House of Commons Hansard Debates for 21 Mar 1995

Mr. Waldegrave: This is unprofitable. The figures are in the Library. I assure the hon. Gentleman that the figures that I have given are correct.

On the other hand, since 1979, and more particularly since 1988, the figures reflect the beginning of a huge shift in the cost and direction of the CAP in which no one, either here or in Europe, would deny for one moment that Britain has been the prime mover. As a result of our efforts, the monster has stopped moving. Now we must start a radical programme of slimming.

The change has not been caused only by the valiant battles of my predecessors as Ministers in the Agriculture Council. A turning point was the imposition of overall control on agricultural spending in 1988, an achievement led by Lady Thatcher. The agricultural guideline ensures that agriculture expenditure will fall progressively as a proportion of the European Union total. It cannot be breached except by unanimity, and we will not sanction such a breach.

Mr. Budgen: The proposal relating to the overall proportion sounded very good at the time, but considerable additional expenditure on other items--particularly the regional and social fund--was then envisaged: as long as the other expenditure rose nicely, it was inevitable that agriculture expenditure would decline as a proportion of the total.

Mr. Waldegrave: That is true--and expenditure that is declining as a proportion is not the end that I want to achieve. Let me use my analogy of the big ship changing direction: this ship is changing direction. Before, agriculture was driving the budget up; that is no longer the case. We have much more to do, however. I am not arguing with my hon. Friend about that.

Incidentally, the pledge that I have just given--that we will not allow the guideline to be breached--is not one that the Leader of the Opposition could give. That would imply that he was vetoing a European Community measure; that he was alone--and he keeps saying that he will not be isolated in the Community. That strikes me as a weakening of the negotiating position that is essential to this issue and many others.

The second watershed was the inclusion of agriculture in the general agreement on tariffs and trade for the first time in the Uruguay round. Britain was a leader in what was originally a minority group in calling for that. If it had not been achieved, we would not have secured the 1992 reforms of the common agricultural policy--which are now being phased in over three years, of which this is the last. Those reforms were driven by the need for European agriculture not to bring the GATT round to a halt.

I am far from saying that the mechanisms used in the 1992 reforms were wholly right; they were not. We wanted the price cuts to hold back over- production, but

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not the quotas or the bureaucracy. But--and it is a big but--those reforms started a process that has helped radically to reduce stockpiles, has reduced the consumer cost of the CAP by about £8 billion--with £1 billion of that gain coming to the United Kingdom--and has, via the so-called peace clause, prevented the EU from increasing support for commodities above the 1992 level in the future. My party currently seems to be very self-denying in terms of claiming credit for its achievements. I do not believe that without our commitment to controlling public spending we would have got the guideline; nor do I believe that without our commitment to free trade we would necessarily have got agriculture into the Uruguay round, or secured the right outcome from the round itself. Those are our Government's achievements, and we should be proud of them. As I said earlier, however, this is only the start. I am not asking the House to endorse the CAP today--far from it--but I ask hon. Members to recognise and support our objectives for reform and the success that we have achieved so far in a battle that will move into a crucial phase during the next few years, with a new GATT round in 1999 and the proposed entry of the central and eastern European countries.

Mr. Tony Marlow (Northampton, North): I would like also to be able to congratulate the Government on what they have achieved, but it does seem rather difficult to do that at a time when our farmers must take more of their land out of production than farmers in any other European country, and our farmers must pour their milk down the drain while our milk manufacturing facilities are having to close. Our farmers seem to have to put up with much more bureaucracy. The IACS form is an example. Under the integrated administration and control system, 24 separate documents could have to be filled in in Britain; nothing like that happens in Spain, Portugal, Greece or Italy. Why do our farmers get the wrong end of the stick every time, whereas all the other European farmers seem to get away with murder?

Mr. Waldegrave: The answer to that is that they do not. No one compels any British farmer to set aside any land, but if a British farmer wants to accept large subsidies for arable production, he must do so.

Quotas are a different matter. It is quite wrong for us to be controlling what is still over-production of milk in the European Community by means of quotas; we should be controlling it by means of lower prices. It should not be thought, however, that when that comes--as it must and will--it will be wholly welcome to dairy farmers. Dairy farming is the sector of British farming that is most profitable in terms of pennies per hectare.

I believe that the policy that I am presenting is supported by forward- looking farmers. Indeed, it is supported by the National Farmers Union, which knows what must be done in the long term. My hon. Friend must be a bit careful when seeking a cheer from British farmers: they are familiar with the other side of the coin.

