Examination of Witnesses (Questions 1100-1119)
RT HON
MARGARET BECKETT
MP, LORD WHITTY
AND MR
ANDY LEBRECHT
WEDNESDAY 15 MAY 2002
Mr Simpson
1100. Secretary of State, you have identified
the difference between real power and probably marginal influence!
(Margaret Beckett) Sir Don Curry's outline of broadly
what his Commission thought would be the effect of some of their
proposals was to identify what the key was of an order of magnitude
of about £500 million over three years, I think I am right
in saying. Obviously we have tried to make some kind of assessment
and it is not easy at the present time. To a certain extent it
does depend on the outcome of the Spending Review. He has put
forward a set of proposals which he would like us to pursue and
he has given an outline indication as to what he thinks it might
cost to carry out those proposals. We then have to undertake our
own negotiations and then we have got to see where we can go and
how we can fit them in the framework which he has identified,
but I cannot really say any more to you than that.
1101. I can understand the constraints under
which you are operating, but, for example, he agreed that the
very important issue, which you have touched upon, of illegal
meat imports obviously has an enormous cost not just to your Department
but across government. Would you agree that that is in excess
of the £500 million that he identified?
(Margaret Beckett) Well, obviously he put in place
some key proposals and he suggested what he thought they would
cost. I think in fact it is undoubtedly true that they did not
make any specific proposals for funding for tackling illegal imports,
but one of the things that I hope we will get out of the risk
assessment is some kind of understanding as to whether we actually
need a great deal more in the way of funding or whether we need
to better target the funding that is available. The most effective
thing we can probably get in terms of dealing with it is intelligence.
It is possible that there are other things that one might seek
to do which might be effective and which might have greater expense,
but we would have to look very carefully at whether they really
are effective and where the greatest risk is coming and whether
that would be the most efficient use of money, so I think while
recognising that yes, that is an area we did not identify, I do
not think it automatically follows that it is an area where we
are just going to put in greater sums as opposed to using them
in a different way.
Mr Todd
1102. Regardless of quite what you have said
to the Treasury, one of the key issues is how you have argued
the case for additional resources at all in this area, whether
it is £500 million or a different figure. One of the critical
arguments which one would expect the Treasury to be more interested
in is whether you can show that additional resources investable
at this time have a payback over the short to medium term.
(Margaret Beckett) I totally agree with that.
1103. Can you perhaps rehearse how that argument
can be made without naming any figures which you might have attached
to the argument?
(Margaret Beckett) I think all I can really sensibly
say at this time is that you are right to say that I think there
is no merit in going to the Treasury to say, "Well, we would
like you to give us some more money because we have some problems".
1104. "Because Don Curry says it is a good
idea".
(Margaret Beckett) That has to be something that the
Treasury can identify and discuss as to what the taxpayer will
get back for such investment. I am very encouraged that in other
previous administrations the whole idea of actually investing
to save as opposed to just cutting costs to the bone has been
better understood and accepted and then there comes the discussion
as to whether or not there is a viable, long-term project, whether
or not putting resources, say, in capital investment, as any business
does, is something that will pay back and over what period of
time and so on. That is the nature of the discussions that everyone
has, but the Treasury is not a sort of goodwill charity.
1105. No. There are two kinds of arguments in
terms of payback. There is payback in terms of some of the things
you talked about earlier of social or environmental goods which
I am sure the Treasury will be interested in, but not necessarily
impressed by and may feel that those things should be delivered
through other means than additional public spending. There is
the other element which is, "You give us this money and our
budget will fall over a period of time reflecting the additional
investment put in to achieve certain goals", mainly to make
farming more efficient, to reconstruct certain areas of farm activity
in the food chain, to achieve a situation in which they will not
constantly be asking you for more cash. I am assuming that that
line has been taken, but have you been able to suggest quite what
savings might have been achieved over a period of time if we invest
sensibly in creating a more competitive farm sector?
(Margaret Beckett) Well, to some extent that does
depend on the farmers and what we are able to achieve in terms
of the mid-term review, but yes, obviously we look at the whole
picture and what the potential is. Also of course is the other
side of the coin which you did not identify which is a sort of
precautionary approach. Let's take a different area from farming
itself, let's take investment in flood defences. If we get that
right, then that is to the overall long-term benefit and helps
to some extent how fast you can move as a matter of practicality.
