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7.16 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Ms Joyce Quin): I congratulate the hon. Member for Broxbourne (Mrs. Roe) on securing a valuable and timely debate on horticulture, which is an important sector of UK agriculture. The debate is timely because of the discussions that are taking place between Government Departments and the industry, and because the Finance Bill is making progress through Parliament. Some of the debates on that Bill relate to the sector concerned.
The hon. Lady rightly recognised the contribution that the glasshouse sector makes and she is familiar with it, because of the presence of the horticulture industry in her constituency. She is well aware of the diversity of the produce of the sector, which includes vegetables, fruits and the ornamental sector. Some parts of the industry have been a particular success. For example, the heated tomato crop has seen great increases of 50 per cent. in yield between 1988 and 1999, which have allowed our annual production to be maintained at just over 100,000 tonnes,
despite a decrease in planted area in that period. We certainly have an innovative and enterprising industry, and I pay tribute to it.I appreciate the comments that the hon. Lady made about certain of the difficulties that the sector has faced in recent months. There is no doubt that, when competing with imports and seeking to export, the strength of sterling has proved a real problem. As the hon. Lady pointed out, the specific weakness of the euro has also caused many of the difficulties. The euro has strengthened recently, but it is still much lower in value than when it first came into being, and therefore the difficulties are not at an end.
My Department has a strong commitment to the horticulture sector, and this afternoon in Committee I spoke on the draft Horticultural Development Council (Amendment) Order 2000, which will exempt some of the smaller horticultural producers from the levy because it will raise the threshold. In Committee, hon. Members from both sides emphasised the importance that they attach to the Government-funded research and development effort on behalf of horticulture, and the industry's efforts and contribution through the horticulture levy.
Certainly, Government-funded research and development has contributed to the success of many sectors of horticulture. My Department at present spends £2.25 million on providing strategic research and development to help the glasshouse industry improve its efficiency overall. That improvement includes reducing reliance on pesticides and developing biological control programmes. They can be important in helping the industry to reduce costs--a welcome advance at this time.
Support is also provided through the European Union fruit and vegetables regime and the EU flower promotion scheme. We hope that that support will be increased in future years. We are also glad that horticulture fared well in the first round of the agriculture development scheme, which is aimed at promoting marketing initiatives. I was delighted that horticulture accounted for about a quarter of the grant allocations made under that programme, and my Department is keen to help horticulture.
Substantial benefits for the industry have arisen from the 1996 reform of the EU fruit and vegetables regime. Producer organisations receive funding for work to improve production techniques, quality, preparation for market, marketing and promotional activity, as well as for developing the use of environmentally sound practices. Total EU payments to UK producer organisations for work done in 1999 will be in the region of £9 million.
The hon. Lady will know that, in our proposals for the future direction of agriculture and for exploiting the EU rural development regulation, one of our priorities was to help sectors such as the horticulture and pigs and poultry sectors, which up to now have received little support from EU common agricultural policy sources. The rural development regulation applies to all sectors of agriculture, and its introduction opens up possibilities for the horticulture industry which it would do well to identify. My Department is keen to work with the industry, to help it exploit some of those opportunities.
The hon. Lady devoted much of her speech to the climate change levy. I can assure her that the Government are very much aware of the concerns of glasshouse businesses about the impact of the levy on their profits, competitiveness and employment. However, I also
welcome the opportunity to discuss this matter further with the industry. Ministers in my Department have received a considerable postbag on this issue, and it has included letters from glasshouse businesses located in the Lea valley, about which the hon. Lady spoke at some length.Ministers have also seen copies of correspondence about the levy between the sector and Ministers in the Treasury and in the Department of the Environment, Transport and the Regions. Furthermore, the hon. Lady may know that, in the run-up to the Budget, my hon. Friend the Financial Secretary met the president of the National Farmers Union. I met him too, as well as leading horticultural members of the Union, so that I could listen to their views in person.
I think that the hon. Lady recognised that my Department has taken the sector's concerns seriously and that we have been happy to represent them to our colleagues in other Departments. There has also been a lot of contact between officials. My officials in the Ministry of Agriculture, Fisheries and Food met their counterparts in the NFU and various parts of the horticulture sector.
Many glasshouse owners are concerned about the possible economic impact of the levy. They fear that the levy will increase running costs and thus cut net margins. They are also concerned that the levy will force them to raise the price of their produce and thus reduce competitiveness, particularly within the EU, as the hon. Lady emphasised.
The UK market for horticultural produce is fiercely competitive. In some EU countries horticultural producers enjoy considerable natural advantages such as a warmer climate and longer daylight hours. In other countries, they receive different treatment under their respective energy tax regimes. I am keen that the Department and the Government monitor what is happening in other countries. I am always interested to hear of any examples that come to the attention of hon. Members so that we can investigate them. If we suspect that unfair subsidies are being given, we raise the issue with the European Commission. In recent years, we have done so in relation to a number of areas of agricultural policy.
As the hon. Lady recognised, energy taxes are not the only ones that affect businesses in the European Union. The position is more mixed than she said. Certainly UK corporation tax rates are the lowest of any major EU economy. We need to look at the overall taxation system.
The framework that the Government have chosen to implement the climate change levy will provide some relief for sectors that are already meeting the obligations
required under the integrated pollution prevention control directive which largely, but not entirely, also encompasses the intensive energy users. However, we appreciate that horticulture is a special case. Before this year's Budget, the Government listened very carefully to the concerns expressed by the glasshouse sector about the impact of the levy. We appreciate that the sector is an undoubtedly substantial user of energy, but does not fall within the scope of the IPPC directive. That means that, under the levy, the glasshouse sector cannot negotiate an energy saving agreement with Government in return for an 80 per cent. discount on the rate of the levy.In recognition of that unique set of circumstances, my right hon. Friend the Chancellor of the Exchequer announced in his Budget this year that, subject to obtaining EU state aids clearance from the European Commission, the Government will provide a special package of measures to protect the competitiveness of the glasshouse sector.
The hon. Lady recognised that, at this stage, we cannot be categorical about the effect of the levy, partly because the package is still under discussion in Brussels, so it is difficult to give precise details about the overall package and its effect on different parts of the horticulture sector. However, I assure the hon. Lady that I intend to monitor the position closely and to continue discussions with the sector. I am also happy to meet people from her constituency and others.
Let me explain the position so far. First, there will be a special package of support to the glasshouse sector from the £50 million energy efficiency fund set up under the levy. The idea is to help the sector to further improve its energy efficiency and to take account of the competitiveness aspects of the levy. My officials are in touch with their counterparts at the NFU and the DETR to consider the types of services and measures which will best help the sector to improve the efficiency of its energy consumption. The NFU has developed some ideas on this score.
Secondly, the list of energy efficient investments which qualify for 100 per cent. first-year capital allowances is being extended to include thermal screens used in glasshouses.
The motion having been made at Seven o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
- Adjourned at half-past Seven o'clock.
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