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Column 491fails and we have to keep trying. It is time that it was demolished and rebuilt in a completely new form. To do that would be to the advantage not only of farmers but of taxpayers, consumers and the countryside.
Mr. William Ross (Londonderry, East) : I listened with interest to the hon. Member for Cambridgeshire, South-East (Mr. Paice) and, when he spoke about the change to the present system of support, I thought that I was listening to a faint echo of my own words in the Chamber from nearly 20 years ago. At that time, not all the countries of Europe had reached their present level of production per acre, or per hectare. Those of us who knew farming and knew the quality of land in Europe wondered what on earth would happen if there were surpluses and food mountains, which duly arrived. That could not possibly have caught Members of either Front Bench by surprise because they had only to look across the Atlantic and examine the long experience of the United States. However, we followed the same route with set-aside and so on. Having said that, I do not propose to follow the hon. Member for Cambridgeshire, South-East any further other than to say that some of what he said, and some of what other hon. Members have said, will be of general interest.
We have a mass of paper to wade through but the bottom line for farmers is the money in their pocket or money in the bank. Many farming sectors have had a hard time in Northern Ireland. Pigs have been mentioned in the context of the United Kingdom as a whole but, in Northern Ireland, the price of pigs is currently about 94p per kilogramme whereas the production cost is 98p per kilogramme--one does not have to be much of an economist to realise that farmers will not make a fortune at that rate.
Weather conditions led to problems for the potato crop last year, which was the second consecutive bad year. In the less-favoured areas of the Province, we find that the net average income is less than £5, 000 per annum, ranging from a top income of some £12,000 down to £900. The reduction in compensation levels in Northern Ireland cost £4 million out of a total cut of £25 million. If people in that area of the Kingdom think that they have been harshly treated, they have good reason. We should note that it is the areas with the harshest climate and environment that suffered the most.
If the bottom line for farmers is money in their bank accounts in profits, the bottom line for the taxpayer is the cost of agricultural support. I can remember the searchlights over Belfast and the fires burning when I was a small child. I still believe in security of the food supply. We would be wrong to run down our farming industry to the point where we could not feed our people. Farming is a long-term business. There is a long lead time to increase production if it goes down, and we do not want that to happen.
Having said that, I am sure that no farmer could possibly be happy with an economic structure in which subsidies in one form or another can sometimes amount to more than the net farm income in certain parts of the country. I understand that that is not only happening in some areas but it will be the consequence in many more areas because of the CAP reform package that was agreed in May 1992.
On top of that, we have a desire to keep a pretty
Column 492countryside through which people can wander- -hedges, stone walls, and attractive, viable villages. Hedges and walls were not planted or built simply to be pretty ; they were planted and built to fulfil the need for shelter for stock, marking field boundaries and farms and making life easier for the farmer. Villages were built as a result of the economic need of the day.
Enough has been said in the debate to show that people who have an interest in the matter have all been driven to the same conclusion : those things can be kept in the long term, if they are not an economic necessity for the farmer--farmers will not spend money on them--for tourists or our own people only if there is some system of subsidy or grant to landowners to keep them in existence. If society wants to keep such things, society will have to pay for them by a grant in some form or another ; they are not cheap to keep. Machines do much of the work that used to be done by hand. However, laying a hedge, building a stone wall or monitoring stock can eventually be done only by hands, eyes and feet on the ground, and all farmers know that. The question then arises whether the rest of the population--the taxpayer--will continue to finance them. Even if the taxpayer is prepared to continue to put large sums of money in the agricultural industry, for so much of farmers' spendable income to come out of the taxpayers' pocket is unhealthy. I am concerned about that, as is every farmer in the country. The question is, how will our agricultural production and food production generate the necessary money to provide an income for farmers throughout the United Kingdom ?
Earlier this year, I asked a number of questions about farm incomes in Northern Ireland. Hon. Members who are interested in the precise details can look them up in Hansard from 24 to 28 February. I shall run through one or two of them ; they will be of interest to many people because they show what the real income in agriculture has been. Between 1964 and 1993, the number of farmers and partners in Northern Ireland fell from 42,600 to 32,400--a decrease of 10,000 people. The number of full-time hired workers fell from 7,300 to 1, 900--in other words, there is about only one quarter of the number in 1964. The number of all regularly employed family workers fell from 24,700 to 6,000--just under one-quarter of the work force in 1964 --and the total agricultural labour force fell from 100,600 to 56,500. Those are considerable decreases.
