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26 Jan 2000 : Column 92WH

UK Wine Industry

12.56 pm

Mr. Mark Oaten (Winchester): I am pleased to have the opportunity to introduce what I believe to be the first debate in the House on the United Kingdom wine industry for almost 16 years.

I want to make it clear at the start of the debate that I am not a wine snob; I have never been able to understand those people who can describe wines as being like a walk down a lane in the autumn sunset and so on. Like most hon. Members, I know what I like--[Interruption.].

Mr. Deputy Speaker (Mr. John McWilliam): Order. In fairness to the hon. Gentleman, would Members please withdraw quietly if they are leaving the Chamber?

Mr. Oaten : Thank you, Mr. Deputy Speaker.

Like many members of the public I have always had a preconception about English wine and I confess that until recently it was very negative. I was therefore delighted to be able to taste the wines at Wickham Vineyard in my constituency. I was pleasantly surprised that they tasted superb. The owners of the vineyard had arranged a meeting with the owners of other vineyards in the region who raised several issues about the industry with me. I shall use this short debate to try to raise some of them with the Minister.

There are some surprising facts about the United Kingdom wine industry. For example, I had not realised that because of climate changes resulting in hot summers, the south of England might soon become one of the optimum wine-growing regions. Traditionally, southern France and Spain have been ideal areas for growing wines but they may become too hot. Thus, the south of England could be the best area for good wines.

Members may be surprised to know that there about 400 separate vineyards in the UK. That is not bad for a country that supposedly does not produce and make wine. I understand that the royal household toasted the millennium with a United Kingdom wine: Nyetimber, a sparkling white wine that is grown and made in Sussex. Why Nyetimber? Because it is an internationally recognised wine that has won a number of competitions. It won the sparkling wine category at the Wine and Spirit International competition, beating 8,000 other wines, including the famous Moet. English wines have much to celebrate. There is clearly potential for the industry to grow, and that potential needs to be realised.

We can take encouragement from what has happened in the world in the past 10 or 15 years. The wine industry is full of success stories about upstarts. Ten years ago, people would have laughed at anyone who said that he was buying wine from Australia, New Zealand, Chile or Argentina, but they have been very successful. Wine growers in those countries have been able to market themselves and have caused the French major anxiety. If we get things right, given the climate changes, there is a chance that in 10 years' time wines from United Kingdom will tell the same success story as those from Australia and New Zealand. The Government could help. I shall suggest ways in which they can do so, to which I hope the Minister will have a chance to respond.

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European Union laws prohibit us from labelling our wines "quality wines". I shall deal with that and with the use of pesticides and some of the wine industry's concerns about having a level playing field on those issues. I have some questions about the UK licensing laws and the controversial matter of the financial support that the Government can give industry. I want, too, to discuss the positive campaign that the Government could initiate and lead by using more UK wines themselves.

I begin with quality wine versus table wine labelling. At present, a £5 bottle of good UK wine is labelled table wine and a £5 bottle of good French wine is labelled "appellation controlee", which means quality wine. The UK wine industry has rightly asked why it cannot label its wines as quality wines. Although French and UK wines are clearly as good as each other, EU law states that we cannot call most of our wines quality wines because many are produced from hybrid, not pedigree, grapes. A long time ago, hybrid grapes used to have a strange taste, but since then flavours have been modified and perfected, and they now taste just as good as pedigree grapes.

The EU law on labelling is desperately out of date and must be modernised. Pedigree grapes do not make economic sense for the UK wine industry, which must rely on hybrid grapes to survive events such as June mildew. In establishing whether a wine should be labelled a quality wine, the EU must address, not the variety of grape used, but whether the wine tastes good.

Certain other countries are ignoring EU regulations on labelling. Hybrid new world wines that are exported to the UK are labelled as quality wines, but our quality hybrid sourced wine is labelled--one might almost say branded--as a table wine. Something must be done to solve that problem. The Government have tried to help, but they should do more. Their regional wine scheme allows quality UK wines to be called "English counties regional wine", but that is not a great marketing tool with which to take on the rest of the world. More must be done to change EU law, so that our wines can be called quality wines.