Dame Elaine Kellett-Bowman (Lancaster): Does my right hon. Friend agree that the effect on our farmers would be devastating if we did not secure reform of the CAP before the entry of the central and eastern European

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countries, to which he referred? Given their huge areas, they will be appallingly difficult competitors if we do not get it right in time.

Mr. Waldegrave: As so often, my hon. Friend has made exactly the right point. Indeed, I was about to deal with it.

Mr. Edward Garnier (Harborough): Will my right hon. Friend give way?

Mr. Waldegrave: I think that I had better proceed with my speech. Perhaps I shall cover the point that my hon. Friend was about to make.

Our next objective must be to use the time that we have before those central and eastern European countries are ready to join to ratchet down the cost further, to make the policy one that will be affordable after they have joined. That was the point made by my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman). It is not so much pressure from the financial guideline as currently drawn that will help us in that regard; our first calculations show that the entry of at least the so-called Visegrad Four countries could probably be financed within the guideline on present, post-MacSharry policies. However, there would none the less be a large increase in cost. Moreover, the extra money "affordable" within the guideline would be completely wasted because it could not be used, under the GATT, to do anything other than destroy or permanently store the increased production that an unreformed CAP would produce in the central European countries. It could not be used for subsidised exports, for example.

I believe that the House, and all sane people, would regard such an outcome as absurd and unacceptable. It would be far better to return the money to the taxpayers, and to set prices at a level that avoids over-production in the first place. We must sort out the problem before those countries join. That means steadily lower prices, which in turn will mean dismantling--over time, and with due warning--the superstructure of controls and quotas that MacSharry introduced to restrain production at a time when the Community would not accept the alternative of greater price cuts. I can agree with one phrase in the Liberal party's amendment, among a number with which I disagreed. There must be due warning, so that the industry has time to adjust.

Mr. D. N. Campbell-Savours (Workington): May I ask the Minister to depart from his speech for a moment, and take us for a canter around Europe? Could we consider what will be the reaction of other European countries such as Italy, France, Belgium, Germany and Spain to the radical proposals that the Minister is presenting?

Mr. Waldegrave: I cannot resist the hon. Gentleman, as is often the case. I believe that in the next stage, according to the laws of arithmetic, the result of the interaction of the GATT with the CAP and budgetary concerns will demonstrate to other countries that the change is now unavoidable. After all, the same thing happened when both the last two changes to the CAP were made: external pressure on the Agriculture Council led to change.

The other countries that will respond fall into two groups. The group that does not want the change argues that we should postpone all action until after the entry of

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the Visegrad Four--have transition periods, hope for the best, all that kind of thing. Another growing group that firmly includes Sweden, Holland and Denmark, alongside us--interestingly, there is increasing support in France--holds that European agriculture is efficient enough to live much nearer to the world markets, and that we will head for a cliff edge if we do not act in time. That would be far more destructive to farming, and far more damaging to those who work in the industry. Although I would be wrong to claim that there is a majority in favour of my proposals, there is a significantly influential minority, represented in the Commission and among serious academics who, after some time lag, influence policy in Europe. The battle is not lost, but the battle would not have a chance of being won if it were not for the external constraints driven by GATT and the entry of the other countries.

The next stage will deliver lower prices in return for restored freedoms. But I must urge the House to believe that the slogan "repatriate the CAP"-- I return to a point to which several hon. Members have referred--will not help us to get the outcome that we need. We cannot accept British farmers having to face subsidies for production elsewhere in Europe or, indeed, America, which they do not get at home, with free trade dismantling any protection for their goods. That is why we need a continuing CAP, with more not less rigorous action to rule out illegal state aids; a CAP which matches the single market with a single, simpler, cheaper, regime of support, which is, incidentally, increasingly focused not on production aids but on environmental gains.

We do not want repatriation of agricultural subsidies any more than any other kind of subsidies. We want fewer subsidies. We want our industry, which is one of the most efficient in the world, to be able to compete fairly and win prosperity from its own efficiency in the single market which we, after all, fought so hard to create. In the meantime, as we prepare for the next forward moves, we are in a period in which the consequences of the previous changes are still working through, which makes the Commission's proposals this year fairly uninteresting. They involve very little change over and above those which result automatically from the 1992 reform. They include some welcome small steps further in the right direction, but the Commission should have gone further to reduce support prices across the board. It has missed an opportunity to signal to farmers and growers the intention to continue along the path set by the 1992 reform, as continue it must.

