Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Examination of Witnesses (Questions 1060-1079)



  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.


  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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