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Agrimonetary Compensation

11. Miss Anne McIntosh (Vale of York): What recent discussions he has had with the Secretary of State for Environment, Food and Rural Affairs on applications for agrimonetary compensatory amounts. [11338]

The Economic Secretary to the Treasury (Ruth Kelly): Treasury Ministers are in frequent contact with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs on a wide range of issues.

Miss McIntosh: Does the Government's refusal to apply for monetary compensation for farmers indicate that they see no viable future for British farming?

Ruth Kelly: We clearly understand the difficulties that the farming sector faces. This Government have drawn down agrimonetary compensation, in contrast to the Opposition, who never drew down a penny of it. However, in the current climate, the case for agrimonetary

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compensation must be well made and it is better to pursue a targeted approach which encourages the sector to develop in a way that will help it to progress.

We are achieving that through the England rural development plan, under which support is given for rural development and agri-environment schemes, and by continuing our efforts in Europe to reform the common agricultural policy. That is the right way forward for the industry, rather than putting more money into a quick fix or help for the agriculture sector.

Paddy Tipping (Sherwood): Was not the right to agrimonetary compensation substantially signed away by Lady Thatcher at Fontainebleau with the effect that 80 per cent. of funding for agrimonetary compensation comes from the taxpayer, which is not the case for our European partners?

Ruth Kelly: I thank my hon. Friend for his comment, but I would argue that the original justification for the Fontainebleau decision still stands. That justification is that the rebate compensated the UK for its relatively low level of EC receipts. [Interruption.] I understand how excited the Opposition get when those issues are raised.

Mr. Hugo Swire (East Devon): Given the Minister's reply to my hon. Friend the Member for Vale of York (Miss McIntosh), there can be no one left in the country who believes that the Government care about farmers and others living in rural communities. None the less, does the Minister agree that there is a reason to give Devon county council compensation for instigating its own inquiry into foot and mouth—an inquiry that will cost £25,000—in the absence of a Government inquiry into the disease?

Ruth Kelly: As the hon. Gentleman is no doubt aware, the Government are committed to achieving a sustainable future for the agriculture sector. Agriculture has been given a high priority, not least because of its considerable difficulties in dealing with foot and mouth disease.

We are committed to compensating farmers as far as possible for the effects of the disease. Not only have we matched funding to voluntary organisations for the relief of distress, helped farmers on a case-by-case basis and compensated them for the effect on their farms and the welfare of their animals, but we are putting significant sums into the rural economy in general. We will continue to approach the matter rationally, so that we can pursue a viable strategy for the industry's future.

Paul Flynn (Newport, West): Is not it reassuring that, in the recent general election, Labour recorded the biggest vote in its history in rural areas and returned its largest ever number of MPs from those areas in spite of the continuous barrage of whining and whingeing from the Opposition?

Although there is great sympathy with the farming industry for its recent problems, before that period the contribution of the farming industry in England to gross national product was less than 0.5 per cent. while manufacturing industry's contribution to gross domestic product is more than 20 per cent. Is not it right to look to

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the coming crisis in the manufacturing industry now, to make sure that aid is given where it should properly be given—to the manufacturing industry?

Ruth Kelly: My hon. Friend rightly points out that the Government's commitment to the rural economy was recognised at the last election, as it was at the previous one. Of course, we must consider the real difficulties in which the agriculture sector finds itself, and we are committed to working with farmers and those employed in the rural economy to think of a viable strategy for the future. That is why the Government are in the vanguard of pressing for reforms to the common agricultural policy in Europe, and of diverting money right back to the rural economy and away from the production subsidies that have done so much to create the problem in the first place.

Mr. Henry Bellingham (North-West Norfolk): Surely the point is that this money was available and the Government did not apply for it. Is the Minister aware that the average income of west Norfolk grain farmers has fallen to £5,000 a year? They have been getting rid of staff and cutting expenditure on local services, and they feel that this treatment is extremely shabby. Surely it shows that the Government do not care about the countryside.

Ruth Kelly: As the hon. Gentleman knows, that is altogether untrue. I take his comments as yet another Opposition plea for more public spending and I want the Opposition Treasury team to spell out exactly how they would meet such commitments. The right way forward for the industry is to enable it to restructure sensibly and rationally, so that it can compete in an efficient market. That is what we are helping it to do.

Work Incentives

12. Charlotte Atkins (Staffordshire, Moorlands): What steps he is taking to improve incentives for those with children to work. [11340]

The Chancellor of the Exchequer (Mr. Gordon Brown): To help families and to make work pay more than welfare, we have introduced and widened the 10p tax rate. We have reformed national insurance contributions and introduced the working families tax credit, including a child care component, which is helping to make work pay for more than 1.25 million families, giving a minimum income for a full-time working family of £225 a week. Building on those successes, we will introduce from 2003 a new system of tax credits that will allow further progress in supporting families in work.

Charlotte Atkins: By guaranteeing a minimum income, the working families tax credit has been a real boon to families in Staffordshire, Moorlands, which is traditionally a low-pay area. What impact has the child care element of the working families tax credit had and has take-up increased now that there are so many more child care places in the local economy?

Mr. Brown: My hon. Friend is right. If we are to help more mothers in particular to get back into work, we need to improve the number of child care places available. The child care tax credit was introduced a few years ago,

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and 145,000 mothers and fathers now benefit from it. It is making work possible for tens of thousands of people who would otherwise not be able to work, and we are determined to do more on the provision of child care places and the child care tax credit. Of course, we could not provide those places if we took the shadow Chancellor's advice and cut public spending to 35 per cent. of national income.

Mr. Michael Howard (Folkestone and Hythe) indicated dissent.

Mr. Brown: The right hon. and learned Gentleman shakes his head. I refer him to his speech to the British Chambers of Commerce on 13 May 1997, when he called for public spending to be cut to 35 per cent.—a proposal more extreme even than the Letwin plan.

Mr. Mark Prisk (Hertford and Stortford): Will the Chancellor enlighten those of us who come from a small business background as to the administrative costs of measures such as the working families tax credit? I understand that he and his colleagues have had the Carter report on that subject for at least two weeks. This vital report could provide support for small firms that find the cost not just of paying wages, but of administering the Government's proposals for the working families tax credit, such a burden. Will he make a commitment to giving relief to those small firms, rather than letting them struggle on in the way that they have?

Mr. Brown: Obviously, we will publish the Carter report's recommendations and deal with it in the pre-Budget report as I have promised. The hon. Gentleman must remember that we have cut small businesses' corporation tax from 23p to 20p, and introduced a 10p band for profits of up to £50,000. We have therefore cut small businesses' corporate taxation by the order of £1 billion.

The hon. Gentleman raises the question of regulations. The two issues that the Conservatives always have in mind are the minimum wage and the working families tax credit. Those measures help to relieve poverty and get people into work. I well remember the shadow Chancellor, when he was Secretary of State for Employment, saying that the minimum wage would cost 1 million jobs and raise inflation by 2 per cent. He went on to say, in 1991, that it

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would push us out of the exchange rate mechanism. The minimum wage did not cost 1 million jobs; we have created an additional 1 million jobs.

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