The main proposals affecting British farmers concern milk, sugar and cereals. In the milk sector, the Commission has proposed a 2 per cent. cut in the intervention price for butter, but no cut in quotas. That is welcome so far as it goes. The United Kingdom is only 85 per cent. self-sufficient in milk, so our producers and dairy industry would suffer disproportionately from any quota cut. I have urged the Council to adopt a larger cut in the butter intervention price so as to relieve pressure for quota cuts in the future.

I am also pressing for provision for the milk quota to be leased across member state boundaries. I regret that that suggestion has not commanded widespread support, but I shall stick to it. I shall nevertheless continue to press for measures to relieve the particular difficulties which

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our shortage of milk quota poses. That will be especially important if the Commission's report on the implementation of milk quotas in Italy and Greece, which is expected shortly, recommends that the quota increases granted to those countries in 1993 and 1994 should be repeated for 1995 and subsequent years.

For cereals, the Commission is proposing to reduce by two months the period during which intervention is open, as well as to cut the monthly increments in the intervention price in response to reduced storage and interest costs. I welcome those measures to reduce the role of intervention and encourage farmers to rely more on market price signals.

The Commission's failure to propose cuts to sugar support prices, which are indefensibly high, is particularly disappointing. I nevertheless welcome the proposal to reduce the level of storage refunds in response to falling interest rates across the Community. We shall seek to get the best deal from this unsatisfactory proposal on quotas for our producers, who are not, after all, the cause of the surplus which the Commission rightly wants to cut.

No change has been proposed in the levels of beef support beyond those determined in the reform, nor in the level of the sheepmeat basic price. I shall be pressing for changes to both those complicated regimes to reduce unnecessary bureaucracy. Expenditure on the beef special premium is controlled by overall national quotas, known as regional ceilings. Yet there is also a 90-head limit on claims under the scheme.

Mr. Christopher Gill (Ludlow): Does my right hon. Friend agree that it would far more satisfactory from everybody's point of view and would certainly encourage a better quality of beef if all the support was given to the suckler herd instead of being spread across all beef production, which includes those dreadful beef--no, they are not beef animals--those dreadful Holstein animals?

Mr. Waldegrave: For a moment I thought that my hon. Friend was getting at the dairy industry and farmers. I know that he speaks with great knowledge. I am not sure that he would be universally supported by the agricultural industry, but he makes the serious point that if a great deal more Holstein-derived beef came on to the market for other reasons, we might see a fall in the beef premium for the specialist beef producers, which would be very unfair.

As I was saying, we do not need the 90-head limit. It imposes a considerable extra burden. We would much rather get rid of the individual quotas on sheep annual premium and suckler cow premium and replace them with regional ceilings, as apply in the beef special premium scheme to which my hon. Friend referred. Such a scheme, which would need to be signalled well in advance to give farmers time to adjust, would remove a significant bureaucratic burden from the industry.

In most other sectors, the Commission has proposed no change in the support prices. As I have said, I think that that is a lost opportunity. It has, however, proposed a cut in the basic pig meat price to bring it slightly closer to market reality, which is welcome.

Meanwhile, however, there is a different area of action to open up: the area of fraud and enforcement of the rules. We have been at the forefront of pushing the Community towards a much more rigorous approach to the control of

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fraud. That matters, of course, not only in relation to the CAP, but the CAP is particularly vulnerable and still accounts for over half of Community spending.

It was, of course, the British who saw to it that the role of the European Court of Auditors was strengthened and ensured that its reports and recommendations should be properly considered in Brussels. In our previous presidency, we pushed through the integrated administration and control system, which although neither my hon. Friend the Member for Northampton, North (Mr. Marlow) nor anybody else would claim is other than unpopular, is an essential part of ensuring that we can secure fair controls right across Europe. If we did not have such a detailed scheme, there would be nothing for us to press to enforce. I shall be able to give my hon. Friend some examples of where, because that system is in place, the rules are being enforced right across the Community. I do not know how we could do that without such an underpinning structure. The 1992 reform helped to reduce one kind of fraud at least, by reducing the role of export refunds and intervention, which have shown themselves to be targets for fraudsters. I very much hope that the Council will soon adopt a new proposal--sometimes known as the "blacklist" proposal--which will further tighten controls in that area. We must vigorously sustain the fight against fraud. I particularly welcome Commission initiatives which introduce tough penalties for those who, it has been proved, have benefited from aid to which they are not entitled.

