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Mr. Jackson : I see that the hon. Gentleman wishes to intervene. In the interests of debate, I happily give way to him.
Mr. McLeish : I am grateful to the Minister. The hon. Gentleman misrepresents the policies of my party. Skills training is a key aspect of investment. Does the hon. Gentleman accept that in the 1990s we need increased productivity and growth in all the sectors of the economy? The supply-side initiatives of other countries are much sharper than ours-- their investment is leveraged and targeted and they can see returns. Does the hon. Gentleman accept that the Government's cuts in training are counterproductive because they will not lead to the skills base that we require or to our having the qualified people whom we need? Does not the hon. Gentleman accept that any sensible Government should spend more on that key aspect?
Mr. Jackson : I was going to comment on training, but I shall respond to the hon. Gentleman's point. Of course the Government believe that investment in training is important. That is why, since we came into office in 1979, we have increased by two and a half times in real terms the amount of spend on training and vocational education. That is a significant increase.
There is a certain element of "fatuity" in the debate, to use the word of the hon. Member for Southwark and Bermondsey. One must recognise that the skills base and investment in it are not achieved by the Government alone. In 1986, the Department of Employment conducted a survey of training funding, which the hon. Member for Southwark and Bermondsey has seen. That survey clearly established what one would have expected to be the case if one thought rationally about it--that the vast bulk of the investment in training is made by employers or their work force. Quoting from memory, in 1986 the Government spent about £7 billion a year on training, most of it in the form of tax concessions to employers ; individuals spent about £7 billion a year, most of it being lost income of students while studying--I do not know whether I regard that as a cost, but the economists did so--and employers spent £18 billion a year. Anyone who is seriously interested in the amount spent on training should consider employers' investment in it. We have lots of evidence that that investment has been increasing, including evidence that it has been holding up in the present recession. The Confederation of British
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Industry surveys of industrial behaviour show that a much larger number of companies are increasing their investment in training than are decreasing it. During the 1980s, there was substantial investment by the Government and employers in training, and that is significant for the 1990s.Mr. McLeish : Does the Minister accept that any investment must be measured in terms of return? If we are to believe the figure of £18 billion investment by employers, which we do not, we would be spending roughly twice as much as the Germans, in which case, would not the Germans be getting a far better return on their investment than we are? If we are talking about all that investment being ploughed into the British skills base, why do we still have no coherent system for 16 to 19-year-olds and why do we have a poverty of programmes for the unemployed, with 20 per cent. of British employers spending nothing on training and 52 per cent. of employees receiving no training--figures from the same report that the Minister quoted?
Mr. Jackson : The hon. Gentleman talks knowingly about the German spend on training, but there is no equivalent figure on training from the Federal Republic of Germany. No OECD country has carried out a survey as thorough and far-reaching as our 1986 funding study. That is why it is difficult to make international comparisons in this area. The hon. Gentleman will be interested to know that so far as one can judge, compared with all other Governments, the British Government's spend on training in 1986 was relatively high. But the hon. Gentleman is not in a position to make that judgment about the scale of spend between Britain and Germany because the German figures are not as complete as ours.
The hon. Gentleman tempts me to make the point that if one looks at the outcome of training--he is right that that is the bottom line ; we do not train for training's sake but for the return--one of the most interesting points is that during the 1980s the rate of growth in the British economy significantly exceeded that of, for example, Germany, and other countries which, historically, have a better training record than we have. That suggests that one must recognise that training is only one of a number of inputs into improvement in productivity in the economy. That would lead one to consider the other factors and they would include such considerations as industrial relations, the ability of management to manage and all those kinds of considerations which Opposition Members tend to overlook for the obvious reason that their commitments are all designed to make it more difficult for those factors to be improved. Just as the hon. Member for Southwark and Bermondsey betrayed a certain lack of grasp in his economic analysis and incoherence between his exchange rate commitments and his spending and interest rate plans, so the same can be said of the hon. Member for Fife, Central and his comments, particularly on recession, which he described in that part of his speech devoted to the macroeconomy as being unique to the United Kingdom. Has the hon. Gentleman read the OECD report from which he quotes? I strongly suspect not. Has he read the conclusions of the G7 summit--they are shorter and may be easier to read-- where he will find that the different member states around the table only a few days ago here
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in London were talking about the recessions affecting their economies and welcoming the signs of a recovery from those recessions?The hon. Gentleman talks about unemployment rates, but a number of other western European countries have significantly higher unemployment rates than ours. Spain has an unemployment rate of 15.4 per cent. and in Italy, France and the united Germany unemployment rates are considerably higher than ours. The rate of rise in unemployment in the United States and Canada is greater than ours. There has even been a rise in unemployment in recent months in Japan. The hon. Gentleman has got the world economy completely wrong.
