House of Commons Hansard Debates for 31 Mar 1993

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STATUTORY INSTRUMENTS, &c.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : With permission, I shall put together the motions relating to statutory instruments. Motion made, and Question put forthwith, pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.) .

Child Support

That the draft Child Support Appeals (Jurisdiction of Courts) Order 1993, which was laid before this House on 8th March, be approved.

Land Registry

That the draft Land Registry Trading Fund Order 1993, which was laid before this House on 8th March, be approved.

Land Registration (Costs)

That the draft Land Registration (Determination of Costs) Order 1993, which was laid before this House on 8th March, be approved.-- [Mr. Robert G. Hughes.]

Question agreed to .

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Agricultural Prices

[Relevant documents : European Community Document No. 4620/92 and the unnumbered Explanatory Memorandum submitted by the Ministry of Agriculture, Fisheries and Food on 18th March 1993, on temporary national compensation for farmers in Germany, European Community Documents Nos. 4821/92, on the common organisation of the market in raw tobacco and on the 1992 tobacco harvest, 5018/93, on the allocation of quotas for certain varieties of tobacco in Greece, the unnumbered Explanatory Memorandum submitted by the Ministry of Agriculture, Fisheries and Food on 18th March 1993, on the progress made by Greece, Spain and Italy in the effective application of the milk quota scheme and on the situation on the market for milk and milk products, and the unnumbered Explanatory Memorandum submitted by the Ministry of Agriculture, Fisheries and Food on 22nd March, on national aid for sheep-farming in France.]

7.28 pm

The Minister of Agriculture, Fisheries and Food (Mr. John Gummer) : I beg to move,

That this House takes note of European Community Document No. 4608/93, on the prices for agricultural products and on related measures, 1993-94 ; and supports the Government's intention to negotiate an outcome on the price proposals which takes account of the interests of United Kingdom producers and consumers, builds upon the 1992 Common Agricultural Policy reforms, and takes full account of the realities of the budgetary situation.

The prospects for the farming industry are brighter than they have been for several years. I think that the House will agree that the first reason for that is that the uncertainty which has hung over the industry for so long has been lessened by the completion of the major part of the proposals for common agricultural policy reform. That provides a framework for the development of a competitive industry for the rest of the century. It gives farmers the stability they need to plan ahead. There is a great deal more to do, but for the major products that so dominate the British farming scene, we have laid the pattern for the coming decade.

The agreement contains several positive features. By cutting prices and reducing the role of intervention, it will bring farming nearer to the market and encourage farmers to pay much greater attention to the demands of consumers. It will reduce the resource costs of agricultural support in the Community. Overall, the costs imposed by the CAP on the consumer and taxpayer will be lower as a result of the agreement. The agreement marks a major step forward in the integration of environmental considerations into the CAP. A last but important element of the agreement is that it does not discriminate against our farmers. The burden of reform will be borne by all producers--not, as the Commission proposed, simply by larger, more efficient farmers. Many people, including Labour Members, openly doubted that that was possible. They could not have been more wrong. None of the Commission's proposals which would have discriminated against larger producers was carried through to the final agreement. All the producers will benefit from the various compensation payments which now constitute such an important part of the reformed CAP. It was essential for the future of our farming industry that we won that point.

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This year we shall begin to see what the agreement means in real terms. Whereas previously 7 per cent. of spending on the CAP came to Britain, now 9 per cent. will come to Britain. If the MacSharry proposals had been accepted, Britain would have received less than 7 per cent. So the increase that has been achieved by the negotiations is considerable. It will be seen in the returns that farmers will have this year and in future years.

In 1992 we also saw a welcome recovery in farm incomes. There is no doubt that farmers have done less well year by year. They often look at the rest of the country and point out that increases in food prices have been much outdone by increases in the prices of other products. It is surprising that, despite the excellence of food in Britain, every year a smaller proportion of the household budget is spent on food. It is a constant concern of farmers that their work is less respected and encouraged by the rest of the community. Nevertheless, farm incomes rose by some 11 per cent. in 1992. That improvement was from a higher level than we predicted last year. The recovery is from a low base. Farm incomes have been under severe pressure in recent years and in real terms remain below the levels achieved 10 years ago. Those in the more exuberant organs of the press who tend to believe that farmers are doing extremely well should look at their own incomes and ask themselves whether they would like it if their income was lower in real terms than 10 years ago. It is important to make that clear lest people run away with the idea that the farmers are back to the income levels which were expected in the past.

However, there are encouraging signs for the future. The fall in interest rates is a major boost to many farmers.. Overall the industry's interest charges fell by 16 per cent. last year. Currently interest rates are at their lowest level for 15 years. Inflation is also down. Farmers are affected by inflation perhaps more than most other sections of the community, for they find it much more difficult to get back from the marketplace the inflationary additions which they have to pay on their inputs and their wages.