We have also been pressing the Commission to use to the full its powers to disallow--not to reimburse from the Community budget expenditure improperly incurred by member states. As a result, the Commission disallowed a total of 1.5 billion ecu, about £1.2 billion for 1991, which is the last year for which decisions have been taken. That represented about 5 per cent. of CAP expenditure.

Mrs. Cheryl Gillan (Chesham and Amersham): Does my right hon. Friend agree that technology is extremely important in combating CAP fraud? I congratulate him on the press conference, which he held in conjunction with the Department of Trade and Industry, at the British National Space centre on 17 January, where it was announced that the spot satellite was to be used for the first time on earth observation and remote sensing, which will help us to combat fraud throughout the European Union.

Mr. Waldegrave: My hon. Friend, who is extremely knowledgable about this subject, is entirely right. The results of some of the early remote sensing satellite pictures in some of the southern countries of Europe have been very interesting and much acreage has turned out not to exist. Such a system will turn out to be a very useful weapon in reconciling people's claims with reality.

Dame Elaine Kellett-Bowman: Some of the remote sensing has to be used with a little care. For example, if one is trying to deal with the output of olive oil, one must know that an irrigated olive tree produces between 10 and 100 times as much oil as a tree which is not irrigated. So one must be a little careful in trying to combat fraud in the production of olive oil.

Mr. Waldegrave: My hon. Friend is perfectly right. The use of remote sensing will be most powerful in

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measuring hectareage, which is mainly linked to cereal production, and in areas where a farmer is claiming subsidies per hectare. That is a powerful tool that the Commission has for obliging member states to put in place effective controls against fraud. I shall give the House some examples. Greece has been disallowed about £45 million for having inadequate controls on cotton expenditure. Substantial penalties will be applied to Italy and Greece in respect of grain frauds that have been uncovered. Those actions by the

Commission--which I wholeheartedly support--send a clear warning to member states that poor controls will be heavily penalised. Our record in the United Kingdom is good, but we too must ensure that our own controls are effective. There has been some publicity recently about off-contract deliveries of milk designed to avoid attracting super-levy. Although the so -called "black milk" problem is considered to be relatively small, I have instructed the intervention board to ensure that its anti-fraud unit actively investigates any information that it receives. If regulatory offences have been committed those involved will be prosecuted, and will also face a much higher levy bill as a consequence.

Part of the disallowance that I mentioned relates to the past failure by Italy, Spain and Greece to implement milk quotas, and the United Kingdom's action in the European Court resulted in a 50 per cent. increase in the disallowance originally proposed by the Commission. People have criticised my right hon. and learned Friend the Chancellor of the Exchequer over the deal, but I believe that they are wrong.

Let me remind the House of the facts. We had taken European Court cases against the Commission's original decisions--decisions that would have led to a total disallowance of about £1.6 billion over five years. We thought that far too low. Despite our requests, not one other member state joined us in bringing the case.

There was, of course, no certainty about the outcome of the case; few litigants can ever expect that. Italy and Spain had counter-claimed, taking their own cases to the European Court and claiming that the disallowances imposed by the Commission were too severe. In any event the case would not have come to a conclusion for a considerable time.

In those circumstances the "out of court" settlement amounting to a total disallowance of £2.5 billion--about £1.2 billion more than the countries concerned received under the milk regime during the same period-- was a good outcome. The deal also established the vital principle that the Commission could act only in accordance with the regulations adopted by the Council, and establishing that had been a major objective of the court proceeding.

Mr. Budgen: My right hon. Friend will agree that it was disgraceful that three of the countries in the European Union were found to have made no attempt whatever to impose the agreed milk quotas. Will he now tell us whether, after all the Chancellor of the Exchequer's generosity on behalf of the British taxpayer, those three countries have now set up a proper system for reducing milk production, as they agreed to do?

Mr. Waldegrave: My hon. Friend is unfair, for once, in that he says that the Chancellor of the Exchequer was

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generous in that business. As a lawyer who has practised for many years, he would have advised his client to accept such a deal, because it was a good one.

Mr. Budgen: What has happened now?