1106. Well, from a local perspective, you will
not find me arguing against that.
(Margaret Beckett) There are substantial costs or
potential substantial costs if one does not make that investment,
so all of those different arguments are part of the case which
can be the only sort of legitimate basis of any proposal one makes
to the Treasury.
Patrick Hall
1107. Secretary of State, Minister, could I
explore this idea of some of your costs and what is competitive
and what is efficient. With regards to the long-term strategy
which is going to be published later this year, will that be fully
costed? Will we be able to hold the Government to account over
the costings, the expenditure commitments in that?
(Margaret Beckett) Well, that decision has not been
made. The key thing at the present time is to identify the broad
approach of the strategy and to set it out, and whether or not
we will be able to attach numbers on what clearly is ahead when
the Spending Review itself only looks three years ahead even though,
in concrete terms, it is more than before, so I will think about
that one, but we have not yet made that decision.
1108. Sir Don Curry's Report does include some
costings.
(Margaret Beckett) Well, in order to indicate the
scale of what he thought might be required. I do not think he
necessarily thought that these were the kind of hard and fast
numbers. I doubt if the Commission have the capacity to do that
at the moment.
1109. Nonetheless, when we questioned him here,
he did mention a figure which has already been mentioned, not
as a kind of panacea, but of new spending over the three years
and an example of things you need to do in terms of the long-term
strategy.
(Margaret Beckett) Well, they are, if you like, numbers
in orders of magnitude.
1110. Well, if the Government does not agree
with that, presumably in its long-term strategy it needs to explain
why not and indeed what is needed instead, but that does come
down to costings as well, so I have made the point and you have
responded.
(Margaret Beckett) I take your point.
1111. Can I develop that a little bit in a slightly
different way. It was something the Chairman said earlier about,
broadly speaking, the switch from price support and direct payments
to environmental and public goods and there was some debate about
what that means, but it is all justified presumably in the name
of better efficiency for agriculture and increased competitiveness.
I visited a farm recently, largely an arable farm, and the argument
there that was put to me was that hedgerows and hedgerow trees,
et cetera, copses were originally put in for economic reasons
to help contain livestock. Now, where you do not have livestock
anymore, there is no economic justification. The justification
is perhaps biodiversity, because people have sentimental attachments
to how the countryside looks, et cetera, et cetera, very important
considerations, but in terms of the real efficiency and competitiveness
of that farm which I visited, I was told that it would be best
to remove them. The farmer had no intention of doing so. In terms
of normal management, those elements were not needed, whereas
if we take the example that the Chairman made of livestock farming
where normal management would require walls and hedges, et cetera,
do you see the switch of public subsidy from direct price support,
et cetera, to environmental and other benefits being ongoing in
terms of maintaining those elements which certain parts of British
agriculture will argue is no longer needed in terms of competitiveness
and efficiency and, therefore, it is a burden upon the units of
management to maintain them? Do you see that as an ongoing possible
commitment for the switch of resources and, therefore, not necessarily
a long-term reduction in the use of subsidy?
(Margaret Beckett) I think that is not impossible.
I do not want to create the impression that every farmer who says,
"I am only keeping these hedges because you have asked me
to" will automatically receive large sums of public money,
but I do accept that there is a legitimate point being made there,
that what ordinary, most efficient farm management would require
can change as circumstances change. I also do accept the base
proposition. I was just looking for, and not finding, some figures
somewhere for what has been done in terms of hedgerow replacement
and things of that kind and these are exactly some of the purposes
for which funding is made available even now and I think that
is a very good example of the sort of legitimate argument which
can be put. Now, obviously one looks at it, as one always does,
on a case-by-case basis, so I think it is a valid point which
is being made.
(Lord Whitty) The dichotomy you are describing is
just what Curry is trying to get over, in other words, we would
be persuading farmers by the change in the subsidy structure to
regard their output as in part environmental and in part market,
whereas at the moment they regard the environmental side largely
as a constraint of the market and your question suggests the same,
but we are saying it is a legitimate output for society to recognise
from farming, that the various environmental goods or the minimisation
of environmental imbalance is part of the output of those who
have care of our landscape. I think you need to broaden the issues.
