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Mr. Nicholas Budgen (Wolverhampton, South-West): I hope that the hon. Member for Cardiff, Central (Mr. Jones) will forgive me if I do not follow his arguments. In the 10 minutes available to me, I shall not have time to argue with him as I should have liked to. Let me begin by declaring an interest. I represent an urban and suburban constituency, but I am also a small farmer. During my years in the House I have rarely attended debates such as this and have usually abstained in the Lobbies, regarding the CAP as perhaps no more than the price that taxpayers and consumers must pay for being part of the free trade area which is what I wanted Europe and the common market--as I saw it--to be. Tonight, however, I intend to support the Government and my former party: I shall vote for the main motion, and vote against the amendment tabled by the official Opposition--a far less effective opposition than we are, I might add. I shall do that for openly political reasons. [Hon. Members:-- "You want to be reselected."] I do, and I also want to be re-elected. I believe that a Back Bencher should be as much nuisance as possible to his party when his party is doing well and is arrogant with success. On the whole, I was as rude as possible to Lord Lawson between 1986 and 1988 and I regard him as being the proximate cause of many of our present difficulties. Now that my former party is doing badly, it seems to be a very proper time to come to the aid of my former colleagues.

I intend to vote along the party line tonight for the reasons that I have given, but I make it absolutely plain that I still regard the CAP as being a very high price to pay for our membership of the free trade area. The CAP is certainly very expensive. I agree that no one can be

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absolutely certain of how expensive it is because we do not know what the effect of reducing all the subsidies and distortions would be on the world market place. It is certainly bad for the environment, as the hon. Member for Cardiff, Central pointed out. It certainly creates gross distortions, such as the quota system. I shall say a word or two, however, about fraud, which I contend is an inescapable part of these European programmes.

I commend to the House two documents from the Library--a document on the European Communities (Finance) Bill, which was published on 22 November, and a document on fraud in the European Community, published on 2 December. It seems clear that fraud in the CAP is running at about 10 per cent. of overall expenditure. The European Community is a half-formed federal structure, which makes it essential for us to understand the cost of further federalisation. It is not a fully formed federal structure such as in America. In the European Community, laws and regulations are made by the Commission with some input--arguably--from the Council of Ministers, but the enforcement is left to member states. The result, of course, is that the enforcement is, at the least, very uneven. Look, for instance, at the way in which the common fisheries policy is dealt with by Spain. Consider the system of transporting animals. Again, regulations are laid down by the Commission, but enforcement by member states is very uneven.

The common agricultural policy is, of course, especially bad. I invite the House to look at the very useful reproduction of what my right hon. and learned Friend the Chancellor said on 21 October about how the Italians and, to a lesser extent, the Spaniards and Greeks, had failed to implement a quota system for the production of milk. That failure goes back to 1989. The House kicked up a bit of a row about it before it considered the European Communities (Finance) Bill. Now, when we ask our right hon. Friend the Minister of Agriculture, Fisheries and Food what is happening in those three countries, we are told that they were let off most of the fine, they were given a great big rocket, they said that they would do something about it and they have done nothing.

Italy, particularly, has a different attitude towards the implementation of law; a rather more Italian attitude towards the rule of law; a rather more relaxed and sophisticated attitude towards fraud than we have in this country. Fraud and non-enforcement of European regulations are an absolutely inescapable part of any European programme. It would apply especially to a single currency. We would have to have a vastly enhanced regional and social fund. I shall vote for my former party tonight and I hope that some of my hon. Friends will do so as well.

Mr. Gill: Not a chance.

Mr. Budgen: Well, I hope that they do so for openly political reasons. The Tory party needs to unite before the local elections-- [Laughter.] I think that my party is in some difficulty-- [Interruption.] The time to be unpleasant to one's party is when it is arrogant and successful. The time to come to its aid is when it is in difficulty. I hope that we may be able to unite in future in believing that what we want is a less federal structure in Europe. We do not want any of these fraudulent and wasteful European socialist mechanisms such as the common agricultural policy. We do not want a single

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currency and we do not want an enhanced regional and social fund. We want an enhancement of the role of the nation state and the resuscitation of my former party, the Tory party.