Mr. Simon Hughes : The hon. Gentleman is right in saying that other countries have higher unemployment rates than Britain, but he must now amplify the comments of the Chancellor by saying what he believes is an acceptable rate of unemployment in Britain. It is not the implicit message of Government speeches that the present rate of unemployment is acceptable, unless the Minister is now saying that such is the unimportance of high unemployment relative to reducing inflation that such a rise is acceptable. What is the acceptable unemployment figure either nationwide or in London that the Minister would commend as part of the Government's economic strategy?
Mr. Jackson : The hon. Gentleman talks glibly about acceptable levels of unemployment. There is not a great deal that the Government can do about them. The hon. Gentleman should compare notes with his hon. Friend the Member for Orkney and Shetland (Mr. Wallace) with whom I had a discussion on the radio the other day in which he used a phrase that I am happy to echo. He said that there was no miracle cure for unemployment. There is indeed none. Unemployment rates are determined by millions of independent decisions being taken in pay bargaining in firms across the country.
In a nutshell, the most recent figure for wage rises was 8.25 per cent. Inflation is falling rapidly, towards 4 per cent. by the end of the year. Productivity increases in this phase of the recession are about zero, or perhaps even below zero. People are pricing themselves out of work. The Government cannot control that process--unless the hon. Member for Southwark and Bermondsey is advocating a return to incomes policies. But the consensus emerging in the House is that such policies are not feasible propositions, irrespective of their merits, in the modern economic climate.
Mr. Simon Hughes : The vast majority of workers are not pricing themselves out of work ; they are accepting relatively low wage settlements. If anyone is setting a bad example of pricing themselves out of work it is the people at the top end of the market--
Dame Elaine Kellett-Bowman (Lancaster) : The leaders of the unions.
Mr. Hughes : They are less reprehensible than the leaders of industry. We heard the boss of the post office workers union mention a figure of £40,000 as his salary on the radio yesterday--
Dame Elaine Kellett-Bowman : Not bad.
Mr. Hughes : Not as bad as what the chairmen of the water industry have awarded themselves. The pressures, in
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any case, do not come from people pricing themselves out of work. The London chamber of commerce has made the point that one of the greatest pressures on jobs comes from the Government's interest rate policy and from the other economic levers under their control. They are far more influential than the levels of wage settlements.Mr. Jackson : I enjoy seminars of this kind, even at this time in the morning, but the hon. Gentleman must be serious. The fact is that although many people are accepting lower increases in wages--perhaps even reductions in wages--averages are always derived from figures above and below a line. The present average settlement is about 8.25 per cent.--well ahead of productivity increases and inflation. People are being priced out of work.
The hon. Gentleman says that all this is the Government's fault because it has to do with interest rates. Obviously, they play their part, but all parties are committed to the exchange rate mechanism and to parity within it. It imposes limitations on each and all of us--on the extent to which we can reduce interest rates. So other factors bear on interest rates and it is not possible to reduce them more rapidly than we are reducing them, in the light of the probable market response to doing so.
Mr. McLeish : Is there any measure on which the Government are willing to stake their record? In the past 12 and a half years, unemployment has doubled--a key measure of success or failure. Vacancies have slumped. Are they a measure of success or failure? Only the equivalent of 166,000 full-time jobs have been created in 12 years. Are they the measure? Despite what the Government say, our skills base is still not up to the standard of that of the Germans, the French or the Japanese. Is the Minister prepared to admit that the Government have failed on any of these counts? There is certainly no miracle cure for unemployment or the problems of the labour market, but how long do we have to wait? The Chancellor has talked of vague stirrings. Will the Minister predict when the recession will bottom out and improvement will begin?
Mr. Jackson : I am delighted to have the hon. Gentleman join the ranks of those who say that there is no miracle cure. I shall probably have future opportunities to remind him of that. Some people sagely and soberly nod their heads and say that there is no miracle cure, then chant some mantra and attempt to produce rabbits from a hat as if there was a miracle cure. We have strayed from the terms of the debate.