I then asked a number of questions about the total income from farming in the same years. The total income rose in cash terms from £45.5 million to £272 million--a multiple of nearly six. The number of farm businesses decreased from 37,000 to 28,000, and the income for farm business in cash terms rose from £1,228 to £9,483--a multiple of 7.2. I hope that hon. Members will keep that figure in mind. The annual wage per full-time hired male over 20 rose from £14 per week, or £728 per annum, to an annual salary of £8,306--a multiple of 11.4. In other words, during that long period, the agricultural paid worker improved his position much faster than the income per farm business or, for that matter, the income of the farmer.
The total income from farming in real terms--taking 1993 as 100--was 126 in 1970, 119 in 1971, 120 in 1972 and 133 in 1973. In 1980, it went down to 39.79, and at one time it was 53. At no other time during that long period did it pass the present level in real terms. It was almost the same story for the income for farm business, and the annual wage per hired male rose overall by 50 per cent. in real terms. The average gross weekly earnings for full-time
Column 493employees in manufacturing industry in the Province during that time went from £29 in 1971 to £279--a multiple of 9.5--with a present salary of some £14,500 per year. That is £6,000 more than the salary for an agricultural wage earner.
If one thinks that that will attract people to farming and help them to stay in farming, one is living in a dream world. The reality is that young people in farming are voting with their feet. Throughout my lifetime, they have continued to get out of farming ; farmers are an aging population, and the farming industry in this country simply cannot afford that. Unless we raise the level of farm income for farmers and farm workers, farmers will literally die on their feet.
Several other interesting statistics came out of those figures and I hope that hon. Members will listen to them. In 1984, the total amount for farm buildings and works was £134 million in Northern Ireland. The provisional amount for 1993 is £55.79 million. Total plant and machinery rose from £44 million to £68 million, but that is only keeping pace with inflation. People were not putting money into long-term investment in buildings and works ; they could not afford it. However, they had to continue to replace plant and machinery, and they did so as best they could.
Farming is not doing well despite the rise in the past year or so. The farming industry has long been one of decline, low income, low investment, low spendable income and a drift of people out of farming. In those circumstances, we must think seriously about what we are doing and how we will increase farm income in the years ahead. That must not take a long time--it must be done swiftly.
There will not be a big increase in the amount of food which we need and which we produce, and we are probably producing a fair percentage of what we can produce. The costs of production are unlikely to fall by much more, while the costs of transport will probably increase. That leaves only an increase in farm gate prices, an increase in consumer prices or a shift in profit from the middle men and food retailers back to the farmer. In her opening speech, the Minister mentioned the retail cost of food over the counter at the supermarket and at the farm gate.
Of course, there is the possibility of restructuring farm sizes. That is not an unmixed blessing, and it has been going on for years. If we want it to continue, we need to make up our minds about to what extent we want it to continue and how swiftly we want it to come about. If we want it to come about quickly and easily, we must look urgently at a farm early retirement scheme.
The economic background which I detailed for farming during the past 25 years has left little scope for the farming community--either the workers on farms or the farmers themselves--to provide for their retirement. So far as the rural scene generally is concerned, we must keep more people in rural areas and, preferably, those who were born there because they know what to expect. It is not always a happy experience when urban dwellers move into the country.
I believe that the planners have a part to play to encourage work other than agriculture in rural areas, and to encourage people to stay there. Schools and viable shopping should exist and there should be a measure of social life.
Column 494I want to finish as quickly as I can, and I will mention just two short items. First, environmental improvement has been dwelt upon by a number of hon. Members. I say to those on the Government Front Bench that if they could solve the problem of silage effluent and render the stuff harmless, they would probably do more for the environment and for the agricultural scene than anything else which they can think of.
Secondly, I want to mention salmon cages to the Minister because he was on the Front Bench when I asked him a question about that subject today. There is a pollution problem, as the Minister knows. This may be the only fishing matter which has been mentioned today. There is a problem with lice on sea trout which has been ruinous. Most people believe that that has to do with sea cages for salmon. I am just trying to save a stamp, because the Minister asked me to write to him on the matter.
The hon. Gentleman will understand that most salmon cages are in sheltered lochs, but there is one off the coast of Antrim at Larne which is in the open sea. I understand that it has stood up fairly well and there is no problem with lice there. That is probably because the stronger tides and the more open water allow them to dissipate. Will the Minister please look at the matter ?
Mr. Deputy Speaker (Mr. Michael Morris) : Order. Before I call the next hon. Member, I must point out respectfully that there are eight hon. Members who wish to catch my eye. We have 70 minutes before the wind-up, and if hon. Members show a degree of modesty about the length of their speeches, everyone can be called.