7.35 pm

Mr. Ieuan Wyn Jones (Ynys Mo n): I hope that the hon. Member for Wolverhampton, South-West (Mr. Budgen) will forgive me for not pursuing his line of argument. I am sure that we all enjoyed his mental contortions in telling the House that he was prepared to throw away his principles on the basis of self-preservation. We thoroughly enjoyed the way in which he justified that to his own conscience. We shall see which Lobby he goes through eventually and whether it is with a smile or a frown on his face.

The price proposals in the common agricultural policy this year represent the final stages of the implementation of the MacSharry proposals. Although they do not greatly change prices or other matters, we must address a number of concerns. I shall do so from the point of view of farmers in Wales. I stress, however, that although the MacSharry proposals were highly criticised because they did not go far enough and because they preserved many of the old common agricultural systems, at least they recognised, in their final form, the importance of maintaining the structure of small family farms and of ensuring rural employment.

I accept, as some hon. Members have said, that it is important to consider agricultural policy in the wider context of rural policy, but it is also important to recognise that people live in rural areas and that if we are to maintain a viable rural economy farmers, who play such an important part in that economy, must be properly supported. I am not saying that they should be supported at whatever cost, but certainly we must maintain a measure of support for farmers who have to farm difficult terrain, in circumstances such as high rainfall and so on, to ensure the viability of our rural communities. That is why I felt that the MacSharry proposals, especially since MacSharry came from such a rural background, understood the effect of significant changes.

We need to look at some of the difficulties that have arisen, especially in the milk sector. Milk quota regulations have been very strictly enforced in the United Kingdom. Year after year--not every year, but for many years-- the milk quota allocation has been cut, even though, as several hon. Members have said, the United Kingdom is not self-sufficient in milk and milk products. We know, however, that other countries, such as Italy, are still struggling to implement milk quota regulations. The fact that while we are facing cuts in milk quotas other member states have not yet implemented the quota regulations upsets a lot of farmers. I urge the Government to ensure that there are no further cuts in milk quota allocations in the countries of Britain, at least in the next few years, and perhaps even occasionally to make the case that we should be entitled to even more quota allocation than we have had in recent years.

There are arguments, of which I am sure the Minister is aware--in Wales, for example--that if there are to be more cuts in milk quotas, at least small milk producers should be protected from them. I ask the Government to give some thought to mechanisms to allow that to happen when the matter is discussed in the Agriculture Council.

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In Wales there is concern about Government pressure to replace individual sheep and suckler cow quotas with regional ceilings. In a country such as Wales, with a predominance of small and medium-sized family farms, such a policy would benefit larger producers at the expense of others. It is important to remember that when considering any change.

The theme has been echoed across the Chamber again tonight, and I too must tell the Minister that we were disappointed that the Government could do no more than maintain hill livestock compensatory allowance payments--indeed, they congratulated themselves on that achievement. I am a member of the Agriculture Select Committee, and when those allowances were introduced the Committee was told by the then Minister of Agriculture, Fisheries and Food that they were compensatory amounts, so that when incomes went up the payments would go down.

The converse must also be true: when incomes go down the compensatory amounts should go up, but the Government have not done that. I urge them not to congratulate themselves on maintaining payments at their current level but to accept the case for increasing them when incomes fall.

As we have already heard, the 1992 reforms must also be seen in the context of the conclusion of the GATT round. Although the impact of the GATT changes will not be significant in the next few years, they will bring about significant and profound changes thereafter. We must recognise that when the GATT agreement was reached it was a major achievement for the industry when it was decided that the compensation for price cuts and set- aside within the CAP reforms would not be subject to further reduction but would be counted as green box subsidies within GATT.

The question remains, however, whether the CAP must face further reforms before the budget is overwhelmed in the event of expansion of the membership of the European Union to the east. There is no doubt that further reform is essential, if only to ensure that support is channelled to those who need it. Far too much within the CAP directs support to farmers and large institutions that do not need it. Instead, the CAP should be used to maintain the fabric of our rural societies.

If any one feature gives the CAP a bad press it is the fact that a handful of farmers seem to get large subsidies while small farmers go to the wall from time to time. We must ensure that farmers who need support get it, even if there is reduced support for others. What farmers in Wales support is better deployment of budgetary resources both in direct support for farmers and in relation to distribution between farmers.