Mr. Waldegrave: On my hon. Friend's second point, the Commission must now come to the Council. It has not yet put the proposals before the Council, although I believe that they will be put before us at any moment. The Commission will have to convince the other members and myself that the proper arrangements are in place. I suspect that there will be a difference between the three countries, and that Spain will be better prepared than the others.

Mr. Budgen: How long will all that go on for?

Mr. Waldegrave: My hon. Friend must restrain himself. The proposals will be before the Council in time for the proper decisions to be made, and we shall consider them. I shall certainly bear in mind the need to convince my hon. Friend and other Members of the House that we have taken the right decision.

Mr. Campbell-Savours rose --

Mr. Marlow rose --

Mr. Waldegrave: I must press on. Other hon. Members will be able to make speeches in due course.

It is essential that we press the Commission to fulfil its responsibilities to ensure that each and every member state obeys Community rules. As a result of our efforts the Commission declared illegal state aids by the French and Irish Governments--"Stabiporc" pigs aid in France, and the market development fund aid to mushroom growers in Ireland--and required that they be repaid. I shall let the House know of one or two other anti- fraud cases now in hand. In one case "high-quality" beef was exported, with high export refunds, from two member states to the United States. The consignment passed customs but was never delivered, because the United States food health authorities declared part of the consignment unhygienic. It was then purchased at a very low price by an associate of the exporters and sent with false health certificates to two other member states as offal, with minimal import duty. After passing through a fifth member state, it was then exported to Africa as high-quality beef, once more with high export refunds. The organisation of the fraud involved companies in four of the member states through which the consignment passed.

Secondly, consignments of butter, sugar and milk powder en route from the Czech Republic to Morocco and Algeria via Spain, with Czech transit documents, were cleared as having reached the Spanish quayside for export, using a fake Spanish customs stamp. In fact they had been sold in various places inside the Community, avoiding import duty of about 20 mecu.

Thirdly, in September 1994 the Commission identified serious irregularities in the compensation paid to hill farmers in Corsica. All payments to Corsica under the heading involved have been suspended while the Commission and the French authorities make further inquiries.

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Fourthly, a mission to Italy the same month revealed a fraud worth 2 mecu concerning fruit and vegetable processing enterprises and Community funds. Legal proceedings have been opened in Rome. I give those examples, which are merely the latest, to show that at long last the battle against fraud is beginning to make some real headway.

Mr. Gill: Will my right hon. Friend give way?

Mr. Waldegrave: I think that I had better press on, because I am almost at the end of my speech.

At the beginning of my speech I promised to report on the other main agriculture policy events of the year, but I fear that I must do so very briefly.

On farm incomes, as I said earlier, the news remains good. The latest 6.9 per cent. rise in total income from farming came on top of substantial rises in the previous two years.

Deregulation of the milk industry last autumn has opened up an over- regulated market to real competition. The same is happening with agricultural tenancies, and the Agricultural Tenancies Bill is currently before the House, to the delight of all parties in the industry--almost the only carping voice comes from the Labour party. As for the Agricultural Wages Board for England and Wales, I concluded that we should heed the advice that we received from most people in the industry and keep it. In the latest public expenditure round--a very tough one--we protected research and made no further cut in hill livestock compensatory allowances.

We have secured a 3 per cent. cut in set-aside, while our long-running campaign to ensure that land put into forestry and agri-environmental schemes can count towards set-aside has at last reached the point where firm proposals are on the table. We have widened yet again the range of our domestic agri-environmental schemes, with six new environmentally sensitive areas, a new habitat scheme and a new countryside access scheme. Total expenditure on those schemes will rise to about £100 million by 1996- 97. We have also begun the consultation with the Secretary of State for the Environment that will lead to a new White Paper on the rural economy later this year.

We have, of course, faced the difficult and emotive issue of live animal transport, which we have debated several times in the House recently and may debate again soon. Work to secure a proper outcome, with the abolition of veal crates and tougher rules on transportation, continues.

It is always rash to say to a farmer that things are going well. When my father was a junior Minister in the Department that I now represent, he had on his desk a cartoon of two farmers leaning on a gate with a sheet of water in front of them. One farmer was saying to the other, "If the floods recede as fast as this we're going to have a very nasty drought on our hands." I have learnt not to say to farmers that things are going well. None the less, they are. There remain huge tasks ahead of us, above all in securing the change that we need in the CAP and in securing it in an orderly way that does not make life impossible for the industry. But I believe that the Government have every right to ask the House to reject the Opposition amendment, which, incidentally, for the second year running, forgets to mention the words

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"farmers" and "agriculture", and to endorse our agriculture policies with some pride--pride in what we have achieved, and confidence that our direction for the future is the right one. 5.27 pm

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

"but believes that the CAP continues to fail consumers, taxpayers, the rural economy and the rural environment and that the Government is not doing enough to make fundamental changes to an unacceptable policy.".