The farming industry has also benefited significantly from the green pound devaluations that have taken place since September, with support prices increasing by some 23 per cent. I wonder whether we might concentrate for one moment on the increase in the green pound and its effect on farmers.

In the past those in the sheep industry have reasonably groused that the arrangements for changes in the green pound have always been organised in such a way that they had to wait a whole year before they received the benefit. It is important to recognise that we ensured that the changes took place early enough for sheep farmers to benefit a year earlier than most would have expected.

So much of the extra money that will go to sheep farmers, especially to those in the less-favoured areas, has come not from the automatic reaction of the green pound but from the specific decision of a Government determined to protect the farmers' interests. As a result of the changes, farmers can be cautiously optimistic about their prospects for the year ahead. However, it is not feasible to look much further into the future because it contains other uncertainties, albeit fewer than previously.

The industry needs to make the most of the opportunities that exist now, using this better time to prepare for periods that may be more difficult in the future. We should take advantage of the competitive level of sterling. Already, exports of sheepmeat were up in 1992 by

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30 per cent. Exports of pigmeat, in which we often think that we do not do so well, were up by 25 per cent. The industry must build on those successes and make itself fit for the rigours of the future. We now have to implement the reformed CAP schemes. I know that there is considerable anxiety among farmers about the administrative burdens which they fear that the schemes will impose upon them. I am cheered that several people, including those who are not at all happy with the place of Britain in Europe or with Maastricht and the like, have said to me that they are pleased with the quality and care with which we have produced the documentation and forms that farmers have to fill in. That is a great tribute to staff in the Ministry of Agriculture, Fisheries and Food. We have brought farmers in at every point to ensure that the forms are as they would wish them to be--as simple as possible.

Dame Elaine Kellett-Bowman (Lancaster) : May I congratulate my right hon. Friend on the forms. I put a towel round my head and went through them last night. I thought that it was going to be awful. But they are extremely well designed, simple to follow and virtually foolproof. My right hon. Friend will be glad to know that the chairman of my local county farmers union has gone on record today saying emphatically that farmers must get the forms in by the crucial date of 15 May and no bones about it. I am convinced that farmers will be able to fill in the forms without making mistakes.

Mr. Gummer : I thank my hon. Friend. I hope that hon. Members will recognise that, whatever their concerns and wherever they stand on the issue of European integration, they must ensure that every farmer returns the forms before 15 May. That is crucial. A great deal of money hangs on it. There is almost £1,000 million this year and there will be almost £1,500 million next year. That money needs to come through.

There is a second important date to which I am sure that my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) would have referred, if she had had time. We have put the date on a special piece of paper inside the package that will come to every farmer this weekend. I hope that every farmer will have it by Monday ; some will have it on Saturday. The special piece of paper reminds farmers of the second date, which is 17 April. That is the last date on which Ordnance Survey can guarantee in its one-stop system to provide the maps that farmers need.

I hope that most farmers have sought the maps already. Anyone who has not done so should do so at once. The quicker that farmers obtain the maps, the quicker they can fill in and return the forms so that we have some chance of checking that they are right. I hope that there will be every opportunity to help farmers fill in the forms. Our regional service centres are staffed up to give advice. But again, the quicker that we receive the requirements, the quicker we shall be able to answer them. [Interruption.] It is all right for Opposition Members who will not have to fill in the forms. They will not receive the money and they would not lose out if they had not filled in the forms. I know that the hon. Member for Workington (Mr. Campbell-Savours) will go round his farmers making sure that they fill in the forms properly.

The penalty for mistakes in filling in the forms could be severe. But we are talking about a great deal of money. We are determined that the same rules will be carried through

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in every country of the European Community. I have looked at the forms in most other countries and our forms are very similar. However, the explanatory documentation that we have issued is much clearer. It is all in one place. Farmers will not have to scrabble around for different booklets and so on. This has been an example to others. I suspect that other countries will follow us in the future. I assure the House that the same information will not have to be produced next year. We hope to use a database to send the documentation to every farmer in the country, who will then only have to update it. That will make a major difference.

o do in Britain what farmers are not asked to do elsewhere. That is why the forms are standard throughout the Community. The Commission and the Council will be able to check whether the forms are properly filled out and, if they are not, the farmers will not get the money. That will be as true in Italy as it will be in Britain. That will be a major change.