The debate has been interesting, partly because we have heard how much support there is for a decoupling system, moving away from direct aid for production and towards aid in the form of environmental payments. That idea has been greatly welcomed throughout the industry in Wales, and I believe that that is the direction in which the CAP reforms should move. Farmers are the custodians of the countryside, as is recognised on both sides of the House and outside it, and they should be adequately compensated for the work that they do.

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I strongly object to the principle of repatriating policy, because if that happened distortions would reappear. Other member states would support their industries at different rates and at different times, and the market would be distorted again. We should at least retain the integrity of one policy throughout the European Union, even if it has to be much reduced because of expansion to the east. That will be vital if we are to ensure that our farmers can compete effectively and continue to succeed in the markets that they have won over the past few years.

I shall briefly confirm another point that has been made tonight. If farmers are to face great changes as a result of further reform of the CAP, it is crucial that they be given the opportunity to adjust to those changes. I hope that the Government will take on board many of the constructive contributions that have been made tonight. 7.45 pm

Mr. Paul Marland (Gloucestershire, West): I start, as others have, by congratulating my right hon. Friend the Minister of Agriculture, Fisheries and Food and his predecessors on the progress that has been made towards reform of the common agricultural policy. Such changes are never easy, and it takes some time for the wheel to turn. When milk quotas were introduced I went with my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) to the Three Counties show. Farmers had hired an aeroplane that was flying overhead pulling a banner saying, "Jopling turns the milk sour". However, farmers have now turned the quotas to their advantage and made them into a great opportunity, so I am sure that now they could think of another slogan to tow behind their aeroplane. My right hon. Friend has been making life a little sweeter for us in this place recently, so how about, "Jopling makes life sweeter"? I am sure that if we tried to separate farmers from their milk quotas now, they would have something ferocious to say.

I believe that the success of the gradual change in policy can be measured by the enormous reduction in the storage of surplus stocks, even this year. Stored wheat has been reduced by 57 per cent., beef by 80 per cent. and butter by 61 per cent. The good news in that development is that the money is no longer going to the owners of intervention stores but to farmers, who in turn recycle it in the rural community, and that was discussed at length earlier. Time is the great thing; farmers need time to adjust. How horrendous was the Opposition idea that intervention buying should be stopped overnight. Can we imagine the effect that that would have on farmers' incomes? I hope that all farmers will hear what the Opposition Front-Bench spokesman, the hon. Member for Edinburgh, East (Dr. Strang), said about that idea.

When the Labour party was in office, in four and a half short years it had reduced farmers' incomes by 32 per cent.--but that is nothing compared with what Labour's proposals would do this time. Not only do farmers need time to adjust and to take advantage of new opportunities, but the Government should seek to give them opportunities, which we have done through the introduction of the Agricultural Tenancies Bill, which is now before Parliament, grants for diversification and marketing schemes.

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How much better and more constructive that all is than what I can only presume was the politically correct waffle from the Opposition Benches-- [Laughter.] I was obviously right; I have obviously scored a hit if what I say is met with such agreement on the other side of the House, especially by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes).

There is no doubt that agriculture must continue to move closer to the marketplace and become less reliant on subsidy. That is a sea change for farmers, and in many ways it is a nerve-racking process to have to go through, but it provides new opportunities.

Farmers undoubtedly operate at the very beginning of the food chain; indeed their work is an essential part of it. It is their business, in partnership with the food manufacturers, who add value, and the retailers, who sell food to consumers, to satisfy demand in this country. As others have said, food manufacture and retailing constitute one of the biggest businesses in the country.

I shall reflect on a couple of aspects of the debate, the first of which concerns milk and the setting up of Milk Marque. Again, there has been some anxiety among farmers and manufacturers about exactly how that would work out. Was Milk Marque set up to establish a free market in milk, or not? Most thought that it was, and saw it as an opportunity and--up to a point-- that is how it has turned out, but it is not quite as clear as that.

Farmers relish supplying a commodity that is in short supply, and they should have every opportunity to exploit that to the full. However, the shortage of supply has given rise to a situation in which manufacturers' difficulties have been compounded by Milk Marque playing its cards close to its chest in the initial stages of bidding. How much milk does it have to sell? How much should such manufacturers bid for, in view of the uncertainty of supplies? How should manufacturers pitch their bids to farmers who are wanting to sell direct? They offered such farmers 1p per litre more because they could save on the bureaucratic costs of a running a brokerage, which Milk Marque is.

