House of Commons Hansard Debates for 31 Mar 1993

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about the opposite. As the documents demonstrate, the taxpayer will be asked to dig deeper into his pocket to fund additional expenditure, and fraud is certain to increase ; indeed, I believe that the fraudsters are already doing their homework. Meanwhile a volatile, uncertain future remains for farmers, particularly in the United Kingdom.

Even according to the most favourable assumptions, this reform is designed not to eliminate but to mitigate the problems. There must be a will for such fundamental reform, and that demands a basic rethink. It is complacent in the extreme to base future policy on so-called reforms, as the Government motion proposes, and I hope that the House will support, in strength, the amendment in the name of my right hon. and learned Friend the Leader of the Opposition.

9.39 pm

Mr. John Greenway (Ryedale) : As usual in these annual CAP debates, the debate has been good natured. I do not wish to spoil the consensus, but I must take issue with the hon. Member for Edinburgh, East (Dr. Strang), who complained that the Government deserve no credit for the increased farm incomes which have resulted from sterling's departure from the exchange rate mechanism. Until black Wednesday, the official Opposition supported sterling's exchange rate in the ERM at DM2.95. Some Conservative Members called for devaluation and for sterling's exit from the ERM, which has had the beneficial effects that we now see and which is why most Conservative Members refer to it as golden Wednesday.

The hon. Member for Edinburgh, East overlooked the fact that the benefit of devaluation flowed to United Kingdom farmers only because of the reform of agri-monetary arrangements which my right hon. Friend the Minister negotiated. If we still had the nonsense of the green pound and monetary compensatory amounts, which used to characterise these debates, we would have been given much more meaty briefs from farmers. Thankfully, all that is past, thanks to my right hon. Friend's initiative and persistence.

The debate always enables us to look at where we have reached in the long process of CAP reform. Listening to my right hon. Friend the Minister at a Back-Bench meeting yesterday, I was musing about the complaints of farmers and others about the common agricultural policy : it is expensive, bureaucratic, open to fraud and, despite the cost, does not give adequate support to farmers. There is a lack of envirUnited Kingdom farmers, especially on the agri-monetary arrangements, to which I have referred ; thankfully, it no longer does. It distorts world markets, encourages over- production and fails to encourage farmers to produce what the market wants.

Not surprisingly, many proposals for change have been made : that farmers need to produce for the market and that we need to reduce cost, direct support at the producer rather than at the intervention store, reform the green pound system, end discrimination, strengthen enforcement and limit production. There have been many arguments at the farmers' meetings that I have attended, not about whether we should have set-aside but about whether it

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should be voluntary or compulsory. We have heard much argument about the need to incorporate environmental safeguards.

We can take stock of several years of debate and argument about how all the changes should be achieved. We should also recognise that the hand of the European Commission was eventually forced by budgetary pressures--the need to keep the CAP within Budget. I remind the House that my right hon. and noble Friend Lady Thatcher campaigned repeatedly year after year on this point, and she deserves much credit for our current position in controlling the European Community budget.

I recall that for about three years we had a series of proposals from the European Commission, the central feature of which was discrimination against United Kingdom farmers. Despite what has been said tonight, it is still my view that, by and large, my right hon. Friend negotiated most of that discrimination out of the eventual package of measures which was agreed last year in the CAP reforms. That is not to say that there are not protectionist pressures in other member states. Such pressures clearly exist, as can be seen in France at the moment. Nor does it mean that there will not be other member states of which it is valid to say that they are not complying with the regulations. Both those issues imply certain discrimination, but my right hon. Friend consistently refused to accept the discrimination that was central to the MacSharry reforms and he won the argument.

We should also remind the House that the package of reforms is not my right hon. Friend's package, but the European Commission's. The price fixing that we are debating follows on from that package. The hon. Member for North Cornwall (Mr. Tyler) said that the set-aside policy was my right hon. Friend's policy, but that is not so. Over the past three or four years in these debates, I have heard my right hon. Friend say repeatedly that set- aside seems to be the only proposal that we have, and that we must argue with other member states that they must play by the rules. I do not think that he has ever stood at the Dispatch Box and said that such supply management was his preferred option. I do not believe that it is. I note from his reaction that he confirms what I say.

If we are to have a supply management package, there is bound to be a great deal of paperwork involved. That is the central problem. I have outlined some of the things that we have said are wrong with the CAP and some of the things that people say we should do, but some of those objectives militate against one another. The most obvious relates to bureaucracy. A supply management scheme cannot work without a great deal of paperwork.

I hope that my right hon. Friend is right. I know that he has put a great deal of effort into producing the forms so that farmers can understand them. I read the article in The Daily Telegraph to which the hon. Member for Edinburgh, East referred, but it did not appear to be too critical of what the Minister had done. It may have been critical of the fact that farmers will have to fill in forms, but if there is to be supply management there must be forms to fill in. I expect that in my constituency and those of other hon. Members there will be merry hell to pay initially, but I do not doubt that with the help of the farming unions we shall persuade farmers that it is not quite so bad as it seems, that the scheme can work and that if they do not fill in the forms and send them off by 15 May they will lose out financially.