Labour Members who are keen on the European Community-- [Laughter.] I understand that those hon. Members are publicly committed to a closer union in Europe and therefore share my attitude to the Community. They would do better if they giggled less and supported more. Many of us spend a great deal of time-- [Laughter] When I make a joke, I shall ask hon. Members to laugh. It would help a great deal if we could get the rest of the Community to follow the high standards that we have maintained in Britain. However, I question whether the Community has the same determination as Britain to keep the documentation and the demands at the lowest level. We have therefore asked the new commissioner to consider ways to simplify the rules and he will come forward with proposals. We are also seeking to achieve that through the Council and other available mechanisms. It is against that background that we should consider the Commission's proposals for price fixing. Quite frankly, they are disappointing. They are largely a roll-over collection of proposals at a time when there is a need for some fairly substantial changes. The reform of the CAP is not complete ; we still do not have an up-to-date wine regime, we do not have changes in the sugar regime, we have not completed the work that we need to do on the beef regime and we still have the enormous expense of intervention hanging over the market. It is regrettable that the Commission has not even brought forward its proposals on fruit and vegetables, olive oil, rice and cotton. There is a need to reduce expenditure in all those sectors. Unless we do that, we will face real difficulty in paying the bill and meeting our expenditure within the guidelines. We have made substantial progress in the reform agreement on integrating environmental considerations into the CAP. I should have liked there to have been more and I still want cross- compliance. I think that, in the end, the public will demand that, where the taxpayer pays out money, it must be to farmers who practise environmentally friendly farming. The farmers who are doing that--and

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they are the vast majority--will increasingly demand that their peers come into line, because the small number who do not farm in that manner harm the reputation of all.

Earlier today, I spent some time addressing the Association of Small Farmers, when it was brought home to me that the farmers felt considerable concern about their status and reputation, which are not what they were. Part of the reason for that has been the activities of a very small number of farmers and cross-compliance could go a long way to putting that right. If there was a more generalised system of cross-compliance, every suburban dweller and urban liver would know that, at the core of the system, was a concern for the countryside and the environment and a respect for the soil and husbandry.

I fear that the Commission's proposals take too little account of the difficult budgetary position that the Community is likely to face in 1994. With lower estimates of Community GNP, the guideline next year is now expected to be little higher than this year. With the increased costs of CAP reform beginning to have a real impact on the budget of 1994, there are fears that, on current trends, expenditure could be set to exceed the guideline even before the costs of the recent ERM realignments are taken into account. The Edinburgh Council agreed to some easing of the current rules to help with the latter costs, but any increase in the guideline remains out of the question.

In those circumstances, I feel that a prudent price settlement is required. We need now to bring spending under control, because otherwise the decisions later in the year will be much tougher. It is also essential that we do not agree anything that would increase the cost of the CAP. In particular, the agreement reached in December on the reform of the agrimonetary system must not be reopened. You, Mr. Deputy Speaker, will be aware of the complicated nature of that system. You are no doubt familiar with the way in which the switchover mechanism works. If that has temporarily escaped you, I am sure that the hon. Member for Workington can explain it in detail. The system has an artificial effect on prices in countries with hard, tough currencies. One of the reasons why Germany has been able to maintain its view on the deutschmark is that the German farmer has been protected, because of the switchover mechanism, from the effect of too strong a currency. That is why it was only with the greatest reluctance that we agreed to the mechanism continuing for two years. Now, there is pressure on us to protect countries with strong currencies against even the small effect that the switchover system allows. That we cannot and will not do.

In addition to the price-fixing proposals in the dairy sector, the Commission has presented two reports to the Council. As, to some extent, they overtake the price-fixing proposals, it would be misleading if I did not mention them in the context of the debate. The first report considers the case for the 1 per cent. quota cut for 1993-94 that was provisionally agreed last year. The House will know that it is not the Government's policy to support further cuts in quota. We already produce less butterfat than we need--that has been so for most of the century and we have always imported large quantities of dairy products. A 1 per cent. quota cut has a much greater effect on a country that is 85 per cent. self-sufficient than on countries that produce considerably more than they need. Therefore, I have always believed that a cut in the butter price rather than in

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the quota is a better way to deal with these matters. For that reason, I am pleased that the report concludes that the market for milk and milk products has improved and that it proposes that the quota cut should be deferred and reconsidered next year. It also concludes that the butter market is very weak and proposes that the support price for butter should be cut by 5 per cent. for the coming marketing year, rather than the 2.5 per cent. provisionally agreed last year.

The House will recognise that that is another example of the Commission moving towards the United Kingdom's position rather than the position taken by other Community countries. That small group of hon. Members who still find themselves unhappy and uncomfortable within the European Community should recognise the degree to which decisions now being made are the same decisions that Britain would have made were it making them on its own, outside the Community. There has been a fundamental change in the way in which the Community is moving, not least on agriculture. We should consider how the CAP is now operated. At a meeting earlier today someone said to me, "It is surprising how far we have moved away from the system that we took on when we joined the Community, towards the system which we once had and which was much closer to the market and to the mechanisms that we know to be good." Those are real victories for the United Kingdom.