The most significant measures of economic success, at least in a liberal economy but not with a capital L, are the increases in per capita income and wealth. By those measures, Britain did well in the 1980s and our record stands comparison with that of other countries. The economy is now much stronger than it was in the late 1970s. That is generally recognised throughout the world and the Opposition should also recognise it.
Mr. Simon Hughes rose--
Mr. Jackson : The hon. Gentleman should not have interrupted so often with general points about economic policy. I shall not give way to the hon. Gentleman again, lest he tempts me to stray from the straight and narrow path.
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The hon. Member for Southwark and Bermondsey was extremely critical of the London Docklands development corporation, and was quite wrong. When the LDDC was created the underlying trend was of a sustained loss of dock-related industry. The hon. Gentleman spoke graphically about jobs in the area in recent years. About 150,000 jobs were lost in the five relevant London boroughs in the preceding two decades. There was no diversity in the local economy and there was fast-rising local unemployment. The LDDC dramatically turned the tide and created the conditions for employment. That process is not yet complete, because it has largely been a matter of developing infrastructure, environment and confidence and encouraging the development of a diversified range of factories and offices.The LDDC is also helping the main providers of education and training to improve their services and it aims to create a stronger, more up-to-date diverse local economy. There has been 14.1 million sq ft of commercial development and a further 21 million sq ft is under construction or committed. The number of firms in the area has doubled from 1,100 in 1981 to 2,300 in 1990, and more than 50 per cent. of those were start-ups and not transfers. Employment has also grown, with 17,000 jobs in new business start-ups and 24,000 in relocation. The hon. Member for Southwark and Bermondsey should pay tribute to the considerable progress made by LDDC rather than knock it.
The hon. Gentleman also criticised the Government's training record in London. We discussed the macro figures. London's youth training budget for 1990-91 is £47.83 million, which is slightly higher than the actual spend in 1990. The employment training budget is £48.44 million. There are more than 15,000 trainees on youth training and more than 11,000 are benefiting from employment training. The hon. Member for Fife, Central asked about the youth training guarantee. The Government are fully committed to that guarantee and it is too early for Opposition Members to say that we are not delivering it. We shall not know about the demand for youth training places until we are clearer about the plans and intentions of summer school leavers. We are monitoring the situation and are in close contact with the TECs, and we shall act to ensure that the guarantee can be met. That cannot be contradicted, because we will not know the figures until later.
Mr. McLeish : The Minister will be aware that the Department carried out a review on or around 26 March after the Secretary of State expressed concern about the delivery of the guarantee. He will also know that on or around 24 May there was yet another survey of supply and demand for youth training places all over the country. This is July, and Government documents now show that it will be September before the picture is clear. Plainly, the youth training guarantee is not being delivered in many TECs and local authority areas. Will the Minister concede that and tell the Secretary of State that TECs need more money and that if they do not get it the youth training guarantee will not be worth the paper on which it is written?
Mr. Jackson : The hon. Gentleman is a great expert on purloined documents, and I liked the language of the
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police courts that he used--"on or around." It sounded like the hon. Member for Linlithgow (Mr. Dalyell), and his talk of the Belgrano. The hon. Member for Fife, Central knows from his purloined documents that the Government are concerned, as they must be, about their ability to deliver a guarantee that they have given. He has recorded the fact that we have been monitoring the position. We continue to do so. Nothing that he said has controverted the point that I made--that we cannot know the position until we know the state of the demand that there will be for YT places. I assure him that it is our intention to deliver on the YT guarantee. I have said that at least a dozen times in the House. The hon. Gentleman should stop pressing us, because he is not implying that we do not intend to honour the words that we have uttered in the House.I am grateful to the hon. Member for Southwark and Bermondsey for instigating this debate. Unlike some, I do not believe in selling London short. We in this House have the honour of working in one of the world's greatest capital cities with an outstanding economic and employment history. And in my opinion London's prospects for the future are just as exciting as its past has been.