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I do not want to be churlish and break the spirit of our good-natured debate but I must take issue briefly with something else that the hon. Member for North Cornwall said. We are all worried to death that member states will not play by the rules, but it does not help one jot for us to say so in the House. We should take the opportunity to tell my right hon. Friend and the Minister of State, who has a lot of negotiating to do, that they have the House's support. If other member states do not play by the rules, every hon. Member should give the Ministers the support that they need to ensure that the reforms are properly implemented. The Commission should be forced to tell other member states that unless they fill in the forms and play by the rules they will not get the money. Unless we are really firm, the whole system will collapse, as some hon. Members have said.

I believe that farmers now recognise that reform of the agri-monetary system, coupled with the devaluation of the green pound, has had a profound effect on agricultural prices. That is extremely welcome and was much needed. Farm incomes have been at rock bottom for some time, with farmers struggling along hoping for better times. For the moment, to a degree, those better times have come--but I am not sure how long they will last. There are signs that sterling may revalue upwards a touch. There have been suggestions of that in the financial pages of the heavy press for some time. There may be some technical revaluation, which will immediately have the effect of reducing prices under the system. Cuts in support prices will therefore follow, but under the reforms there will be cuts in support prices anyway. I believe that from the year beginning 1 July cereal support prices will be cut by up to 25 per cent. That was the central thrust of the package ; in time, it must have an effect on the market price and eventually on the price that the farmer gets.

There has been some adverse effect on food prices, but by and large that is overstated. We have heard some criticism tonight to the effect that food is expensive. I do not believe that it is. Over the past 14 or 15 years food price rises have generally been below the rate of inflation. If we take a longer-term view we find that it is not so much the price at the farm gate which affects the price of food in the shops as all the other pressures in the commercial world--pressures in the grocery trade and the retail trade, the cost of transporting food around the country, the cost of imported food, and so on--which have a much greater effect.

Tonight we must consider whether the proposed CAP reforms will have the desired effect. I have asked three questions. First, will they direct more money to the farmers? I think that they will, and that the new set-aside scheme--the cause of all those forms that farmers will have to fill in-- will provide almost £1 billion in income for United Kingdom farmers in the year ahead, and nearly £1.5 billion for the year after that. My right hon. Friend the Minister of Agriculture, Fisheries and Food said in his opening speech that the United Kingdom's share of the common agricultural policy budget will increase from 7 to 9 per cent. That welcome 30 per cent. increase in money was much needed.

My second question is whether the reforms will reduce output. There is more reason to doubt whether they will

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have the effect that we want in terms of reducing output because farmers constantly strive for greater efficiency. Year on year, we have seen yields rising.

Thirdly, will the reforms encourage production for the market? I think that there will be some limited success there, especially when we see the impact of the fall in support prices central to the reform package.

We also need to consider other ways of helping farmers to become more market oriented. I greatly welcome my right hon. Friend's continuing commitment to helping with marketing grants to marketing schemes, in which farmers can effectively combine together to gain a little more power in the market place and to improve the quality and consistency of their products.

There is an important stumbling block, however. I still feel that consumers generally do not know enough about where their food comes from. I want to mention to my right hon. Friend an article which he may have seen and which appeared in The Sun yesterday. It is not just where the food comes from ; it is what people drink as well--they do not know where that comes from. The article tells us that my right hon. Friend

"pushed a bottle of the famous spring Perrier water out of his sight after finding it in front of him at a London conference. Mr. Gummer said, Perrier fizzy water is not as good as those produced in the UK.' A Sun survey agreed."

The best is yet to come--just remember that bit about the United Kingdom.

"Here are three brands that are TWICE as nice and only HALF the price-- Strathmore Buxton and Evian".

That is one for a "Tell me another" book, I am sure, but it makes me think that we need to do a lot more to inform the consumer, the housewife and the busy shopper where the food that they are buying is produced. We have nothing to fear in the United Kingdom across our agriculture sector in marketing British products wherever we can. I would like to mention three specific issues to my right hon. Friend. First, the beef special premium scheme is exceedingly unpopular in my Ryedale constituency and I dare say that it is unpopular in other hon. Members' constituencies. I have been in the House since the debate began and I am surprised to find that I am the first hon. Member to mention it. Auctioneers and farmers in my area tell me that they will have grave difficulty making it work. I implore my right hon. Friend to be as flexible and helpful as he can. I am sure that he will be as I know that he is concerned particularly about the beef sector, especially in relation to the continuing fall in demand for red meat. Even Dr. Peel, following my three yearly medical check-up here in the House, advised me to eat less red meat. I am not sure that I shall take much notice as I enjoy beef and Yorkshire lamb, but it is advice that I suspect that many doctors are giving to other people, too.