There are two ways in which that can be achieved. The first--which I do not recommend, but which the industry wants the Government to consider--is to follow the German Government's example and flout EU laws by allowing our good-quality hybrid-sourced wine to be labelled as quality wine. The second option, which the Minister should consider carefully, is for the Government to give a rock-solid commitment to renegotiate a change in EU law, so that our quality wines can be recognised.

Pesticides and controlling the way in which grapes grow are important issues for the industry. Up to 30 per cent. of grapes are lost each year through mildew. Controlling such losses is clearly essential, because they can devastate businesses in the growing industry. Pesticides to combat problems such as mildew exist and are used by our EC competitors in France and Germany. However, the UK wine industry is unable to use many pesticides because licensing them in this country is too expensive. Licensing the right to use a

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pesticide can cost a vineyard more than £35,000. Vineyards with small budgets soon discover that such a cost can wipe out the year's profits.

The Government should put pressure on the EC to harmonise EU licensing regulations, so that wine growers in this country can use pesticides that are already licensed elsewhere in the EU. It would be logical for wine growers that have passed EU environmental and safety controls to be permitted to use that licence in this country, rather than go through a separate licensing process which, as I have said, can cost more than £35,000. That would help to provide a level playing field and the necessary tools to overcome problems such as mildew.

I referred to the industry's concerns about licensing laws. If I were a craftsman, I would not stay in my workshop and wait for customers to come to me; I would go out and sell my product. Wine makers are no different, but the licensing laws make it difficult for them to do that. Wine makers want to attend farmers' markets and agricultural fairs. In the past year, the number of town markets has increased and they have proved popular. At any market in France, one sees local wine growers selling their wines and people sampling them. However, our licensing laws make it difficult for UK wine growers to do the same. Even a wine maker who is licensed to sell wine in his own vineyard must apply for a different licence, spend the morning in court and pay extra money whenever he wants to sell his produce at a market. Wine makers with a certain type of licence are sometimes not allowed to sell wine at markets at all.

Everyone wants proper licensee controls to protect youngsters, for example, from alcohol, but there seems to be little danger that licensing laws will be flouted at agricultural fairs or markets by under-age buying. Such markets offer regional wine growers an ideal opportunity not only to sell direct to the public but to influence local businesses and opinion-formers. At the moment, that opportunity is being missed.

The benefits in reforming the law are clear and I ask the Minister to make representations to the Home Office, so that wine makers can apply for a yearly licence that would enable them to attend markets and agricultural fairs. That would be preferable to the overly bureaucratic process of applying for a licence for each event, even where that event takes place monthly.

It is almost lunchtime and I hope that hon. Members will enjoy a sip of wine with their lunch. However, before I conclude, I have a few more points to make about the wine industry. If hon. Members do not know of Wickham Vineyard, which is in my constituency, I invite them to familiarise themselves. Wickham Vineyard supplies the oaked white wine that is available in the Palace of Westminster. I hope that the Minister has tasted it and was suitably impressed. I urge her to encourage her ministerial colleagues to taste English wine--not only wines from my consituency--and to ensure that it is served at official functions. For example, the Department could break with tradition at its next Christmas party and serve UK wine. The Government could ensure that English wine is served at more official civic functions. If the Government were to take that lead, they would boost the industry by showing the world that we are proud of our wine and happy to serve it.

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Finally, on the financial support that the Government could give to the industry, they seem strangely unaware of the cross-channel wine trade's impact on UK wine sales. There is a big difference between wine excise duties in the UK and France. In the UK, duty is £1.12 a bottle and in France, it is only 2p a bottle. It is not surprising that, since 1993, when the law was changed, Britons have hopped across the channel and brought back vast quantities of French wine, which I do not doubt was for their own consumption. As a result, UK wine sales have decreased and the impact has been greatest in areas close to the channel tunnel in the south, which is where most vineyards are located. Despite optimism about the industry's potential, one in five vineyards has gone out of business since 1993. Prior to that date and the changes to the licensing laws, the industry was growing.

