Examination of Witnesses (Questions 300
TUESDAY 18 JANUARY 2000
TIMMS MP, MR
300. You do not believe that the Government's
view that "the polluter pays" should apply to this industry?
(Mr Timms) No, I do believe that the "polluter
pays" is the right principle. That was one of the reasons
for looking at a pesticide tax. However, I am saying that I think
we have enough research data currently in order to make some progress
on this, while recognising that there are still some things that
we do not know everything about yet.
301. Why does the Government's approach on aggregates
differ so markedly from the Government's approach on pesticides?
(Mr Timms) I would not agree that it does. In both
cases we have commissioned research, we have carried out consultation,
and we have developed proposals on the basis of the results. One
difference of which I am aware is that the research work that
has been carried out in the case of aggregates was a good deal
more costly. It was a larger-scale study. There were a number
of reasons for that, one of which I have already mentioned, that
there happened to be more existing work on pesticides than there
was on aggregates. The approach that we have taken, the careful
step-by-step approach that I described at the outset, has been
the same in both cases. That is the approach that I would like
to see applied for future issues of this kind as well.
302. I want to take us back to the question
raised earlier in relation to the RSPB evidence to us. That organisation
was quite firm about this. It quoted two studies, saying that
farmers could cost-effectively reduce pesticide use now and save
between £100 million and £274 million a year. They were
not firm on the figure of £274 million. If the industry is
in such a crisis, why do you feel that farmers are not actually
making such cost-effective savings? Why are they not taking advantage
(Mr Timms) Certainly I am conscious of the pressure
that farmers feel that they are under at the moment. I think that
there is widespread agreement about the potential for reducing
costs here. As you will no doubt know, we are looking at the possibility
of taking action on pesticides forward with a partnership approach.
The sort of measures that would be examined within that package
would be along those lines: looking at ways of working with the
industry and farmers to reduce the amount of pesticides used,
perhaps using less environmentally damaging pesticides than have
been used in the past and a variety of measures of that sort.
I believe you are right that everybody would benefit from that.
There would be savings in costs and there would be a reduced degree
of pollution as well.
303. Concentrating more firmly on the NFU and
BAA estimates of the impact of such a tax on farm incomes, some
of us are being strongly lobbied by the NFU. I believe that it
is fair to say that some of us believe that the NFU/BAA estimates
are, in fact, rather grossly exaggerated. It seems that they have
chosen to use worst-case scenarios all the time. What would you
say about that? Do you think that they are deliberately slanting
the argument and, in fact, avoiding a partnership approach?
(Mr Timms) As I said earlier, there is a range of
views here. It is clear that the figures involved are substantial.
There is no dispute about that. Everybody agrees that that is
the case and that there is a case for action as a result. The
BAA has indicated that it is interested in a partnership approach
to tackling the issue. They are coming forward with proposals
on that approach. We shall look at those carefully and decide
how to go on from there. I would not say that BAA has been unhelpful.
It has sent in its proposals and we shall look at those very carefully.
304. I find that encouraging, particularly as
government policy is to encourage farmers to be custodians of
the countryside with significant environmental responsibilities
and they do not want farmers to be on one side and environmental
groups on the other. Taking you on to the objectives of the pesticide
tax, should those objectives be to influence distinctly the behaviour
of farmers or to fund other measures to reduce usage, or as a
sort of stick with which to encourage a voluntary change?
(Mr Timms) The objectives of the tax would be a reduction
in the level of pesticide usage, consistent with adequate crop
protection. That is what we would look for. Because of the banding
approach to the tax that was proposedI think that the proposal
made in the ECOTEC report was widely supportedI believe
that we could look to a move towards less harmful pesticides where
pesticides are used. The overall aim would be a reduction in the
level of usage consistent with adequate crop protection.
305. Looking at the long-term as well as the
medium and short-term, what sort of level of elasticity would
you consider would be the absolute minimum for any such tax to
be justified as a demand management tool?
(Mr Timms) The actual level of tax would be a matter
for the Chancellor at the time of the Budget, as you know. The
research that we have seen suggests that a tax of around 30 per
cent of the product price would reduce pesticide use by between
eight per cent and 21 per cent. That figure has been developed
from research. The question of the level would be a matter for
the Chancellor to decide at the time of the Budget.
306. As always, you are not giving away any
Treasury secrets. In terms of such a pesticide tax, I think it
is true of all environmental measures of taxation and that is
why we get such worried and frightened letters from particular
lobbies. How much more work would you say would be required to
develop detailed, clear, transparent tax proposals? In your view,
when is the earliest that such a pesticide tax could be introduced?
I know you cannot do it tomorrow.