It is not an either/or, but it is part of the total operation
of the farm and subsidy will help that, but it is also the approach
of our farmers as to what their task is and the role of farmers
in the rural economy. What foot and mouth did show us was that
if you shut down farming, the knock-on effect is that the tourist
trade and other businesses in the area are severely damaged. In
order to maintain that, you need to maintain a high standard in
the landscape and, therefore, the economic benefit in a wider
sense is there, albeit that to get the farmer to produce it, we
may have to give them a public subsidy.
1112. I would agree with that and I am instinctively
attracted to that way of reasoning. Looking back at the point
that Mr Todd made about what may or may not impress the Treasury,
if the long-term strategy does identify costs which may be attached
to some of these slightly more difficult issues in terms of economic
justification, nonetheless important though they are, then it
would be easier, I guess, in the future to ensure that some of
the mysteries in the way the Treasury operates can be exposed
to more effective public scrutiny, so issues such as this are
on the agenda and openly able to be tested.
(Margaret Beckett) Let's not be too unkind to the
Treasury. Even under existing circumstances, and I have found
the figures now, under the Countryside Stewardship Scheme there
are something like 16,000 agreements where 8,000 miles of hedges
have been restored or planted and 13,000 miles of grass margins.
Also the Treasury agreed, and is quite keen on, PSA targets for
the Department which include trying to restore biodiversity in
farmland birds, so it is not quite as restrictive, the approach
they have taken, as people might sometimes assume.
Mr Jack
1113. Before I go on to my main line of questioning
about agriculture and its competitiveness, you mentioned the publication
of the strategy. Will that be accompanied by a debate in the House
of Commons in government time because so far attempts to have
a full-scale debate on agriculture have been repelled by your
successor, the current Leader of the House, and given that as
we move through, we will have the time, the opportunity to discuss
Curry, et al, your strategy and other matters, are we going to
have a debate about this?
(Margaret Beckett) Far be it for me as a former Leader
of the House to attempt to commit my successor, but if you are
saying to me do we, as the Department, accept that there is a
legitimate case for such a debate once we have been able to publish
the strategy so that people will have time to assess what is involved,
then of course we accept that there is such a legitimate case.
I would also accept that there is always a great deal of pressure
on government time.
1114. I want to move on to the question of the
performance and competitiveness in British agriculture. To pick
up on a point that you mentioned earlier in your remarks about
reform and discussions with other European leaders, do you ever
have any discussions with them about taking advantage of the natural
advantages and competitive position that Member States will have?
For example, people in the United Kingdom would say, "Well,
we are good at growing pasture", so pasture-based agriculture
will be a natural advantage. Those in northern France might well
talk about their advantage in terms of pasture and wheat production
and so on. Do people yearn within your discussions in Europe to
take, if you like, the shackles off and allow their farmers to
show just what they can do where they think they would have an
advantage over others?
(Margaret Beckett) I have never engaged in quite that
kind of discussion. Certainly there are a number of us who are
very keen, for example, to stick to the agreement in principle
that was mentioned today about phasing out milk quotas because
we do believe that it is undermining the competitive position
of British farmers and they could take advantage, particularly
in the value-added end of the market, if those quotas were phased
out. I have never engaged in a discussion of quite the kind you
suggest, although I will ask Andy in a minute to say whether he
has because he has been involved in these issues for much longer
than I have. I would be a little cautious about it because there
is always the danger of other Member States saying, "Well,
we do this terribly well, so the rest of you had better not do
it at all", and I would be reluctant in any way to sort of
get engaged in a discussion as to how you should fetter the choices
that British farmers wish to make because somebody else in another
part of the European Union says that it is easier for them to
do it.
(Mr Lebrecht) All I would say is that I do not recall
any explicit discussion of the type that Mr Jack has suggested,
but the issue actually underlies the whole debate within the European
Union as between the liberalisers who accept the logic of comparative
advantage and those who wish to maintain production controls and
restrictions who would resist that, so I do not think it has ever
been brought out explicitly in the way that you suggest, but it
is there underlying the discussions.
1115. Let's look specifically at the competitiveness
of British agriculture. We often use the phrase "the efficient
British farmer". What studies have you done, what benchmarking
exercises sector by sector have you done recently to determine
whether that phrase is still valid and what are the results?