Is the Minister worried about the channel tunnel trade's impact on the industry? I am not so naive as to suggest that the excise duty, which brings money to the Exchequer, should be reduced. I accept that we must live in the real world, but the Minister must acknowledge that the UK wine industry is suffering as a result of that income. Does the Minister recognise that this is a growing industry that needs our support and does she agree that the Government should consider measures to encourage it?

The Government have rightly provided the cider industry with a considerable subsidy by allowing the first 7,000 litres of cider to be sold excise free. That measure has had a big impact. I have corresponded with the Minister on this issue and I understand that there are technical reasons why the UK wine industry cannot be granted a similar subsidy. However, the principle of Government subsidy for the cider industry, which I support, should, for the same reasons, be extended to the wine industry.

The UK wine industry has shown, through competition, that it can be successful. We know that the climate is changing, and we need to grasp that opportunity. World markets appear to be opening up, and, with good marketing, the public's attitude to wines have changed considerably. They are not now so wedded to the traditional idea of French wine; they are prepared to explore a range of wines from different parts of the country. The industry now needs a kick start and a boost.

I hope that the Minister will address the points that I have made about better labelling, because the UK industry will be held back until we can have quality wine. Until we have a level playing field relating to pesticides, 30 per cent. of crops could continue to be wiped out each year. We also need to address the licensing laws. Above all, I hope that the Minister will use this opportunity to give a commitment that the Government will try to use UK wine more freely in civic functions. I hope that they will also get behind the industry and support a big marketing campaign, so that we can proudly say to the world that our wines can compete, and so that, in 10 years, it will be quite common for UK wines to be up there with Australian and French wines.

1.11 pm

The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin ): I welcome the opportunity to respond to the hon. Member for

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Winchester (Mr. Oaten) in this short debate. It is a pleasure to see you, my constituency neighbour in the north-east, presiding over it, Mr. Deputy Speaker.

The hon. Gentleman said that this had been the first debate on UK wine for 16 years. I am sure that he is correct; I certainly do not remember one during my time in the House. I am glad that he has given us the opportunity of raising issues that are of concern to the UK wine industry and its future. The hon. Gentleman's constituency contains vineyards and his county, Hampshire, contains about 10 per cent. of the vineyards in the United Kingdom. I therefore understand his interest in the issue.

The hon. Gentleman mentioned the question of climate. He expressed the opinion that, given the climate changes that we have already witnessed, and those that may happen, the prospects for the UK wine industry will be very different. However, we need to retain a sense of realism. Evidence of the favourability of climate is not so strong. Although the weather has become warmer, those warm days can give way to cold, clear skies at night, especially in the early spring, and frosts have been known to damage the early growth of the vine. The question of climate is not, therefore, entirely straightforward. We shall bear it in mind as we examine the future of the UK wine industry, but it may be too soon to make any definite predictions of how it may affect the industry's expansion.

The hon. Gentleman made the point that we are part of the European Union and its agricultural regime, and that the wine industry must operate in the context of the Community's wine regime. The rules of that regime are complex, and we are taking a keen interest in recent proposals to change it. We are interested in the effects that those changes would have not only on the European Union wine industry as a whole, but on the UK industry and its prospects.

Those complex rules often appear, to both growers and Governments, to have been designed to benefit the larger, more established wine-producing members, sometimes to the detriment of smaller-scale producers and of the UK industry. However, the Government defended the interests of the UK wine industry during this year's review of the wine regime as part of Agenda 2000, and established important pointers for the future.

There will be no changes in the permitted wine-making practices. The present arrangement for enrichment with sugar for deacidification, and for minimum natural sugar levels, will continue. That contrasts with a proposal for reform several years ago, which, if implemented, would have created serious problems for the domestic industry. Equally important is that no ban on new vines will be imposed on the United Kingdom until average production over five years exceeds 25,000 hectolitres a year. Despite the hon. Gentleman's confident predictions, it is unlikely that we shall exceed that amount, given that our present production level stands at about 15,000 hectolitres. That would be a rather dramatic expansion. We are, therefore, glad that our position was safeguarded in the recent round of negotiations.