I should like also to mention the linseed regime. The decision to drop set- aside for linseed was very welcome, but some United Kingdom growers have planted or are ready to plant on land which has now been declared ineligible for arable crops because it was outside the arable rotation at the end of 1991. I find this very difficult, but I have one young farmer who is a new entrant and who spent £1,500 on the seed. He was all ready to go and has now been told that because of the change in the rules he cannot have the money. Because of the support for linseed, what he would get for it on the market will not make the exercise worth while. I understand that within the linseed

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regime there is still a deficit across the Community. That in itself suggests that more support might be justified and that we need perhaps to re-examine that.

Thirdly, I want to mention sugar. There is as yet no proposal from the Community, but my right hon. Friend knows the great importance of the sugar crop to farmers in the vale of York, around Malton and in the vale of Pickering. When it comes to arguing in Brussels, as I know that he will with all the power and strength at his disposal, will he please bear in mind that we produce about 50 per cent. of our sugar needs in the United Kingdom on United Kingdom farms? That suggests that we should not suffer sizeable quota cuts. This crop has helped to sustain many farms in my constituency through some difficult times in recent years.

This year's price proposals carry forward the process of reform agreed last year. The CAP is far from perfect. We all have our doubts about its future and more reforms seem inevitable to many of us. Two crucial points matter : first, we must keep within budget ; secondly, there must be no discrimination against United Kingdom farmers. 9.59 pm

Mr. Nick Ainger (Pembroke) : Many hon. Members have referred to the fact that agriculture is a vital part of the rural economy and I do not contradict them. However, west Wales and especially the county of Dyfed comprise an area which, by the EC's own data, could be considered as having the same problems as Portugal, Greece and Ireland, because it has only 76 per cent. of the average per capita income of the EC and thus would qualify for objective 1 status. Unfortunately, that is not a possibility because of its population size, although the statistics on income would merit that status. For an area such as west Wales, which is so dependent on agriculture, any changes will have a significant effect.

I am worried about compulsory set-aside, about the reduction in cereal support in Wales compared to the reduction in England, and about the hill livestock compensatory allowances, which we debated a few weeks ago. My farmers do not believe any of the figures given by the Minister. I am also worried about the fact that, even after the 1984 imposition of milk quotas, Britain remains at an enormous disadvantage compared with many other European countries. As a member of the Committee on the Agriculture Bill, I had an interesting meeting yesterday with representatives from Unigate, which runs the creamery in my constituency. The representatives made the point forcefully that Unigate, as a major producer of cheese, wanted to purchase at least another 20 per cent. of milk in my constituency. Unigate cannot do so because of the quotas and, as a major British food manufacturing company, it is extremely annoyed to see on supermarket shelves significant amounts of cheese imported from Ireland, from EC countries and from Canada.

It is important, when considering the reforms, to address the issue of income for our rural areas. Conservative Members have almost congratulated the Minister on the effects of black Wednesday. It is rather peculiar for policy to appear to be set by accident rather than by design. It is a bit rich for Conservative Members to tell us that they had been calling for devaluation before September. I do not recall hearing such voices on

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Conservative Benches. I have never believed that we should have supported the benchmark of DM2.95 to the pound.

The current levels of surplus in storage, to which my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) referred, and the cost of maintaining those surpluses, are robbing the rural community. On current levels, only £3 out of every £10 of expenditure on the CAP goes to the farmers. A significant proportion of the remaining £7 is wasted in storage costs, intervention costs and export subsidies. That issue must be addressed fundamentally if there is to be a significant improvement in the CAP regime generally. The hon. Member for Ryedale (Mr. Greenway) let the cat out of the bag when he indicated that he sees set-aside as a means of increasing farm incomes, while admitting that it is highly unlikely to reduce production. If that is the case, why on earth have it? Why should British cereal producers be told, in effect, that they will have to set aside 15 per cent. of their land if this is to have no effect on surpluses? For the reasons that I gave earlier, I hope that it will have some effect. In the long run, farmers are robbed of income. It is rather worrying that, in a debate of this nature, which many Conservative Members have described as important, there are no representatives of the Scottish Office or the Welsh Office on the Government Front Bench to reply to points relating to Scotland and Wales.

Mr. John D. Taylor (Strangford) : Nor is there a representative of the Northern Ireland Office.

Mr. Ainger : I accept the right hon. Gentleman's point. I do not know the reason for the absence of such representatives. Perhaps Ministers have business elsewhere. Agriculture is the mainstay of the rural economy in Wales, and we have significant numbers of people employed in the food industry generally. That being the case, it is strange that no Welsh Office Minister could be bothered to come along to what is a relatively rare debate.