Firms in London employ 3.5 million people, twice as many as in the whole of the east midlands. It contributes 15 per cent. of Britain's gross domestic product, and though we hardly think of it as a manufacturing centre, there are 21,500 manufacturing premises in the capital. It is true that, like other areas of the United Kingdom, London is suffering job losses and rising unemployment. But when Opposition Members talk as though London is derelict, polluted, impoverished, and grinding to a halt, I wonder whether they ever spend any time out and about the capital.
London has some of the finest museums in the world. As I went to see it only a couple of days ago, I mention in particular the new Sainsbury wing of the National gallery, so generously endowed by my hon. Friend the Member for Hove (Mr. Sainsbury). We have great orchestras, theatres, parks, leisure attractions and sporting venues that match the best in the world.
London also represents one of the most important, arguably the most important, financial, commercial and telecommunications centres in the world.
As the economic policies of the Government bring about a return to prosperity, London is well placed to be a major beneficiary. Our inner city policies are encouraging economic regeneration in partnership with the private sector, with the docklands as a shining example. London's transport system is currently being strengthened, at a cost of billions of pounds, through projects such as the extension of the docklands light railway to the City, and the Dartford crossing. All these urban and infrastructure improvements will provide huge opportunities and benefits for London's businesses and workers.
I recommend to the hon. Members for Southwark and Bermondsey and for Fife, Central that they reflect on these developments in a more balanced way, to give a more balanced presentation of the opportunities as well as the problems that face London.
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EC Agricultural Policies
8.3 am
Mr. William Hague (Richmond, Yorks) : I am pleased to be able to raise the subject of the European Community agricultural policy. I am grateful to my hon. Friend the Parliamentary Secretary for being here to reply to the debate. This subject is of vital concern to my constituents and many thousands of others throughout the country who work in agriculture or depend on it in some way. It should be of concern to all those who believe that food should be produced efficiently, that trade between the nations of the Community should be fair, and that our rural environment should be well looked after and preserved.
I raise the subject now because the launch of a new set of agricultural policy proposals by the European Commissioner, Mr. MacSharry, has brought discussion about future agricultural policy to a critical point, and because these discussions inevitably have implications for the success of the GATT round to which my right hon. Friend the Prime Minister and his colleagues among the G7 leaders have committed themselves.
The debate in the Community is only the latest in a long fight to reform the inefficient and wasteful common agricultural policy that has already gone on for years. In the 1980s, we took a leading role in arguing for reform, often in the face of unrelieved complacency and a near-paralysis of decision-making in the highest councils of the Community. Now, at least, the need for change is being more widely recognised, as continuing budget pressures and the demands of the GATT negotiations finally force some sense into the collective mind of the Community's agricultural policy makers.
How the Community responds to those pressures is important. The agricultural policy that emerges from the next few months will constitute a significant statement about--and an indication of--the sort of entity that the Community will be. Will it be open, fair and competitive, or protectionist, closed and discriminatory? The danger now is that the Community will adopt an agricultural policy that favours the inefficient, high-cost producer at the expense of the efficient, low-cost producer and that, in doing so, it will damage the interests of Europe's agricultural industry and its consumers and the cause of more open and effective competition around the world. In particular, there is a danger that the Commission's proposals will discriminate against, and disadvantage, the average British farmer simply because he tends to be more efficient and to develop his business on a more viable scale and has adapted to changing circumstances more effectively than his average continental counterpart.
Dame Elaine Kellett-Bowman (Lancaster) : Is not one of the difficulties the definition of family farms? Many of our farms have a number of people living and working on them--a father, a couple of sons and often a daughter. They are quite small units, but because they are all under one umbrella they are subject to all the disadvantages that MacSharry is trying to wish on them now--or would have, if we did not have a very effective Minister who will fight for us.
Mr. Hague : My hon. Friend is absolutely right. On many British farms several generations, or different branches of a family, work together. Such families have
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been penalised in the past by Community arrangements and they will be penalised still further by some of the proposals that are on the table now.The danger to which I have referred is nothing new. Britain joined the European Community too late and the agricultural policy that was already in place when we joined was tilted towards the small farmer and, in general, the continental farmer. The common agricultural policy pursued by the Community before we joined--and ever since--has led to more expensive food, the production and costly storage of huge unwanted surpluses and the maintenance of many tiny, uneconomic, part-time farms in continental Europe, which add to the surpluses at the expense of the taxpayer and to the detriment of larger, more efficient and more professional farming businesses around the Community.