Mrs. Jacqui Lait (Hastings and Rye) : I shall try to be brief, and I will certainly not follow the hon. Member for Londonderry, East (Mr. Ross) down the line of fishing, as a number of hon. Members will understand.
I have listened with enormous interest to all of the speeches today, and they have encompassed practically every issue involved with the common agricultural policy. There seems to be an agreement that the CAP is not perhaps the most appropriate policy for this day and age. Probably all of us who have been involved in politics during the past 20 years are conscious that the United Kingdom has never found the CAP an easy policy to live with.
I am equally concerned that some of the suggestions which are being made to improve the CAP would not help the problem greatly in terms of over- production and under-production. Those of us who remember the system of deficiency payments will equally remember that there would be far too much of one thing one year, and then everybody would switch to something else. There were great peaks and troughs, and to bring back national aids to each member country would, I suspect, exacerbate that problem. Hon. Members may multiply that problem by 12 at the moment, by 16 soon and by 20 in a few years.
I wish to refer to the speech by my hon. Friend the Member for Faversham (Sir R. Moate). During the past few years, there have been screams of agony and pain from the farming community, and those are beginning to become muted--I would put it no higher than that. However, there are great screams of pain within the horticultural industry, particularly in Kent, east Sussex and my own constituency.
Column 495I am delighted to say that my constituency has a mixed farming base, so we have a one-constituency common agricultural policy. Every inch is covered by environmentally sensitive areas, areas of outstanding natural beauty and sites of special scientific interest. One particular farm, which has rediscovered the 18th century seed bed, is becoming a European SSSI. We are all proud of that.
To diversify, a number of farmers have rightly and historically turned to fruit growing. I endorse everything that my hon. Friend the Member for Faversham said about the need to sort out surplus production, particularly of apples and even more particularly of Cox's. We need grubbing grants and a reduction in intervention prices.
We also need to encourage as far as possible--I am delighted that the Ministry is doing this--the further development of marketing grants and the encouragement of collaborative and co-operative efforts. The screams of pain in my constituency are coming most clearly from those who grow blackcurrants. That may seem to be a tiny part of the market, but it is an exceedingly valuable part--or it was a few years ago.
The problem is that there has been increased planting throughout the EC. Germany is now the largest producer, while there have been planting grants in France which, I am happy to acknowledge, are soon to end. There is a particular problem in eastern Europe. Probably all of us remember when the iron curtain existed, and one of the great imports from Poland then was soft fruit.
Increased planting has meant that United Kingdom prices have tumbled during the past few years. Last year, growers were able to get £250 a tonne, but now it is £200 a tonne. One of the criticisms which has been voiced tonight is how slowly the Commission reacts to setting minimum intervention prices. I believe that the Commission is likely to set minimum intervention prices in May, but that is of no help to my constituents who are fixing their contracts now, at a time when there is no floor to the market. It is possible that they will not make a profit, but will make significant losses.
My hon. Friend the Minister of State and my right hon. Friend the Minister should bear that in mind when they come to talk in Brussels about the reform of the fruit and vegetable package. We must ensure that the minimum intervention prices come in at a time when they are crucial.
The other issue which is of enormous concern is the fruit which is being produced in eastern Europe. I am not for one moment suggesting that we do anything to reduce trade, access to hard currency or any of the other benefits which have flowed from the ending of communism in eastern Europe. I want to see the markets strengthened. However, one of the problems with which we have to deal is that there is no knowledge in eastern Europe of what a market is.
The countries had centrally controlled and directed economies, so nobody knows what profit, loss, costs or everything else are and blackcurrants grown in eastern Europe are coming into the EC at giveaway prices. One of the suggestions which I would like to put to the Minister--I would be grateful if he would pass it on to my right hon. and hon. Friends in the Foreign and Commonwealth Office--is that we use the know-how fund to bolster the economic knowledge of growers in Poland, Hungary, the Czech republic and Slovakia.
One of my constituents, who is a blackcurrant grower, is going out to eastern Europe next week and will inquire directly into that problem. I have asked him to produce a
Column 496report, which I shall ensure that the Minister of State receives, containing his recommendations to try to establish a knowledge of markets in eastern Europe.
The other part of the policy that needs reforming is that in relation to the wine market. England is not, shall we say, one of the great wine- growing nations, but over the years we have improved English wine enormously. We are facing problems in the European Community, especially with France, in terms of recognition of the vines that are being used, hybridity and many technical areas that I do not want to pursue. I urge the Minister of State to bear in mind that that high-quality product should be encouraged as part of the continuing diversification in farming. If we can encourage farmers to broaden their production and to ensure that, one way or another, they receive an adequate return, we shall continue to have the mixed and varied countryside that is so important to us all.