If the manufacturers underbought, there was no way in which they could pick up the extra supplies that they needed in a free spot market. That begs the question--how free is this market in milk? We are getting there, but there is some considerable way to go. It is not a genuine free market, because Milk Marque is not acting as a genuine broker. It is seeking to draw to itself extra

responsibilities, rather than allowing the market to find its own level.

For example, Milk Marque is acting in that way with regard to transport, milk balancing and service levels. On transport, there is not a free market as manufacturers cannot collect direct from the producer. If people want to collect beer direct from a brewery they can, as it is a free market, but that does not happen with milk. Manufacturers have their own transport and want to use it, but Milk Marque will not let them.

Traceability is also very important to milk manufacturers, who want to know precisely what is in their milk and how it has been handled between the farmer and their depots. They cannot know that unless they use their own transport. With more pressure being applied on the quality of production, it is extremely important that milk manufacturers are able to use their own transport.

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There are serious difficulties for manufacturers who are vital long-term partners of farmers, and the interests of both parties are closely linked.

The imposition of conditions on the purchase of milk is known as bundling, and is an offence under competition law. I hope that my hon. Friend the Minister will take note of that, and will not simply say that milk manufacturers should go to court. He must look at the matter closely, and take an active part in unbundling this market. If it is to have a proper future as a free market, it is essential that bundling is undone.

Before leaving transport matters, may I reassure isolated small farmers and milk producers who feel that they may be left out in the cold as a result of the changes that they will not be? No dairy farmer in the country is more than 40 miles away from a processing plant. In south-west England, there is a plant at St. Erth; in west Wales there is a plant at Haverfordwest; in the Lake District there is a plant at Appleby; and in Aberdeen, local manufacturers must compete with dairies in Glasgow to get their milk supplies. There is no way in which any milk producer in this country will be left out in the cold.

Milk is in short supply, and manufacturers and distributors want every drop that is going. It is a home-produced product which cannot satisfy the demand, so a good price is obtainable anywhere. The price is, of course, dependent on transport costs, but that is understandable.

I mentioned that Milk Marque is doing its own balancing. That destroys the free secondary market, which can be a vital fall-back for milk manufacturers. Why should not there be a genuine spot market in milk, as there is in so many other commodities? What currently happens to surplus milk? We have heard today about shortages of milk as farmers cut production to avoid possible fines, but what happens when there is a surplus?

Milk Marque is selling its surplus to Ireland without offering that milk to UK producers, who would have paid more for it than the Irish. Why did not Milk Marque offer it to United Kingdom producers? Why is it so adamant about doing its own balancing?

I also mentioned the different service levels offered by Milk Marque that do not allow for a free spot market and all that goes with it. Why does Milk Marque insist on fixing the price of milk a year in advance with no reference to supply and demand? That is done in Ireland, where manufacture is keyed into supply so that the two are linked. Both parties are then able to take advantage of the least expensive system of production--farmers, because they produce when the grass has grown, and manufacturers because they produce when the milk is available.

I urge my right hon. Friend the Minister to look at Milk Marque's method of operation before the next price round, and to look again at the possibility of having an independent regulator in the market. I do not mean a price regulator, but a regulator who would make sure that the market is operating in a true and fair manner.

There were other matters which I wanted to speak about, including the export of live animals, but in view of the time--I can see that you are fidgeting to get to your feet, Mr. Deputy Speaker--I will stop there.

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7.55 pm

Mr. Andrew Welsh (Angus, East): It is with great regret that I notice that not one Scottish Conservative Back-Bench Member has been present in the Chamber throughout the debate, and no Scottish Tories at all are present now. Given the importance of agriculture to Scotland, that explains why the Tories stand at 12 per cent. in Scottish opinion polls, and why that figure is falling. It may be appropriate that the Minister of State, Ministry of Agriculture, Fisheries and Food is here, as it seems that that Ministry is now determining Scottish Office policy. Perhaps the Minister can answer the Scottish points that I hope to raise.

Mr. Garnier: I could make the same point about the hon. Gentleman's Scottish National party colleagues. Where is the remainder of the Scottish National party?

