WEDNESDAY 10 JULY 2002
Mr David Curry, in the Chair
Memorandum submitted by Department for Environment, Food and Rural Affairs
Examination of Witnesses
LORD WHITTY, Parliamentary Under-Secretary (Lords), MR PAUL ELLIOTT, Director of the Rural Economies and Communities Directorate, and MR JIM DIXON, Project Manager, Policy and Corporate Strategy Unit, Department for Environment, Food and Rural Affairs, examined.
(Lord Whitty) Yes.
(Lord Whitty) At least, Chairman, you appreciate our aesthetic touch. The design of the stand perhaps cuts against its purpose. We have received a number of critical remarks about the nature of the stand as it has gone round the major shows, but not so much criticism has been made about the content from those people who have actually been in it. Although the stand is slightly hi-tech and rather open plan, there is a lot of expertise that farmers and others could tap into. We had our vets there; the rural development staff were there; the Environment Agency was there; we had people dealing with the RPA there; and people dealing with wider responsibilities of the department, such as people from the national parks, which is appropriate for the Great Yorkshire Show.
(Lord Whitty) When I was there there were a few customers, but I agree that it was not oversubscribed at that time of the morning. That is partly a factor of the design of the stand. It is not sufficiently user-friendly; it is not sufficiently enticing to people.
(Lord Whitty) Of the people who go to the show, a small minority are farmers. Farmers need to tap into that information, but also vast numbers of the public turn up. I thought that there was a good turn out yesterday, despite the threatening weather and the skies opening up just as I was leaving. The public also need to know what DEFRA as a whole is doing. You describe it as "blather" but we are actually concerned with air, water and earth as well as with the techniques of farming. We need an interface with the wider public. Therefore, I do not accept the substantive criticism, but I accept some of the design and organisation criticism. Clearly, it is important that where the majority of sheep farmers are likely to go that we have something to do with the national scrapie plan. That was separate from the DEFRA stand, but the main stand needs to be reviewed in its design and content. However, there was a lot of expertise there available to farmers and to others who are engaged in environmental and land management.
(Lord Whitty) The situation at Covent Garden is difficult. What comes back to me is not so much that we are not taking decisions, but that the decision is no. There has been a limit on the amount of capital expenditure that we can engage in at Covent Garden, given the money supplied for this year and the number of other areas of DEFRA expenditure. It is true that in this financial year it has been particularly difficult to set the final budget. That is partly because of the expenses relating to the creation of the new department and partly because of the overhang of foot and mouth disease. It has also been due to the need to allocate the total budget within fairly restricted resources. Covent Garden's capital programme is not as good as the Covent Garden Authority would wish, but we have indicated to them how much money we can put to it. In the mean time, of course, we have been engaged in quite complex discussions with the Covent Garden Authority and the City of London on effectively carrying through the remit that your Committee pointed us to on the future of Covent Garden and the future of London wholesale markets as a whole. As you will know, we have recently appointed Mr Nicholas Caffrey (?) to conduct that review which effectively we are doing with the Corporation of London. So we are looking at the totality of the wholesale markets of London and their future. That will help us to define what the future of Covent Garden will be and how we need to develop it.
(Lord Whitty) The Covent Garden Authority has its own financial structure and direction. It is at arm's length from the department. As with any other organisation, if there is a legal requirement to be met by the Environment Agency or anybody else, some rejigging of the budget is necessary. I accept that there has been a tight ceiling on the amount of money that is available to Covent Garden over recent years to make capital improvements. There are other complications on the future of Covent Garden, as you will know, in relation to the range of activities conducted there. It is a complex situation at Covent Garden, but I do not think that one would expect the department directly to take responsibility for what is the authority's area of judgment as to how they meet the statutory requirements or the order requirements of the Environment Agency. It has implications for the budget, which we have to look at.
(Lord Whitty) It needs our permission and it needs the Treasury's permission for major capital expenditure. That is true.
(Lord Whitty) The future of Covent Garden has to be assessed in relation to the development of wholesale food supply in London as a whole, which over the five years has changed quite dramatically. The best way to do that is to look at it in conjunction with the other wholesale markets that are owned by the Corporation of London. Therefore, we have spent some time understanding those markets. Not all of that understanding is shared. As you will know, Covent Garden wish to extend its ability to trade at Covent Garden to areas other than fruit, vegetables and flowers. In doing so the corporation's markets see that as competition.
