House of Commons Hansard Debates for 23 Jun 1993

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me deal first with the situation should there be a regime. As hon. Members will know, the proposal that the Commission made last November is very lightweight. It does not provide any market support measures and if it is adopted in its present form it will mean the end of national arrangements here and elsewhere. We made it clear that, in the context of that proposal, we would not press for retention of quota and support buying arrangements because no other member states wished to adopt quotas. It clearly would not be in the interests of our growers, even if we were allowed to do so, to adopt quotas while others could grow as many potatoes as they liked.

Mr. Ainger : Does the right hon. Lady accept that in France the powerful co-operatives that supply seed and eventually market the produced potatoes operate, in effect, a quota system? Although the French Government do not set quotas, those powerful co-operatives are effectively operating a quota system.

Mrs. Shephard : I am not sure whether that is the case, although I would probably bow to the experience of the hon. Gentleman. If we limit our acreage, we could put our growers at a disadvantage without knowing the outcome of the EC scheme.

Mr. Malcolm Bruce (Gordon) : Is the Minister aware of the concern expressed by potato farmers in my constituency that the large seed developers and the seed merchants are taking more control over exactly what farmers can do, including for species of potato that have been established for 20 or 30 years? Is that not a restriction on the market that should be investigated? Farmers are telling me that the Plant Varieties and Seeds Act 1964 says that monopolistic practices by seed merchants and developers cannot be investigated because of a ruling of the House. Is that sensible, and should not it be changed?

Mrs. Shephard : I accept, of course, that all growers wish to grow for a particular market. If there are matters which the hon. Gentleman wishes to draw to my attention I shall be happy to look at them. However, most growers are anxious to work with the market that they have.

Mr. Welsh : Can the Minister guarantee that she will not abolish the potato marketing scheme or give up the advantages of the potato marketing board before any European scheme is adopted?

Mrs. Shephard : I am coming to what I am prepared to do. The Bill prepares us to respond to any Community regime and to retain the constructive and desirable activities of the board, such as research and development and market promotion, if that is what growers want. The Bill allows for establishement of a successor body for that purpose. Without the Bill, we would have no alternative but to revoke the scheme and wind up the board without the possibility of a successor and the protection of its important functions.

I should mention briefly what is happening in Brussels. The proposal was considered by the May Council together with presidency proposals incorporating marketing standards. There was no agreement on that and the Special Committee for Agriculture has been asked to do further

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work. The proposal was not discussed at the June Council and it remains to be seen when it will be brought forward again.

Mr. Campbell-Savours : Will the Minister clarify something? If there is no European regime, is the Minister sure that she will then not revoke the scheme, or does she think she may have to revoke it even if there is an agreement?

Mrs. Shephard : Funnily enough, I was about to deal with that. In addition to all the other things we have described him as, the hon. Gentleman is perhaps a little impatient, but also has some foresight. I was about to say what might happen in the continued absence of an EC regime.

The Government have not made any decision to revoke the scheme. My hon. Friend and I want to acquaint ourselves first-hand with all the arguments, and we have set in motion meetings with the industry bodies concerned. We shall then be in a position to discuss the matter in an informed way with the Secretaries of State for Scotland and for Wales, who are also involved in making any decision. I have made it clear that I want to spend a considerable amount of time and effort listening to growers, processors, retailers, packers and consumers before reaching any conclusions about the future of the scheme.

I am also aware that statutory decisions need to be taken shortly with regard to the 1994 crop year. The potato marketing board has to announce its quota arrangements by the end of August so that growers can plan their 1994 plantings. I am prepared to allow the present arrangements to apply to the 1994 season in order to give myself time.

The Government have retained the full spirit of the amendments made in another place. We have tidied up the amendments which their Lordships accepted would be necessary, but the thrust of the amendments is unaffected. They have as their most important effect the requirement to bring any decision to revoke the scheme, apart from one made in the context of an EC regime, back to Parliament for approval. That is sufficient safeguard for growers' interests in that it will ensure that a case for or against revocation would be heard in full and that informed debate would be guaranteed, should the Government consider that revocation is appropriate.

That brings me to new clauses 2, 3 and 4. The effect of the clauses would be that, in the absence of an EC potato regime, Ministers could not begin to take action to revoke the scheme even if it were patently obvious that it were necessary to do so, unless a poll of producers had shown a majority to be in favour of revocation. The informed debate in Parliament to which I have referred could not begin unless a certain group of potato producers gave Parliament the go-ahead.