One would have thought that the GATT round presented an opportunity for the Community to break with the inefficiencies of the past. As the whole world looked to freer competition and fairer trade, surely the Community would move in step with the times. In almost every other industry, the Commission is busily at work ensuring fair competition, reducing state aids and insisting that industries learn to compete on equal terms. Not so in agriculture.
Mr. MacSharry's latest proposals go deliberately and unerringly in the opposite direction from the policies set by the Commission for other industries and the policies that the whole world seeks for agriculture. His proposals would indeed cut the support prices offered to European farmers for most of their products ; but they would go on to compensate fully all farms below a certain size for the reductions envisaged--and possibly do more than fully compensate them. They would also discriminate against the largest and most efficient farmers and probably lead to a further growth in the budget required to carry the common agricultural policy, without any significant benefits for the consumer of for the farmer who runs a sound business.
The proposals must be fiercely opposed and I am delighted to learn that my right hon. and hon. Friends in the Ministry have opposed them vociferously. I hope that they will continue to do so. Let us look at a few examples of what the proposals could mean.
The Commission proposes to reduce the intervention price for cereals by about 35 per cent. Compensation per hectare would be paid to farmers to help them to withstand the cut, but to qualify for payments a farmer would have to enter a set-aside scheme. Here is the rub : a farmer producing less than 92 tonnes per year would be exempt from the set-aside obligation. On United Kingdom farms, the compensation payments for set-aside would effectively be limited to the first 6 hectares, with the rest unpaid.
The net result would be severe discrimination against the larger farms. The National Farmers Union has calculated that a small arable farm of 15.6 hectares would suffer a 2 per cent. loss of income as a result of the proposals, while a 100 hectare farm would suffer a 28 per cent. loss. As farm size increases, the fall in income becomes more severe. The National Farmers Union estimates that United Kingdom cereals production would fall by about 2.5 million tonnes--a 10 per cent. cut out of
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a normal output of about 24 million tonnes. The total cost of this policy for the whole of the European Community would be additional payments of thousands of millions of pounds, mainly going to small farms on the continent, which are not economically viable units anyway, and keeping them for ever in competition with the less subsidised farms in this country that can produce cereal products more cheaply for the consumer.The cereals policy is bad enough, but it is only the beginning. In the milk sector there would be a 10 per cent. cut in intervention prices and a 4 per cent. quota cut, but compensation would be paid--this is the problem--on the first 40 cows. Once again the result would be to disadvantage severely the large farmer and, therefore, generally the British farmer. European Community expenditure on the milk sector could rise by up to£500 million a year, if these proposals are implemented. The extra money once again would go to the tiniest farms.
The NFU has again estimated the implications for farms of different size. Its estimates show that a small farm with 30 cows would be 6 per cent. better off, that an average dairy herd of 70 cows would leave its owner 12 per cent. worse off and that a herd of 140 cows would mean a 25 per cent. reduction in income. That is even after allowing for the reduced cereal prices resulting from the measures already discussed. Once again the successful farmer who has expanded his business would suffer. The one who had sat on his hands and collected his subsidies each year would, yet again, be better off. That cannot be the right policy to take European agriculture into the 21st century.
The greatest horrors are still to come. These are the implications for the livestock sector to which I, representing the hill farmers of the Yorkshire dales, take particular exception. For one thing, the reductions in cereals prices are likely to encourage increased production of poultry and pigmeat. That would mean a reduction in the price for these products, which in turn would exert a downward pressure on the price of beef and sheepmeat. Paradoxically, the result could be increasing surpluses of beef and rising intervention stocks, producing yet more expense for the taxpayer.
Mr. Andy Stewart (Sherwood) : I thank my hon. Friend for introducing this debate on behalf of the farmers of this country. It is high time that the points he is making were brought out so that they are understood. There is a myth that the common agricultural policy is costing the average family £17 a week. Do my hon. Friend and Mr. MacSharry honestly believe that, by reducing output and prices, prices to the consumer will be reduced?
Mr. Hague : My hon. Friend has made an extremely valid point. Any analysis of the proposals now before the Council of Ministers does not lead to the immediate conclusion that prices to the consumer would fall. However, expense to the consumer and taxpayer has every chance of increasing.