Mr. Gummer : Given that agriculture is so basic in Wales and that there are more than 25 Welsh Labour Members of Parliament, perhaps the hon. Gentleman can tell us why he is the only one who has bothered to turn up. I exclude the Whip, who has to be here as he is on duty.

Mr. Ainger : I do not have to defend my position, and I certainly do not have to defend the position of my Labour colleagues. It is also significant that not one representative of the Welsh National party is present, despite the fact that all Welsh nationalist Members represent rural constituencies. I admit that, in one respect, I am unusual. However, I like to think that I represent a trend--Labour Members from Welsh rural constituencies.

With regard to set-aside, the farmers of my constituency say that it is far better to use land productively--not for food production, but for industrial production--than to abandon it to weeds and brush, in which small partridges can find nesting places. This is a matter to which the hon. Member for Hexham (Mr. Atkinson) referred. The National Farmers Union branch in Haverfordwest has considered in great detail the option of producing rapeseed oil on set-aside land, perhaps taking

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over land used for cereal production, in the hope that the Government will recognise the importance of bio fuels, which are environmentally friendly.

The energy technology support unit has estimated that, if all the United Kingdom's 1992 set-aside land were turned over to the growing of rapeseed, 743,000 tonnes of fuel could be produced. That would replace more than 600,000 tonnes of conventional, mineral-based diesel. The effect of that on the environment would be a 3.5 per cent. cut in carbon dioxide emissions. Not only is that a way of increasing incomes in the rural economy and of making good productive use of land without adding to the surpluses, but it also assists by cleaning up the environment and reducing the problem of global warming.

Among the many disappointments in the Chancellor's Budget speech was the lost opportunity to assist the farming industry in a move to industrial crops. Under the current EC regime, pilot schemes for such crops receive a specific tax benefit. It was unfortunate that the Chancellor missed that opportunity. I understand that, in a new directive, the EC tax Commissioner is proposing the possibility of a 90 per cent. reduction in duty on biodiesel. If that is true, it is welcome, and I hope that the Government will push for it in negotiations in Brussels.

Instead of setting land aside and reducing farming incomes, and thereby further reducing prosperity in our rural economy, it is a great shame that that opportunity is being missed. Following the Rio summit, it has been acknowledged that all countries should take steps significantly to reduce carbon dioxide production. By moving to far more environmentally friendly fuels such as biodiesel, we could at a stroke solve some of our problems in relation to global warming, and also add value to land that is currently set aside.

It is extremely worrying to hear constant assurances from Conservative Members that the deal has overall been a good one. They rightly admit that the increases that have stemmed from the package, although small, are from a low base. As I have said, the rural economy in my constituency is in a crisis that is linked to other problems, such as the closure of Ministry of Defence bases. It is no good the Government saying that they are trying to reduce the effects of the CAP, when at the same time they are reducing incomes in the rural economy. Ultimately, the taxpayer will have to pick up the bill in one way or another. It is important to try to reduce our surpluses significantly. When the Minister responds, I hope that he will refer to biodiesel and to biofuels, as they are a far better way of using productive land than producing weeds. 10.13 pm

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : Madam Speaker, I hesitated before rising as I was hearing some most useful technical information from behind when you called my name. However, I am very grateful to you for calling me. I am also grateful for the fact that I have passed the magical witching hour of 10 pm. I would not have liked to foul up the 10 o'clock rule, so that I was responsible for keeping my hon. Friends here all night listening to me. That would have been most unfortunate.

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I will be extremely brief. However, this is a very important debate. We are talking about the third largest industry in the country, after the combined chemical industries and the North sea oil industry. This subject affects all our constituents, because they are all consumers. It also intimately affects the performance of our economy. Although it is such a large industry, we have a £5.5 billion deficit in the food and drink section. It is therefore vital that we promote policies which boost the performance of that industry. That is why I welcome the new Agriculture Bill, for in the potato and milk sectors we shall have the opportunity to compete on equal terms in an unrestricted way and add value in both sectors.

I thank my right hon. Friend for writing to me in the past week announcing the new Cotswolds environmentally sensitive area. It is part of his new agri-environmental package amounting to £31 million, with an extra £12 million for the six new environmentally sensitive areas. My farmers in Cirencester and Tewkesbury and in the Cotswolds will be grateful for his action, and will grasp the opportunity with alacrity. I quote my right hon. Friend's description of the Cotswold hills, because it sums up my constituency beautifully

"The Cotswold hills are an outstanding example of limestone scenery. The area is dominated by steep escarpment rising dramatically from the vales of Berkeley, Gloucestershire and Evesham."

[Interruption.] I suggest to some of my hon. Friends who are conducting conversations that, if they listened more and came to my constituency, tourism might benefit considerably.