In opening the debate, the Minister rightly said that it has two purposes. It addresses the common agricultural policy price proposals and it is the traditional annual debate that used to follow the old agricultural price review before we joined the European Community. That was essentially a stock-taking exercise and an opportunity for the Minister to defend the price review and the agreements that he had reached with farmers' unions for the year ahead. I intend to treat the debate in the same way.

Like the Minister, I believe that we must accept that Europe is crucial to agricultural policy. All the major strategic decisions are made in Europe, and of the spending on agriculture in this country, expenditure through the framework of the common agricultural policy is about four times the Government's domestic expenditure on agriculture.

The Minister said that the industry is doing relatively well, and I am happy to agree. In fact, that is an understatement because across the industry there has been a significant rise in farm incomes, which we warmly welcome. That rise occurred against the background of the depressed incomes of the 1980s, and I think that most people in the wider community still do not appreciate how badly agriculture did during the 1980s and how much investment was depressed.

The Minister would probably accept that there are still some sectors which, to put it mildly, we would like to see doing better--the pig sector, the fruit sector and the upland sheep farming sector, which are not doing well enough--but returns for cereals and milk, major commodities, and potatoes are very good.

It is important that we continue to understand that the increase in prosperity is not a consequence of the Government's policy--far from it. The major factor in the increased returns for British farmers is what we still rightly call black Wednesday. It all goes back to that debacle in the autumn of 1992 when the Government were humiliated and had to abandon their policy of trying to stay within the ERM. It is important to dwell on that point so that people fully understand what happened. It was fundamental to the long-term prospects for British agriculture, and it explains why many farmers, who may be doing well now, are still uneasy about the future.

The Minister reminded us today that the 1992 MacSharry reforms produced an agreement to cut the cereal price. Other price changes were agreed, but the crucial decision was to cut the intervention price for cereals. To compensate cereal growers for that, direct payments to farmers were to be introduced along with set-aside and farmers were to have an arable payment scheme, which included set-aside payments. In other

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words, if a farmer had 100 acres of grain, he would get paid so much per acre of grain and so much for the set-aside, the land left fallow.

What happened in the United Kingdom is very different from what was envisaged under MacSharry, and very different from what happened in Germany. In the UK, the increase in the sterling green rate and the devaluation of the pound meant that we did not have a reduction in cereal prices. By and large--I am happy to be corrected on this--it is fair to say that cereal prices in the past two or three years have not changed for UK farmers, although they have, in the main, been above the intervention price.

There has been a huge change in the incomes of growers as a result of the arable and set-aside payments. The effect of the devaluation of the pound was massively to bump up those payments, and that is the crucial factor. Farmers did not experience a price cut and they received much more enhanced compensation payments than had been envisaged at the time of MacSharry.

The arable area payment for England, which began in 1992-1993 at £140 per hectare, increased to £247 per hectare for 1994-95. The set-aside payment in 1992-1993 was £253 per hectare; in 1994-1995 it was £313. There has been a huge increase of money into the cereal sector.

Mr. Marlow: What is the hon. Gentleman's conclusion? Is he saying that farmers are far better off because of white Wednesday, or that farmers should not have the payments?

Dr. Strang: I shall come to that later. I am not saying that price cuts could be made in Europe without some attempt being made to alleviate their short-term effect. What happened in the United Kingdom was totally different from what was intended by the Council of Agricultural Ministers.

Mr. Budgen: I am trying to understand the general drift of the hon. Gentleman's remarks. He says that some sectors of agriculture are doing badly and require more investment. Is he offering more public support in the form of taxpayers' money to sectors of agriculture that are complaining? How is that consistent with reducing financial support for the agricultural sector?

Dr. Strang: I shall come to that. [Interruption.] The Member for Hertfordshire, North (Mr. Heald) will not be disappointed when I do. The massive boost to British agriculture in the past few years is a direct consequence of black Wednesday. The Government cannot claim credit for the increase in farmers' returns because they and previous Conservative Governments have implemented policy changes that have tended to be inimical to British agriculture. I intend to dwell on some of those changes.

