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Mr. Nick Brown: I am trying to follow the hon. Lady's argument. Is she urging the Government to reject the MMC report?

Mrs. Browning: In considering breaking up Milk Marque, the Secretary of State for Trade and Industry must consider carefully whether or not to accept the report. It is in his gift to decide. I ask him to consider Milk Marque's request on processing, which would allow it to take its place in the market.

When it comes to import substitution, value-added products will appear on supermarket shelves, which are a huge growth area for the dairy sector. If those products are not British, they will be imported products. Some may even have been produced from UK milk. Earlier this year, the Dutch bought liquid milk from the UK--there are no borders because we are in a single market--but the UK consumer and producer will find those products back on our supermarket shelves.

When new Labour came to power two years ago, Labour Members' bleepers continually told them to repeat two words at us in every speech from the Front or Back Benches--fairness and justice. Milk Marque and British dairy farmers are asking for no more than fairness and justice. They want fairness in the marketplace so that they can compete on a level playing field, and justice so that United Kingdom producers have the opportunity--it is down to them at the end of the day--to put their products on the supermarket shelf so that we do not have to buy from foreign competition.

I hope that the Secretary of State will use the opportunity to release the industry from its shackles, as it is in his gift to make sure that the industry can compete and is viable so that British dairy farmers can look to the future instead of considering whether to call it a day.

6.50 pm

The Secretary of State for Trade and Industry (Mr. Stephen Byers): I begin by congratulating the hon. Member for Tiverton and Honiton (Mrs. Browning) on her promotion to shadow Secretary of State for Trade and Industry. I am sure that the whole House is pleased that her personal circumstances allow her to accept a well-deserved promotion and take her rightful place on the Opposition Front Bench.

7 Jul 1999 : Column 1091

The MMC report is a substantial document. I welcome the opportunity of accounting to the House for my decision on the report on the supply of raw milk in Great Britain and of answering some of the questions that have been raised during this afternoon's debate.

Let me start by explaining to the hon. Lady why I did not make a statement to the House yesterday. She will be aware that when an MMC report contains commercially sensitive information, it is not the subject of a statement to the House, since the City would have notice of such a statement's being made and that might not be appropriate. That practice has been adopted by successive Governments.

The MMC report was clear. It found that Milk Marque was operating in a way that was against the public interest. In my view, that related to the conduct of its sales procedure. The MMC identified two possible remedies to address the abuse by Milk Marque of its monopoly position. It recommended an enforced break-up of Milk Marque. I rejected that recommendation. However, I accepted the view that we should address what I consider to be the key issue--the selling process that Milk Marque has operated.

It was not an easy decision, as it not usual to disagree with a clear recommendation from the MMC. It is one reason why the report took longer to publish than I would have liked; I understand the concerns expressed by many right hon. and hon. Members this afternoon and by the farming community, particularly the dairy farmers, about the delay in its publication. I wanted to publish the report as soon as possible and I have done that. I would have liked it to be sooner, but I wanted to make sure when it was published and I had put on record my decision that all avenues had been properly investigated.

When I gave evidence to the Select Committee on Trade and Industry some two and a half months ago, I said that I would ensure that the report was published by the summer recess. I am pleased to say that I have managed to do that with some two weeks to spare.

I was not prepared to accept the MMC recommendation to enforce the break-up of Milk Marque because I believed that it would lead to a period of uncertainty. That would be the last thing the dairy industry wanted after the uncertainty of recent weeks.

Mr. Hilton Dawson (Lancaster and Wyre): I am grateful to my right hon. Friend. Although I applaud his decision not to break up Milk Marque, at least a break-up would have allowed the various companies within it to develop processing. Will he look again at the serious issue of allowing Milk Marque to carry out processing?

Mr. Byers: I shall address processing and vertical integration specifically as the issue has been raised by several right hon. and hon. Members this afternoon. The hon. Member for Congleton (Mrs. Winterton) referred to the need for diversification and vertical integration in the processing industry.