(Mr Timms) No. The earliest point for the announcement
would be the Budget.
307. The coming Budget?
(Mr Timms) The coming Budget. Before moving to a decision
on that we shall need to consider proposals put forward by the
308. It is quite clear that the Government will
be open and transparent about that and let people see the detailed
work that has been going on. Whenever you try to change the tax
base, lots of worries appear unless people are taken on board.
All our witnesses have said to us that they feel that hypothecation
of any tax to fund technology transfer and advice to farmers would
be absolutely vital for its success. Would you agree with that?
(Mr Timms) Do you mean hypothecation of an element
of the pesticide tax?
(Mr Timms) I would not necessarily agree, no. If we
accept that the aim is a reduction in pesticides use consistent
with adequate crop protection, I do not believe that that necessarily
implies that the portion of the revenue should be used in the
particular way that you imply. Clearly, that would be an issue
that the Chancellor would need to take a view on in the run up
to the Budget, but I would not regard it as an inevitable or unavoidable
feature of a well-designed pesticide tax.
310. Minister, as to good working practice,
you have used the mantra that you want to see a reduction in the
level of pesticide usage consistent with adequate crop protection,
although I am not sure what that means. In practice, how will
that be done? Will there be dual charging of different sorts of
pesticides? You have also mentioned that less harmful pesticides
should be encouraged. What is a less harmful pesticide? Is it
one that is more dilute than a more harmful one? In that case,
will it be taxed less and then the farmer can use more of that
less harmful one, which would produce the same result? How will
it work in practice?
(Mr Timms) The proposals that we are starting with
are those contained in the ECOTEC report. A system of four bands
was proposed there and the report proposed how those bands should
be defined. The suggestion was that there should be a variable
level of tax added to the price of the pesticide, depending on
which band the pesticide was in. That was fairly straightforward.
That was a reasonably well-supported structure. Of course, the
idea of a tax has been quite hotly debated, but in terms of the
best structure for making a tax work, I think the proposals in
the ECOTEC report have been widely supported.
311. The key thing must be the effect. At the
moment it strikes us that pesticides are bad and will be taxeda
broad-brush approach. There may be some variation as between some
bands, as you say, but the Government seem to have done little
work on the effect of them. You have quoted that a tax of around
30 per cent as an average would reduce usage between eight and
21 per cent. That is an enormous band. It strikes me that the
Government have not done enough work on the effect. We have heard
witnesses from the NFU say that there may be stronger pesticides
that can be used through the use of technology right up to satellite
positioning, or whatever, concentrated on areas of weeds in a
field, rather than just a broad-brush approach. There are all
sorts of technological advances that can be used, but what encouragement
are you giving for those to be used if you just tax heavily the
actual pesticide being used while being reluctant about any hypothecation
towards better stewardship or farm management. At the end of the
day will this just produce money for the Exchequer? What incentive
will there be for the good farmer and the environmentally sensible
farmer, who uses fewer pesticides or more effective pesticides
which means having less of an impact on a wider area of land?
One final point, are you taking on board the fact that it is not
just a question of using less pesticide? If you use less pesticide
the whole crop may, in some cases, become unviable. You will not
just have an 80 per cent yield or a 90 per cent yield; unless
you use a minimum amount of pesticide the whole crop may become
(Mr Timms) First of all, I have not proposed a 30
per cent rate for the tax. I was simply referring to one research
finding which was based on that figure. It is not a figure that
I have endorsed. The structure proposed in the ECOTEC report,
by having a different level of tax for pesticides, depending on
their environmental impact, would have an encouraging effect of
the kind that I think you are seeking. The imposition of a tax
at all would, as we have said, reduce the level of pesticide usage,
which I think would be widely acknowledged as a good thing. There
may be other ways of achieving it and that is why we are looking
at the partnership approach with the BAA, but nevertheless I believe
that the tax would have the effect of reducing the level of use.
It is important that we acknowledge that there is a need for pesticides
to be used. That is why the statement that you referred to as
my "mantra" includes the point about being consistent
with adequate crop protection. I entirely recognise that and it
is an important point. Pesticides have an important part to play
in agriculture. We can frame a tax, I believe, that would acknowledge
that and be consistent with adequate crop protection but would
nevertheless produce increased incentives for lower or cautious
or sensitive use of pesticides. That would be our aim.
312. Going back to your mantra, the fact is
that both the NFU and the BAA have said to the Committee that
there is no scope for reduction in pesticide use. I am surprised
to hear you say that everyone is agreed.
(Mr Timms) The British Agriculture Chemicals Association,
with the support and some involvement from the NFU, has been working
up proposals for addressing the issue. We asked for them by the
end of last week and we received them by the end of last week.
