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The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Jeff Rooker): The work is still being done. The taxpayer is paying for the work in the abattoirs. That is new. It is not as though the work is not being done. The Government's decision that the taxpayer should carry the burden amounts to a cost saving for the industry.

Mr. Kennedy: I do not buy that argument. That is similar to saying that the private finance initiative, where one removes the cost on the broadly based taxpaying public and concentrates it on one specific community or area for the project involved, is somehow a net saving. It is not. It is an additional cost on the people who are directly involved rather than spread more broadly across taxpayers. An important political principle is involved there, and a similar principle applies in this regard.

The present level of sterling means that UK farming is rendered uncompetitive, even in commodities that we are allowed to export. That has opened up domestic markets.

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We should access the EU funds that have been established to deal with the situation, as other Governments in the EU have done. We need lower exchange rates and lower interest rates. The options open to the Government are time-limited, the next time limit being 31 July, because the aid has to be accessed within 12 months of green pound revaluation.

Although we are not having a particularly party political debate this afternoon, the Government should be more seized of the wider economic issues because they, like us, are, in principle, committed to sterling's entry into monetary union. In the United Kingdom, only the Conservative party is not. The Government should recognise that sterling's early entry into EMU would in all likelihood reduce the strength of sterling, from which agriculture, like manufacturing industry, is suffering. They have to take note of the fact--the Tories are isolated on this--that the leadership of the NFU is now expressing support for the principle of sterling's involvement in EMU, precisely because it can see the benefits that would accrue to its membership.

I conclude on a point that I have raised a couple of times during Agriculture questions, which the Ministry needs to consider further. Given the sums of money that, according to the National Audit Office report, have been paid out for, one hopes, the extraordinary occurrence of BSE and its associated costs, and the follow-through costs because of the collapse in agricultural incomes generally, the Ministry, in its attitude towards taxpayers' money, needs to think more carefully about the extent to which the dramatic rise in the number of farmers and their families having to take additional social security and income support, which, in most cases, has never been necessary before, is proving a bigger drain on the economy than is necessary, given the sums that could be saved by accessing EU funds and doing something about the strength of sterling.

At the other end, surely we need to consider early retirement schemes. If they are to be applied, they need to be much more sensitively structured than is currently the case at European level. As proposed, they would lead to further amalgamations and bigger individual farming units and would have a detrimental effect on tenant farmers, who would have to give up their property and their homes and find somewhere else to live. The matter is not sufficiently related to the needs and realities of UK agriculture.

Mr. William Cash (Stone): Will the hon. Gentleman give way?

Mr. Kennedy: If the hon. Gentleman will forgive me, I am about to conclude.

I congratulate both Select Committees on their work. They have given extremely telling pointers for the beef sector in particular, for the role of supermarkets in general and for the future of viable, family-farmed UK products as a whole.

5.59 pm

Mr. Paul Marsden (Shrewsbury and Atcham): As a member of the Agriculture Select Committee, may I first pay tribute to the staff and particularly the Clerk, and to the Chairman, the hon. Member for Mid-Worcestershire

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(Mr. Luff), who has shown fine leadership and a certain fairness. We can safely say that our Committee is one of the most productive in terms of its reports.

Farmers in Shropshire have had to endure horrendous hardship. They have shown strength of character in having come through such trying times, and they still deliver some of the finest-quality products, despite difficult financial circumstances.

The beef industry's aim must be to deliver world-class, safe, traceable beef, but it needs a level playing field within the European Union. We must restructure the industry if we are to deliver a real future for our farmers. There is no going back, so we must take account of the BSE crisis. Farmers must recognise that high animal welfare standards are an integral part of any restructuring, and must embrace any improvements to the local environment. If they can achieve those aims, we shall be able to have a thriving and, importantly, a sustainable beef industry.

There has undoubtedly been a long-term decline in beef sales. In its recent controversial report, the London School of Economics said that, on average, there was a 2.5 per cent. decline every year between 1985 and 1995. Clearly, before 1996, there was an over-supply of beef in the European Union, which amounted to some 116 per cent. of consumption needs. That is why restructuring the industry is absolutely vital.

Mr. Gray: The hon. Gentleman is right to say that there is an over-supply of beef within the EU as a whole, but does he accept that the United Kingdom produces only some 70 per cent. of the beef eaten locally, so there is no over-supply in the United Kingdom?

Mr. Marsden: I note the hon. Gentleman's comment, but many farmers have suffered in the short term. Although they have great potential to meet requirements, there is still an over-supply. Once the European beef ban has been lifted, there will be enormous potential. I agree with the hon. Member for Mid-Worcestershire that the European market can allow for an expansion of beef exports and hence an expansion of beef production, but the figures do not support the hon. Gentleman's point.

Mr. Keetch: Would the hon. Gentleman like to comment on the view of my hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy) that political constraints are stopping the lifting of the beef ban? Does he genuinely believe that the farmers of Shropshire, Herefordshire, Worcestershire and Gloucestershire will see the beef ban lifted before the German general election in September? That is what is stopping the lifting of the beef ban. Should not the Government press for the beef ban to be lifted on scientific grounds, in line with the Florence criteria, rather than simply wait for the results of the German general election?

Mr. Marsden: That is precisely what the Government are doing, and they have made great headway. The first stage has already occurred in Northern Ireland and great steps have been made in terms of the cattle tracing system and the date-based export scheme. Those great strides were not made under the previous Administration.The Government's success has a lot to do with how

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welcome Britain is within Europe: we are now given a fair hearing, whereas under the previous Administration we were not.

I agree that the strength of sterling has caused serious problems for exporters in terms of compensation rates. I also agree that the price of beef has fallen. In 1995, the price was 244.4p per kilo and, by the end of 1997, it had fallen to 182.4p per kilo. We must remember that, in the two previous years, it fell by 30 per cent., so the origins of the substantial fall, which has translated into a substantial fall in farming incomes, go back many years before the Labour Government came to office.

Mr. Cash: Will the hon. Gentleman give way?

Mr. Marsden: I should like to make a little more headway.

I shall sum up some of the Government's actions to date. They have achieved maximum application of EU agrimonetary compensation for the beef industry. They have made progress on lifting the beef ban, which is critical. As other hon. Members have said, that is the first priority. The cattle tracing scheme is progressing well and, despite a slight hiccup in setting up that impressive system, which is clearly leading Europe and, arguably, the world, the system will shortly be implemented. The date-based export scheme is proceeding well, as is the quality assurance scheme.

As a former quality manager, I have found that the quality assurance scheme works well, and will be important when it comes to labelling British beef abroad. Once British beef is labelled and allowed to be sold abroad, there may be problems. By guaranteeing our product in the first place, we shall quickly win over consumers abroad.

The Government are taking a partnership approach. They have made good progress, but farmers must realise that change will come in great abundance.

Mr. Cash: I invite the hon. Gentleman to cross the border from Shropshire to my constituency in Staffordshire and chat to some of the farmers there. I spoke to them only last weekend, and they certainly do not share the views that he has just expressed. Interest rate rises, not to mention the ban on beef on the bone, have brought disaster to rural communities. I live in Shropshire, so I also hear what the hon. Gentleman hears in his surgeries.

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