The second report covers the implementation of the milk quota system in Spain, Greece and Italy. I hope that the House will distinguish between those three countries because they all have different issues at stake. There is no doubt, for example, that if Spain had had accurate production figures in the first place, it would have had a higher quota. Spain is, in any event, a deficit producer. It now has accurate figures and has already begun to cut its production. It is important for us that Spain should do that : the less that Spain produces, the greater will be our opportunity to oppose a cut in quota and the more markets there will be for over- production in France.

We have said that the Spanish will be given no help with their quota until they have made the necessary cuts. One million tonnes must be taken off the system before we can accept that Spain should have the quota that she would have secured historically.

Greece has a deficit in regard to the production of fresh milk. It cannot import from the rest of the Community and does not produce enough milk for its own internal needs. Obviously, Greece should be able to produce enough for fresh milk consumption ; that is entirely sensible and does not interfere with our markets.

In Italy, the issue is much sharper. For years, the Italians promised us that the quota system was being implemented ; later, it became clear that it was not. I have therefore made it plain to the Commission and the Council--as have a sufficient number of my colleagues--that we will consider very carefully before providing any help on the quota front. In its first report, the Commission says that Italy has not yet done what it must do before the Commission can make a recommendation on the basis that Italy has taken the necessary 1 million tonnes of production out of the system. We shall want clear proof of that.

I have made clear my feelings about the way in which Italy has dealt with these matters. I can, however, give one piece of good news. This year, for the first time, the Italian Government reported their own failures to the

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Commission. Some of the popular press said how appalling it was to discover the perpetration of fraud in, for example, the growing of durum wheat ; what was not mentioned was the fact that that fraud was detected by the Italian Government. Satellite pictures were taken on the Italian Government's demand and they accepted that there would have to be a reduction in the money that they received.

That is a big change, which must be supported. I have seen no such development in my earlier dealings with the Italians. I think it only fair to draw attention to the change, given the tough way in which we must approach such matters. I hope to be able to discuss it with the new Italian Minister, who is the fifth with whom I have had to deal in recent times. I am sorry about the demise of the last Minister, in circumstances of which I know nothing ; for the first time, an Italian Minister appeared to be on top of the job and to be getting on with the business of dealing with these matters. I shall, however, chase his replacement : I hope that he, too, will be on top of the job, with none of the attendant disadvantages.

There is already a success to report. I found it intolerable that the Commission presented proposals on vining peas, for example, when they were not supposed to be introduced to the arable area scheme and then took them out after people thought that they would be included. That left us all in a difficult position, legally and morally. The same seemed likely to happen with linseed ; that would have been very serious for farmers in Britain and Germany, the two countries in which linseed matters most.

We have persuaded the Commission to announce that there will be no question of linseed's inclusion in the arable area scheme this year and that has set many farmers' minds at rest. We secured that assurance in the teeth of opposition and I believe that it shows that the Commission and, indeed, the Community are becoming much closer to the realities of life.

The decisions that we make each year in the annual price fixing are important to farmers, but they are concerned with the detailed workings of the common agricultural policy. In focusing on the detail, we must not lose sight of the larger picture--the reasons why we need a thriving farming industry and the reasons why that objective merits support from both Government and Opposition.

We need farmers to produce food. We may have surpluses in the European Community, but we would be very foolish to assume that surplus will never again be followed by shortage. The world is not as it has been in the past and it is not difficult to imagine a scenario in which shortages might arise. There need not be much climatic change, or a great increase in the taste for "temperate" food in developing nations--which is one of the first consequences of improved living standards. There need not be much effect on the speed with which technological change is introduced, because of environmental questions, for a change to take place in the whole way in which the supply of food is kept ahead of the population increase.

Why, in past years, were the gurus wrong--all those who told us that world population would change the patterns of life, and that the battle beteen south and north would replace the east-west battle? Because the population increase was outpaced by the rapid technological advances in husbandry. Such a result is possible only if the speed of development is maintained. Now, more and more people have real concerns, insisting that we take longer to license,

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take more care in what we do and are more sure of what we let into the atmosphere. Such action changes the pattern fundamentally. I do not think it helpful to suggest that we rest on the assurance that there will always be a food surplus. I cannot say when the change will take place ; indeed, I cannot be absolutely sure that it will take place. I know, however, that no Government or potential Government can sensibly leave the feeding of their people to such a hazard. It is essential that Britain's land continues to produce food and to be available for increased production ; it is also essential for farmers to be able to bring about that increased production should the need come about.