However, I have not yet had the chance to study them. The fact
that those proposals have come forward, and indeed it has been
confirmed in discussions that I have had with the BAA that it
is their view as well, indicates that there is scope for some
action in this area. They would prefer that we did not go ahead
with the tax. We shall need to study the proposals that they have
made and see whether they can make adequate progress in that area.
My impression from the discussion that I had with them was that
they saw a good deal of scope on the voluntary front for reducing
the environmental damage from pesticides.
313. If you have done the study, why do you
not know what the scope is? Why does the Government not have a
view? You said in answer to the original question that the Government
have no view as to whether the RSPB was right or the NFU was right.
Why do you not know?
(Mr Timms) I think it is a reflection of the fact
that there are a good deal of uncertainties in this area. Equally,
skilled and able researchers can reach different views. However,
it is important to acknowledge that the effects are significant
and that there is, therefore, the basis for action to reduce them.
I think there is agreement about that, and that is why we have
proceeded as we have done.
314. One of my last research projects was to
develop biodegradable herbicides: molecules that did the job on
the weeds, dropped onto the soil and were converted by organisms
in the soil into relatively non-toxic materials which certainly
did not end up in the water courses. That is the kind of research
that is going on.
(Mr Timms) You probably have the edge on me on that
315. It is research that is going on and in
my view it is research that you ought to encourage. I am pleased
to hear you talk about the banding of a pesticide tax. My view
would be that biodegradable pesticides of all kinds, if it can
be proved that they are biodegradable, should not be subject to
the tax so that we encourage their development. Unfortunately,
if we apply this blunt instrument we may inhibit research of that
kind. Has anyone raised that subject with you so far?
(Mr Timms) The industry has, as you know, urged us
not to introduce the tax at all. I have not yet received from
anybody in the industry any proposals along the lines that you
have described. Perhaps it would be helpful to ask Simon Virley
to say a little more about how this banding system would work.
As you know, that was proposed in the ECOTEC report. I think it
has been a principle, at least, that has been quite widely accepted,
although there is certainly scope for debate about the form that
the bands should take.
(Mr Virley) That is right. As the Minister has indicated,
the principle of the banding structure has been widely accepted.
A large number of representations on exactly where the band should
fit have been made, allowing for the toxicity of different pesticides.
There have been some representations made about what form of pesticides
might be exempt from that. Obviously, that would be a matter for
the Chancellor to decide upon on the scope of a tax if one were
316. Minister, you spoke earlier about the Government's
desire to have a partnership approach with the industry. Would
a partnership approach include representations from environmental
organisations and agencies?
(Mr Timms) We would certainly want to take account
of the views of environmental organisations in taking that forward,
317. With respect, that is a somewhat obscure
answer. Perhaps I can ask the question again. Would the partnership
approach include representatives from environmental agencies?
(Mr Timms) I have not seen the proposals that the
BAA has come forward with, so I do not know whether they are proposing
a structure on which representatives from different institutions
would come together. If there is not, then I do not think that
the suggestion that you are making would be one that would apply.
However, it is very important. From time to time I meet with the
representatives of environmental organisations. We pay careful
attention to their views on all these matters including the pesticide
tax. The RSPB has been particularly vociferous on this topic,
although we meet with all the organisations. Certainly I am anxious
to take full account of the views of the RSPB and others in taking
this matter forward. Whether there would be a sort of institutional
role, I do not know. I think that would depend on what form the
partnership took. I apologise if you thought my remark was obscure.
It was not intended to be. I wanted to make the point that I want
to take full account of the view of those organisations.
318. What public accountability would there
be if the Government decide to agree to some sort of voluntary
(Mr Timms) Again, you are pressing me on the details.
It is a little early to talk about how this will work out in detail.
As I have said, I have not studied the proposals that have been
submitted, still less formed a view as to whether that is the
right road to go down. I believe that it would be important, perhaps
particularly in the pesticide area, that there was a good deal
of public reassurance around our proposals and that there would
be some reassurance for the alarm that there has been on this
front. It is too early to say how that would work precisely.
319. I can understand your inability to go into
any detail about it, but I am sure that you understand that if
a voluntary approach were decided upon, there would be a number
of interests out there that would need to be assuaged that this
was not simply a sweetheart deal and that there were some clear
targets and penalties involved in the scheme. Do the Government
have any views on those principles if not on the details?
(Mr Timms) I entirely accept and agree with the principle
that a range of interests would need to be reassured. That is
something that we would want to take seriously. What form that
would take, whether there would be targets, and so on, it is really
too early to say. If the Committee would want, I would be very
happy to come back to the Committee to talk further about whichever
of the routes that we decide to go down.