Before I do so, I wish to be fair and to describe two exceptions to those changes. The first is the decision to reprieve the agricultural wages boards. The decision to close them was inspired by Tory dogma, and it was opposed by the whole industry. We know from history, however, that that was not necessarily sufficient to ensure that the boards survived. The Minister decided to reprieve the boards, which were of great importance to the Labour party and it would be churlish not to thank the right hon. Gentleman for that decision.

The second exception is in relation to animal welfare. As I have explained, we do not think that the Government have gone far enough, although we had a constructive

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debate on the Adjournment on a Wednesday morning recently. I acknowledge that the right hon. Gentleman has adjusted the British Government's position on animal welfare, and has moved us towards a more pro-animal welfare position. There is still some way to go, but I welcome that fact.

Mr. Mark Robinson (Somerton and Frome): Will the hon. Gentleman give way?

Dr. Strang: Not on the subject of animal welfare. My hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley) will deal with that matter when he speaks. I will not give way on the agriculture wages boards either, as I merely mentioned the two subjects in passing.

I am grateful to the Minister for making available to us the Department's annual review, which is to be published on Thursday. The major event, as it rightly points out, was the decision to deregulate the milk industry after 60 years and to eliminate the milk marketing schemes. The Opposition do not believe that any of the evidence that has emerged since the abolition of the milk marketing boards justifies any alteration in our stance. We opposed the abolition of the boards, and said that--at the very minimum-- the Government would have a responsibility to lay down an appropriate structure that would operate in the best interests of the industry.

The Government have abdicated their responsibility, although I know that that decision predates the term in office of the present Minister of Agriculture, Fisheries and Food. We are still concerned about the closure of manufacturing capacity, and we see no evidence that the abolition of the milk boards is resulting in an increase in the production of high-value milk products, as the proponents of the changes on the Conservative Back Benches suggested. On the contrary, we are still worried about the reduction in capacity, which is not in the long-term interests of milk producers, although they are benefiting from the sharp price increase that has resulted from deregulation.

Before I move on to the CAP, I want to say a few words about the damage that the Government have done to the long-term prospects of British agriculture by attacking what I would call the public services, expenditure on which has nothing to do with Brussels. It is wholly funded directly by the British Treasury. It is mainly very positive expenditure that brings great benefit not only to farming but to the British people. I refer, for example, to agricultural training.

Anyone who goes about the country and knows anything about agriculture must be aware of the number of people directly involved in agricultural training who have lost their jobs. Expenditure on the agricultural training board has been slashed. The new ATB Landbase is only a pale shadow of the previous board. In 1992-93 the Government spent £6.7 million on the agricultural training boards. In 1994-95 the ATB Landbase contract was for just £4 million.

The state veterinary service--I hope that the Minister will listen to this- -has a tremendous history. It has been peopled by some of the most dedicated vets and civil servants in Britain. It is a tremendous asset to the country. It is in the front line. It is not less important but more important now because of the increased risk of animal

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diseases coming in from central Europe. The Minister nods his head. Let me remind him what the Government have done to the state veterinary service. The number of vets employed by the service has fallen from 580 in 1979 to 403 in 1994--a 30 per cent. cut. We are talking not about money but about real resources. We are talking about what the veterinary service is about--vets.

Instead of fewer state vets, we should have more. I hope that the Minister will abandon the dogma that has bedeviled the service and demoralised vets. We will pay a price for it if we do not reverse the cuts. The price will be a costly one if some major disease that is prevalent in eastern Europe comes into Britain. Such diseases could easily come to Britain through the European Union.

The Agricultural Development Advisory Service is a great service. Colleges in Scotland and the former national agricultural advisory service in England, which became ADAS, served the industry well. Anyone who has spoken to any employee of ADAS will be aware of the destruction and demoralisation of the service by Government dogma and successive cuts. ADAS is a Government service, not a private consultancy. There are plenty of private consultancies about. We are all for them if they can earn a living. ADAS is a Government service that is supposed to help our farmers and give them independent advice, which they do not get from fertiliser companies or compounders. It is supposed to give them advice on all the things that we should encourage farmers to do. It is now required, according to the latest figures, to recover 63 per cent. of its costs from consultancy. The service has been pushed so far down that we do not know what its future is. I hope that the Minister will try to minimise the damage. He will never reverse the cuts, but I hope that he will not go for complete privatisation of ADAS.

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