Examination of Witnesses (Questions 1060-1079)
RT HON
MARGARET BECKETT
MP, LORD WHITTY
AND MR
ANDY LEBRECHT
WEDNESDAY 15 MAY 2002
1060. So farmers can plan, in their business
plan, on the fact that they will always have that disadvantage,
and that the Government is not intending whatsoever to address
any of that exchange rate disadvantage?
(Margaret Beckett) I accept that there are many farmers
who would like us to do something more to address it, but I simply
say to you that until 1997 that did not happen. We did take substantial
steps, but that scheme has now come to an end.
Mr Borrow
1061. In some of the discussions we have had
with farmers and their leaders there seems to be an assumption
that if we move resources from Pillar I to Pillar II we are simply
substituting one source of income for another source of income
and, therefore, in many ways it is subsidies by another word direct
to farming as against the support for rural development, which
Lord Whitty mentioned. I am just wondering whether you accept
there is a real danger that if we get Pillar II wrong we will
simply be using it as a way of directly subsidising agriculture
rather than rural development. By illustration I am putting in,
by way of an example, the fact that farming businesses under the
existing system pay no contribution towards local taxation whereas
non-farming businesses in rural areas do pay business rates. Where
you have a comprehensive rural package you would look at all rural
businesses, farming and non-farming, and see how they contribute
towards rural development.
(Margaret Beckett) I think you are bringing me back
to part of the conversation that we had earlier on, in the sense
that our long-term goal is to see farming in the marketplace and
making its decisions in the way that any other business would
on market circumstances and how they identify consumer demand
and how they satisfy consumer demand. However, we also recognise
that there is a special contribution that farmers make as custodians
of the land and land managers, and that is a public good and that
it is right for that public good—which would not attract
support in the marketplace—to be supported from public funds.
Farmers, of course, do not like you calling it subsidy anyway,
but I take your point that that would still mean resources from
public funds going into the sector which we describe broadly as
farming. It is a form of income support in order to reward people
for doing things that the public wants them to do, and that does
seem to me to be a reasonable and better proposition than what
we have now, where we are often rewarding them for things they
do not do.
(Mr Lebrecht) Could I just add a word on this, that
there is a WTO angle as well in relation to this. One of the key
differences between Pillar I and Pillar II is that Pillar I payments
fall in either the amber or the blue box and are, therefore, required
to be reduced over time, whereas Pillar II payments are in the
green box and are, therefore, not so required. Clearly, if the
community wants to buy public goods on a permanent basis it has
to devise schemes that are not, or are minimally, trade-distorting
and therefore get into the green box. That is an important safeguard
in this respect.
Mr Jack
1062. With the pressure in the Curry report
to increase the percentage to modulation, how will you decide
what the right number will be beyond your present plans? What
is the methodology or formula or thinking that underpins your
decision-making process to decide on what is the right percentage
for modulation at any moment in time?
(Margaret Beckett) I repeat that we will look at that
in the context of whether or not we feel we can make better use
of any such resources, because the framework for how you can budget
modulation procedures changes. It would be a genuinely very difficult
issue to address if that framework does not change. They would
have to consider whether we could get value for money putting
substantially more into a modulation scheme. If we do get that
greater freedom from the new money we would simply start with
the Curry proposal and discuss that with stakeholders. Why invent
another proposal when there is one on the table already?
1063. So, effectively, it is an economic choice.
(Margaret Beckett) In the long-term it will be an
economic choice, yes, but it does go back very much to the context
in which you could use those resources and whether that context
will change.
1064. Following on from that, you have had some
experience of modulation already. Are you constructing any kind
of cashflow analysis to see where money moves from within UK agriculture—in
other words, winners and losers—so that you can actually
see, in economic terms, where the areas are that are, if you like,
paying out but not yet benefiting from rural development plans,
and who the winners are? How will we know what the economic effect
is?
(Mr Lebrecht) Two comments on that: firstly, that
the application of modulation in this country is divided as between
England, Scotland, Wales and Northern Ireland, so there is a regional
phase across those boundaries. Secondly, we do, as a matter of
course, evaluate the schemes that we operate under the rural development
programme. Of course, it is still relatively early days but we
are in the process of beginning to construct those evaluations.
1065. So, if you are beginning, when might we
expect to see some fruits of your labours?