The many hours that my right hon. Friend and the Minister of State spend in Brussels trying to negotiate a satisfactory reform of the CAP must be frustrating in the extreme. I assure them that I am aware of the hours, days and nights that they spend there trying to produce a suitable package, only to return here to be greeted with carping criticism, more carping and more criticism, from Opposition Members who never produce any positive proposals of their own.

The package that the Minister managed eventually to negotiate, contrary to the original prediction that Ray MacSharry would sell us all down the river and that our farmers would be put out of business, represents a considerable step forward. In the current economic climate, with GATT not having been renegotiated and the CAP in the middle of renegotiation, no Minister or farmer can be certain what the future holds.

I am delighted that the socialist Government of France have been chucked out. They were unreliable and useless. I hope that the incoming Prime Minister, Mr. Balladur, and his Ministers will not seek to revisit the agricultural part of the GATT negotiations. If they do, the whole thing will unravel and we shall not stand a chance of securing the Uruguay round.

I remind the House that not only the farmers of the western civilised economies benefit from the GATT round-- [Interruption.] I urge Opposition Members to listen to me more carefully. Instead of being critical, they should listen and learn. Those who benefit most from the conclusion of any GATT round are the poor countries of the third world. They desperately need to trade their produce. If trade barriers are erected against them, they will continue to remain poor and rely on overseas aid. I am all for trade with the third world and want open and free trade to remain the order of the day for as long as possible.

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The shift in support from the processor to the producer is an important part of the reform. Much has been said about CAP money merely going to producers and lining the pockets of skilful entrepreneurs instead of going to the farmers, the primary producers, who need the aid. Support is best given in that way, for four reasons. First, we need to target the huge amount of money that will be given out under the CAP. We can target it to produce benefits that the public really want, environmentally friendly farming systems and more organic farming. Organic farming is not the panacea that many environmental organisations would claim, but at least it has a place. Any mechanisms that my right hon. Friend can negotiate under the CAP reforms to encourage it must be of benefit to the general public, and particularly to those who want to buy organically produced goods. An increasing number of consumers want such goods.

Secondly, it has been possible to produce a Communitywide scheme. In my intervention in the speech of the hon. Member for Edinburgh, East (Dr. Strang), I made the point that a Communitywide scheme would cut out fraud. It does not behove any hon. Member to say, "Why have we got this scheme, when the Italians, the Greeks, the Portuguese and the Irish will not enforce it?" My right hon. Friend should go to Brussels with all guns blazing and produce a scheme which everybody will enforce. It we enforce a scheme and others do not, we will become less and less competitive. I shall come back to anti-fraud measures.

Thirdly, contrary to all the rumours and predictions about what Ray MacSharry would inflict on us, the package has not discriminated against our large farmers. There were scare stories about them being penalised, but there will still be a level playing field. That was a significant achievement by my right hon. Friend.

Fourthly, the package is particularly advantageous to the United Kingdom, because it will increase our proportion of the CAP budget from 7 per cent. to 9 per cent. As my hon. Friend the Member for Ryedale (Mr. Greenway) said, that represents a 30 per cent. increase. There will be an additional £1 billion this year and an additional £1.5 billion next year. These are important extra funds which my right hon. Friend has managed to negotiate for our farmers. On the enforcement aspect of the package, as hon. Members will be aware, part of the package is the production of a new, integrated administrative control system. If I achieve one thing in the debate, it is to say to farmers that, if they do not fill in the forms by 15 May, they will not get the money to which they are entitled. The package is not complicated. I have read all 80 pages which accompany it. The booklet is fairly readable for those who take time to peruse it. Much information is needed to fill in the forms. No doubt we will get many letters from our constituent farmers in the next few weeks about the forms. Farmers should sit down and read the booklet. It is not complicated : my right hon. Friend and his civil servants have done a good job in making it as simple as possible. I do not believe that it is beyond the capability of most farmers to fill in the forms correctly. I stress that they should get on with it as soon as possible. As my right hon. Friend said, they have to lodge an application to the Ordnance Survey to be sure of getting the maps. The date of 15 April is not far hence. Therefore, the loud and clear message to all farmers is that they should get the maps and

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get their forms into my right hon. Friend's divisional offices. If the forms are submitted in good time, officials will have a chance to look at them and send them back if they are wrong. If farmers submit their applications on 15 May, the deadline, there will be no time for the Department to send them back. I urge farmers to fill in the forms correctly. The message is that they should fill in the forms if they want the money. As my right hon. Friend said, an important point about the forms is that similar requirements will be produced for the other 11 member states.

The committee which will be responsible for implementing the system will be able to scrutinise the forms after 15 May. It will be able to scrutinise and demand production of the forms of individual properties of farmers in the member states to see whether they have been filled in properly. All sorts of new enforcement-checking measures, including aerial photography, will be available. It will be easy for us to demand that aerial photographs be taken of areas of Greece, Portugal and Spain to see whether farmers in those countries have completed the forms and whether the aggregate figures on the forms confirm the totals which one is able to glean from the photographs. The age of compliance is upon farmers in all the member states.