I am more than willing to listen to the views of growers and other interested parties, and to take them into account. However, I do not think it is on to subordinate proper parliamentary consideration of any issue to the views of a particular interest group. I do not think that Parliament's hands should be tied in that way ; moreover, such action would remove the essential safeguard contained in the 1958 Act to prevent the potato marketing

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board from damaging the interests of consumers. I hope that, in the light of the assurances that I have given, the House will reject the new clauses.

9.30 pm

Amendment No. 49 appears to me to reflect the procedure that I would propose to adopt before making any decision on the future of the scheme. I am sorry that it was rubbished by the hon. Member for Workington and by my hon. Friend the Member for East Lindsey (Sir P. Tapsell) into the bargain. I am happy to accept it. Amendment No. 50 is a little more problematic, because the wording is odd. It suggests that we should consult on the possibility of national measures after certifying that it was necessary to bring the potato marketing scheme to an end because its continued existence was inconsistent with an EC regulation. I do not think I could accept that the Government should be committed in those circumstances. I think the spirit of the amendment is that I should consult, and take account of the industry's views. As I am already committed to such action, I hope that the House will not accept the amendment.

I want a flourishing potato industry. I want our processors--who also provide a good many jobs--to be easily able to obtain the supplies that they want to process, so that we can discourage costly imports rather than using our own excellent potatoes. I want our producers, processors, retailers, packers and consumers to be delighted with this country's arrangements for the potato market, and I am prepared to take time to engage in discussions with interested bodies to ensure that that is what we achieve.

Dr. Strang : I think the House will agree that we have had an excellent debate, which has reflected the industry's views. The Minister's reply did more than justice to the discussions in which we have engaged.

The Minister referred to the position that would accompany an EC regime. Given our experience, that is the last thing that we want. The danger is that even a regime that started off relatively lightweight would end up like all the others, involving a huge cost to the taxpayer. That is an unsatisfactory way in which to support the market. I very much hope that there will be no question of the Government's allowing the EC to operate a fully fledged common potato regime : such a regime would probably create more of the problems experienced by other sectors of agriculture in this country, such as beef, milk and cereals, and bring about huge, costly surpluses. The important part of the Minister's speech, however, related to the position without an EC regime. As she and other hon. Members have pointed out, the Council of Ministers has not made the progress towards a common regime that was expected. No one can be sure of the outcome, but it seems reasonable to assume that it will be some time before such a regime is agreed.

The Minister's response was very helpful. She said that, as things stood, the Government did not intend to wind up the potato marketing board ; she said that no decision had been made and that she wanted to spend a long time consulting the industry about the future. She stated that the potato marketing board and the joint committee could go ahead and fix the target acreage and that the quotas could be in place for next year. They are positive advances and fully reflect the consensus in our debate, which did justice to the industry.

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When the Minister examines the matter further, I believe that she will recognise the strength of the case for the potato marketing board. My hon. Friend the Member for Workington (Mr.

Campbell-Savours) made a valuable contribution to the debate in destroying the argument initially put forward by Ministers that there were no other support arrangements within the EEC and that there was something peculiar about Britain's special domestic arrangements for supporting our potato market. That is not the case. Many other Community countries have elaborate arrangements for supporting their potato industries.

We have had a most valuable debate. Anyone who is in any doubt about the change in the Government's position should have a casual look at some of the statements made by the Minister's predecessor, on Second Reading and especially in Committee. It is clear that the Government were intent then on unilaterally winding up the potato marketing board, but the Minister has now made it clear that the Government are not going ahead. For that reason, we shall not press the new clause.

Question put and negatived.

Clause 23

Activation of Part II

Amendment made : No. 49, in page 13, line 27, at end insert (2A) Where subsection (2) above applies, no order shall be made under subsection (1) above unless the Ministers have consulted on a proposal to bring the Potato Marketing Scheme to an end with such persons appearing to them to be representative of the interests of producers, purchasers, retailers and consumers of potatoes as they consider appropriate.'.-- [Sir P. Tapsell.]

Clause 29

Information

Amendment made : No. 15, in page 17, line 28, leave out 21' and insert 14'. -- [Mrs. Gillian Shephard.]