In 1992, the Conservative Government decided not to allow Dairy Crest, the processing subsidiary of the former milk marketing boards, to be transferred to Milk Marque. They decided that it would not be appropriate to allow vertical integration. Since then, vertical integration has

7 Jul 1999 : Column 1092

occurred in two areas. The MMC specifically addressed the point of whether vertical integration should take place, concluding:

    "Although we did not find that Milk Marque was exploiting the scale monopoly situation in respect of its current vertically integrated processing activities, we consider that the planned enlargement of its vertically integrated processing capacity will give Milk Marque the ability to exploit still further the scale monopoly situation in its favour and it may therefore be expected to operate against the public interest."

In the light of that clear recommendation, I decided that there should be no expansion of its milk marketing operations unless sanctioned by the Director General of Fair Trading.

Mr. Tyler: What level of market share can or should Milk Marque fall to before the right hon. Gentleman is prepared to review the position?

Mr. Byers: As the hon. Gentleman will be aware, the review is decided by the director general of Fair Trading. The rules were established by the previous Government. It is a matter for the director general to refer Milk Marque to the competition authorities. That power was conferred on him by the previous Conservative Administration.

I turn to the point that was raised by the hon. Member for North Cornwall (Mr. Tyler) about the difficulties that would be created by the adoption of the interim remedies that I have put in place. I was particularly aware of the difficulties caused by the report's being published at this time, just as the new selling round was about to commence. I have received strong representations, including from Mr. Ben Gill, the president of the National Farmers Union, about the difficulties that would be created if we were to implement the interim remedies immediately. I have taken the view that it would be unfair to impose them at such short notice. I therefore propose that the interim remedies recommended by the MMC should not apply to the selling round that is about to begin. However, I shall require the director general to report to me within three months of the publication of the report on the undertakings received from Milk Marque.

Several hon. Members have also raised concerns about the six-month period in which I have asked the director general to discuss with Milk Marque and other interested parties the reform of the selling process. It is not a maximum of six months. If agreement can be reached sooner rather than later, I shall be pleased to receive recommendations within the six-month period. It would be great for the industry if agreement were reached before the next selling round early next year, and if the industry and the director general made some positive proposals. I hope that Milk Marque recognises that opportunity. I look forward to the day when it proposes a selling round and a process that can be agreed by the director general, since that would make an important contribution to ensuring that Milk Marque had a strong future ahead of it.

As our amendment makes very clear, we wish to strike a balance between the interests of the dairy industry and the interests of consumers. It would have been totally irresponsible of me, as Secretary of State for Trade and Industry, and in the light of the MMC report, to ignore its findings. By rejecting the imposed break-up of Milk Marque, but by allowing further time for consultation and discussion about the selling process, I have sought to balance those--sometimes conflicting--interests.

7 Jul 1999 : Column 1093

I look forward to the time when, in partnership, we can meet the consumer's interests through a healthy and thriving dairy industry. I believe that the decisions that we have taken following the Monopolies and Mergers Commission's report will provide us with the facility to do precisely that. I urge the House to reject the motion and support the amendment.

Question put, That the original words stand part of the Question:--

The House divided: Ayes 176, Noes 326.