An important part of Maastricht is the new increased powers provided for the Court of Auditors. We have been told that the common agricultural policy budget this year will be 34 billion ecu. I do not want my taxpayers' money to go to Spanish, Portuguese, German or any other farmers if it does not go to the people who are entitled to it. As a British taxpayer and a British farmer, I want to see enforcement across the Community, and I will be urging my right hon. Friend every step of the way to ensure that that happens.

We all want security in the future for our farmers. For the past 15 to 20 years, farmers have been telling us that that is absolutely paramount. However, it is difficult, especially with the new Democratic Administration in the United States. I was in the United States before Christmas, and there is no doubt that those Democratic senators whom Labour Members so revere are increasingly protectionist. They do not want to see a GATT agreement or the north American free trade agreement : they want protectionism.

free and fair trade across the world as we can possibly manage. I repeat loud and clear my earlier comments : I hope that no EC Government will want to renegotiate the agricultural part of GATT. It will be difficult enough to get the textile, steel and various other parts of GATT negotiated. I hope that Labour Members will welcome the motion and support it in every possible way.

My right hon. Friend has worked extremely hard to get a fair package for our farmers. The package will give them a thoroughly good deal in the current economic circumstances provided by my right hon. Friend the Chancellor, of low inflation, no unit wage cost increases at all this year and low interest rates. Those are precisely the conditions which farmers and all businesses need to succeed in the United Kingdom. They now have the opportunity. They should reduce their debts, accelerate

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their investment programmes and make hay while the sun shines, because things may not be quite as rosy in the future.

I hope that Labour Members will welcome what my right hon. Friend has achieved. When I explain my comments to constituent farmers up and down the country, they will realise that this Conservative Government have treated them as well as could possibly be done in the circumstances by any Minister negotiating for us in Brussels. 10.28 pm

Mr. George Walden (Buckingham) : I shall be brief, not least because I was, unfortunately, not able to be in my place for the earlier part of the debate, for which I apologise to my right hon. Friend the Minister and to other hon. Members.

My hon. Friend the Minister of State was kind enough to meet Buckinghamshire farmers recently. Many issues were discussed, and he produced a persuasive and useful performance, not least on the potato issue. Buckinghamshire farmers are grateful to my hon. Friend. I shall not say that my right hon.Friend the Minister is said by the farmers in my constituency to be doing a good job ; they have not said that. I judge from the relative lack of complaints that he is doing a brilliant job. Nowadays, I do not hear so often the traditional complaints. Instead, I am told about bureaucracy and petty controls. Time and again, individual farmers and the National Farmers Union, at group meetings in my constituency, produce the most mind-boggling examples of ever-increasing bureaucracy.

Despite what has been said about the integrated support system, a farmer who is engaged in small or medium mixed farming is almost overwhelmed with form filling. My hon. Friend the Minister of State will remember that the matter was raised when he met Buckinghamshire farmers. If it is conceivable, I ask him at Brussels to find ways of reducing the bureaucracy that is being imposed on farmers, and especially those who run small and medium farms.

The Government are right to say that farming incomes have increased considerably--22 per cent. is quoted. However, farmers are hard-headed people, and after being a Member for about a year I stopped trying to soft- soap them in any way. Nowadays, we tend to talk rather more realistically, and it seems that there are three realistic things that have to be said about farming in future.

First, the hon. Member for Pembroke (Mr. Ainger) was right to say that we should not make too much of the improvement in farm incomes, which has come fortuitously through the revaluation of the pound. But how far can we base the future of the industry on devaluation? I think that my doubts are felt generally by those who are engaged in agriculture.

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My hunch is that, over the next few months, the French Government will decide that they cannot sustain the power of the franc and will find a way to devalue it. Leaving aside what will happen to the exchange rate mechanism, that will have a damaging effect on the United Kingdom. We shall find that we are engaged in competitive devaluation. Farmers had a good year last year, and things may not be too bad this year, but we must be realistic. It must be accepted, however, that the way forward for us and the French is not competitive devaluation.

Secondly, there is the general agreement on tariffs and trade. It is not popular to say this--for that reason, I shall say it--but the French have a point on GATT. Perhaps that is a terrible thing to say, but it is true. It is not by chance that all French political parties feel constrained to support the farmers. It is because the social structure of France is entirely different from that of the United Kingdom. Agriculture in France is crucial for the viability of many small towns, as well as for individual farmers. Enormous numbers of people live in small towns, rather than the huge and anonymous areas of suburbia in the United Kingdom. That is a fact of life. Political pressures in France, whether we welcome them or not, to take a tough line on the GATT will not go away. We might as well reconcile ourselves to a tough struggle. The French will be pretty hard-line after their election, and we know the presidential election is due in two years. We do not make life easier for ourselves by denouncing the French as self- seeking or as wreckers. There are strong social and political pressures, and the French Government, whatever complexion they may have, will react to them. If we do not take account of that reality, we shall make life difficult for ourselves. When I talk to farmers, I find that they recognise that reality perfectly, because they are in the same business. So let us be realistic about that.