Schedule 4

Provisions relating to carrying out of approved transfer scheme

Amendments made : No. 77, in page 60, line 46, leave out from which' to first

of' in line 47 and insert imposes a prohibition (whether absolute or qualified) on the transfer'.

No. 66, in page 61, line 1, leave out penalises' and insert has the effect of penalising'.

No. 78, in page 61, line 2, leave out , or a transfer without consent,'.

No. 79, in page 61, line 3, leave out prohibits the effecting without consent' and insert

imposes a qualified prohibition on the effecting'.

No. 60, in page 61, line 7, leave out private' and insert purposes other than public'.

No. 67, in page 61, line 14, leave out penalises' and insert has the effect of penalising'.

No. 80, in page 61, line 15, leave out without consent". No. 81, in page 61, line 29, leave out prohibits' and insert imposes an absolute prohibition on'.

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No. 82, in page 61, line 31, leave out paragraph (b). No. 61, in page 61, line 32, leave out private' and insert purposes other than public'.

No. 68, in page 62, line 5, leave out penalises' and insert has the effect of penalising'.-- [Mrs. Gillian Shephard.]

Clause 47

False statements to obtain payments

Mrs. Gillian Shephard : I beg to move amendment No. 43, in page 24, leave out lines 39 to 42 and insert

knowing or recklessly makes a statement which is false or misleading in a material respect'.

I shall be brief. This is a technical amendment which does not affect the substance of part III. The creation of a single offence of knowing or recklessly making a false or misleading statement brings the offence into line with similar provisions in the Bill and in other statutes.

Amendment agreed to.

Clause 48

Time limit for prosecutions

Mrs. Gillian Shephard : I beg to move amendment No. 44, in page 25, line 3, leave out brought' and insert commenced'.

Mr. Deputy Speaker : With this it will be convenient to discuss also Government amendment No. 45.

Mrs. Shephard : I shall be equally brief. These are technical amendments. They do not alter the substance of part III. The purpose of substituting the word "commenced" for the word "brought" is to make the provisions compatible with Scottish criminal law. Amendment agreed to.

New clause 15

Commercial activities of milk marketing boards : distribution of profits

.--(1) It shall be deemed to be an overriding requirement of a milk marketing scheme that any distribution in respect of profits attributable to any relevant commercial activities shall be made so as not to discriminate, as between persons who are registered as producers under the scheme--

(a) by reference to the identity of the person to whom milk is sold, or

(b) by reference to whether milk is sold in the form of milk or in the form of a product which is wholly or partly derived from milk or which includes milk as an ingredient.

(2) The powers conferred by a milk marketing scheme on the board administering the scheme shall be deemed to include whatever powers are necessary for the purpose of giving effect to the requirement under subsection (1) above.

(3) For the purposes of subsection (1) above, the following are relevant commercial activities, namely--

(a) the separation of milk,

(b) the heat treatment of milk,

(d) the manufacture of milk products, and

(e) the provision of services for reward, otherwise than under the arrangements for the sale of milk to the board.

(4) In that subsection, the reference to a milk marketing scheme is to a scheme having effect under--

(a) the Agricultural Marketing Act 1958, or

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(b) the Agricultural Marketing (Northern Ireland) Order 1982, for the marketing of milk.

(5) This section shall apply in relation to any distribution the amount of which is declared on or after the passing of this Act, irrespective of when the profits concerned were made.'.-- [Mr. Jack.]

Brought up, and read the First time.

Mr. Jack : I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker : With this it will be convenient to take Government amendment No. 46.

Mr. Jack : In the interests of brevity and taking into account Community law, may I say that the new clause will ensure that all registered producers are treated equally after the passing of the Bill in terms of the distribution of profits that the milk marketing boards make from their commercial activities.

Mr. Campbell-Savours : The new clause is of particular importance to Northern Ireland. If accepted, it would mean that all producers who were part of the milk marketing scheme in Northern Ireland would be eligible for a share in the profits of the processing arm, Dromona Foods. It would mean that the 400 producers who currently sell to Strathroy Milk Marketing, and not to the Northern Ireland milk marketing board, will receive a share of Dromona's profits. Some challenge that, arguing that that will happen after none of their milk has passed through a Dromona plant ; that they have chosen to go the Strathroy route, their milk is exported to Ireland and they are paid a premium for this ; and that they have not received a share of Dromona's profits in the past.