It is no longer sufficient, however, for farmers simply to produce food. In the past, producing enough food to feed the whole population was an achievement in itself ; nowadays, people want more. Consumers are used to a wide choice of foods and, to compete, our farmers need to produce what consumers want at attractive prices. I still hear farmers say that they do not want to produce a particular type of potato, or a particular weight of lamb, because they do not like it--although the customer demands it. In the end, it does not matter what the producer likes ; what matters is what the customer demands. The producer can obtain a price--certainly, a premium price--only if he adjusts his production to meet the needs of the market. The farming industry must be focused increasingly on the market. It must be able to add value, diversify into new enterprises, lower costs and sell its products ; it must be able to take a growing share of home and export markets.

We also need farmers if we are to retain our landscape and the countryside for which we care. That countryside was created by 2,000 years of farming and only by farming can we keep it--with all its glorious variety--for the next 2,000 years. It must be farmed in ways that respect its traditional characteristics and the natural environment. The great majority of farmers already farm in that way : they take pride in their ro le as custodians of the countryside. That ro le deserves public support and is increasingly receiving it. Where we ask farmers to go beyond good agricultural practice to benefit the environment, it is surely right for the general public to pay. People cannot be asked to do what is expensive for the general good unless they are provided with some help. That is the principle that underlies the environmentally sensitive areas scheme, which was pioneered in this country--not least by my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling)--and has now been extended to the rest of the Community.

This is one of the ways in which Britain is leading the Community. All the major environmental schemes in Europe bear the stamp of Britain : we led the way. We persuaded Europe to make such measures the centrepiece of its CAP reform and we are generally regarded as the country that uses the most practical means to bring together the needs of the environment and the demand for food production. I took it a step further last week by announcing proposals to implement the Community's new agri-environment regulations. We are planning to build on the success of the ESA Scheme, with proposals for six new ESAs, and to introduce a number of new schemes,

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including measures to conserve moorland, to promote improved access to the countryside and to encourage organic farming.

I well remember that when I first joined the Ministry as Minister of State I was not allowed to use the words "organic farming". I remember finding it rather difficult to make an appointment with the Soil Association. I am not suggesting that the Government should say that organic farming is better than conventional farming ; I am merely saying that Government should provide the opportunity for the choice to be made.

We are a nation that believes in choice and the pioneering work of my former constituent, Lady Balfour, who began the work of the Soil Association but who died recently, taught an attitude to the land that goes much further than the narrow tenets of the Soil Association. It was the concept of respecting the soil. I visited a farm that is farmed by one of our major farming companies--a very efficient outfit--and was extremely pleased when the first thing that the farm manager told me was, "That is where it is made : it is that soil, that tillage. Getting that right and respecting it is how we make the difference between profit and loss." That attitude should go much further than those who, properly, are the heralds of a different way of looking at the future of the countryside.

The proposals will add £31 million a year to the Ministry's expenditure on environmental schemes by 1995-96, bringing the total to more than £100 million by that time. When one recalls the small amounts that were possible when we piloted the first Bill through Parliament six or seven years ago, one realises that there has been a huge change throughout the country. No doubt the Labour party will suggest that more might be done --it did so at that time--but we have tried to build on our achievements and will continue to do so. We can honourably say that every scheme that we have introduced has been a success and we have been able to extend it because of success rather than fear for its future because of failure.

I believe that the proposals will be money well spent if they contribute to the preservation of our countryside. We all need that countryside because the unfortunate fact is that the majority of our citizens live in towns and suburbs. They need the countryside for their green lung, which will be increasingly essential as the tempo of urban life accelerates. Rural life remains the guardian of continuing values. We would all be the poorer if they were lost. Farming families are at the heart of rural life. To produce food, to conserve the beauties of our countryside and to sustain working rural communities we need farmers farming the land. That belief is at the heart of the Government's policies on farming and rural society. 8.4 pm

Dr. Gavin Strang (Edinburgh, East) : I beg to move, to leave out from 1993-94' to the end of the Question, and to add instead thereof :

welcomes the reduction in support prices contained in 1992 Common Agricultural Policy reforms ; opposes the introduction of rotational set aside which will damage the rural economy and environment ; regrets that the reforms do not adequately address the failures of the Common Agricultural Policy including its exorbitant cost to EC taxpayers ; and calls upon the Government to press for a Common Agricultural Policy which breaks the link between subsidies and

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production, rewards environmentally sensitive farming, reduces the cost of food to the consumer and encourages employment in agriculture and the countryside.'.

I agree with the closing remarks of the Minister. Indeed, all hon. Members would agree about the importance of the agriculture industry to our people. It is important because of the farm gate value of its output and because of the number of farmers and farm workers who are directly dependent on it.