Mr. Cynog Dafis (Ceredigion and Pembroke, North) : I have to declare an interest--the ownership of 32 acres of agricultural land, no more than that. What I have to say, by and large, will be in tune with the general theme of the debate, but I need to start with a few words of criticism.
The Government's position on these price proposals seems to be characterised by the fact that the Government are especially enthusiastic in support of cuts, except insofar as they are not sufficient in the area of milk, sheep, and beef--crucial sectors for my constituency and for Wales. The Government support cuts or call for deeper cuts. That cutting theme is of a piece with other measures that have aroused the ire of the agricultural community in Wales, and which I want to mention.
The reduction in hill livestock compensatory allowances has been justified by the Government in terms of the increase in incomes since 1990. However, those increases were from a very low level--still lower than they were in 1988-89, and attributable largely to the devaluation of the pound. Those increases are already being eroded by the increase in the value of the pound. Will the Government undertake to increase the value of HLCAs if the pound continues to gain in strength and less-favoured area incomes decrease ?
The reduction from 50 per cent. to 20 per cent. in the farm and conservation grant scheme for the disposal of silage effluent, slurry, dirty water and so on is most unsatisfactory. In my constituency the effect will be that many small farmers, especially middle-aged ones, will be unable to meet the capital costs of works, will find themselves facing the possibility of heavy fines for pollution, will leave milk production, will sell their quotas and will thus eliminate a farm as a viable unit. That process has very damaging social and cultural effects in rural areas.
That is the opposite of what we should be trying to achieve nowadays. We need measures to strengthen and maintain small family farms. I endorse the suggestion of the Farmers Union of Wales that if we are to have a milk quota cut--I notice the Government's undertaking not to support such a cut- -the first 240,000 litres, for example, should be exempt from any such cut.
Even more fury has been aroused in Wales by the way in which the arable aid scheme discriminates against cereal growers in the way that has been mentioned. The basic injustice of the lower level compensation in Wales has been compounded by the Government's efforts to get out
Column 497of difficulty. First there was a carve-up in Wales on parish lines, with some farmers gaining at the expense of even lower levels of payment for their neighbours on identical land just the other side of the parish boundary. That was followed by the less illogical, but still unsatisfactory, LFA/non-LFA division.
Welsh farmers want parity--no more and no less--with their English counterparts. I am asking for an undertaking from the Secretary of State for Wales that he will fight for that parity until we get it, but of course the Secretary of State for Wales is not in the Chamber. His absence is astonishing. I cannot believe that when we are debating such a vital industry in Wales--an industry that in mid-Wales, for example, employs about 20 per cent. of the work force--the Secretary of State for Wales, who is the Minister of Agriculture for Wales, is not present, especially in view of the many grievances that Welsh farmers have these days.
The rest of my remarks are based on the relationship between agricultural policy and the environment and on environmental sustainability. I express my great pleasure at the emerging consensus of the importance of bringing those two themes together. Environmental sustainability must henceforth be the guiding principle of all policies, not simply in agriculture. All development henceforth must be based on the principle of sustainability. That is recognised by the international community in new international conventions, by the European Union in very important policy documents, and by the British Government in documents published a month ago. The Government have declared that they will work for
"a higher proportion of EC expenditure on direct payments to farmers to be applied to encouraging more environmentally sensitive farming".
It is good to read that type of commitment. We have to wait and see whether it amounts to anything substantial. The Government also speak about
"the application of environmental conditions to support payments" -- interesting stuff.
We have the beginnings of such a trend in many initiatives in Wales--useful and praiseworthy enough, but their number, as has been suggested, constitutes a problem.
Agri-environmental schemes for Wales under EC directive 2078/92 include, on the Wales-wide level, the farm woodland premium scheme, the farm and conservation grant scheme, the hedgerow renovation scheme and the habitat improvement schemes. They also include the organic farming scheme, which is a scandal and needs to be rectified because of its very unfair treatment of organic farmers. Also there is the moorland extensification scheme. Those are on an all-Wales level.
On a territorial basis we have Tir Cymen, we have sites of special scientific interest management agreements, and of course we have environmentally sensitive areas. Those are administered by the Welsh Office Agricultural Department and the Countryside Council for Wales. In addition, other schemes are available in and through national parks, by local authorities, and by the Forest Authority. We thus have a plethora of schemes, some overlapping--two, for example, concerning woodland, one obviously inferior to the other and therefore never taken up--administered by three national organisations, plus the national parks and local authorities.