Division No. 227
[7 pm


Ainsworth, Peter (E Surrey)
Allan, Richard
Amess, David
Ancram, Rt Hon Michael
Arbuthnot, Rt Hon James
Atkinson, Peter (Hexham)
Beggs, Roy
Beith, Rt Hon A J
Bell, Martin (Tatton)
Bercow, John
Beresford, Sir Paul
Blunt, Crispin
Body, Sir Richard
Boswell, Tim
Bottomley, Peter (Worthing W)
Bottomley, Rt Hon Mrs Virginia
Brake, Tom
Brand, Dr Peter
Brazier, Julian
Breed, Colin
Brooke, Rt Hon Peter
Browning, Mrs Angela
Bruce, Ian (S Dorset)
Burnett, John
Burns, Simon
Burstow, Paul
Cable, Dr Vincent
Cash, William
Chope, Christopher
Clappison, James
Clark, Dr Michael (Rayleigh)
Clarke, Rt Hon Kenneth
Collins, Tim
Colvin, Michael
Cormack, Sir Patrick
Cotter, Brian
Cran, James
Dafis, Cynog
Davey, Edward (Kingston)
Davis, Rt Hon David (Haltemprice)
Donaldson, Jeffrey
Dorrell, Rt Hon Stephen
Duncan, Alan
Duncan Smith, Iain
Evans, Nigel
Fabricant, Michael
Fallon, Michael
Fearn, Ronnie
Flight, Howard
Forsythe, Clifford
Forth, Rt Hon Eric
Foster, Don (Bath)
Fowler, Rt Hon Sir Norman
Fox, Dr Liam
Fraser, Christopher
Gale, Roger
Garnier, Edward
George, Andrew (St Ives)
Gibb, Nick
Gill, Christopher
Gillan, Mrs Cheryl
Gorman, Mrs Teresa
Gorrie, Donald
Gray, James
Green, Damian
Greenway, John
Grieve, Dominic
Gummer, Rt Hon John
Hamilton, Rt Hon Sir Archie
Hammond, Philip
Hancock, Mike
Harvey, Nick
Hawkins, Nick
Heald, Oliver
Heathcoat-Amory, Rt Hon David
Heseltine, Rt Hon Michael
Hogg, Rt Hon Douglas
Horam, John
Howard, Rt Hon Michael
Howarth, Gerald (Aldershot)
Jack, Rt Hon Michael
Jackson, Robert (Wantage)
Jenkin, Bernard
Keetch, Paul
Key, Robert
King, Rt Hon Tom (Bridgwater)
Kirkbride, Miss Julie
Kirkwood, Archy
Lait, Mrs Jacqui
Lansley, Andrew
Leigh, Edward
Letwin, Oliver
Lewis, Dr Julian (New Forest E)
Lidington, David
Lilley, Rt Hon Peter
Livsey, Richard
Lloyd, Rt Hon Sir Peter (Fareham)
Llwyd, Elfyn
Loughton, Tim
Luff, Peter
MacGregor, Rt Hon John
McIntosh, Miss Anne
MacKay, Rt Hon Andrew
Maclennan, Rt Hon Robert
McLoughlin, Patrick
Major, Rt Hon John
Malins, Humfrey
Mates, Michael
Maude, Rt Hon Francis
May, Mrs Theresa
Michie, Mrs Ray (Argyll & Bute)
Moore, Michael
Morgan, Alasdair (Galloway)
Moss, Malcolm
Nicholls, Patrick
Norman, Archie
Oaten, Mark
Öpik, Lembit
Page, Richard
Paice, James
Pickles, Eric
Prior, David
Randall, John
Redwood, Rt Hon John
Robathan, Andrew
Robertson, Laurence (Tewk'b'ry)
Roe, Mrs Marion (Broxbourne)
Ross, William (E Lond'y)
Ruffley, David
Russell, Bob (Colchester)
St Aubyn, Nick
Sanders, Adrian
Sayeed, Jonathan
Shephard, Rt Hon Mrs Gillian
Shepherd, Richard
Simpson, Keith (Mid-Norfolk)
Smith, Sir Robert (W Ab'd'ns)
Smyth, Rev Martin (Belfast S)
Soames, Nicholas
Spelman, Mrs Caroline
Spicer, Sir Michael
Spring, Richard
Stanley, Rt Hon Sir John
Steen, Anthony
Streeter, Gary
Stunell, Andrew
Swayne, Desmond
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, Rt Hon John D (Strangford)
Taylor, John M (Solihull)
Taylor, Matthew (Truro)
Taylor, Sir Teddy
Thompson, William
Tonge, Dr Jenny
Townend, John
Tredinnick, David
Trend, Michael
Trimble, Rt Hon David
Tyler, Paul
Tyrie, Andrew
Viggers, Peter
Wardle, Charles
Webb, Steve
Wells, Bowen
Welsh, Andrew
Whittingdale, John
Wigley, Rt Hon Dafydd
Willis, Phil
Wilshire, David
Winterton, Mrs Ann (Congleton)
Winterton, Nicholas (Macclesfield)
Woodward, Shaun
Yeo, Tim
Young, Rt Hon Sir George

Tellers for the Ayes:

Mrs. Eleanor Laing and
Mr. Geoffrey Clifton-Brown.


