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Mr. Lembit Öpik (Montgomeryshire): Given that farmers will be expected to pay an increasing proportion of the money spent on rural development plans, will the Minister assure me that they are being involved in the design of the plans?
Mr. Brown: Comprehensive discussions have taken place with farmers' leaders, and I did my best to consult individual farmers for a whole year as the plan was being devised. I accept that modulation--which I believe to be the best way forward--is controversial in some quarters. However, for every pound that is modulated in England, Scotland, Wales and Northern Ireland, there is an extra pound from the Treasury. No part of the UK can lose out overall, and UK agriculture as a whole gains. Within that, some individual businesses will be beneficiaries and others will be losers. There is a redistributive effect, and I have paid careful attention to that in devising the England scheme--for which I am responsible--to make sure that there is no disproportionate redistribution between the English regions. The allocation within England has taken careful account of that.
Several of the new schemes will help the process of diversification and increase competitiveness. We plan to reintroduce an expanded processing and marketing grants scheme. A new rural enterprise scheme will promote rural development on and off the farm. Government aid will
On 30 March, the Prime Minister, ministerial colleagues and I met farming and food industry leaders from throughout the UK to agree a strategy for the future of agriculture. The aim was to chart the way forward in the context of the current difficulties in the sector. An enormous amount of work across Government and in the private sector went into preparing for that summit. I am grateful to colleagues in other Departments, to their officials and to those in the devolved Administrations.
The result is an action plan for farming, supported by more than £200 million in new Government expenditure. The action plan contains 62 measures to support the Government's long-term agriculture strategy. We are working hard to achieve the goals set out in the action plan, and we have already made good progress.
We have notified the Commission of a number of new state aids and the agri-monetary aid that we intend to pay to the beef, sheep and dairy sectors. By the end of this year, the Government will have paid more than half a billion pounds in agri-monetary compensation since coming to office.
Mr. Tony Baldry (Banbury): Does not the intervention by the hon. Member for Monmouth (Mr. Edwards) show how little Labour Members understand? Did milk prices ever collapse under a Conservative Government, as they have recently? The Minister has given details of many interesting schemes, but will he tell us how much money the Government's actions will put into the pockets of dairy farmers--for whom milk prices are at their lowest level since the Domesday book was compiled?
Mr. Brown: Going back to Domesday is probably going a bit far. It is also claiming quite a lot for the previous Government to take credit for the shifting terms of trade. If the hon. Gentleman is making the point--it is a perfectly fair point to make--that when sterling is weak, the terms of trade are advantageous to agriculture as a sector, he is correct. However, I should also point out that when the international markets were selling sterling, interest rates were increasing to 15 per cent. It is fair to point out that at the heart of the current difficulties in the dairy industry are, at least in part, difficulties with the terms of trade--the strength of sterling and the weakness of the euro.
The Government, however, are doing absolutely everything that we can with the instruments directly under our control--including agri-money, dairy hygiene charges and the weight limit on the over-30 months scheme--to give what help we immediately can to hard-pressed dairy farmers. That is a fair response to what I acknowledge is a difficult position. I have also said that I am using my office, as much as it is proper for me to do, to try to facilitate a solution to the difficulties within the supply chain.
Mr. David Heath (Somerton and Frome): The issue of agri-monetary compensation is important, and I am grateful to the Government for doing something about it, however belatedly and partially. What is the long-term solution on agri-monetary compensation? It is clear that the current arrangements will not last indefinitely, and that there will be pressure on other European Union member states, as members of the eurozone, to remove agri- monetary compensation. What is the British solution to that, and how can it be disentangled from the Fontainebleau arrangements, which are getting in the way of providing proper support for the British agriculture industry?
Mr. Brown: The Fontainebleau arrangements are a complicating factor in all this. As I have said repeatedly to the House, when agri-monetary compensation is discretionary rather than mandatory, I am competing with other demands for public expenditure, effectively from the domestic Treasury, in order to make those payments. Of course there is a debate within Government about priorities.
The future for the current agri-monetary regime is time- limited, as the hon. Member for Somerton and Frome (Mr. Heath) rightly said. The current scheme spans three years, with half the money being allocated for this year. That is the money that we are, in part, drawing down. I believe that next year, one third of the total sum will be allowed, with the final sixth coming in the following year. After that, the scheme comes to a conclusion. It is not a continuing arrangement, so the Government's policy of securing a stable exchange rate and bearing down on interest rates is important.
Mr. Paterson: But--there is a but--he has been disingenuous. He has failed dreadfully in his negotiations with the European Union and let down this country's dairy farmers. Why did Italy, Spain, Ireland and Greece get huge increases in milk quota last year, when our dairy farmers got nothing? In his negotiations on beef, why did he get nowhere on calf exports? A good bull calf in France makes £150, but a good bull calf in Shropshire either goes to the hunt kennels for nothing or at best makes £15. He has let down this country's dairy farmers, and he should not hide it with blather about a lot of little schemes. The real money is made from selling milk and calves to customers.
In any event, the real issue is not extra dairy quota, but the future for dairy quotas. There are only two possible ways forward. One is to lock us into the regime, which would be wrong. The other is to argue for reform, even if we are currently arguing from a minority position. I stand by the proposition that we, together with the Governments of Italy, Sweden and Denmark, put forward for a permanent phasing out of dairy quota over six years. That would give the industry a period in which to depreciate its quota holdings and provide certainty about the longer-term outcome, resulting in a much more market- oriented industry, which is the only real way forward.
When the quotas were introduced in the early 1980s, they were supposed to be a temporary response to a particular market difficulty. The market difficulty has come back, but the response is not helping. We need to think strategically. There is not much difference between the Government and the Opposition on the strategic question.