Mr. Welsh: My hon. Friends will be here to vote. The point I am making is that the Scottish National party is represented here, whereas not one Scottish Conservative Member is in the Chamber. It is a valid point, and I would like to have seen a Scottish Office Minister. [Interruption.] I do not wish to digress, but Conservative Members are indicating the Minister of State, who is an English Member of Parliament.

The main objective of agriculture policy must be to maintain supply and demand in balance, while ensuring the economic viability and prosperity of the rural economy. I seek an absolute assurance from the Government that they will not use price pressure or unchecked free market forces as the main determining factors for producing structural change in the agriculture industry. Such a dogmatic policy would decimate the industry, destroy living standards and massively depopulate rural areas in one fell swoop.

Sensible management for change should make use of a sensible mix of supply control measures, environmental improvements and a widened range of income- creating alternatives to supplement straightforward food production. Agriculture is the backbone of Scotland's rural economy, and it must be given every opportunity to retain employment and finance among rural populations. An overall rural area strategy is required to meet the specific needs of agriculture, and that must be combined with the provision of infrastructure designed to raise rural living standards and to keep people in viable and thriving communities. The alternative is continued rural depopulation and poverty of both incomes and opportunities.

What is the Government's commitment to Scotland's rural communities, which dominate the nation's geography? The warnings are clear. If Tory free market dogma is applied in the form of uncompensated price pressure, it has been estimated by the NFU that as many as 40 per cent. of Scottish farmers could be forced out of business. Mr. Jack rose --

Mr. Welsh: The Minister will probably point out that the Scottish Office Minister has returned, and I am happy to welcome the hon. Gentleman to the debate, most of which he has missed.

If up to 40 per cent. of farmers are forced out of business, with them will go the agriculture supply industries, transportation, vets and others. There would

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also be the inevitable school closures and the exodus of people, and that must not be allowed to happen. I would seek an outright assurance from the Government that uncompensated price pressure will not be the chosen means for agricultural restructuring. Can the Government guarantee that future European Union measures will not simply follow French agri-politics and target support measures towards smaller farms? Scottish farmers have created larger, more efficient production units. They have a right to expect a clear declaration of support and understanding from the United Kingdom Government in their negotiations within Europe. The success of Scottish farmers in creating larger, more efficient units should never be used as an excuse to discriminate against them or for the United Kingdom Government's failure to recognise their needs and fight for Scottish interests.

Will the Minister ensure that Scottish pig producers are not placed at a continuing disadvantage in the face of illegal state aid to their French direct competitors? What is the Minister doing to ensure that the reduction in European Union agricultural output required by the GATT agreement is spread fairly throughout the EU?

What reassurances can the Government give about the effect on Scottish farmers of the entry into the European fray of central and eastern European countries? Past problems, for example, for Scottish raspberry growers, will be as nothing compared with the unfettered effect of those countries' low- priced, less sophisticated agriculture industries on European countries. What strategy do the Government propose to adopt to deal with those exact problems? I hope that the steps taken will raise central and eastern European farm incomes and not lower Scottish and EU levels of income and affect methods of production.

Will the beef special premium scheme, with the ceiling on claims in Scotland, be reassessed to reflect the increased number of cattle eligible for the premium? What steps are the Government taking to reduce the bureaucracy and time wasting inherent in the cattle control documentation system? I know from my constituency that the sheep quota rules pose problems for partnerships. Will the Minister consider attaching the quota to the partnership rather than to the individual, as happens with the suckler cow quota?

Although, thankfully, farm incomes have risen this year following a series of poor years, major problems nevertheless remain for pig farmers and hill farmers. I ask the Government to end their complacency about the hill livestock compensatory allowance. No change this year must be put in the context of the 29 per cent. cut in HLCA values in the past two years. There is a past income deficit to be made up in a section of the industry that is very vulnerable. I deeply regret that the Government killed off the marketing boards, which have served both consumer and producer well in past decades. I especially regret the end of the potato marketing board, given the importance of the seed and ware markets to Scotland. Short-termism has replaced long-term thinking. The unique, world-renowned Scottish system of agricultural research is in danger of being broken up and managed from research councils based in the south of England. Scottish Office Ministers can only sit and watch, as is happening tonight, while the Ministry of Agriculture, Fisheries and Food takes decisions at European level. In European negotiations, I expect the Government to argue

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more strongly for specific Scottish interests, although that could be guaranteed only by independent Scottish representation in Europe in our own right. In addition to ensuring that specific Scottish interests and the distinct structure of the Scottish industry are fully registered, it is important that the strongest possible case be made for the extension of objective 1 status to the whole of Scotland. I wonder whether the Government are prepared to argue for that.