Column 498Countryside and agricultural organisations are at one in lobbying for rapid progress towards a single consolidated scheme for the whole of Wales. Such a scheme would be more cost-effective than the existing ones ; it would avoid the danger of double funding ; it would be easier to evaluate and to modify to improve performance ; it would be much more comprehensible to farmers and their advisers and so would be more readily taken up, because currently people are no doubt confused by the multiplicity of schemes and organisations. A single scheme would provide the one-stop shop where users would deal with one organisation--one officer.
The Countryside Council for Wales reckons that the net additional costs of an all-Wales agri-environment scheme at 1993 prices would be about £26 million per annum. Simply on economic grounds, that would be an excellent investment, in my view. It would provide an element of stability for farm incomes. It would be good for tourism. Midmore and Jenkins of the university of Wales, Aberystwyth, have calculated that there would be significant employment gains in rural areas. There would be a certain amount of loss of employment through reduced inputs and so on, but there would be a significant net increase in employment through increased demand for labour and materials in relation to environmental tasks such as fencing, hedge restoration and tree planting.
The environmental benefits would considerable, obviously in terms of the visual attraction of the countryside but also, and more importantly, in the crucial area of biodiversity. It is impossible to over-emphasise that consideration. Biodiversity is the subject of an important Government document published a month ago, along with the sustainable development strategy. Socially and culturally, such a scheme would be extremely advantageous to rural areas. Unfortunately, the Welsh Office failed to set in train a process of creating such an all-Wales integrated scheme a year ago. The possibility existed but was not taken up.
However, the Secretary of State for Wales set up a working group to consider the issue in October and I understand that the working group is about to report to him. This debate should concentrate his mind on what he should do with that report. I trust that it will not turn out to be a mechanism for postponement and that the Secretary of State for Wales will see the opportunity for Wales to play a pioneering role in the area. I was delighted to hear the hon. Member for Carmarthen (Mr. Williams) say that the percentage of support in Wales was higher than in the rest of the UK.
I strongly believe that agri-environmental payments should occupy an increasingly central role in agricultural support on a European level. Currently, they constitute no more than 5 per cent. of the European Union or British agricultural budget. There is every reason to believe that they could and should become the primary mechanism for agricultural support, rather than continue to occupy their present marginal position. They would encourage an extension in production, a way of reducing over-production infinitely preferable to the set-aside scheme and its inevitable corollary of intensified production on the remaining acreage.
Agri-environmental payments would work through management agreements on environmentally-sensitive farming systems in return for direct, annual, area-based payments plus capital payments for specific environmental enhancement. Good husbandry, skilful crop management
Column 499and efficiency would be rewarded in the market place and in profit margins. There is ample evidence, including from the Organisation for Economic Co-operation and Development, that direct area-based payments are easily the most cost-efficient means of providing agricultural support. In the interests of maintaining small-scale family farms and a living countryside, those area-based payments would have to be modulated. I know that that was once a dirty word for the Government, but they would have to be modulated or tapered on an acreage basis. The scandalous state of affairs whereby 20 per cent. of farmers receive 80 per cent. of the subsidy is unsustainable morally, socially or in public relations terms. There is little doubt that such agricultural support would be legal under GATT and would come within the green box.
With CAP reform due in 1996, now is the time to explore in detail the mechanisms and implications of such a switch. If we merely limp and lurch from cut to cut, as is currently happening, we shall end up with environmentally damaging agricultural business and a devastated countryside, neither of which we can afford. What we need is not cuts but a pro-active approach to environmentally sustainable farming applied flexibly throughout the European Union according to local circumstances. That requires a radical redirection of support aimed, at the very least, at maintaining the agricultural population at its present level. There is no justification for continuing to reduce the agricultural population.
Agri-environmental payments would provide greater stability and confidence in forward planning and would probably provide economic security for greater numbers of people at a significantly reduced cost to the taxpayer. That is the way ahead.
Mr. Peter Atkinson (Hexham) : I am grateful for being called to speak. I hope that the House does not consider it a discourtesy that I have been absent for much of the debate, but I am serving on the First Scottish Standing Committee, from which there is no parole. I represent a constituency in which agriculture is still the largest industry. Much of it is in less-favoured areas and I shall concentrate my brief remarks on hill farming.