It is even more important than that, because it provides the raw material for our food industries, which represent a large amount of investment and hundreds of thousands of jobs. Furthermore, the agriculture industry, in most rural parts of Britain, represents the core of the rural economy. Few employed in the industry are farm workers, but many jobs are dependent on agriculture. There can be no dispute about the importance of agriculture to our economy. The Minister acknowledged--I was pleased that he did so--that the 1980s have not been easy for the agriculture industry. The Government cannot shirk their responsibility for these hard times. Britain's farmers did not see any of the Lawson boom. The latter half of the 1980s was disastrous for the industry, and only now are we beginning to see some slight recovery. As the right hon. Gentleman reminded us, that recovery still has not restored us to our position at the beginning of the 1980s.

The Minister said that the main factor for the increased optimism in the industry was that the CAP reforms had been settled. Who is he kidding? He does not believe that the MacSharry reforms are leading to increased confidence and hope in the British industry. He knows, like every other hon. Member, that the industry is looking forward to a better future because of black Wednesday--Britain's forced withdrawal from the exchange rate mechanism, the devaluation of sterling and the consequent increases in support prices. That is the first, second and third reason why British agriculture can, we hope, look forward to higher returns, which we want to see translated into more jobs and higher investment.

Last week, we debated the Agriculture Bill, in the course of which the Minister and I referred to the Agriculture Act 1947 and the good old days when we had an agricultural price review and all that the House had to concern itself with was support prices and the bargain struck between the Government and the agriculture industry. In some respects, those were halcyon days, since when things have become so much more complicated. We then had a far better system of support for the British consumer and the industry, but the reality is that the European Community is where all the major decisions on agriculture policy are taken, and have been taken for a long time. That is why this debate is the major agriculture debate in the parliamentary calendar.

I turn now to the documents, some of which the Minister, for reasons which may become obvious, managed to avoid referring to. I am sure that he will correct me if I am wrong, but at least two of the documents have something to do with tobacco production. I remind the Minister of what he said a couple of years ago :

"It is outrageous that we should subsidise the increased growth of tobacco when most member states are seeking to reduce the consumption".--[ Official Report , 6 February 1990 ; Vol. 166, c. 789.]

He has changed his position a bit since then. On 12 June 1992, he said :

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"It is not feasible to end tobacco production."--[ Official Report , 12 June 1992 ; Vol. 209, c. 565.]

The Minister avoided the problem this evening simply by making no reference to the tobacco documents which are before the House. As the tobacco regime is costing the European Community about £1 billion per annum, and as the cost of the regime has been ratcheting up every year and was estimated to rise again in 1992, one is entitled to say that the Minister, by failing to refer to that regime, is guilty of a certain degree of complacency.

Mr. Gummer : I should hate the hon. Gentleman to feel that I am complacent. I could easily have said that under this system we are reducing the amount of tobacco which receives support from 460,000 tonnes in 1982 to 350,000 tonnes in 1994. In Greece, 200,000 small farming families are dependent on tobacco production. I believe that what I said on those occasions remains true. It is outrageous that we should be spending that money. We should reduce it--and we are reducing it, but it must be done at a pace which ensures that villages and small communities in southern countries are not wiped out at once. I believe that at the end of a reasonably short period of time there should be no support for tobacco. We are on the way. The measures have been so tough that the Greek Minister has held up many meetings because of the effect on his rural community. We can only move at a pace which takes account of the many livelihoods which depend on tobacco.

Dr. Strang : I am grateful for the right hon. Gentleman's intervention. He has mentioned some of the points that I was going to make at the end. Tobacco is a labour-intensive sector. It is true that many jobs in southern countries depend on it, but it happens to be the most costly regime per hectare of all the regimes. My final quotation in this respect is from the British Journal of Addiction. An article written by two authors --one French and one British--states :

"The common agricultural policy of the European Community subsidises tobacco production to the tune of £900 million. This amounts to £1,700 per minute, and is more in one year than the total amount spent on tobacco subsidies by the US in the last 50 years. The purpose of this policy was to maintain farmers' incomes and adapt community production to demand The policy has failed. Expenditure has spiralled out of control, production of unmarketable tobacco varieties has risen enormously, and the EC is the world's largest importer of raw tobacco."

Despite the efforts to switch to alternative tobaccos, the regime is a disaster.

We must adopt a position of principle. Yes, we have to support the rural economy of the areas involved, but instead of talking about supporting the tobacco industry it is high time that the Government considered ways of enabling tobacco producers to move to other economic activities so that they are provided with alternative employment.