(Lord Whitty) The answer is that we do not know what legislation will be required for Covent Garden until we have completed this inquiry with the corporation. I am not sure to what you are alluding in reference to HRI, but we do not need any new primary legislation in relation to HRI, but we need to sort out its financial basis. A quinquennial review is about to take place on HRI and we shall base our decision on that.
(Lord Whitty) That is also taken account of in the quinquennial review. We do not regard that as the essential element of the future of HRI. There are financial problems with HRI, but I do not believe that the lack of legislation is preventing us from sorting those out. In relation to Covent Garden, if one were ever to change the status of it a complex piece of legislation would be required and it would probably be a hybrid piece of legislation. I am not able to answer for the totality of the Government's legislative programme, but I suspect that there will be difficulties in squeezing that in until we are absolutely clear about the direction in which it will develop.
(Lord Whitty) We have now been in existence for a year. We had a difficult inheritance and we have a range of areas that is not entirely, in the public's mind, pulled together sufficiently. We have been effective in pulling together in terms of policy, establishing our role within Whitehall and with the various clients with whom we deal, but if you ask me whether DEFRA, in public consciousness terms, has yet established itself, I believe that we have some way to go. That is certainly an area that is taking the attention of the Secretary of State and the department.
(Lord Whitty) No. I think it is a complete caricature. For example, as soon as you go in on the right there is a service relating to the RDAs and another one relating to the vets. The first two items that you would come across would relate to farming. In relation to our broader remit, the Environment Agency's stand focused on issues of pollution, waste management and nitrates, which are primarily farmers' concerns. However, it is important to say that we are not the ministry for farmers; we are the ministry for rural affairs and the environment. An important part of rural life is farming, but we are not the ministry for farming in the way that the Ministry of Defence is the ministry for the Armed Forces. The creation of DEFRA attempted to get away from that. It may be that we are making some difficult presentational decisions in how we get away from that, but we want to get away from that. The criticism that we are not sufficiently farmer-focused seems to me a wrong one and one that leads to a misunderstanding of the changes to the government machinery that we intend to achieve.
(Lord Whitty) No. If you had been at the Exeter Show you would have seen me in very close proximity, and probably too close a proximity, when I presented all the prizes to the livestock at Exeter. So that is untrue. It is true that yesterday, due to House of Lords' business, my intention to visit the cattle lines had to be curtailed. Normally, I would have gone down to see the livestock, as I did at all the other shows - Cornwall, Bath and West and so on.
(Lord Whitty) Absolutely. It seems to me that the problem of the past is that quite often the relationship between the agricultural sector, strictly the primary producer part of the agricultural sector, and the ministry of agriculture was focused on the subsidies production and on the regulation production and not on placing agriculture in the wider context of the landscape management and the rural economy as a whole, horizontally, nor vertically, for example, in the food chain. Although MAFF had "food" in its title it was not responsible for the industry and it tended to deal with agriculture in a different way from the way in which it dealt with the rest of the food chain. Some of that was inevitable because of the European regulations and the way that the CAP worked, and subsidies for farming before that, but in practice there was a bit of a ring-fence around agriculture, both in relation to the rest of the neighbours in the rural economy, their environmental impact on the rural economy and their relationship with the rest of the food chain. The Curry Commission and, as I understand it, Commissioner Fischler's proposals today indicate that the future for farming must be to see itself in a broader context.
(Lord Whitty) I do not believe that you could derive that conclusion from anything that I or any spokesperson at DEFRA has said. We want to see a thriving farming sector. It may need to change, but we need to see a thriving farming sector with money going back into farming and with it making its contribution to the wider countryside and rural environment. We are saying that to do that, agriculture has to see itself in a wider context and its relationship to Government in a wider context. The relationship, particularly, between the sponsoring department and the industry needs to change in order to help to give it that wider focus. From day one that was part of our difficulty in the sense that MAFF - excluding the Armed Forces and the defence industry - was the only remaining department that was responsible for a single line of industry. It had a certain Soviet-life overtone to it, in that the Government decided the level of subsidy, decided to a large extent what shape the industry would be and to some extent via the European Union decided its prices and its output. That kind of relationship is not appropriate to the modern age and there have been painful changes needed to the relationship between the department and the farming sector. The more progressive elements in the farming sector recognise that.
