Examination of Witness (Questions 80 -
99)
TUESDAY 29 FEBRUARY 2000 (Afternoon Sitting)
RT HON
NICHOLAS BROWN
80. I think it would be helpful to the Committee
if your team could actually give us what you know has so far emerged
from other Member States in this area.
(Mr Brown) Frankly, that is it, ourselves and the
French making use of the model. No one else has said they are
going to.
81. Can someone put that in writing to us so
that we can examine that because there are two things, one is
what can we learn from other people, which we always ought to
be trying to do, and the other is the bearing on the competitiveness
of our own sector of the choices other states make vis-a"-vis
ourselves.
(Mr Brown) Clearly, if there is a different modulation
at a different rate it has a bearing on the relative competitiveness
of those who are being modulated against more severely than those
with whom they are in competition and that would clearly have
an impact on the arable sector, for example,. As far as the views
of other countries go, it is really only Britain and France that
have so far made use of this permissive instrument in the horizontal
measures that came with the Rural Development Regulation. I know
that other countries are interested in it and are looking at it
but, remember, policy makers will also be thinking about the issue
of degressivity with an eye on the pressures that people can see
building up in the Common Agricultural Policy itself.
82. Taking one strand of what I was asking about,
which is the impact on competitiveness of this particular package,
how do you see the package in the round (because I think some
of the specific measures will be discussed in a moment) impacting
on the competitiveness of the United Kingdom farm sector, the
English farm sector?
(Mr Brown) I think over time its influence is bound
to be beneficial. That was a point I was exploring with Lembit
earlier.
83. Actually what you were addressing there
was the amount of money that would be available to farms which
I do not necessarily equate with the concept of competitiveness.
It has a relationship to it but is not the same thing.
(Mr Brown) The largest single proportion of monies
is going on environmental stewardship. In exchange for this effort
on the part of the farmers, that provides a steady income stream
which is protected, as much as any of these things can be to a
farm business, from the fluctuations of the market place. In other
words, that is an underpinning income stream to a farm business.
I would have thought that that would help. On the market orientated
measures the 5(b) successor schemes, Article 33 as it is now,
Rural Enterprise Schemes as we are calling them, the training
monies and the marketing measures, all of that must have a positive
impact on competitiveness and enable a workforce to put more effort
into the marketing of good products, diversification from current
enterprises which are struggling to make a living for the farmer.
All of that has got to be the right way forward.
84. I think you are very persuasive about the
fact there is additional money going to farms. What I am less
clear about is whether that additional money going to farmers
will improve the competitiveness of the English farm sector or
whether it will make our countryside a great deal more attractive,
which is a perfectly acceptable goal and one we would all share.
(Mr Brown) It must improve the competitiveness of
the farm businesses but whether that would be in conventional
agriculture or not, if that is the point you are making, is an
open question. Clearly some of the reshaping will be to develop
income streams that are not conventional agriculture. Tourism
is the area that is most often mentioned but there is a whole
range of businesses and income conversion plans that have been
put forward all of which would be eligible and of course they
will be getting by without continuing support from the supply
side of the Common Agricultural Policy because they are more market
orientated. They either work or they do not. The historic evidence
is that, by and large, they do.
Mr Jack
85. Just a brief question. When farmers get
their cheques back from the various schemes to which they are
applying for help under the Common Agricultural Policy, will there
be a little line that says "minus X for modulation"?
(Mr Brown) If this were done electronically this could
be shown explicitly, but we will show what the payment is and
I guess any deductions will be shown as well.
86. Each farmer will know what his personal
contribution to modulation is?
(Mr Brown) Let me check this to make sure that I am
giving the Committee the right answer, but my assumption is that
the payment slip that goes to the farmer actually sets out how
the calculation is done. In any event, as you know, people are
professionally advised on this from both sides. We have a pretty
rigorous duty on the administration of these schemes and, of course,
anyone who fills in one of those forms without being professionally
advised has got to know what they are doing. Of course most people
are members of organisations like the NFU where the branch secretary
will check the form before it is submitted. That is a service
that the union provides.
87. Can you help me on one other technical point.
For the first time we are taking from individuals an amount of
money that they would have received under a European scheme and
we are going to collect that money up and spend it nationally.
Does that affect the way that it is scored in public expenditure
terms taking into account the rules of Euro PES?
(Mr Brown) I do not think it does because it is a
specific measure that is allowed for under the horizontal measures
that cover the Second Pillar of the Common Agricultural Policy.
88. The Euro PES arrangements are unique arrangements
in the United Kingdom public accounts to score the spending of
European money. The question I asked was not to do with your ability
to be allowed to do what you are doing, but to ask the question
how is it scored as a result of the fact that Euro money now becomes
national money under the terms of this proposal.
(Mr Brown) You mean how do we account for the European
element of this? I think the answer is, but I will check this
for you, that because this is under a European Union scheme, all
of it, which will have been approved by the Commission, as all
the other countries have to be approved by the Commission, then
it will all fall to be accounted for under the regulations.
89. But it is a combination of national and
European monies which is quite unusual.
(Mr Brown) That is perfectly true but this is true
of all Rural Development Regulation submissions from each Member
State. They all have their own funding streams under different
national schemes which are now consolidated into this measure
which is a European Union measure. Our departmental baseline contained
monies for such measures before the Rural Development Regulation
was ever thought of and we have incorporated that money into the
Regulation. So I think it is all now accounted for regardless
of the source of the monies as part of the European Union instrument.