It is clear that Europe now decides the future of agriculture policy. Without independent Scottish representation, our industry is vulnerable. The Minister added injury to insult by ignoring the Scottish Office in the formation of the United Kingdom CAP policy advisory group. In creating a United Kingdom CAP group that does not include anyone who has an active role in the Scottish farming industry, the Government have excluded Scotland from the CAP policy group in spite of the significantly greater importance of agriculture to the Scottish economy.

The Parliamentary Under-Secretary of State for Scotland (Sir Hector Monro): The hon. Gentleman will know perfectly well if he reads thepress or has heard any of the statements that I have made that decisions on the CAP are made by Ministers, not by any CAP advisory group.

Mr. Welsh: Even the Minister in his complacency cannot ignore the fact that no Scottish farming interest is represented on that advisory group. I presume that it was formed to advise the Government, so its views will be taken into account. It was formed without any Scottish input. That cannot be a sensible way in which to treat the Scottish industry.

Mr. Jack: In view of the hon. Gentleman's interest in submitting his party's views on CAP reform, will he submit a paper to my right hon. Friend's group in due course?

Mr. Welsh: I am sure that that will happen. We shall be happy to let the Minister know our views. The important point is that the Government, acting on behalf of the United Kingdom, formed an advisory committee on CAP reform without including anyone who was active in Scottish agriculture. That is no representation and no way to treat one of Scotland's most important industries. The Under-Secretary of State for Scotland is making noises. I regret that he did not make more noise when the arable acreage in Scotland was settled. The Minister has not explained how the Scottish Office reached its figures or why it took the east Germans and the German industry to reduce the penalty imposed on Scottish cereal farmers. The Minister has a great deal of answering to do. He has not given answers in the House. If policy is determined--

Mr. Deputy Speaker: Order. Time is up.

8.5 pm

Mr. Tony Marlow (Northampton, North): I disagree with the hon. Member for Angus, East (Mr. Welsh), who seems to want agricultural policy to be decided at the European level. I feel that the best place to decide it is at home.

I have an interest to declare. I have an interest in land. I am also in receipt of European subsidies. I believe that the vast amount of money that is given by this country to

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Europe makes it almost a patriotic duty for those of us who can claim it back to get as much as we can. Why do I want to repatriate our agricultural policy? It is simple. It is because the common agricultural policy is bad for Britain. It is bad for the consumer. One aspect of the CAP that is mercifully being reduced is the threshold price. That means that if we want to import feed or foodstuff from elsewhere, we have to pay more for it. So the housewife has to pay more than she would otherwise have to pay. Secondly, the CAP is bad for the British taxpayer. Our net contribution to the European Union will be about £3,000 million a year. About two thirds of European expenditure is on agriculture. Therefore, the CAP costs this country £2 billion a year net. That is money--cash--down the drain into a fraudulent hole somewhere in the centre of Italy.

Thirdly, the CAP is bad for the British farmer because he is probably the most efficient farmer in Europe. Many people would say that the British farmer is the most efficient farmer in Europe. The rules and constraints of the CAP mean that if the British farmer is to receive the same levels of subvention as his European cousin, he has to set aside, thereby not farming more of his land than any other farmer in Europe.

As my right hon. Friend the Minister said, the British farmer is allowed to produce only 85 per cent. of the milk that is required for consumption in the United Kingdom. The most efficient milk producer in Europe is not allowed to produce enough milk even to satisfy his own public. Britain is the most natural environment for producing sheepmeat--lambs, ewes and the rest of it. Yet we are

quota-restricted. If we are to compete on level terms, we are restricted by the quota. So we are discriminated against. The best farmers in Europe are the most heavily discriminated against. The CAP rips off the housewife, plunders the taxpayer and discriminates against the British farmer. Any red -blooded British Government would seek to get out of it and would do so now. My right hon. Friend the Minister has pointed out that the farmers are hooked on the CAP. They are hooked on milk quotas. It is absurd that that artificial creation is worth more than farmers' land, livestock, house and business put together. Milk quotas are not going to last. They are an agricultural version of the dock labour scheme. They cannot endure. I warn my farming friends that they will not exist for ever.