(Lord Whitty) Whether it "is succeeding" or "has succeeded" would probably take longer than a year. Whether it is succeeding can probably be measured in two broad ways. One, we are the department for sustainable development across Government as a whole. We are the driver for sustainable development - environmental, social and economic. We are the body that is charged with ensuring that the whole of Whitehall and the government agencies operate on a sustainable development basis, and take sustainability as a benchmark for their policies. The degree to which we will have achieved that in a year's time will become apparent, in so far as it is not already. On our own policy areas, the change in direction of farming may well be a symbolic policy area where we can best measure sustainability being inculcated into the policy. We have to follow through to the Curry Commission and we have the mid-term review of the Common Agricultural Policy, the outcome of which is subject to considerably difficult negotiations. Nevertheless, by this time next year we shall be clear on the direction of European, Government and industry policies towards the future of farming, which will be to put it on a more sustainable basis, a less production dominated basis and one that ensures that farming contributes to the other aims of the department on landscape, rural economy and the environment. I think we shall be able to measure those things in a year's time.
(Lord Whitty) Much of the direct delivery in relation to the environment, will rest with other Government departments and with local authorities, but part of our objective will be to ensure that sustainability is built into their approach to planning decisions, to our development of the social fabric of those inner cities and to the way in which we provide their services. On transport, for example, there is the question of whether we can move to a form of transport that is accessible to the kind of communities that you are talking about, and that does not create congestion and other environmental problems. Most of the delivery is down to other agencies rather than to ourselves. That is why the first measure of how far sustainability has entered Government as a whole is a measure of our success or otherwise.
(Lord Whitty) I regret to say that I am not responsible for the website of the Cabinet Office. In policy terms, we have achieved a certain degree of success. Certainly sustainability through the various interdepartmental activities has become much more central to their assessment during the course of this current spending round. We are to make an announcement. I have to be careful as I am aware of what the announcement will contain, nevertheless I hope that it will reflect the work that we have done with the Treasury in ensuring that the assessment of everybody contains a sustainability dimension. I hope that we shall see that when the announcement is made next week. Clearly, much of the delivery relies on that. In relation to your previous question, there is in one of our documents, Foundations for our Future, a list of indications of progress on sustainability, much of which depends on other departments and local government meeting that. We are the driver for it and we have to take responsibility for trying to ensure that the rest of Whitehall and the government bodies as a whole pursue that. Although we may not achieve as much as we would like with the Cabinet Office in adopting those policy levels, we are discussing the matters closely with the Cabinet Office, with central Government generally and with the Treasury.
(Lord Whitty) Yes, indeed. In terms of the process and structure, when the department was first set up, and the DETR was dealing with planning and transport, we developed a close relationship there. Previously we had all been in the same department and previously I had had responsibility for transport myself. We needed a new concordat and we established that contact. We are now in close contact with the two successor departments and the Permanent Secretaries meet regularly to establish a new basis for engagement between the two departments. Clearly, planning in the rural context and in the environmental context are very important to us.
(Lord Whitty) We have discussions at ministerial level on planning and on transport continuously. The machinery of Government involves a regular Permanent Secretary contact which will lead to a new concordat between the two departments.
Mr Lepper: We await the Chancellor's statement in a few days' time to see one measure of success.
(Lord Whitty) That is a big question. One of the jobs of the department is to ensure that our decisions and the decisions of other departments have a longer time focus than is often the case in Government. So you have a time potential, a time conflict in short-termism or even in medium-termism and what happens in the long term. It relates to using resources. I believe that it differs policy by policy because in many areas what one does in the short term alters the long term. Therefore, one has to ensure that the short-term decisions are in the right direction; for example, on achieving the Kyoto targets. We want to see where we are in 2012, but we have to take decisions now that move us in that direction. In so far as there is conflict on the three pillars of sustainability - economic, environmental and social - that is the responsibility of all policy areas. There is sometimes not as great a conflict as is suggested between environmental and economic objectives. In the long term, the wrong environmental decisions are also the wrong economic decisions. Sometimes the decisions taken for environmental reasons primarily turn out in the not very long term to be economically beneficial. There is not continuous conflict. There is occasional conflict and policy departments have to be responsible for managing that. Our job is to give the bigger framework.
(Lord Whitty) In any direct sense the only capital programmes with which we are concerned are those that fall on our budgets and on our agencies, which is a relatively small part of the totality. We are engaged, for example, in relation to the DTLR, in ensuring that transport projects have a strong long-term environmental dimension to them. Therefore, again we have an influence beyond the area of capital spending for which we are responsible which frankly is pretty limited.
