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3.19 pm

Mr. Colin Breed (South-East Cornwall): First, I welcome the Budget as far as it goes. The Chancellor made a great point of saying that it should be a balanced Budget, but much of that balance is subjective. I welcome the help for low-income families, particularly in rural areas where, as the right hon. Gentleman knows, far too many families--especially those working in agriculture--are on very low incomes.

Small businesses predominate in rural areas. More than 97 per cent. of businesses in Cornwall and in my constituency are small, or even micro-businesses employing fewer than 10 people. The fact that they will have a simplified means of paying VAT and corporation tax--for those that have the good fortune to pay tax--is to be welcomed. The reduction in VAT on the renovation of property is also to be welcomed. There is a significant number of empty properties which could be used for affordable housing. I hope that the measure will be directed at that sector, not at providing even more potential second homes for other people who want to live in Cornwall.

I also welcome the raising of the minimum wage, which, for an area of very low wages, is one of the most significant measures in the Budget. I hope that that increase will help a considerable number of my constituents who take home the minimum wage.

But--and there has to be a but--one sector of our business community has suffered considerably in the past five or six years, not only from the consequences of BSE but, in some places, from the catastrophe of swine fever, from the wet weather and the flooding of much farmland, and now from the disaster of foot and mouth disease.

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It must have been a bitter blow for many people engaged in that industry when they listened yesterday afternoon for the sort of measure that might give them some hope, but recognised at the end of the speech that what they would get was a free tax disc for their tractor. That will be a bitter blow to many hard-working families--families of the kind who the Chancellor recognised needed assistance.

I suspect that there can be no harder-working sector of the community than those who are engaged 12 or 14 hours a day in trying to make a living on a farm. Their incomes have dropped significantly in a relatively short time, but they have not succeeded in attracting the Chancellor's attention to their plight.

The fact that the Government are going to apply for agrimonetary compensation is welcome, but if they had applied for it six months ago, some of the payments would be coming through now. I welcome the fact that the Government recognise that they must try to get it fast-tracked, but they were already depending on it to deal with the problems that we faced prior to foot and mouth disease. This morning, the Minister of Agriculture, Fisheries and Food said that the present foot and mouth crisis influenced the Government's intention to apply for agrimonetary compensation. It would not, perhaps, be wrong to deduce from that comment that, had the disease not occurred, the Government would not have applied for the compensation.

Mr. Hope: Is the hon. Gentleman aware that, in the lifetime of this Parliament, farmers have received upwards of £500 million in agrimonetary compensation, whereas under the Conservative party, they received not a penny?

Mr. Breed: I agree, although I suspect that the Opposition would say that they were only in power for three or four months during the period when they could have applied for such compensation. Nevertheless, the hon. Gentleman is right. Farmers have benefited over a long period of time. The Government have also recognised that remaining outside the euro at present has a cost not only to farmers but to tourism and manufacturing. The agrimonetary compensation scheme was set up for that purpose. That cost should be provided for.

Mr. John Townend (East Yorkshire): Does the hon. Gentleman agree that if we went into the euro at the present exchange rate, it would not make the slightest difference? He is assuming that we would go in at a much lower rate. He cannot assume that.

Mr. Breed: If we were going in at today's rate, presumably we would be having a referendum now and deciding to do so. I do not suggest that we would go in at the present rate.

The agrimonetary compensation scheme finishes this year. At present, there is no successor scheme to provide further support while we remain outside the euro.

The timing was right and the compensation is to be welcomed. However, specific support to deal with foot and mouth disease would be unbalanced. The Chancellor's great card was that he wanted the Budget to

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be balanced. At present, the balance is that farmers who have the misfortune of having foot and mouth disease confirmed on their farms will have their animals slaughtered and receive 100 per cent. of the market value for them, but that many more farmers who will probably be affected by the disease because they are in a restricted area and cannot market their animals will receive nothing.

I accept that the question of consequential loss is a minefield. For some time the Government have said that no Government have provided for consequential loss to be compensated, and that a decision to do so would set a precedent. However, these are unprecedented times for agriculture. We cannot ever have seen such a decline in the industry. There cannot have been a time when farmers have been subjected to so many disasters in such a short time, or when a consequential loss has rippled out to affect such a large area. We should consider measures that would be carefully targeted--a phrase that the Chancellor often uses--on areas affected by foot and mouth disease which will not receive compensation.

Mr. Bercow: The hon. Gentleman makes a lot of sense on foot and mouth disease and assistance to farmers, but was casual in his reference to the experience of this country outside the eurozone. Will he confirm that he does not think that short-term fluctuations in interest rates or the difficulties posed by an over-valuation of the exchange rate in any way constitute an argument for the permanent abolition of our national currency, given that under the terms of the treaty of Amsterdam, the European Central Bank is not merely entitled but obliged to ignore any representations from outside bodies about its conduct of monetary policy, and furthermore, that the treaty goes on to specify in article 108:

Is that not an affront to, and the antithesis of, democracy?

Mr. Breed: I do not agree with virtually any of that, to be honest. The situation is clear. Farmers and many people in my part of the world recognise only too well that being outside the euro has been a disaster. Many of their businesses have been affected. Had we had the opportunity to be inside the euro, they would not have been visited by quite so many disasters.

Support for those affected by foot and mouth disease is unbalanced: the present situation with respect to compensation is at best an anomaly and at worst a real injustice. So many people whose businesses are clearly affected will receive no compensation. To continue that anomaly or injustice would not be right. However difficult it may be--I suspect that it will be very difficult--the Government must decide to assist those businesses which have been affected by foot and mouth but which under the current arrangements will receive no compensation. Many of the good measures in the rural White Paper will be much more difficult to achieve if the economy in rural areas is further weakened.

There is another disappointment. The introduction of an early retirement scheme linked to a new entrants scheme could have assisted the agricultural sector. We have been promoting such an initiative for a long time. It can be no surprise to many hon. Members that a significant number of older farmers--especially tenant

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farmers--are locked into their business. In the current circumstances, they cannot get out. They are making almost no money and have no real assets to provide themselves with a decent pension fund, while other people have the skills, experience and enthusiasm--even at present--to take over some of those agricultural holdings and make a success of them.

It should not be beyond the wit of the Government--nor should it be extremely costly--to develop a scheme whereby those who are locked into a miserable situation can retire with some dignity and those who have the enthusiasm and will to get into the business can do so. Not only will that help to revitalise the industry: it will address a particular hardship, which I am sure the Chancellor wants to do.

Over the past three or four years, although I have heard much talk about venture capital for small businesses, no significant amount has gone into them. Most small businesses are undercapitalised: it is difficult for them to access affordable and sensible amounts of capital. The Government have announced several schemes--regional and national--to which the Secretary of State for Trade and Industry referred again today, but no significant progress has been made.

Small indigenous businesses, especially in rural areas, are still much in need of genuine risk, venture or even development capital, but there is no source for it. In many cases, the costs involved are small. I realise that if a business needs capital of £50,000, the costs will be horrendous, but there should be some means of providing the small amounts that businesses want.

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