Secondly, British farmers are hooked on the power of the so-called French peasant. They are sure that if French farmers want more money, they will go on to the streets and stop the traffic and prices will go up. But little by little, the interests of the French peasant will diverge from the interests of the British farmer. Small farmers in France, bigger farmers in Britain. The Union is moving towards giving relatively higher payments to the smaller farmers. The British farmer will again be left on one side.

There is distrust of British agricultural policy controlled by Her Majesty's Treasury. Look what is happening to the European budget at the moment and what is likely to happen to the direction of that budget if Europe enlarges towards the east. I would rather put trust in my Government and the British taxpayer than I would long term in the European taxpayer.

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My right hon. Friend the Minister said that British farmers had done well recently. Since 1979, farm incomes have risen in real terms by 10 per cent. If the income of any other section of society had risen by only 10 per cent. since 1979, would not those people now be on the streets rioting? British farmers have not done as well as the rest of the British community.

All the fear about having our own agricultural policy and coming out of the CAP is misplaced. People say that there would be no subsidies, but if we controlled our own affairs, we would have at least as generous a system of support for agriculture. First, in a free market in Europe, which we would still have, everybody else would have such a policy and it would be politically unacceptable not to support our farmers if everyone else's farmers were being supported. Secondly, for any business to thrive and prosper requires an element of predictability. With agriculture, the climate is an additional element of unpredictability, so unless we have a support mechanism for agriculture, we shall not have sustained output. Thirdly, one of the jewels of Britain--the reason why so many people come here--is the beauty of our countryside. Even the hard-hearted mandarins of Her Majesty's Treasury would want to ensure that our countryside was properly maintained. Without adequate support for agriculture and the villages in our countryside, that could not continue.

Let us look back at the track record and the times before the CAP. British agriculture was more prosperous then than now. We spend £3 billion net a year on the European budget, two thirds of which goes on agriculture. That is £2 billion that the Treasury could retain within the United Kingdom, part of which could be used to subsidise agriculture, on top of the subsidies that we are already getting--if necessary. Instead of going to the Mafia in Italy or low-grade and fraudulent Greek tobacco producers, that money could be used for people in this country.

How do we move to a British agricultural policy within Europe? First, it goes without saying that we believe in free trade, so the raw materials for agriculture could come in without a threshold price. Secondly, we would have a single market within Europe, as we have at present. That allows free trade within Europe and a single price throughout Europe. Thirdly, we would return to the old system of deficiency payments. Cereal is the basic commodity of agriculture. It is used as foodstuff and feedstuff, which is then moved on to the livestock sector. If we keep world market prices low and have a standard quantity for cereals, we can tell farmers that, for that standard quantity, they will get whatever price is necessary to sustain agriculture. If the world price goes down, farmers receive a deficiency payment that makes up the difference, and if they go beyond that standard quantity, the surplus is sold off at world market prices. That has the great advantage that, as British farmers are efficient, they do not have to take land out of production. People are concerned about that great obscenity. Farmers can then produce as much as they efficiently can.

The same applies to milk. We should have a standard quantity of milk with a price attached to it and farmers would receive a guaranteed price for that. But over and above that quantity, the milk could be usefully used by

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our manufacturing industry, so that the output of British agriculture and the British food industry could be increased greatly to the benefit of Britain.

Mr. Jack: Will my hon. Friend give way?

Mr. Marlow: I really have not enough time. I wish that that were not so.

As my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) said, the CAP is absurd. It is European money of which national Governments regulate the expenditure, and it is a recipe for fraud. The only sensible policy for Europe as well as Britain is to repatriate agricultural policy, which would be better for consumers, housewives, taxpayers and British farmers. It can be done. All that is needed is for my right hon. Friend the Minister to have the willpower to do it.

8.14 pm

Mr. George Foulkes (Carrick, Cumnock and Doon Valley): For the past 16 years I have had the privilege of representing in the House Carrick, Cumnock and Doon Valley, a large rural area of 800 square miles.

Mr. Jacques Arnold (Gravesham): Too long.

Mr. Foulkes: The hon. Gentleman was named by Madam Speaker earlier. He would be better advised to keep quiet.