Did the right hon. Gentleman omit to refer to the document on national aid for sheep farming? I believe that he mentioned the document which provides for a continuation of temporary aid for the German agriculture industry when talking about the switch-over mechanism. I do not wish to make a major point of it, but does he accept that the Council of Ministers should make it pretty difficult for such national measures to be passed? If there is to be a level playing field and a common agricultural policy, it is not in the interests of our industry for other Governments who are prepared to spend their own money

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to be allowed to provide additional, large- scale subsidies over and above those available to our producers under the CAP.

The Minister referred to the documents on milk, especially the milk quota. He seemed to be trying to talk tough on the Italian milk quota, but if hon. Members take the trouble to read his words I do not think that they will find he was being so very resolute. Milk quotas were introduced in 1984, and the Italian Government have failed to operate the system for all those years. It would be utterly unacceptable if the Italian Government were to receive an increase in their quota as a bribe for implementing the system from now on. I should have thought it sensible for any increase in the Italian quota to depend on at least one year's operation of the existing arrangements, which they should have been operating since 1984. That is a very important issue for this country.

I was rather surprised that the Minister made a great deal of our lack of self-sufficiency. I do not disagree, but the problem with the British milk quota is that we have a very competitive industry. It is generally accepted, especially with the increase in support prices and the devaluation of the pound, that we would be able to increase our share of milk production in the European Community if there were no milk quotas but a genuinely free market, because of the efficiency of our milk processing industry and its scope for expansion.

Mr. Gummer : I know that the hon. Gentleman would not want to mislead the House. I find his argument difficult to believe. If we were using all our milk quota for high value products, which were to be found on supermarket shelves in France and Germany, I should be much happier. At the moment, however, we are turning our milk quota into skimmed milk powder which we are exporting at a subsidised price. That is outrageous. It shows that the system does not produce the competitive edge that it should, so the hon. Gentleman's case does not stand up.

I hope that there will be changes in the milk industry so that it will be possible to claim what he claims. Perhaps we can then buy quotas across national borders and do what we should be doing, which is making milk products in the countries with the rain and grass to do so.

Dr. Strang : There is more to the system than the right hon. Gentleman suggests. We have a built-in preference in the pricing arrangements for liquid milk in that we have rightly attached a high priority to maintaining higher liquid milk sales. I do not think that the hon. Gentleman disputes the fact that Britain's fundamental climatic advantages, as compared to much of the Community, and the fundamental efficiency of our milk processing companies are such that, if we were operating in a genuinely free market without quotas, we would have more investment and more jobs.

It is indisputable, as many of the dairy companies agree, that investment in many aspects of processing, including those which do not need a great deal of milk, is inhibited because there is concern about obtaining an adequate supply of milk. In a speech at the end of last year, the right hon. Gentleman seemed to agree that it was regrettable that quotas had become a permanent feature of the milk regime. There is an implicit agreement that as part of the MacSharry reforms quotas will continue until the

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end of the century. I am not over- enthusiastic about the sale of quotas across national boundaries. I should like to think that Britain would buy the quotas, but I am a little uneasy that some countries, especially France, will find a way of loading the system so that we shall not see the desired movement of quotas to this country.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. David Curry) : Would the hon. Gentleman favour the complete fresale of quotments other ways of maintaining the livelihoods and jobs in our industry. I shall finish with the milk issue because I have much more to say.

We welcome the decision to remove the co-responsibility levy. I was a member of the Labour Government when the levy was introduced in 1977. We opposed it then, and I think that we have been fairly consistent in our opposition to it since. School milk is currently financed from the co- responsibility levy. I hope that the Minister of State will give a clear undertaking that there is no question of school milk being jeopardised in the long term as a result of the removal of the levy and that the Government will accept the obligation to continue the funding.

I will deal briefly with the price proposals. The price proposals for the maor commodities were predetermined by the agreement last year on the MacSharry reforms. The cuts in cereal and beef prices are positive measures. The right hon. Gentleman recognised that reform of the wine and the sugar regimes is of enormous importance because of the huge costs to the overall EC agricultural budget. Our amendment says that there are some positive elements in the reforms, but that judged against the scale of the problem and the enormity of the CAP they are totally inadequate.

To appreciate that fact, we must take a minute or two to remind ourselves of how big a disaster the CAP is and continues to be. It continues to force up food prices and maintain them at an unacceptably high level, imposing high costs on all families in this country, especially on the poorer families who tend to spend a higher proportion of their household budgets on food. The CAP represents a monstrous cost to the taxpayer ; the sums of money involved in intervention buying and export refunds are mind-boggling. It damages international trade, and especially the positions of many developing countries, because of the policy of subsidising our surpluses and effectively almost dumping them on world markets. In essence, considering the money that the CAP costs, it fails to provide anything like the support that we should expect for the industry and for employment in rural areas.