The reform of the CAP coupled with a reduction in the value of the pound has brought considerable benefits to farmers in my constituency whose incomes plunged to disastrous levels in 1990-91, when they dropped by several thousands pounds to an average of £5,000. The Government should be congratulated on changing, in the CAP negotiations, the method of paying premium on lamb. The switch from a variable premium has given a considerable boost to the market for exporting live lamb. In my constituency, some 30 to 40 per cent. of lambs are exported. The measure has been particularly valuable for hill farmers because the small, hardy hill ewes produce small carcasses that are popular in southern France and Spain, while the bigger carcasses now go to the rest of France. Although that is good news for hill farmers, it is bad news for English consumers who must now pay continental prices for their lamb.
Nevertheless, hill farmers still face problems. One of the reasons why there was such an outcry when hill livestock farming allowances were cut was that they were based on average incomes. For every farmer on average or above-average incomes, many more are on below-average
Column 500incomes and they have suffered because of the HLCA cut. I understand the logic of cutting the payment, which is meant to go up when incomes go down and go down when incomes go up. The difficulty is that farmers on small incomes see it simply as a reduction in their income, which can be crucial if their earnings are very low. I agree with my hon. Friend the Member for Cambridgeshire, South-East (Mr. Paice) that one of the disadvantages of the HLCA payment is that it is paid on headage. I hope that the Government will move away from a headage-based support to switching at least some of the premium payments to area payments in the hills. I know that such a way forward has been pushed by the National Farmers Union and the Moorland Association, but it would improve the guarantee of an income for upland farmers without forcing them continually to increase stocking.
The time for hill farmers has come. I appreciate the fact that agricultural Ministers have been busy with the CAP reform, GATT and other important negotiations like the reform of the milk marketing board system, but the problems facing hill farmers should now move up the agenda. One or two things can reasonably be done to help them. Apart from de-coupling premium payments and replacing them with area payments at no extra cost to the taxpayer, another great help would be to pay all the special premium on beef in a lump sum to producers. The idea of paying it in two parts after eight and 24 months is fine but it is unsuitable for hill farmers, who cannot keep beasts that long.
It would be a great boost to such farmers if the money could be paid to the producer as it would simplify much of the administration. It would also have the benefit of improving the marketing of beef. At present, much of the beef is going on the market because of the payment of the second part of the premium rather than because it is the optimum size for slaughter, so the measure would improve the quality of the carcass at the same time.
The Government could also continue to resist pressure by animal welfare groups to reduce the hours that animals can spend in transportation. As I said, 30 to 40 per cent. of the lambs produced in my constituency are exported. A restriction to eight hours would instantly wipe out that market. If those regulations are to be changed, they must not disadvantage farmers in hill areas. The Government could also consider improving relationships between farmers and MAFF. With all those forms in the past two or three years, the relationship between the Ministry and farmers has deteriorated because of farmers' difficulties in filling in forms and the advice on them that they receive. I hope that my right hon. Friend the Minister understands that, as a result of quotas and IACS forms, some farmers in my constituency who have no quota have been fined for filling in forms incorrectly, in that they have not received their premium. I think that this has caused an unhappy relationship between MAFF officials and some farmers. When a farmer simply fills in the wrong box on a fairly innocent form, having spoken to the regional office, he can suddenly discover that he is short of his quota by 100 sheep. That is unfortunate. MAFF was a friend, but it is becoming less friendly and that is a pity.
These are some of the things that can be done to help hill farmers. I think the time has come to consider the hill farmer. We do not want to see our upland areas turned into
Column 501television sets for series such as "All Creatures Great and Small". We want a continuing, viable hill farming community where people can live and work.
Mr. D. N. Campbell-Savours (Workington) : I am very conscious of your strictures about time, Mr. Deputy Speaker, and therefore I will be brief. I had wanted to go further down the road of the debate about potatoes and milk that we had last year when the Agriculture Bill was going through the House, but I will raise just two issues in this debate.
We heard two very interesting contributions this evening from the Government Benches. One of them came from the hon. Member for Wantage (Mr. Jackson) and the other from the hon. Member for Cambridgeshire, South-East (Mr. Paice). I thought those contributions were significant because those hon. Members are obviously peering through a window that is of interest to a number of hon. Members on both sides of the House.
I served briefly on the Front Bench, and know that one is constrained to some extent as to how freely and openly one can discuss what is going through one's mind about agricultural reform. Perhaps I am now able to express a view or two on those matters a little more freely.
Having examined the brief for a year, I believe that there is an argument for patriating agricultural policy. I do not think that it is a problem in the way that the hon. Member for North Cornwall (Mr. Tyler) suggested. He seemed to think that we were talking simply of repatriating the policy in terms of regulation and standards. That is not the issue.