I was examining the possible consequences for the livestock sector and how beef surpluses might increase still further. On top of all that, a 15 per cent. intervention price cut is proposed for beef and veal. We can reasonably expect sheepmeat prices to fall by about the same proportion. In addition, the Commission's proposals would limit the number of sheep eligible for the ewe premium on each holding to 350, instead of 500, and to
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750 in the less-favoured areas, instead of 1,000. The result for livestock farmers in the less-favoured areas would be a fall in income of 26 per cent. on average and a staggering 43 per cent. fall in the lowlands. Such reductions would mean the abandonment of large parts of the British countryside and the dereliction of much of our finest rural landscape. And for what? The policy would need £500 million in additional ewe premium and £600 million in additional suckler cow premium. What sort of saving would be made in the face of such increases in costs?We can see, therefore, that British agriculture would suffer considerably from these proposals, without the British taxpayer gaining much in return. The people who are best at producing our cereals, milk and livestock would all be hard hit, yet farmers of some other products in the Community would not need to lose a moment's sleep over what is proposed. If a farmer produces olive oil, he can rest easy. A fruit farmer need not worry. These are areas where the Commission believes that it would not be right to reopen the debate, given that so-called comprehensive changes have been agreed recently. In reality, the producers of southern Europe are left alone while northern European producers are expected to bear the burden of the Commission's policy in price cuts and tax.
To be fair to the Commission, its policy incorporates reasonable proposals that are by no means as lunatic as those that I have listed. It has introduced a number of schemes to aid environment, including an extensification scheme, an environmentally friendly management scheme and a scheme for the environmental upkeep of abandoned land. It also proposes an afforestation scheme and an early retirement scheme, which in principle are not bad ideas. Much of the help that it proposes needs to be less indiscriminate and more carefully targeted, but let us at least give it credit for those measures.
Nevertheless, Britain should fight the overall proposal all the way. Mr. Rodney Swarbrick, president of the Country Landowners Association, put it well in his letter to The Times last week. He said of the proposal :
"It attempts to throw the whole process of economic development into reverse. Mr. MacSharry has openly stated that his objective is to retain the maximum number of farmers on the land, the great majority of whom in his own words could never be described as competitive or viable. He, therefore, proposes that billions of extra ECUs of taxpayers' money should be spent to preserve an antiquated EC agricultural structure.
Worse, the heavily subsidised production from these farmers will compete with the unsubsidised production of those bearing the brunt of the discrimination in his proposals and facing keener world markets after a GATT settlement. This can only lessen the viability and competitiveness of EC agriculture in precisely those areas where these qualities are most needed.
There can be no economic rationale for this. It removes the much needed incentive for structural reform of European agriculture and the CAP budget implications would be colossal."
That is a good summary of the position. I hope that Ministers will do their utmost to persuade their counterparts on the continent that this cannot be the right way to proceed. We need price cuts in the GATT deal--but cuts which mean that efficiency pays and which take place at a pace that the efficient farmer can withstand.
We must ensure that new European policies will not lead to huge expense and mountains of surpluses. They must therefore exclude the blanket subsidies to every part-time farmer in Europe, as envisaged by Mr.
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MacSharry. They should make environmental considerations a more integral part of the policy, with set-aside linked to provision for environmental protection and more selective direct payments for delivering specified and valuable care for the countryside or for those who maintain the finest rural environment in the face of permanent handicaps imposed by climate or geography such as in the less-favoured areas of the United Kingdom.Dame Elaine Kellett-Bowman : The stone walls.
Mr. Hague : My hon. Friend refers to the stone walls of northern England. They would soon be gone without the farmers who work in those areas.
Surely the Commission can be brought to see that the policies that it proposes are a futile retreat before the advance of economic reality and a terrible advertisement for the Community and the principles on which it operates. To have a sound future, the Community must be fair to all its citizens, must bring the best out of its industries and must encourage its people, who can compete successfully with anyone else in the world. With its ludicrous agricultural proposals, it is being true to none of those objectives and I implore my hon. Friend the Minister and his colleagues to do all that they can to ensure that the proposals end up in the waste bin, where they properly belong.
8.18 am
Mr. Peter L. Pike (Burnley) : I congratulate the hon. Member for Richmond, Yorks (Mr. Hague) on giving us the opportunity to discuss these important issues. The MacSharry proposals are important to people who are involved in agriculture and farming. More farmers are leaving the industry than at any time since the war, which is of grave concern to many parts of the country.