(Lord Whitty) Increasing the totality of capital spending is a matter that I had better not comment on, especially as it is a few days before the spending review comes out. The way in which particular projects are planned, within a given quantum, needs more of a focus on longer term objectives than sometimes state and private projects supported by the state have done in the past. The transport system is one such area.
(Lord Whitty) No, not at all. They used to make the same play in relation to the DETR and to the Department of the Environment in the past. It is the job of government-oriented NGOs to push for greater emphasis for an environmental dimension.
(Lord Whitty) One success that has not been fully recognised is the degree to which the department has pushed forward on the Kyoto agenda and the agenda leading up to Johannesburg. One of the Secretary of State's early triumphs was to rescue the Bonn talks on the policies of Kyoto, followed by Marrakesh. By the time we reached Johannesburg we would have made an across-government effort on putting sustainability on the government agenda in a big way. That is a substantial success by the Government. If one looks at other more specific areas, more domestic areas, and if one looks at decisions on transport, one will see that there are decisions that a few years ago would not have gone the way that the CPRE and others had suspected. I used to be responsible for road projects, whether welcome or not, and they have had a much bigger environmental dimension in the past year or so than certainly was the case in the past. One sees the influence of environment ministers, both under the previous structure and carried through into the current structure, reflected in significant government projects. We are there and clearly we are influencing other people's strategies. Therefore, I would reject what the CPRE is telling you. I do not think that we ghetto-ise at all. I think there was a danger of MAFF on many occasions being ghetto-ised, but I do not think that the current department is ghetto-ised. I think we are a bigger player and a more central player to Government as a whole.
(Lord Whitty) It has been, yes.
(Lord Whitty) No. It is heading in the right direction, but not as fast as we would want.
(Lord Whitty) It is code for the fact that we need to do more and we need to get local authorities to do more and to get public opinion and behaviour more focused on recycling. Yes, a lot more needs to be done in that context. There is no slippage; we are moving forward.
(Lord Whitty) We have to consider what we are trying to do and some of the unfortunate by-products. The aim of the fridges directive - Ido not want to go over all that ground again as the Committee is probably sick of it as well - was a clear environmental objective.
(Lord Whitty) It is a regulation whose objective was a clear environmental benefit. There were problems of interpretation and problems of delivery which we are in the process of overcoming. The fact that we went through a difficult patch on fridges does not alter the fact that we were committed to ensuring that the detrimental environmental impact of fridges disappears. Likewise, there is the case of abandoned cars. We had some reservations about the form of the regulations and in the case of fridges there was some lack of clarity, but the objective must be clear and we are pursuing it. That is environmentally positive. In the short term we have a bit of clearing up to do.
(Lord Whitty) No, certainly not. In relation to my personal role, in agriculture I work very closely with the environmental side and as Mr Curry said, most of my job is with food and farming, but the environmental dimension of that is constant. The same is true of other government ministers - transport and energy - in other government departments.
(Lord Whitty) On broad sustainability, our aim is to put agriculture and land management on a sustainable basis in light of the Curry report and changes in agriculture. That has been one of our biggest tasks. On sustainability generally we have to look at those rural areas and rural communities that are quite isolated at present. We need to ensure that they have a sustainable economic future, that there are jobs and housing and so forth in those rural communities. If that is too broad a statement, perhaps I can squeeze waste into that as well as it runs across all industries and all parts of the economy. It is not just municipal waste, but the whole waste strategy must be about sustainability targets as a whole. That is put under sustainability in general or under the environment in general. In terms of the specific environmental dimension, clearly the international dimension I have already emphasised as a big point, including the delivery of Kyoto. That is the first point. The second point is probably the whole issue of the relationship between energy use, its overlap with Kyoto, but getting an energy policy that is more renewable and less carbon intensive. Thirdly, and perhaps of more immediate concern to your constituents and to others is the fact that we have to deal with the problems of increased flooding and other areas of potential disaster that the department has to provide for. It has to ensure that we do it in a way that goes with the grain of the environment while protecting property and people. Those are three points and I suspect that if I were to think about it for another five minutes they would not necessarily be the top three.