(Margaret Beckett) Again I will ask Andy to comment
on any specific studies, but what I would say to you is that I
do not think it is alright that there is a role maybe only to
some extent for our farmers and one of the things which I think
is extremely encouraging is that in the development of the Food
Chain Centre and the English Collaborative Board, the basis of
much of what they are doing is seeking to establish benchmarks
and to encourage best practice and in many ways I think it is,
as much as anything, for the industry itself and if and as the
industry becomes more market-oriented, the market will do that
for it. We will help to set for them what are the benchmarks,
what are the bottom lines, "Are you really competitive? If
you are, then you must be able to sell into the marketplace",
so I think it is not necessarily just for us as government to
run those studies.
1116. I accept that you are not in the necessary
business of providing a fix for the uncompetitive, but the question
I actually asked was, notwithstanding the work of people like
the Institute of Grocery Distribution and indeed the Food Chain
Centre and those who participate, what studies have your own Department
made about the competitiveness of British agriculture? You may,
for example, in speeches to farmers and to the food industry want
to comment on areas where you think we could do better, where
we are doing very well or where things are going bad and I am
interested to explore how you might inform such remarks, so I
ask again whether you have done any studies on this?
(Margaret Beckett) Sometimes there are relatively
simple facts like, for example, in the organic sector where we
know a very high percentage of the market in organic produce in
the United Kingdom is being satisfied from overseas, so there
is a clear simple fact there and you do not need a major study.
I cannot give you a list of them, but I am sure we could write
to you.
(Mr Lebrecht) Clearly we do look at the overall performance
of United Kingdom agriculture and that can be compared with how
agriculture in other Member States may be doing because Eurostat
collects quite a lot of data, but I think I would come back to
the Secretary of State's point, that at the moment there is a
highly regulated and managed European agriculture which results
from the policies which have been in place for a very long time
and it is only through changing them and allowing different parts
of British agriculture to compete that you can actually get a
definitive answer to your question.
1117. Well, let's come back with another one.
We have heard colleagues asking about spend to save, improving
the effectiveness and efficiency of British agriculture and the
Secretary of State has told us that you are looking very hard
at strategic objectives. How, if you have not got any analysis
of your own about the strengths and weaknesses, to put it another
way, of British agriculture, will you ultimately determine your
future policy and subsequent disposition of resources if you are
trying to strengthen agriculture against the background of external
pressures which will bear down on the amount of direct production
support and may require the farmers to learn new skills with reference
to marketing and production and also in terms of their environmental
responsibilities, all of which could be derived from an analysis
of the strengths and the weaknesses?
(Margaret Beckett) It seems a bit elaborate, if you
don't mind my saying so. Obviously we recognise that there are
sectors and sometimes it is due to a whole range of different
factors as to where there will be a particular weakness from time
to time. We recognise that there is a general case for training
to be available in order to increase the skills-base of farmers
and give them greater opportunity, but really I can only go back
to what I said before. We are not trying to look at agriculture
to say, "Here's a sector that needs particular support more
than others and here's a sector which has particular weaknesses".
There is a general approach to try and strengthen people's marketing
capacity, to try to make farmers think about themselves as businesses
and to look to what their future market opportunities might be
and how they could satisfy those market opportunities. There is
not a sort of master plan and I am not sure we feel there ought
to be a master plan which says that we should put more money into
a particular sector.
1118. That is the whole point. I would not expect
MAFF or DEFRA, as it now, is to have a prescriptive master plan
because farming is really a series of individual enterprises and
you are the interface between those enterprises and the wider
policy issues at the European and world levels. Coming back to
a comment Mr Lebrecht made, he talked about the liberalisers,
and let's try and strip out some of the complexity and make it
a straightforward question. In a more liberal regime, apart from
milk which we have discussed, which sectors of British agriculture
do you think would most benefit?
(Margaret Beckett) We are back to, "Will some
sectors of British agriculture disappear?" I cannot tell
you.
1119. It is not like they are disappearing in
a Houdini-type approach to agriculture, but I want to know who
is going to gain as a result of a more liberal regime?
(Margaret Beckett) Well, everybody who runs a successful
and competitive business, and those who are not able in the long
term to run a successful and competitive business will not, but
I cannot categorise—
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