I know that my hon. Friend the Minister understands that, in the long term, British and western European agriculture has not even started to face difficulties. We shall face increasing competition from eastern Europe. Only the artificial sterilising effect of communism has stopped us facing that competition in the past. People in eastern Europe and Russia are not congenitally unable to produce things : it is only that their political system has prevented them from doing so. So, one of these years, they will start growing and exporting things.

If western Europe wants to export industrial products to former communist countries, it will have to come to some accommodation with them. I shall not go into that now, but my local farmers and undoubtedly the farmers in my hon. Friends' constituencies are perfectly aware that the troubles of British agriculture are not over. They know that geographical--and, if you like,

historical--pressures will come to bear on them.

Diversification will be the name of the game in future, as it has been in the past few years. That is not new to my hon. Friend the Minister, but, while respecting all the environmental desiderata, we need realism in the planning regime if farmers are to be kept in business.

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Agricultural Prices

10.35 pm

Mr. Elliot Morley (Glanford and Scunthorpe) : This has been a wide- ranging and important debate. It is an opportunity to discuss the common agricultural policy, which is of major significance to the people of Britain, given the enormous amounts of money that they contribute. The fact that hon. Members on both sides of the House have raised serious and important issues demonstrates that people's attention is directed towards the CAP.

I welcome the comments of my hon. Friend the Member for Edinburgh, East (Mr. Strang). It is not carping to express some reservations about the operation of the CAP, given the problems with it. We are still saddled with a Frankenstein's monster. It is hugely expensive. It is inefficient. It is damaging to world trade. It traps farmers into growing simply for subsidies, not to meet market demands. Almost every hon. Member would accept that that is the fundamental weakness of a system of the nature of the CAP. As my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) said in his excellent speech, even though the purpose of the CAP reforms was to bring the budget under control, the cost is still spiralling.

The debate is an opportunity to evaluate the reforms of May 1992. The Opposition are entitled to criticise certain aspects of the review. When the Minister of Agriculture, Fisheries and Food announced the reform, he was treated as a hero coming back from some battle abroad. One was surprised that some of his Back-Bench Members did not throw down rose petals and offer him a laurel crown. We should evaluate just what was achieved in May 1992, whether the reform of the CAP has been the great success that was claimed by the Minister and whether it will meet the objectives that were laid out then.

I remind the House that the Minister said last year that the reforms would cut £8 billion off the CAP budget. At the time the Labour party expressed some doubt about that. I still express doubt about it, given what we have heard today about the problems of controlling the CAP budget. There is also the question whether the reforms have helped all our farmers, as some people have claimed. Like other hon. Members, I attended a conference of small farmers today. The Minister was present. It was a pity that he did not share the platform with me and other parliamentarians, as was originally promised and was on the agenda. Those small farmers made it clear that they did not believe that the CAP would work to their advantage as it has been reformed. I am sure that they made their views known to the Minister when he addressed them this afternoon.

We need to consider the attitude of the incoming French Government to the CAP. The hon. Member for St. Ives (Mr. Harris) made some pertinent and sensible points about that. The French Government are not sending the right signals to either their farmers or their fishermen by suggesting that they can renegotiate GATT and CAP agreements. I hope that the Minister will make it clear to the French Government that that does not set a good example to their farmers and fishermen, who now think that they can ignore bilateral agreements made in good faith.

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At the heart of last year's reforms is compulsory set-aside. I shall concentrate the majority of my remarks on that and on the agri-environmental programme. Both are important areas that need reform. Although we have made valid criticisms of the agreement, I also want to make some suggestions, which I hope the Minister will think are constructive.

Set-aside was advocated by the Government even before the MacSharry proposals. It was introduced in Britain on a voluntary basis in 1988. I believe it to be a negative way to use large sums of public money and a number of hon. Members have clearly stated that they share that view. In its current form, the benefit of cutting production is doubtful. Like the previous system, the scheme benefits large farms--the larger the farm, the greater the benefit. Indeed, a report in The Sunday Times suggests that at least one landowner is receiving an income of £30,000 a year for putting his land into the voluntary set-aside scheme. Taxpayers and owners of small businesses will want to question whether that is good value for public money and whether the scheme actually provides worthwhile benefits. The new scheme is virtually compulsory for larger farms, which must put 15 per cent. of their cereal production land into set-aside. In crude terms, the potential of that is enormous : 1.5 million acres, which is an area the size of Lincolnshire, being put into set-aside. The package of set-aside payments--the compensation that farmers can claim if they meet the targets- -has increased CAP costs by 5 billion ecus, which at current prices is £3.5 billion. How can that help to achieve the target of reducing CAP costs by £8 billion?