(Lord Whitty) We would always like more resources, particularly in the areas that have direct interface with those who are taking decisions outside government. The areas of enforcement, as you imply, and the organisation of those areas need addressing. In relation to the advice and help in many areas for which we are responsible we could do with more resources. It is partly an organisational issue. Without going back over what I was saying about farming, one of the Curry report recommendations is how we deliver regulations on farming and that relates to the problems that farmers have in relation to umpteen different regulations all concerned with one-dimensional aspects of their work at a given time. If we can deliver the regulatory, advisory and supportive role in a cohesive way the problem may not be one of resources, but of how we organise them better. I am engaged in that on the agriculture side and between agriculture and the Environment Agency. That is one of our organisational priorities over the next few years. That would not necessarily mean that at the end of that period that we have more people, but if we have fewer they would be better directed. As to relative wages and so on, I fear that public servants are often in that position and it is probably not a particular DEFRA problem. Although, as you know, we had specific salary and wages problems when the department was set up which have now been addressed.
(Lord Whitty) Yes.
(Lord Whitty) There is a high degree of motivation to do so. The management of the department is very much engaged in trying to ensure that they do so. We are very focused. We have a training development project for delivering DEFRA which is focused in this phase on the management role. It is important that senior management up to the top level change their focus and engage in quite an intensive period of training. That involves all senior civil servants and senior management. That was seen as a priority. If that is not right, the rest of the staff will not change their direction. Clearly, there are people within all parts of the department who are doing exactly the same thing that they were doing two years ago and some 15 years ago. They need the training, the IT and other support that we are beginning to bring in. It is quite a long process.
(Lord Whitty) For the management/leadership level it is very intensive and virtually all the top management have now gone through, or are in the process of going through that.
(Lord Whitty) I am sure that is broadly true, but it is not a DEFRA-specific problem.
(Lord Whitty) We have made major changes in structure and in personnel at senior management level. The changes are not so dramatic at the junior levels. There will be some who will take more kindly to and be more dynamic about the new process than others. That is always bound to be the case.
(Lord Whitty) I think that there are some changes to be made. It is probably not a matter of taking the big piece and moving around in a kind of continental drift, but more a matter of co-ordinating between different parts of the department and refocusing the department. I think there are probably some other structural changes that will have to be made. We are constantly engaged in looking at those areas, both in the department and in its agencies.
(Lord Whitty) I share some of that anxiety in the sense that the rural affairs dimension lacks direct budget and direct levers. Therefore historically, whether in the DETR or in MAFF, it has been less intensively staffed than those areas where there is direct government legislation or direct government subsidy and so in staffing terms it probably looks weaker. Part of the issue is whether there is any shift of balance to provide more support staff in rural areas, in the rural affairs structure, but more importantly those who carry out some of the functions need to be less silo-ised and blinkered themselves. If you are looking after forestry or an aspect of waste management, you are looking at the rural environment as a whole and not simply carrying out your duties under the specific regulations for which your post has historically been designated. That is part of the culture change that we are trying to achieve. It may be that the numbers under the heading of rural affairs do not rise significantly, but the people who traditionally are in agricultural posts or environmental posts begin to take on rural affairs roles. That is beginning to happen already and it needs to happen more.
(Lord Whitty) It is a concern that I have inherited. I do not think that it is valid. Some of the decisions require both resource allocation and decisions across Whitehall, but we have made great progress, for example, on the market towns initiative and on the villages initiative. We have also made quite substantial progress in terms of the countryside dimension in relation to the AONB structure and resourcing. We have encouraged other departments to deliver their part of the rural White Paper; for example, on the transport side in terms of rural buses and grants to parish councils direct. There is the question of how effectively that has been delivered on the ground. Although we have put more resources into rural transport, not all of that has been seen as of great benefit to the majority of rural dwellers. We need to rethink how we deliver that. Much effort and quite a lot of money has already been delivered. In relation to parish councils, one of the disappointing things is that the relatively small grants for flexible transport, which is available to parish councils, has been taken up by relatively few parish councils. So there is a problem at that end as well as at our end.
(Lord Whitty) The context of rural proofing was crystalised in the White Paper, so it has not been running for very long. We have asked all departments to look at rural proofing their own areas of policy and we have designated the Countryside Agency as an independent monitor of how far that rural proofing has gone. They have been quite critical of government departments, including DEFRA of not sufficiently rural proofing all their policies. The pressure is on to do precisely that. I do not know whether Mr Elliott would like to comment on the progress of rural proofing.