The hon. Member for Richmond, Yorks referred to the need to reach agreement on reform of the CAP and the subsidy to agriculture because of the importance of reaching a conclusion on the GATT round. We all acknowledge the importance of that for Britain's trade in manufactured goods and other commodities. The two points are linked and the hon. Gentleman was right to draw attention to that. We also recognise the importance of that.
Another reason why it is important that we should discuss these issues and why any reform of the CAP is of extreme importance is that we face changes within the European Community that we may not have envisaged two or three years ago. Many eastern European countries may come into the EC before the turn of the century. We must have policies dealing with agriculture that will recognise the completely changed situation when other countries come in. We have already absorbed East Germany ; it was incorporated into West Germany and became a united Germany, which we welcomed so much only a year ago. When we recognise that countries such as Romania and all the other eastern European countries may enter the Community before the turn of the century and that before the war cereal production in Romania was second only to that of the Ukraine in European output, we recognise the implications for change. We have the opportunity of having policies that meet the needs now, allow us to reach agreement on the general agreement on tariffs and trade and take account of the rapidly changing situations which
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many of us welcome. I believe that it is in the interests of Europe and the world that other countries are admitted to the EC as soon as they meet the criteria.There is widespread opposition--which we share--to the MacSharry proposals and there is concern about them not only in this country, but in the other countries of Europe. Many farmers are very canny people. Some whom I have met suspect that, because there is such widespread opposition, by the quirks of the way in which the Community works, the proposals may go through. We must reassure farmers that we will ensure that we get a better and more acceptable arrangement not only for those who are involved in agriculture, but for the consumers and the country generally.
When the Minister of Agriculture, Fisheries and Food answered questions last week, he made his position clear. In reply to questions, he said :
"I will then place on record again our opposition to those parts of the MacSharry plan that discriminate against British agriculture, northern agriculture, specialist agriculture, efficient agriculture, the interests of the consumer, European agricultural ability to compete with the rest of the world, and use reform not to reform agriculture itself, but to put forward Mr. MacSharry's personal views."--[ Official Report, 18 July 1991 ; Vol. 195, c. 488.] The hon. Member for Richmond, Yorks emphasised that point. The Opposition and the farmers want to hear exactly what the Government believe should be done. [Interruption.] When we sit on the Government Benches, we shall be glad to say exactly what our position is. In all seriousness, we want to hear what the Minister proposes.
I draw attention to one item--the subsidy for tobacco. Some £1 billion is given as a subsidy for the benefit of two member states of the EC that produce a tobacco of unusable quality. That seems nonsense. It has been said that we want to spend money on research to develop more usable tobaccos. I am a smoker, so I am not anti-smoking, although I know that I should give up. It seems nonsense when other sections of the Community are leading campaigns to stop advertising and to discourage smoking altogether. I believe that most people would argue that to subsidise tobacco from Community funds is nonsense.
Dame Elaine Kellett-Bowman : The hon. Gentleman has raised an excellent point. It was absolutely crazy to spend money on producing tobacco which nobody smoked and which went straight into store.
Mr. Pike : I am grateful to the hon. Lady for underlining a point on which there is universal agreement.
The present agricultural policy costs the average family of four in this country £16 a week. We pay £23 billion for storage, disposal of surplus and export refunds. That money does not go to the farmer. People would be extremely surprised to learn that 60 per cent. plus of the budget does not go to the farmer. It goes to the intermediary. We do not have a cheap food policy either, which is another nonsense.
The price of sheep in cash terms is less now than it was a few years ago. If one allows for inflation, however, the price in real terms is even worse. Many sheep farmers work difficult land and they are finding it hard to manage. In the supermarket the price of lamb is no cheaper than it was all those years ago. The farmer is therefore entitled to ask where the difference in price goes.
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I know that the Minister visited the Trough of Bowland last week. Last year a number of colleagues and I visited a number of farms as part of an all-party tour. Those farmers gave us the relative figures on what they received in subsidy and what they spent. I found it extremely difficult to understand why those farmers remained in farming. Their take from the income they received and on which their families were expected to live was so abysmally low that there was no encouragement for them to continue to farm. As the hon. Member for Lancaster (Dame E. Kellett-Bowman) said, younger generations are extremely discouraged from remaining in farming.The environmental implications of the MacSharry proposals should strike a chord with everyone. We should consider the proposals sympathetically. They are in line with the Labour party proposal on green premia. Such environmental proposals should be considered carefully in future. We should discourage the use of pesticides and fertilisers beyond a certain necessary level, particularly as the environmental implications of their use is already well known from experience.