The Northern Ireland milk marketing board has told us that it wants to use Dromona's profits to help to offset the extraordinary costs of reorganisation, but if that were done under new clause 15, it could be charged with not distributing the profits fairly. Some people feel that it is odd that Strathroy producers should benefit from a share in Dromona's profits yet should not have to pay the costs of reorganising the Northern Ireland milk marketing board, which they will be free to join in the future.

Will the Minister explain the position? What is her interpretation of the impact of new clause 15 on that group of people?

Mr. James Molyneaux (Lagan Valley) : The hon. Member for Workington (Mr. Campbell-Savours) has rightly said that the new clause is of great importance and interest to Northern Ireland, and it will be very much in the minds of all 17 Northern Ireland Members of Parliament regardless of their party affiliation.

As the hon. Gentleman said, the new clause amends not only the schemes in Great Britain but the scheme in Northern Ireland, although, as you will have noticed, Madam Speaker, the Bill does not apply to Northern Ireland except with regard to taxation matters. It should also be recognised that the current scheme in Northern Ireland differs from the schemes in Scotland and in England and Wales. As I understand it, the purpose of the new clause is to make it an overriding requirement that any distribution of profits attributable to commercial activities will be made in a manner that does not discriminate between registered producers under the scheme. That requirement is based on the false premise that all registered producers operate similarly under the scheme.

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After all, the concept of discrimination implies that like situations are treated differently. However, under the scheme, registered producers are permitted to operate differently. For example, they may sell their milk to the board or they may withhold it, if they choose to process their own milk or to export it. Those processors and exporters of milk are known as withholding producers, whereas those who sell their milk to the board are known as supplying producers. Both withholding and supplying producers are registered producers under the scheme, but it is clear that they operate differently. The new clause requires that they be treated identically with respect to sharing the profits of the scheme's commercial activities.

It must be recognised that about 400 producers, who produce approximately 10 per cent. of the milk in Northern Ireland, export that milk to the Republic of Ireland. They are registered under the scheme, but they supply no milk to the board and make no contribution whatever to the costs of operating the scheme. The new clause makes it an overriding requirement that such withholding producers share the profits of the commercial activities conducted under the scheme in exactly the same manner as producers who supply their milk to the board.

Those profits are made from the commercial business of converting the milk supplied into products and marketing them. The new clause requires that withholding producers share the profits made from the milk supplied to the board by supplying producers. The Bill, and subsequently an Order in Council for Northern Ireland, will wind up those schemes, and the board will then reorganise into organisations that all producers, both supplying and withholding, will be entitled to join. Clearly, that reorganisation will involve substantial costs and extraordinary charges--for example, accounting adjustments to cover write-offs, deferred taxation and costs such as redundancy. If the profits of the commercial activities are used to meet those charges in whole or in part, that could be interpreted as distribution made clear that the Government do not intend the use of commercial profits to cover what I have called extraordinary charges and that those costs arising from reorganisation should be interpreted as a distribution of profits. If that is not the Government's intention, the Government are saying that those withholding producers are entitled to share in the profits of the board's commercial activities, but are not required to share the costs and the extraordinary charges associated with reorganisation. Can the Minister assure me that the new clause will ensure equality of treatment for all registered producers in respect of the costs of reorganisation and any associated accountancy adjustments, as well as ensuring equality of treatment for all producers in respect of any distribution of the profits of commercial activities? Knowing the reasonable way in which the right hon. Lady and the Minister of State have reacted to all the sensible proposals made this evening and in Committee, I am confident that my proposals will meet with a favourable response.

9.45 pm

Mr. Jack : I thank the right hon. Member for Lagan Valley (Mr. Molyneaux) for his courtesy in giving me notice of the general subject that he wanted to probe. I hope that I can deal with his specific points as well as the

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more general issues raised by the hon. Member for Workington (Mr. Campbell-Savours). The hon. Member for Workington chose to describe a specific point of concern, but it must be seen in terms of the wider context and the policy that applies to that subject.

I shall first deal with the general issues relating to the basis for the distribution of profits from commercial activities. All registered producers have to operate within the terms set by the relevant milk marketing scheme, even where they are not bound to sell their milk to the board. The pricing structure of the entire market is dictated by the agreements reached between the board and the Dairy Trade Federation and the relevant joint committee. The Agricultural Marketing Act 1958 requires all registered producers to contribute to the debt of a board on a winding up, not just to those producers who sell to the board.