(Mr Elliott) Yes, we have established a range of contacts in each department to make sure that not only are our particular policy proposals rural-proofed but the message gets spread more generally. I have participated personally in a seminar at the DTI with all the senior policy makers where a lot said that this had opened up new perspectives for them. So I think we are making progress in that sort of area. Clearly the Countryside Agency's last report shows that there is still some way to go and by its nature our efforts in trying to influence other government departments is a largely behind the scenes activity which will have to be judged on results and outcomes. We are making progress and I hope very much, and I am pretty sure, that the next report from the Countryside Agency will have some good results to show.
(Lord Whitty) I think you are absolutely right, that that is what should happen and you are probably also right that what actually happens in some cases with rural-proofing as a new concept is that at the end of the policy development period, which probably started before rural-proofing was on the agenda, they then rather hurriedly double-check whether they can give a positive rural-proofing dimension to the policy. What we are in the business of and where our contacts which Mr Elliott is referring to are so important is that in our development of policies now rural-proofing should be mainstreamed right from the beginning. So we are in the business of trying to get sustainability mainstreamed across Whitehall but we are also convinced there is the business of getting rural-proofing mainstreamed across Whitehall. Many of the policies that have emerged on which the Countryside Agency have commented started before this concept was being pushed and before DEFRA was created and are only now coming to fruition. It is a bit of a messy situation but I think in a year or two's time it will be different.
(Lord Whitty) Yes, I think the views of the Countryside Agency are important. They are independent. Sometimes I find it slightly strange that the Countryside Agency is an agency of our Department because they are so independent, but that is a really very positive role in this respect because we need that degree of independence to check our actions as well as those of other government departments.
(Lord Whitty) It is important that we and the Countryside Agency get beyond the production of those documents stage and we deliver. That is certainly fair and we are absolutely focused on that now. The particular examples of statistics that you chose I think are rather important to a lot of country dwellers, particularly those who do not have much transport or access to a car or whatever, of which there are a very large number resident in rural areas. I think those particular statistics are rather important.
(Lord Whitty) Whatever your views are in general, I do not think it is sustainable, if I can use that term, in the particular because we have, particularly post DEFRA, two very strong and effective cross-departmental committees, the DARR Committee, which is dealing with rural affairs, which is chaired by Margaret Beckett and largely consists of Secretaries of State and Ministers of State, which is pursuing the rural agenda, including rural-proofing and all the other issues that we have been talking about, and the committee on policy, which as you know is a Cabinet sub-committee, looking at environmental policy in general, which the Secretary of State and the Deputy Prime Minister are strongly engaged in and which looks at things like the international dimension of this, and also the NG Committee which is looking at how government policies take on board the environmental Directives. So I think we have very good Cabinet committees and inter-departmental ministerial committees in this area. In some areas you need task forces and I would not like to stray in areas more generally but in this area I do not think that criticism is valid.
(Lord Whitty) We can let you have that. Under the previous structure that was maybe a valid criticism but I do not think it is under this one. We will get that to you.
(Lord Whitty) I am not able to call to mind, even if I have seen it, the Government's direct response to the first of those reports and certainly the view since I have been in DEFRA - and I do have responsibility for horticulture - has been that one option would indeed be to put HRI as public corporation but it may not be the only option. Clearly the performance of HRI scientifically is unchallengeable but the performance of HRI organisationally and financially is an on-going problem and one which the current quinquennial review is addressing. I am therefore awaiting the outcome of that quinquennial review before I would want to take any policy decisions on the future of HRI. The complexity, which does not quite apply to Covent Garden because it does not involve the City of London in any sense, is deep and would have to take its place within government priorities for legislation, which is why Baroness Hayman referred to the possibility of it being done by a Private Member's Bill should we wish to go down that road. Since I have been Minister we have not taken the decision to go down that road; we are awaiting the advice from the quinquennial review team.
(Lord Whitty) I do not disagree with much of what you say. I think horticulture is an industry which we should take a little bit more notice of for the reasons that you outline. It is not only an important part of agriculture in the big sense but it is also an important part of the rural economy in employment, with relatively sophisticated operations, and also in man sectors it goes further down the food chain and they are closer to their customers. Horticulture is a big sector and parts of it are a growing sector. It has probably received less attention precisely because it is unsubsidised. The area, of course, where you cannot claim it has received less attention is the one you have just been touching on, where historically the R&D budget financed by the Government has been higher for horticulture that it has been for other areas. Relating to GDP contribution that remains the case. So the Government has been supportive to horticulture in that respect. I think there are problems about the competitiveness of the industry and to a limited extent its organisation, but they are by no means as fundamental as parts of agriculture proper. I therefore think that horticulture could be a success probably.
