to the disastrous effects of high interest rates? Finally, will he tell us whether the £155 million that he mentioned is net or gross profit?

Mr. MacGregor : As the hon. Gentleman will realise, the price negotiations were about the price negotiations and not about anything else.

I know of the hon. Gentleman's concern about sheepmeat. The review of the sheepmeat regime is still ahead of us : I have often told the House that I expect this to be a long and difficult negotiation, and I now believe that it will be even longer than I thought. Meanwhile, I am sure that the hon. Gentleman will be pleased to learn that, as a result of decisions that we made last week, there will

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be an improvement in the sheepmeat sector of 4.3 points in the 1989-90 marketing year as a result of the green rate changes. That is a significant improvement, and I hope that the hon. Gentleman will agree that this negotiation has helped in that respect.

Finally, let me answer the hon. Gentleman's question about the figures. The £155 million is net for a full year, after account has been taken of the effect on feed. We calculate, however, that dairy producers' incomes will increase by another £20 million as a result of the changes in the milk co-responsibility levy.

Mr. David Curry (Skipton and Ripon) : Will my right hon. Friend confirm that a co-responsibility levy is wholly incompatible with a quota system? Will he say whether all producers will pay only 1 per cent. up to the first 60,000 kg of production, or whether some will pay 1.5 per cent? Will he also pay some attention to not allowing the principle of differentiation between the small and the larger farmer to become too widespread?

Mr. MacGregor : I shall go further than my hon. Friend and say that I do not consider the co-responsibility levy system appropriate in the context of CAP reform as a whole. I think that we should be tackling it in other ways, and I am therefore eager to find any way of obtaining support for reducing and eliminating the system. We made big progress this year : for the first time, other Ministers are coming in behind the argument that I have been pushing ever since I became a member of the Council.

The first 60,000 kg in the milk co-responsibility levy is for small producers with a quota of less than that amount. Those with a quota above that will pay the full 1.5 per cent. I thought that quite hard last week ; it seemed to me wrong to give preferential treatment to the small producers, of whom we tend not to have very many. It also seems wrong--I think that this is what my hon. Friend had in mind--as a general approach to CAP reform. I nearly obtained majority support but not quite, and I thought it better to settle for this now--because it was the first major step in dealing with the co-responsibility levy--knowing that we would come back to it next year.

Hon. Members representing constituencies where dairy farmers are in the less-favoured areas will find it worth noting that the LFA change--a nil co -responsibility levy--will affect some 25 per cent. of our dairy producers.

Mr. Tam Dalyell (Linlithgow) : The Minister referred to the north American drought and its effect on Community prices. Does he accept that perhaps that drought has a good deal to do with the destruction of rain forests in central America and Amazonia--that is a climatologist's opinion and not mine? Will he put on the agenda of the next Council meeting the import from unsustainable sources of woods such as mahogany on which I have received frankly helpful answers from the Parliamentary Secretary? Does the Minister recognise that it is a European matter and not simply a British one?

Mr. MacGregor : As it happens, I have come to the House straight from the global climatology seminar in another place. I certainly take a very great interest in these matters and I hope that the Council will be able to discuss them. We have been discussing them informally, but I hope that we will be able to discuss formally in the Council the implications for Community agriculture and forestry, among other matters. The hon. Gentleman may know that

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we are in the final stages of agreeing a Community forestry programme which will also be helpful. The weight of evidence and scientific opinion about the north American drought this year is that it is not yet linked to the longer-term effects. Nevertheless, I agree with the hon. Gentleman that the global climatology issues will very much affect agriculture, and need to be discussed.

Mr. Teddy Taylor (Southend, East) : While the Minister has made the farmers very happy, does he agree that it is an abuse of the EEC pricing system to consider proposals for 36 separate green currency changes at a net cost to the Community of less than nothing, which will mean that the entire cost of the extra price will go to the consumer and less than nothing, according to the figures, to the EEC? Is it not simply an accountancy fiddle to help keep the Community's expenditure within the spending limits? Does he have any proposals to bring down the surplus production of food, which is costing taxpayers throughout Europe more than £200 million a week to dump and destroy?