I remind the House of the issue of fraud within the CAP. An excellent report of the House of Lords Select Committee on the European Communities entitled, "The Fight Against Fraud" was published at the end of last year. An interesting study had been carried out on milk refunds and the money spent on them, centring on two companies, described as company A and company B, in two different countries which account for a high proportion-- 10 per cent.--of all the money spent on milk export refunds. The report showed that the companies had not been audited since 1966 and concluded : "There is strong evidence that fraud and irregularity continue on a large scale, not only in the agricultural sector,

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but with the Structural Funds also, and that controls within the system are not sufficiently effective throughout the Community As things are at present detected fraud is likely to be the tip of the iceberg, and serious dangers will remain until all concerned with the collection, administration, disbursement and use of these funds accept in full the principles of sound financial administration, reporting an audit Notwithstanding the continuing efforts which have been made, the Committee are convinced that a great deal more needs to be done if fraud and irregularity are to be contained within tolerable limits."

That in itself is a major indictment of the CAP as it stands. What about the so-called fundamental reforms agreed last year? First, I shall examine briefly the accompanying measures. When the reforms were debated last June people were in the dark about much of the detail of what had been agreed, and much still had to be worked out. I hope that when the Minister of State winds up he will tell us about the early retirement package. Why is it not being applied at all in this country? I do not see that as a rationalisation measure but as a measure whereby older farmers can be helped to move out of the industry and provide opportunities for other farmers ; every time that happened, it would mean that another person had been found a job at a time of high unemployment. Secondly, what about the regulation on the forestry measures? I am sure that most of us would agree that they would be positive. What is the Government's attitude? Thirdly, what about the agri-environment programme? The Minister said quite a lot about that and, as he reminded us, on Friday he announced his proposals to meet the requirements of the programme. It is with some satisfaction over the years that we in the Opposition have seen the importance of the environment dawn on the Government. We support the change that has taken place over the years in their attitude, following the policies adopted by the Labour party. [Interruption.] If Conservative Members read the documents the Labour party has published over the years, they will see that we have led opinion in this country on the environment and that the Government and the Conservative party have followed.

We must welcome the Minister's proposals, but an increase in his Department's environmental expenditure by only £31 million over three years, in the context of a departmental budget of about £8.5 billion over that period, cannot be said to represent a major shift in priorities. When my hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley) replies to the debate for the Opposition he will say more about the environmental impact of the changes and of the Government's policy.

Set-aside is the major supply control measure in the reforms, and the Opposition have deliberately singled it out in our amendment, because we do not believe that it is the right policy. We are sceptical about whether it will be effective--certainly about whether it will be as effective as the Government and the Commission try to suggest--in cutting cereal production. We believe that some of its effect will almost certainly be offset by greater intensification by farmers in their reduced acreage.

Of course, we strongly support breaking the link between subsidies and production, but we want the payments to be made for a positive purpose and to provide employment. We do not believe that we can possibly justify spending such huge sums on paying farmers to do nothing and to leave the land fallow. That is not an acceptable system, and we do not believe that it will be acceptable to the British people in the medium to long

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term. Rotational set-aside is not an environmentally positive measure and does not provide anything like the environmental benefits that we would like to stem from the policy of reducing cereal acreage in this country. Permanent set-aside is a different matter, into which it would be possible to build more effective environmental benefits, but here we are talking about rotational set-aside. For those reasons, we believe that the policy of set-aside should be opposed in principle.

Some of us were probably rather amused at the Minister's reference to the forms. He seemed to present as some great achievement all those documents that the farmers will have to complete. Yes, perhaps the Minister's civil servants have done quite a good job in producing all those publications-- but does he not recognise that the very fact that they have had to go to such lengths, and that so much time and effort will be devoted to the forms, is in itself a fundamental criticism of what the Council of Agriculture Ministers agreed last year? The set-up is utterly indefensible.

If hon. Members have not read it already, I commend to them an article by David Brown, agriculture correspondent of The Daily Telegraph, which says :

"More than 240,000 farmers are affected by what is being described as the biggest farm information gathering exercise since the Domesday Book was begun in 1086

The National Farmers Union has been running a series of road shows to keep farmers up to date with developments. So far about 30,000 farmers have turned up and thousands more are expected from this weekend.

The Country Landowners Association has established a nationwide network of land agents to give 15 minutes of free advice to its members"

[Interruption.] I am quoting from The Daily Telegraph ; I thought that Conservative Members might appreciate that. The article continues :

"While assuring that efforts would be made to simplify the forms next year, Mr. Gummer said that the Government had always feared such a system would bring too much bureaucracy."

It certainly does. To try to make out that this is some great virtue is nonsense. It is itself a criticism of the system and of its complexity.

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