Everyone who takes a sane approach to these issues accepts that there must be a level playing field throughout the Community in terms of regulatory arrangement, whereby there are common standards and whereby a producer in Italy, Germany, France and the United Kingdom complies with broadly the same rules.
However, I think there is room for increased patriation of the budget. The proposition is that one necessarily has to have a level playing field on the budget throughout the Community. We can survive within the Community without that level playing field. I will give an example from the United Kingdom. The arrangements for area payments in Wales are different from those in England. While there may be those who would object to that, it shows that we can run two regimes side by side that do not provide for a level playing field. There might be a need to recalibrate, but that establishes a principle. It is quite insane that the financial mechanisms that apply in the United Kingdom in terms of subsidy should necessarily apply in the Mediterranean countries of Europe. They produce different products in different circumstances and it might be that their climates are more favourable to one product as against another, just as our climate is more favourable to a particular product. It is really a question of accepting that there may be conditions in which a level playing field may not apply but countries are not necessarily placed at a competitive disadvantage.
The National Farmers Union should consider those matters, as there is a very good case to be made. I do not want to go too far down this route tonight, but I see budget funding in that light. Brussels advocating money for a specific purpose is not an ideal arrangement. One could
Column 502establish a system whereby moneys are allocated to individual nation states based upon a mathematical formula. Once those moneys have been allocated, within an agricultural budget--some people might even say outside it--they could be spent in whatever areas national Governments decide will be their priority.
In other words, if the Italians want to resist spending money on environmental improvement--as I understand it, various countries within the Community do not want to spend money in particular areas and one is always negotiating to find a standard arrangement for allocation--let them have their money, and if they want to spend it in certain ways they should be allowed to do so.
However, why not then allow other countries to spend their money by way of area payments as against headage or promoting particular forms of production ? This is how I was thinking privately during the time when I had some responsibility in such matters.
An extremely important subject is not being addressed in the debate, and there must be wide support across the House for the principles that I am about to enunciate. We have failed persistently--for decades--to deal with the problem of fraud in the Community. The problem is far greater than we are led to believe because our information sources are limited. The reasons why they are very limited can be found in the reports that were placed in the Vote Office for hon. Members to read. I do not want to go into the details today, but they suggest to me that we are only sampling what may be a much bigger problem.
Some interesting work on those matters has been done in the House of Lords. The other place has produced three reports : one released in 1988 entitled "Fraud Against the Community", another in 1992 entitled "The Fight Against Fraud", and, from the Select Committee on the European Communities, a very interesting report of 14 March this year entitled "Fraud and Mismanagement in the Community's Finances". I shall quote from that report some sections that are particularly relevant to our debate. It refers to the first two reports that I have alluded to and says :
"we noted that some of these proposals"
the proposals in the reports
"have been implemented to varying extents. However, we concluded that there was still a lack of strong political will in the Council of Ministers to bring fraud to an end and put the management of the Community's finances on a firmer footing".
In reference to a statement in one of the auditor's reports attacking failure to act, the Committee then goes on to say : "This statement is depressing enough, but our concerns are heightened by the fact that the Court feels that there has been little or no improvement' in the financial management of the Community, despite repeated criticisms made in its annual reports. The Court considers that the Commission has had sufficient time to act or to launch any necessary legislative initiative, but has failed to do so. The Court's report also issues the warning that, unless there are radical changes, it may not be able in future reports to provide the statement of assurance about the reliability of the Community accounts and the legality of its underlying operations which is required by the provisions of the Maastricht Treaty." They are heavy criticisms, but it is interesting that, before producing the report, Committee members wrote to the Chancellor of the Exchequer. The paper to the Chancellor sets out what the Committee believed to be the alternative approach. It proposed that a task force should be set up. The paper stated that it was "suggested that a high level Task Force should be set up by the Heads of Community Governments to inquire into the financial organisation of the Commission and also of the Member States,
Column 503insofar as Community funds are involved and to make specific recommendations . . . We propose that the Task Force should be established as a temporary measure for, say, five years. It should not be a new institution and should not be seen as in any way usurping the functions of the Court of Auditors . . . we suggest that it be a small independent group comprised of, say, 4-6 persons with wide experience in the administration of large concerns". I believe that on Monday this week the new Commissioner responsible for such matters was supposed to report to ECOFIN on his proposals for dealing with fraud in the Community. I understand that there has been some delay--the proposals should have been published this afternoon.
I keep asking myself whether, despite the fact that the Commissioner has been appointed specifically to deal with fraud, we are once again going to dodge the issue and not face up to our responsibilities. The fact that has always worried me is that the existence of the rebate to some extent compromises us in negotiations and prevents us from laying down the law by demanding major reform. I understand that there has been some change and that the Home Secretary's proposals will be considered by the Community. I hope that some action is taken to deal with this important sector of Community finance.
Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : I thank you, Mr. Deputy Speaker, for allowing me to catch your eye at this time of the evening. I am glad to follow the speech of the hon. Member for Workington (Mr. Campbell-Savours).
Our purpose is to consider European Community document No. 4616/94, which I have with me and which is a bulky document--who says that the EC is not bureaucratic ? We also have to consider the excellent booklet prepared by my right hon. Friend the Minister entitled "Agriculture in the United Kingdom 1993", which is a much better document. It is clearer and more informative.
Today's important debate on agriculture comes at a critical time following the 1992 CAP reform and, particularly, the 1993 GATT Uruguay round, concluded so successfully in December by my right hon. Friend the Prime Minister. It brings 116 countries within the GATT mechanism and means that, for the first time, the GATT will cover agriculture. It puts us on the road to reforming the excesses of the CAP--to a certain extent, we have the Americans to thank for that. There are advantages in the GATT because direct export subsidies would be reduced by 36 per cent. over six years and subsidised exports would be reduced by 21 per cent. over the same period. Unfortunately, the French introduced a last minute stopgap in the Breydel agreement and extended the period to nine years. Nevertheless, at the Edinburgh summit we undertook to restrict the budget to 1.27 per cent. of our resources. The French again introduced a rider stating that if additional measures proved necessary, the requisite steps would be taken. In other words, there is a get-out clause. Despite the fact that my right hon. Friend the Minister said earlier that the Chancellor had agreed this week that the ceiling would not be breached, a get-out clause exists. We must watch carefully if expenditure within the CAP is not to go on and on mounting. The Blair House agreement introduced a new scheme of subsidising the land rather than production. Many hon.
Column 504Members have called for the ending of subsidised production, which simply extends the system of ever-increasing subsidies. The integrated administration and control system--IACS-- introduced last April brought about that welcome change. We shall now gradually be able to tie subsidies to the land and perhaps, which would be even better, to the person involved.
Under IACS we set aside 15 per cent. of land throughout the EC. That amounts to about 666,000 hectares--about 1.5 million acres--in this country. That is not the correct policy for the long term. We have seen what has happened this year--farmers have taken out their best land and employed better crop husbandry techniques and better techniques generally. Although we have taken out 15 per cent. of our land, the EC as a whole has reduced its production by only 2 per cent. A scheme costing many billions of pounds in the EC that reduces production by only 2 per cent. cannot be sensible. In the long term, it will be unsustainable.
The set-aside regime did not originate in IACS, but had been operating earlier. There was a five-year set-aside scheme and, thanks to my right hon. Friend's efforts at the last Council meeting, there is now an environmental scheme over 20 years. That has enabled us to introduce more environmentally friendly farming, of which much has been said today. My hon. Friend the Member for Lincoln (Mr. Carlisle) mentioned the subject in great detail. In the time available to me I cannot develop the subject in such detail. I agreed with a number of the points made by my hon. Friend.
I have been urging on my right hon. Friend the Minister that we should include forestry in the set-aside regime. England has a forestry cover of only 8 per cent.--the lowest cover of any country in Europe. I know the problem facing my right hon. Friend within Europe where there is a much higher percentage of forestry cover. But it must make sense to plant more trees--I believe that many farmers would wish to do so--on land that will not come into production again in the near future, if ever. It would make sense to put some of that land into forestry.
I also urge my right hon. Friend to consider the management regime for set- aside. Last year we introduced a system whereby farmers were obliged to cut the weeds from their land to prevent it from becoming too untidy prior to July. Many nests and much wildlife were disturbed. I should like a regime, particularly on non-rotational set-aside, that allowed a moratorium between April and July so that the land could be left alone.
My hon. Friend the Member for Lincoln mentioned the 20-year environmental set-aside scheme. The problem is that no one will implement it at present. It is not in IACS and is financially unattractive. It would be sensible for us to have an environmental set-aside scheme, and I urge my right hon. Friend the Minister to consider that.
As well as EC environmental schemes there are domestic environmental schemes. I congratulate my right hon. Friend on creating six new environmentally sensitive areas--I am particularly grateful for the two which affect my constituents and which will be welcomed by them--the upper Thames tributaries and the Cotswolds. I am grateful to my right hon. Friend for helping my constituents and I hope that, in turn, farmers in my constituency will take up the policy with alacrity and farm in a more sympathetic way. That is exactly what the public want. I hope that, as