Therefore, to discriminate between producers who sell to the board and those who do not for the purpose of distributing commercial profits is not, in the Government's view, justifiable. It is certainly not acceptable to the European Commission, which believes that it would be contrary to the provisions of the European Community's regulations authorising the board's activities and to the principles of the Common Market. The Government have taken account of the Commission's views and the likelihood of action against us under article 169 of the treaty if we fail to act. Those are the clear benchmarks against which the distribution of profits is to take place. I hope that hon. Members who have raised issues on the subject will be able to draw the appropriate conclusions.

The right hon. Member for Lagan Valley raised separate issues about some of the expenses involved--for example, in connection with reorganisation. I think that he will immediately understand that my point about the distribution of profits from commercial activities is a separate issue. It deals specifically with how that particular gain is to be apportioned among members. It is possible for all registered producers to take a share of the costs involved with reorganisation, and that must be a decision for the appropriate board. The key factor is that costs and some of the other issues related to the distribution of profits mentioned by the right hon. Gentleman are separate.

Where Northern Ireland matters affect the legislation, the Minister of State, Northern Ireland Office--my near-neighbour, the hon. Member for South Ribble (Mr. Atkins)--asked me to ensure that he was kept informed of those issues. In light of what the right hon. Member for Lagan Valley has said, I shall undertake to do that. I shall give careful and detailed study to some of the other issues to see if there is anything about which it would be appropriate for me to write to him.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New clause 16

British Wool Marketing Board :power to grant relief

. For the purposes of section 727 of the Companies Act 1985 and Article 675 of the Companies (Northern Ireland) Order 1986 (power of court to grant relief in certain cases), the

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British Wool Marketing Board shall be treated as a company and its members shall be treated as officers of it.'.- - [Mrs. Gillian Shephard.]

Brought up, and read the First time.

Mrs. Gillian Shephard : I beg to move, That the clause be read a Second time.

Madam Speaker : With this it will be convenient to discuss Government amendment No. 47.

Mrs. Shephard : My hon. Friend the Member for Hexham (Mr. Atkinson) tabled a new clause in Committee seeking to address a point of concern to the British wool marketing board. That arose from the fact that, in terms of legal liability, members and officers of the board did not currently enjoy a degree of protection equivalent to that ordinarily available to directors of limited companies.

The new clause tabled by my hon. Friend the Member for Hexham proposed to apply section 727 of the Companies Act 1985 to the board and the Government undertook to consider that point sympathetically. We have now done that. We understand the board's desire, given the ending of the guarantee, to take steps to address the usual risks associated with operating within a more commercial business environment.

New clause 16 therefore places the board members and executives on an equal footing with company directors with regard to scope for release from liability. Amendment No. 47, which amends clause 59, is linked to that and confirms the application of the new clause to Northern Ireland. I hope that it will be accepted by the House. Question put and agreed to.

Clause read a Second time, and added to the Bill.

Schedule 5

Repeals and revocation

Mrs. Gillian Shephard : I beg to move amendment No. 48, in page 66, leave out line 31 and insert--

1. The repeals in the Agriculture Act 1957 are without prejudice to sections 50(2) and 51(2) above.'.

This is a purely technical amendment. It deletes the current reference in schedule 5 to termination of the wool guarantee having effect from 1 May 1993. It follows from a Government amendment adopted in Committee to alter the date of the coming into effect of clause 50--then clause 48--from 1 May 1993 to the date of the enactment of the Bill. It also confirms that repeal of schedule 1 to the Agriculture Act 1957 does not affect the saving clauses in relation to the wool and potato guarantees. I hope that the House will accept the amendment.

Amendment agreed to.

Clause 59

Short title, commencement and extent

Amendments made : No. 46, in page 30, line 6 at end insert section [Commercial activities of milk marketing boards : distribution of profits],'.

No. 47 in page 30, line 6 at end insert

section [British Wool Marketing Board : power to grant relief], '.-- [Mrs. Gillian Shephard.]

Order for Third Reading read.

Motion made, and Question proposed, That the Bill be now read the Third time.

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9.52 pm

Mr. Paul Marland (Gloucestershire, West) : It is a tremendous disappointment to me that my carefully prepared and statesmanlike speech cannot now be delivered in full because of the pressure of time. However, I take this opportunity to welcome my right hon. Friend the Minister of Agriculture Fisheries and Food and my hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food to the Front Bench.

Hon. Members and members of the trade outside

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