Just for completeness, the element that is provided directly from
the Common Agricultural Policy budget (essentially Structural
Funds, now shifted into the CAP) is a relatively small part of
the total for every nation state. It is even smaller for us because
of our history. So everyone will be faced with essentially the
same question and I am pretty certain the answer is that these
monies are now explicitly being spent under the Second Pillar
of the CAP. They are all under a European Union instrument and
it is not permissable to spend money on things like this outside
the Rural Development Regulation. Remember, this is all consolidated
now.
90. I appreciate that.
(Mr Brown) That is what I think the answer is. That
sounds like the rational answer.
Chairman
91. I will make sure if a note is passed to
you that I give you the opportunity to share the contents.
(Mr Brown) If the position is substantially different
or needs tidying up, then we will write to the Committee. It is
a fair point but it does not go to the heart of the matter, of
course, which is that we want to spend a lot more money.
Mr Paterson
92. Could we turn to the question of priorities
and what the money is going to be spent on. Under these regulations
there were three priorities, the rural economy, the environment,
and the making of thriving rural communities. Why has 60 per cent
of funding been directed to agri-environment measures?
(Mr Brown) We looked at the balance and there has
been some economic modelling done on this. All the agri-environmental
measures are real income to real farmers so although it underlines
the environment—the whole Countryside Stewardship Scheme
is geared to that, and they are the largest single gainer out
of all this—it is a real benefit to farmers too. It is roughly
a two-thirds/one-third split between economic development measures
and environmental measures, including forestry and organic farming.
Can I just say, again for completeness, that it is not totally
inflexible. We will be administering the schemes with our regional
partners. We will be looking at the bids that come through and
we will be making sure, as I said earlier, that we keep a balance
between regions and sectors because I do not want there to be
big winners and losers, but if experience shows there is a huge
and rational demand for one type of project and one of the other
heads is under-applied for, then it is permissable to move money
around between the budget heads. These are all notional allocations
rather than set in stone.
93. What I would like to try and get is an idea
from you of what you think the role is of a farmer today. 50 years
ago you would have said it was to produce food and generate income
for his family and his business. That has now changed. What proportion
of the farmers' time and efforts should be dedicated to producing
food and how much to extra food production activities such as
the environment?
(Mr Brown) Each individual business is different and
although we talk about agriculture as a whole, types of farm businesses
are very different indeed and, therefore, the problems that they
face are different. The big question for us is how much of the
change that is currently taking place in agriculture is structural
and how much of it is cyclical; in other words, if the businesses
would survive when the upturn comes. The view that I am taking
is that it is a mixture of the two and that some people will need
to reshape farm-based businesses, probably going into things which
we would not regard as direct agricultural production (although
attitudes in different continental countries are different from
the way they are here) but which will give them a steady income
through the business and an income that is derived from the market
rather than the First Pillar of the Common Agricultural Policy,
the supply side production-orientated supports. How much time
a farmer believes he should spend on agri-environment measures
and the partial income they have to match with their time and
the costs of putting in their time is a judgment for individual
farmers, but there are some of course that are ideally placed
to take advantage of those measures, and given the strength of
demand for them I confidently predict that people will.
94. You said MAFF had done an assessment. Have
you looked at the effect of the Regulation on Less Favoured Areas?
(Mr Brown) We did have a little trawl round that earlier.
There is this crucial meeting this autumn to decide the level
of support. You are absolutely right, we should also consider
how that support should best be given. Should it be a production
support? Should it be a flat rate area payment with all the tensions
that causes between tenant farmers and landlords, for example,
because it affects the calculation of rent? Or should we look
at something a little more far-reaching? These are early days.
I have a very open mind.
95. What is your personal view?
(Mr Brown) I am the Minister and so I think it is
best that I hear other people's views first and let them inform
my own. I do think this is going to be a crucial round in all
of this and I have made it very clear to the Committee that I
do not go into it with an extra budget.
Mr Jack
96. Your colleague, Elliot Morley, announced
on 14 February with great triumph that he was out on a recruiting
exercise "to recruit down on the farms . . . new recruits
for the first instalment of the Government's proposal for redirecting
agricultural subsidies." How are you going to go about this
great recruitment exercise?
(Mr Brown) I think we set out our stall and wait for
applications.
97. So it is a passive activity as far as you
are concerned?
(Mr Brown) No, I do not think that. I think we have
got to explain the implications of each of these measures because
they are all accompanied by their own rules and the Countryside
Stewardship Scheme in particular have pretty detailed rules and
regulations that have to be met because we have to make sure we
are spending public money in such a way that gets good value.
98. Will you be telling farmers how these schemes
operate? Obviously the number of people who take up these schemes
is going to determine how much is spent on them. How are you going
to recruit them? Are you going to positively go out and promulgate
the gospel or sit back and wait for them to knock on your door?
(Mr Brown) I do go out and promulgate the gospel now
as much as I can with both farming leaders and indeed with individual
farmers. All the schemes at the minute are heavily subscribed.
Some of the figures that we intend to spend have been set by capacity
problems.
99. So you have got a queue at the moment for
Countryside Stewardship?
(Mr Brown) Yes, we have and even more so for organic
farming.
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