We must also consider what is happening with set-aside. Some claim--I do not know whether the allegation is true--that farmers set aside the least productive parts of their land while increasing production on the other parts. That achieves exactly the opposite of what was intended. That must be nonsense.
My generation learnt in school that farmers laid certain sections of the land to rest and practised crop rotation. Perhaps in the years ahead we should revert to some of the old systems with a lower intensity and fewer fertilisers and pesticides.
Those issues are extremely important and, although we recognise the complexity of reaching agreement with our European partners, we must do so. Obviously, many other aspects of European harmonisation are also taking place. Our farming industry differs greatly from those of our European competitors because our farms are much larger. In many countries, farms are extremely small and farmers' circumstances are completely different from those in this country.
It is nonsense to have milk quotas but insufficient milk to produce all the dairy produce that we need, so that we must import so many higher value products. Anyone who goes around the supermarkets will see an increasing number of imports of such products. We must consider whether reforming the milk marketing board is the right way to proceed. We must also consider milk production and the effect of quotas, because there are some anomalies.
How do the Government see the way ahead in the negotiations? We recognise that they are extremely difficult, but we want a deal that will encourage and enable our farmers to remain in business and live a reasonable lifestyle without experiencing poverty. Many farmers in less-favoured areas are finding it extremely difficult to survive. We also want a fair deal for consumers so that they do not have to subsidise inefficient agriculture in Europe to an unfair and unacceptable extent. Finally, we want to reach an agreement that will enable the GATT round to be concluded in the best interests of this nation.
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8.33 amMr. Andrew Rowe (Mid-Kent) : I am grateful to my hon. Friend the Member for Richmond, Yorks (Mr. Hague) for introducing this important debate in such an authoritative way, even if he brings us no cheer. We must ask ourselves what we want agriculture for, because there is considerable confusion about that question in Europe. The purpose of agriculture used to be to produce good food as cheaply as possible so that we could feed our populations, but those days seem to have passed. However, I would not put it past us to create a policy that would cause some sort of food crisis in about 20 or 30 years' time. Many countries in the European Community see agriculture as a sophisticated form of relief for people whom it would be difficult or expensive to introduce to a more urban lifestyle.
We must look carefully at the age structure. I was surprised when I was given some figures about the age structure of French farming that showed that it was younger than I had expected. But the age structure of the farmers in many European Community countries is becoming older and older. It would be short sighted and absurd to create a policy that effectively turned out to support a generation that is coming out of farming.
If we want our farms to be a system of sophisticated countryside gardening- -as I suspect many people in this country see it becoming--we shall have to debate much wider issues. One factor that makes it hard for our farmers is that they are regulated up to their necks on what they may do with their land. They are prevented from selling it for any purpose, yet we are exposing them to fiercer and fiercer competition across Europe.
I come from a constituency where most of the population would, I think, be hostile to considerable development. However, at present, we face considerable development that is being haphazardly added on to the urban sprawl. It is hard on farmers and makes it difficult to create an effective set-aside policy or take land out of production. We must reconsider those issues.
I believe that this country's farmers must do more direct marketing. The distribution chain in this country is far too long and far too expensive. That is true across Europe, but especially in this country. The Kingdom Cox campaign, which put the Cox's orange pippin back into the shops of Europe, is a fine example of what can be done if the farmers get their act together and start selling British produce in a way that causes other people to take it seriously. We need to achieve wider alliances in Europe--not just in the European Community but within those countries that would like to join it. In addition, my right hon. Friend the Minister, who is fighting hard on behalf of British agriculture, needs to have more weight behind him. There are a great many people in Europe who, if the MacSharry proposals go through, will wake up and discover that they are a rotten deal for them. At present there is a tendency for others to say that the British are once again trying to protect their agriculture, which draws a veil over people. They stop thinking clearly and merely say, "It is the bloody Brits trying to protect their industry--we'll stop listening."
One place where my right hon. Friend the Minister might look for allies and an energetic debate is the Council of Europe, which takes in a wide range of European
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