Abbott, Ms Diane
Ainger, Nick
Ainsworth, Robert (Cov'try NE)
Alexander, Douglas
Allen, Graham
Armstrong, Rt Hon Ms Hilary
Ashton, Joe
Atherton, Ms Candy
Atkins, Charlotte
Austin, John
Barnes, Harry
Barron, Kevin
Battle, John
Bayley, Hugh
Beard, Nigel
Beckett, Rt Hon Mrs Margaret
Begg, Miss Anne
Bell, Stuart (Middlesbrough)
Benn, Hilary (Leeds C)
Bennett, Andrew F
Benton, Joe
Bermingham, Gerald
Berry, Roger
Best, Harold
Betts, Clive
Blackman, Liz
Blears, Ms Hazel
Blizzard, Bob
Blunkett, Rt Hon David
Boateng, Paul
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brinton, Mrs Helen
Brown, Rt Hon Nick (Newcastle E)
Browne, Desmond
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Butler, Mrs Christine
Byers, Rt Hon Stephen
Caborn, Rt Hon Richard
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Campbell-Savours, Dale
Cann, Jamie
Caplin, Ivor
Casale, Roger
Caton, Martin
Cawsey, Ian
Chapman, Ben (Wirral S)
Chisholm, Malcolm
Clapham, Michael
Clark, Rt Hon Dr David (S Shields)
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Charles (Norwich S)
Clarke, Rt Hon Tom (Coatbridge)
Clarke, Tony (Northampton S)
Coaker, Vernon
Coffey, Ms Ann
Coleman, Iain
Colman, Tony
Cook, Rt Hon Robin (Livingston)
Corbett, Robin
Corbyn, Jeremy
Cousins, Jim
Cranston, Ross
Cryer, Mrs Ann (Keighley)
Cryer, John (Hornchurch)
Cummings, John
Cunliffe, Lawrence
Curtis-Thomas, Mrs Claire
Dalyell, Tam
Davey, Valerie (Bristol W)
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C)
Davis, Terry (B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Denham, John
Dobbin, Jim
Dobson, Rt Hon Frank
Donohoe, Brian H
Doran, Frank
Dowd, Jim
Drew, David
Drown, Ms Julia
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)
Edwards, Huw
Efford, Clive
Ellman, Mrs Louise
Ennis, Jeff
Etherington, Bill
Field, Rt Hon Frank
Fisher, Mark
Fitzpatrick, Jim
Fitzsimons, Lorna
Flint, Caroline
Flynn, Paul
Follett, Barbara
Foster, Rt Hon Derek
Foster, Michael Jabez (Hastings)
Foster, Michael J (Worcester)
Fyfe, Maria
Gapes, Mike
Gardiner, Barry
Gerrard, Neil
Gibson, Dr Ian
Gilroy, Mrs Linda
Godman, Dr Norman A
Godsiff, Roger
Goggins, Paul
Gordon, Mrs Eileen
Griffiths, Jane (Reading E)
Griffiths, Win (Bridgend)
Grocott, Bruce
Grogan, John
Gunnell, John
Hain, Peter
Hall, Patrick (Bedford)
Hamilton, Fabian (Leeds NE)
Hanson, David
Heal, Mrs Sylvia
Healey, John
Henderson, Ivan (Harwich)
Hepburn, Stephen
Hesford, Stephen
Hewitt, Ms Patricia
Hill, Keith
Hinchliffe, David
Hoey, Kate
Hood, Jimmy
Hope, Phil
Hopkins, Kelvin
Howarth, George (Knowsley N)
Howells, Dr Kim
Hoyle, Lindsay
Hughes, Ms Beverley (Stretford)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hurst, Alan
Hutton, John
Iddon, Dr Brian
Illsley, Eric
Jackson, Ms Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Jenkins, Brian
Johnson, Alan (Hull W & Hessle)
Johnson, Miss Melanie
(Welwyn Hatfield)
Jones, Rt Hon Barry (Alyn)
Jones, Mrs Fiona (Newark)
Jones, Helen (Warrington N)
Jones, Ms Jenny
(Wolverh'ton SW)
Jones, Jon Owen (Cardiff C)
Jones, Dr Lynne (Selly Oak)
Jones, Martyn (Clwyd S)
Jowell, Rt Hon Ms Tessa
Kaufman, Rt Hon Gerald
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Keen, Ann (Brentford & Isleworth)
Kemp, Fraser
Kennedy, Jane (Wavertree)
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