During that time, I have come to understand the importance of farming to the rural economy and the rural environment in general. I have also come to realise the need for a fundamental reform of the common agricultural policy. To take just one example, it is immoral to pay millions of pounds in set-aside to farmers not to produce food while 24 people in the third world die every minute from hunger. That fact alone argues the case for fundamental reform. With enlargement and the entry into the European Union of eastern European countries, we face further problems.

May I tell the hon. Member for Northampton, North (Mr. Marlow) that I am a long-term supporter of the European Union but that does not mean that I support every aspect of it--quite the reverse. I feel much more able to criticise it as a supporter. Criticism that comes from enthusiasts for the European Union is regarded as much more genuine than criticism by people like the hon. Members for Northampton, North and for Wolverhampton, South- West (Mr. Budgen), which always seems to have an underlying motive. I am always suspicious of their motivation as they seem to seek to undermine the European Union as a whole rather than make a genuine point.

There is no point in my repeating the excellent arguments put forward by my hon. Friend the Member for Edinburgh, East (Dr. Strang) and others on the general issues, with which I concur. In the minutes available to me, I shall raise one or two specific issues that have been raised with me by my friends in the executive of Cumnock National Farmers Union, whom I met a week last Monday. I hope that the Minister of State will reply. If he cannot do so when winding up the debate, I shall understand and look forward to a letter subsequently.

The first issue is waste disposal, about which farmers are understandably concerned because of increased requirements from the European Union. In my area, the Clyde river purification board is, understandably,

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imposing those regulations strictly. Yet while those new stricter regulations are being imposed, the Government have removed grants for improved waste handling facilities for farmers. That seems absolutely crazy to me and my constituents.

When I visited Auchincruive agricultural college in my constituency recently, with my hon. Friends the Members for Paisley, South (Mr. McMaster) and for East Lothian (Mr. Home Robertson), who happen to be former students of that distinguished college, it was pointed out to me that agricultural waste is extremely toxic compared with domestic waste. It seems sensible that the Government should help farmers to dispose of such waste and it is crazy to withdraw the grants. Secondly, I want to deal with a point raised by the hon. Member for Angus, East (Mr. Welsh). I am glad to see that the Under-Secretary of State for Scotland, the hon. Member for Dumfries (Sir H. Monro), is in his place. I have great respect for him as he has the interests of agriculture at heart, even if he cannot always implement them because of pressures from elsewhere. I am concerned about the beef special premium scheme. As the hon. Member for Angus, East said, the regional ceiling on claims in Scotland needs to be reassessed as more cattle are now eligible and there is an overshoot. I understand that Italy and Greece have been granted an extra allocation and I do not see why Scotland should not be granted one, too.

The hon. Member for Ynys Mo n (Mr. Jones) raised the question of hill livestock compensation allowance payments. He pointed out that, in the past couple of years, the real value of HLCA payments has gone down by 8 per cent. and this year farm incomes on the high hills are less than £10,000 on average. That is appalling.

As the hon. Member for Ynys Mo n said, the idea of HLCA was that, when farming incomes decrease, compensatory allowances should, by definition, increase. I hope that the Ministers will consider that further, especially as that has resulted in changes in environmental conditions that have created special problems on wetter and more exposed land. As the hon. Member for Dumfries will know, in the past few months the south-west of Scotland has been especially exposed and especially wet. I hope that special consideration will be given to that.

Fourthly, I want to discuss milk, not the aspects of marketing that were dealt with earlier, but the milk intervention board, which is in a shambles, as I was told by the Cumnock branch of the National Farmers Union of Scotland. Scottish farmers experience

problems--delays--in quota transfers. I hope that the hon. Member for Dumfries might whisper in the ear of the Minister of State, to mention with approval the possibility of a Scottish intervention board, which would deal with Scottish applications. I know that that would find favour with the hon. Member for Angus, East, and that would bring decisions much nearer to the farmer.

Mr. Brian H. Donohoe (Cunninghame, South): The milk marketing board.

Mr. Foulkes: Not the milk marketing board; this is the intervention board. That would bring decisions much nearer to farmers in Scotland.

Fifthly, I want to ask a question about the licensing of heavy goods vehicles. I know that that is perhaps more the responsibility of the Chancellor of the Exchequer or

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