The hon. Gentleman rightly drew our attention to the matter of hybrids, and their use in the wine industry. English and Welsh producers are penalised because the ban on the production of quality wine from non-pure

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wine varieties--non-Vitis vinifera varieties--will continue. It is also clear that the hybrid varieties in our climate have much to contribute to the success of our industry, as well as being environmentally friendly. The hon. Gentleman was right about the use of hybrid varieties elsewhere in the world.

For those reasons, the Government insisted, and the European Council agreed, that the Commission should finance an independent study into inter-specific varieties, and report to the Council, if appropriate, with proposals for amendment and modification. That report will not be completed until 2003, which sounds like a leisurely timetable. However, one realises that that is not the case when one thinks of the physical requirements of the tests and studies to be carried out in order to provide the database in the European Union that we will be able to use in future.

I commend to the hon. Gentleman the Government's achievement during those negotiations in getting that study under way. Many fierce interests we defended in any negotiation on the European Union wine industry, so agreement on the study was an extremely useful outcome for us. We hope that it will provide the possibility for change.

The new regime, agreed under Agenda 2000, is designed more closely to align production with demand in the European Union. However, it will place no additional requirements on our producers, There are financial schemes available to Community wine producers that have not been available to producers in the UK, but much of that expenditure has been, and will continue to be, on market management arrangements designed to tackle surpluses and chronically low prices in parts of the European Union.

Obviously, English and Welsh wine is not in surplus, and can, and does--in line with the arguments about quality that the hon. Gentleman advanced--command relatively high prices. The decisions that have been made at European level are aimed at a problem that we do not have. Furthermore, member states in which market control mechanisms are in operation have accompanying compulsory requirements, in the form of red tape, that would be inappropriate for our industry, which prides itself on quality and innovation and would not welcome being subject to requirements that are designed to tackle problems that are specific to certain regions of the European Union.

Quality and innovation are the keys to the commercial success of our wine producers, even though the commercial environment in which they operate is demanding. A few years ago, in order to support and encourage our producers, the then Government--I am not making party political points at the moment--introduced a quality wine scheme that promotes high

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standards through compulsory analytical and organoleptic tests--in other words, professional tests on quality standards.

As the hon. Gentleman said, a similar regional wine scheme, which permits the use of hybrids, was recently introduced. As he expressed some doubts as to the real value of that scheme, I point out to him that it was introduced at the industry's request, and represented a joint attempt by the industry and the Ministry of Agriculture, Fisheries and Food to draw consumers' attention to the variety and quality of our wines. It is better to have that scheme, which covers a variety of areas and kinds of wine, than no scheme at all.

The success of the scheme is monitored by a joint industry and MAFF committee, which meets regularly to discuss and make amendments to the rules in the light of experience, and to consider and evaluate matters such as evolving market conditions. That leads me to the obvious but important point that my Department is keen to work actively and continually with the industry on all the issues that the hon. Gentleman mentioned, in order both to avoid disadvantaging the industry unfairly in Europe and to look at ways of moving the industry forward in future.

It is possible for the wine industry to apply for grants under some of the schemes that the Government have introduced in recent months. For example, UK wine producers have shown some interest in the agricultural marketing scheme. The Government have brought forward similar schemes as part of their proposals for the rural development regulation.

The Government would be able to consider expenditure for the UK wine industry under Community finance for restructuring. However, it would be up to the industry to come forward with a well-thought-out and detailed plan at the appropriate time. Funds are not likely to be large and, as the hon. Gentleman and other hon. Members will know, there is currently huge pressure for available funds from agriculture in general, given the difficulties that are faced by several sectors. Given the nature of that competition, I do not want to sound over-optimistic. However, the possibility exists, and it will be for the industry to consider whether it can take advantage of it.

I shall try to touch on other matters that the hon. Gentleman raised. As he will understand, the level of excise duty is a matter for the Chancellor. Although it is an important issue, we cannot grant producers discriminatory preference on the basis of their location in the UK. We must not fall foul of European rules in that way. Respect for European rules is absolutely crucial at the present time, and I would not want to flout them--as the hon. Gentleman suggested at one point--especially given our difficulties with disrespect for the rules on the part of the French.

Mr. Deptuty Speaker : Order. Time is up.

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