Kingham, Ms Tess
Kumar, Dr Ashok
Ladyman, Dr Stephen
Lawrence, Ms Jackie
Laxton, Bob
Lepper, David
Leslie, Christopher
Levitt, Tom
Lewis, Ivan (Bury S)
Lewis, Terry (Worsley)
Liddell, Rt Hon Mrs Helen
Linton, Martin
Livingstone, Ken
Lock, David
Love, Andrew
McAllion, John
McAvoy, Thomas
McCabe, Steve
McCafferty, Ms Chris
McCartney, Rt Hon Ian
Macdonald, Calum
McDonnell, John
McGuire, Mrs Anne
McIsaac, Shona
McKenna, Mrs Rosemary
McNulty, Tony
MacShane, Denis
Mactaggart, Fiona
McWalter, Tony
McWilliam, John
Mahon, Mrs Alice
Mandelson, Rt Hon Peter
Marsden, Gordon (Blackpool S)
Marsden, Paul (Shrewsbury)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Martlew, Eric
Meacher, Rt Hon Michael
Merron, Gillian
Michael, Rt Hon Alun
Michie, Bill (Shef'ld Heeley)
Mitchell, Austin
Moffatt, Laura
Moonie, Dr Lewis
Moran, Ms Margaret
Morgan, Ms Julie (Cardiff N)
Morley, Elliot
Morris, Ms Estelle (B'ham Yardley)
Mudie, George
Mullin, Chris
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Naysmith, Dr Doug
O'Brien, Bill (Normanton)
O'Hara, Eddie
Olner, Bill
O'Neill, Martin
Organ, Mrs Diana
Osborne, Ms Sandra
Palmer, Dr Nick
Pearson, Ian
Pendry, Tom
Pickthall, Colin
Pike, Peter L
Plaskitt, James
Pollard, Kerry
Pond, Chris
Pope, Greg
Pound, Stephen
Powell, Sir Raymond
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Prescott, Rt Hon John
Prosser, Gwyn
Purchase, Ken
Quin, Rt Hon Ms Joyce
Quinn, Lawrie
Radice, Rt Hon Giles
Rammell, Bill
Raynsford, Nick
Reed, Andrew (Loughborough)
Reid, Rt Hon Dr John (Hamilton N)
Roche, Mrs Barbara
Rooker, Jeff
Rowlands, Ted
Roy, Frank
Ruddock, Joan
Russell, Ms Christine (Chester)
Salter, Martin
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheldon, Rt Hon Robert
Shipley, Ms Debra
Short, Rt Hon Clare
Simpson, Alan (Nottingham S)
Singh, Marsha
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)
Smith, Angela (Basildon)
Smith, Miss Geraldine
(Morecambe & Lunesdale)
Smith, Jacqui (Redditch)
Smith, Llew (Blaenau Gwent)
Soley, Clive
Southworth, Ms Helen
Spellar, John
Squire, Ms Rachel
Starkey, Dr Phyllis
Steinberg, Gerry
Stevenson, George
Stewart, David (Inverness E)
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stoate, Dr Howard
Straw, Rt Hon Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Gerry
Taylor, Rt Hon Mrs Ann
Taylor, Ms Dari (Stockton S)
Taylor, David (NW Leics)
Thomas, Gareth (Clwyd W)
Thomas, Gareth R (Harrow W)
Timms, Stephen
Tipping, Paddy
Todd, Mark
Touhig, Don
Trickett, Jon
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Turner, Dr George (NW Norfolk)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Vaz, Keith
Vis, Dr Rudi
Walley, Ms Joan
Wareing, Robert N
Watts, David
White, Brian
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Rt Hon Alan
(Swansea W)
Williams, Alan W (E Carmarthen)
Williams, Mrs Betty (Conwy)
Wilson, Brian
Winnick, David
Winterton, Ms Rosie (Doncaster C)
Wise, Audrey
Wood, Mike
Woolas, Phil
Worthington, Tony
Wray, James
Wright, Anthony D (Gt Yarmouth)
Wright, Dr Tony (Cannock)

Tellers for the Noes:

Mr. David Clelland and
Mr. Mike Hall.

Question accordingly negatived.

7 Jul 1999 : Column 1096

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.


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