(Mr Lebrecht) The agri-environment schemes, in particular,
need, according to community law, to be evaluated by 2003.
1066. Coming back to my question though, are
we going to be able, within that evaluatory exercise, to track
who has paid and who currently has gained?
(Mr Lebrecht) Perhaps in a broad sense. We obviously
know from where modulated moneys come (that is an easy calculation
to make), and in broad terms we can see where the money is going
in terms of agri-environment schemes. What we cannot do is predict
in advance, because these schemes are competitive and they depend
on farmers' willingness to apply for schemes and then to win the
competition.
(Margaret Beckett) We are also cautious about using
it as a predictor of what would happen in a wider scheme, simply
because of the point I made before; there is a certain amount—and
I am not sure if it is more than anecdotal—of anecdotal
evidence that there are people who would be interested in taking
part in bidding for schemes under modulation who are put off by
the bureaucracy and the restrictions and so on. Even the information
we can get will not be as good a predictor as we would like, at
this stage.
1067. Finally, can you tell me when I should
table a Parliamentary question asking, county-by-county, how much
money has been taken out by modulation and the corresponding question
how much has been paid back in through, for example, rural development
plans? When would I get a meaningful answer to that question?
(Margaret Beckett) I do not know, Mr Jack. We will
write and tell you.
Chairman
1068. Secretary of State, are you, like me,
very suspicious of this term "public good"? We all talk
as if there was a single public good which is so manifestly obvious
to everybody. There must be a dozen public goods around and some
of them are in conflict: those who want to conserve and those
who want to shoot, for example; those who want access and those
who want monuments. Do you not think we ought to be rather careful
before we keep using this term "public good"? Who decides
what it is, in any case?
(Margaret Beckett) I agree with you. The only thing
is that I cannot think of an alternative way of shorthanding the
description as to why it is okay to make some funds available
when you are saying you want to remove subsidies, for example,
from production. Yes, I accept there are different things, some
of which people may not think are public goods and some of which
are in conflict, but I think there is a broad category of things
for which the market will not pay, and then we have to decide—and
it is through the ordinary political processes—whether the
taxpayer will pay.
1069. When we talk about public good we are
really talking about the particular hobby-horses of lobby groups,
are we not? Nobody comes to my surgery and says "I just wanted
to talk a little bit about public goods, Mr Curry, and what my
ideas are." It is not a topic of conversation of a serious
kind. The RSPB, the Council for the Protection of Rural England,
Greenpeace and all the usual suspects talk about it, but the ordinary
person never talks about this.
(Margaret Beckett) No, they do not but they do talk
about how much they hated it when they saw hedges disappear and
they do talk about liking to see some of the things in the landscape
that they have enjoyed preserved. They do talk about those things,
but I agree they would not think of describing them as public
goods.
Paddy Tipping
1070. Would it not be the case that if a broad,
shallow scheme were introduced through modulation, you would see
resources switch from the east of the country, from arable lands,
to the west of the country?
(Margaret Beckett) I do not think it can be a given.
It does depend on what you do and how the scheme is designed.
I think there are understandable fears. People who have a certain
structure of subsidy and so on now fear they will lose out in
a different scheme. I am not aware of any evidence to suggest
that there is a particular group or sector that is bound to lose
out under any theoretical sets of proposals.
(Lord Whitty) What Curry is talking about and what
we are discussing with the various stakeholders is an accessible,
broad and shallow scheme, which means accessible to all types
of farming. There are no built-in presumptions, either by size
of farm or type of farm, that one sector would benefit more than
others.
Mr Todd
1071. Is maintaining a high level of food self-sufficiency
in this country a policy?
(Margaret Beckett) Not as such. Certainly we see advantages
in producing the best of what British agriculture can produce,
but we have always been a country that has traded substantially
and that has drawn in food from elsewhere, and I accept we always
will be.
1072. DEFRA keeps data on self-sufficiency,
and what it shows is that particularly over the last four to five
years and, particularly, within that period, in the last year
our self-sufficiency has fallen. Is that a concern?
(Margaret Beckett) It is not an intrinsic concern
of mine. I am cautious about this. I recognise that it is something
that will concern some people and I am prepared to consider and
discuss that, but I am always extraordinarily mindful of the fact
that the reason we have got the CAP that we have is because—I
think I am right in saying—people put food security above
all else, and that led to the CAP. When people say is food security
a prime part of policy I say no, not necessarily.