Mr. MacGregor : I know that my hon. Friend felt that the February 1988 reforms would not bite and did not have much impact, but he should recognise the progress that has already been made. One cannot change everything overnight, and it is important that we carry through internationally CAP agricultural reforms in dealing with subsidies and surpluses. I hope that my hon. Friend will notice the progress that has already been made. It is not an accountancy fiddle. The figures are quite clear ; they show that, as a result of last week's negotiations, on current forecasts we will be £700 million below the ceiling in 1988 and 1.9 billion ecu below it in 1989. Those are real figures and they demonstrate the real progress that has been made. At the same time, I hope that my hon. Friend will accept that the green currency changes were absolutely right, because United Kingdom farmers were being disadvantaged. That is why that was one of my prime objectives in the negotiations.

Mr. Dennis Skinner (Bolsover) : The Minister says that he cannot deal with the problem overnight, but the Government have been at it for 10 years. The Prime Minister sticks up an Agriculture Minister about once every two years and then she sacks him. We have an annual farce when the Minister tells us he has got a good deal. How much of the money will end up in farm workers' pockets? How much will end up in the pockets of the godfathers? No doubt one of these years the Minister will be telling us that they have given the Mafia a seat at the table.

Mr. MacGregor : Not for the first time, I do not think that the hon. Gentleman has been listening.

Mr. Skinner : I have.

Mr. MacGregor : In the past year, we have made considerable savings, for which I have given the figures. We have, quite rightly, improved farm incomes as a result of the green currency changes for United Kingdom farmers. That will work throughout the farming system and be of benefit to it. It has an absolutely negligible effect on consumers. The hon. Gentleman referred to other elements--

Mr. Skinner : Farm workers.

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Mr. MacGregor : I have already dealt with that in saying that the measures will work through the farming system.

One of the other issues that I raised in the Council is fraud. I believe that we are now getting down to detailed proposals which will enable us to take more and more action on that front. The hon. Gentleman knows that I agree with him on that, and I hope that he will allow that we are making considerable progress.

Mr. Michael Lord (Suffolk, Central) : I congratulate my right hon. Friend on the package and on the great effort he has made on the monetary compensatory amounts. He needs no reminding from me that few, if any, cereal farmers in East Anglia made any profits last year. Does he agree that it is important that probably the best cereal farmers in the world are allowed to make a living, not only for their own sakes, but for the sake of the people they employ, who have just been mentioned by the hon. Member for Bolsover (Mr. Skinner)? The workers' livelihoods depend on sound agriculture, just as much as those of the farmers, and the many rural industries that depend on cereal farmers for their incomes.

Mr. MacGregor : Of course I agree with my hon. Friend. We are neighbours and share the same problems. My hon. Friend will acknowledge that, in our part of the world, we have had bad harvests in the past two years, which have had a considerable impact on the incomes of cereal farmers. We must hope that that does not happen a third time. There is not much doubt that I could not have achieved more this year in the price negotiations for cereal farmers. Their relative position has changed considerably.

Sugar is the other major concern that my hon. Friend probably has in mind. It is important to take into account all the factors involved, including, of course, the green pound changes ; that means that returns to United Kingdom growers and beet processors will rise by about 2 per cent. after the effect on levies and the devaluation of the green pound are taken into account--even after the price reduction.

Mr. Andrew Welsh (Angus, East) : While welcoming the green pound devaluation, I regret that it has taken 10 years to reach even this stage, and that the differentials have not yet been eliminated. How will the Minister's package measure up to the needs of an industry facing rising costs, not the least of which is the 5 per cent. interest rise of last year? I estimate that it will cost the industry at least twice as much as any improvements in this package. Are we, yet again, facing the problem of too little, too late for the industry?

Mr. MacGregor : It is not 10 years, but two years. I gave the hon. Gentleman the figures for two years ago. He will see that the monetary compensatory amounts are negligible in two sectors and that in three other sectors there is a nil MCA. That is a considerable improvement. I hope that the £155 million improvement in farm incomes negotiated as a result of this deal will be helpful to farmers. It is important to bear in mind also that we are talking about support prices. The returns to farmers could be higher than that, depending on the market. We have been discussing only the support prices themselves.

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