So far, even the curbing of production--the very principle underlying set- aside--has not been that successful. Cereal production has actually risen since 1988, when the voluntary scheme was introduced. According to MAFF's figures, in 1988 some 21.1 million tonnes were produced ; by 1991 that had increased to 22.6 million tonnes ; and even in 1992 the figure was 21.1 million tonnes--the same as 1988--despite the fact that it was a wet year, which affected production.

I am sure that farmers would agree that set-aside is a public relations disaster for them. A Friends of the Earth publication "Set-aside : money for nothing" quoted a Northumberland farmer, Mr. Adam Harrison, as saying :

"If the object of the exercise had been to make farmers look feather- bedded, parasitic, corrupt and incompetent, then the new-look CAP could hardly have been bettered."

Those are strong words, but farmers in my constituency tell me that they are concerned about the way in which set-aside is used and about the image that it reflects on them.

Set-aside has also cost jobs. Research by the Centre for Agricultural Studies shows that a full-time job is lost for every 130 hectares set aside. Moreover, under the present scheme the environmental benefits of set -aside are extremely doubtful. It is certainly not a return to the old system of rotation in the modern agricultural system ; it means that production is intensified in the parts of farmland that are not set aside. Some of the more sensible uses of set-aside have not been encouraged.

I echo the comments of my hon. Friend the Member for Pembroke (Mr. Ainger) about biofuels. I do not think that the recent Budget helped to encourage their use, although it surely gave the Chancellor an opportunity to provide some tax encouragement. At present, biodiesel is treated in

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exactly the same way as ordinary diesel in terms of duty. Rather than allowing fields to be set aside, doing nothing, the Government could encourage biofuel production--not only in the context of oilseed, but in the context of fast-growing coppice, which can be cropped and used for biofuel. That was not encouraged in the Budget ; nor has it been encouraged in provision for research and development. This morning I attended a conference with small farmers. It emerged very strongly that they feel betrayed in relation to research and development. Organisations such as ADAS--a useful organisation with a proud track record --are being turned, more or less, into private consultancies. Many small farmers simply cannot afford the assistance provided by such consultancies. If we are to encourage a more constructive use of set-aside--biofuels are just one example ; there are one or two others--both ADAS and the Government have important roles to play.

Mr. Robert B. Jones (Hertfordshire, West) : Does the hon. Gentleman agree with what the Select Committee on the Environment said this week? The Committee said that it was extremely important for forestry to have its proper place in set-aside and that permanent set-aside--as it comes to be discussed by the European Commission--included the possibility of long-term planning for extra forestry in this country and elsewhere, involving all sorts of environmental benefits, both global and national.

Mr. Morley : I acknowledge that, and I pay tribute to the Select Committee's report. I thought that it made a useful contribution to this issue and, indeed, to forestry in general. I will go further and commend to the Minister the recent report of the Countryside Commission, which has also considered farm forestry and the expansion of forests. Our country has one of the lowest levels of afforestation in Europe and set-aside certainly provides opportunities in that regard--particularly in the agri- environmental package, to which I shall refer later.

We need a major reform of the common agricultural policy. We need to sweep away as many forms of production and intervention support as possible, along with all the bureaucracy that goes with them. United Kingdom farmers are efficient ; they can stand up for themselves and compete, as long as they are given a level playing field. The massive sums involved in the CAP should be shifted towards environmental support and away from production support--and, if necessary, towards social support, so that people can be maintained on the land. We should ensure that small farmers are supported and rural communities and their social fabric are protected.

The Minister may well refer to the advantages of the

agri-environmental package and to measures that the Government have introduced--for instance, environmentally sensitive areas, countryside stewardship schemes and naturally sensitive area schemes. I shall not be churlish ; those schemes are very welcome. As my hon. Friend the Member for Edinburgh, East pointed out, they have long been Labour party policy and we argued for them long before they were fashionable. However, all those measures--welcome though they are--must be seen in the context of the huge spending involved in the CAP. They are tiny in comparison with the money directed towards them.

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As we said earlier, diversification will become increasingly important. I accept that ; I also accept that we need an integrated approach to rural policy. Diversification need not go against present planning laws, but the number of applications for golf courses shows that certain forms of diversification can go too far. I have nothing against golf courses, which sometimes are a useful form of diversification, but the number of applications for golf courses in, for example, the Sevenoaks area makes one wonder where all the golfers will come from and who the proposed courses are for, because they cannot be for the benefit of local people. At the current rate of applications in the Kent area, there will be one golf course for each Kent resident.

I recently visited Kent and was accompanied by the excellent Labour councillor, Sarah Goodall, who showed me around the area and drew my attention to the problem. A balance needs to be struck, and I hope that the Minister will issue guidance to local authorities in this respect.

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