(Lord Whitty) What is a prime part of policy is that
we want to see an agriculture and food industry which is competitive,
both in terms of its export markets and against import markets.
Whilst we may not have a figure with which to see a sort of settled
figure of self-sufficiency we can see a competitive industry,
and that is indeed part of the economic sustainability—
1073. On last year's data 62.5 per cent of the
food consumed in this country was grown and produced here. Too
low? Too high? Do not care?
(Margaret Beckett) If you take the view that there
should be a market approach to British agriculture then it seems
to me to be incompatible with having a fixed view as to what percentage
of what Britain consumes should be produced within the UK. Andy
has just reminded me that, of course, those figures in any case
will have been influenced by BSE and by FMD and will not be typical.
1074. Yes, although there is a longer-term trend
as well.
(Margaret Beckett) Indeed, yes. Nobody is disputing
that.
1075. I actually agree with you. What I am challenging
you to do is to firmly reject the "U-Boat" long-term
strategy, essentially, which has founded British agriculture and
European agriculture for the last 50 years, in our terms, and
30, 40 years in European terms. Would you simply say that is not
a relevant policy goal nowadays?
(Margaret Beckett) No, I think there are risks inexorably,
and I think that particularly post-September 11 we have to recognise
potentially some of the vulnerabilities that that creates. I also
think that we have been—almost, perhaps, for centuries—moving
inexorably in this direction; that the whole thrust of the marketplace
in which agriculture has to operate is a free trade and that that
will continue to be the case.
1076. Anyway, consumer tastes change and there
are many things that consumers seek now which just simply cannot
be grown here.
(Margaret Beckett) When I was a student—which
shows you how many years ago that was—there was only one
place in Manchester, where I was studying, where it was easy to
get things like courgettes and aubergines, and that was at the
delicatessen. By the time I moved to London they were already
on sale in the corner shop, and that is true universally. There
is an amazing shop in Brixton where you can go in and see things
that you have absolutely not the faintest idea what they are.
So, yes, all of that has changed, and consumer tastes too.
1077. Turning to a different subject, you expressed
the hope of CAP reform and you backed it by the views of other
ministers that CAP reform would produce a simpler regime as well
as one which was more market-aligned. Do you feel that—based
on the evidence we have seen certainly in the last Parliament
and from the working groups that have examined the processes we
choose to impose on agriculture ourselves and the Haskins report
on environmental regulation on agriculture—the core of our
problem is the CAP or the core of our problem is our own bureaucratic
obsessions?
(Margaret Beckett) A mixture. I think the core of
our problem is the CAP. There is not any doubt about that.
1078. When the Brits start to get to grips with
it, it gets even worse.
(Margaret Beckett) I would not entirely say that and,
of course, the whole approach has got to be better regulation,
in the sense that we have to recognise that there are some issues
that we very much want to regulate because of food safety or environmental
standards. It is a matter of trying to find the best way of doing
that which is effective but is not over-burdensome. There is a
simplification initiative. The Commission has a CAP simplification
initiative with a working group reviewing that, and that, for
example, is looking at a pilot scheme which is particularly geared
to small farmers. Leaving aside the fact that it is harder for
small farmers to meet any of these requirements, if you get a
really small farm you still have to go through huge bureaucratic
hurdles that clearly can be quite burdensome, so people are looking
at these issues.
1079. Why would your civil servants wish to
part with that job-creating opportunity?
(Margaret Beckett) They may have seen the light!
(Lord Whitty) There are two other dimensions. One
is that a lot of the apparent bureaucracy and doubling of bureaucracy
as compared with certain other industries is due to the fact that
they have to qualify for subsidies. If we made the whole access
to subsidies simpler through the Curry proposals there is an automatic
simplification of that. We are also, even within the present system,
trying to rationalise the IACS procedures and indeed the Environment
Agency procedures. What Curry wants is to get, and we would agree
with this in the longer-term, to a more holistic approach to regulations
on farms, so that you work on the whole farm rather than having
to deal with several different regulators, sometimes in conflict
but always increasing the bureaucracy. I think in that respect
we do need to make a significant change. It will take a bit of
time to get there but we are certainly looking very hard at how
we can deliver an approach to whole-farm plans and whole-farm
certification.
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