(Lord Whitty) With respect, that is exactly the wrong question that I have been telling farmers and growers who have been in the old relationship they should get away from, so I do not want to bring horticulture into asking me that question. What the Government owes to horticulture is to recognise its important position mainly in the rural economy and to ensure that the context, the framework in which it operates does not operate to its disadvantage. There are issues relating to regulation and issues relating to taxation which I think we need to look at in relation to horticulture. We have made a temporary arrangement, for example in relation to the Climate Change Levy, which has protected horticulture to some extent and we need to recognise the rather special nature of the way horticulture operates, but we are not going to tell horticulture that there is a whole new tranche of subsidies for you or a whole new area of government intervention which is going to move you further away from the market rather than the rather good relationship with the markets that you have. Because it is a competitive industry and parts of it are subject to quite severe competition from the rest of Europe, horticulture has probably suffered as much, if not more, than other parts of agriculture with the decline of the euro against the pound recently. That is a particularly difficult economic situation but not one I can address directly except by improving the framework in which they operate.
(Lord Whitty) I would have thought that all our pronouncements on the sustainability of agriculture address that. Every time I address a farming audience which might be sceptical in the same way that your question implies, I say that economic sustainability means profitability means money back into farming. That dimension of sustainability subsumes the need to get farming in the long-term back to a profitable situation.
(Lord Whitty) Let me say it is, but it is profitable farming which is operating within a new context and one which some members of the NFU do not fully accept. The NFU operates like most trade associations and trade unions in a way which has both a sophisticated dimension and a crude dimension. The crude dimension is quite often the one that gets in the papers which is effectively saying we need to be profitable, we are not profitable now and therefore government give us more money. As I was saying earlier, that is not the kind of relationship we can have let alone want to have with the agriculture sector. A lot of questions from farmers, including from representatives of farmers, is along those lines. The more sophisticated version of that does chime better with what the government is thinking which is we need more money back into farming, we need a larger share of the value of the food chain going back to primary producers one way and another, we need to ensure that the structure of farming is closer to the market and closer to what the ultimate consumer is prepared to pay for, all of which, as you will know, are strong themes of the Curry Report as is profitability a strong team of the Curry Report, and we have clearly endorsed that objective.
(Lord Whitty) I intend it to be. The process to which you refer is not so much a process of new-found consultation because the Commission themselves went in for a pretty hefty consultation process. We have said that we support the broad strategy of Curry with one or two qualifications. We will try to engage the sectors at regional and national level in the delivery of the Curry consultation process rather than to re-open all of the issues but, nevertheless, some of them need to be defined a bit more and in particular we need, before we reach that definitive statement, to take on board, frankly, the amount the money we are going to get out of the SR 2002 and what is the likely outcome or at least the general direction of the European proposals on the mid-term review. We need those two things out of the way before we can produce a definitive report. The timescale of the definitive strategy will be in the autumn and it will, I hope and believe, contain assessable and measurable items of how far we can progress down that road taking on board Curry's recommendations.
(Lord Whitty) I do not think it is quite an either/or as that. Of course, the difficulties in negotiations are substantial and elections are always a bit of an inconvenience in this process, but Commissioner Fischler and the Danish Presidency are aiming to get political agreement by the end of year on this package. Okay, we can be slightly sceptical about that but we are certainly working with them to try to make sure we do get to that by the end of the year. There will be details which will have to be sorted out beyond that but we will by the time we produce our strategy be pretty clear how far Fischler's initial proposals are likely to get.
(Lord Whitty) There are issues of timing and issues of precisely how that dimension of the Curry package and the Fischler package actually work. Both Curry and Fischler are looking at a period, roughly speaking, two years hence before this new process operates. There is a question of whether it is a compulsory modulation, as proposed by Fischler, or a unilateral modulation, as recommended by Curry, and to some extent as we have already taken the decision to go down that road. The likelihood of the Fischler proposal coming out will partly determine the timing as to some extent, no doubt, will the Spending Review. Whether or not we go down the compulsory modulation or unilateral modulation route is a second order question. Providing we go down the unilateral road, we will produce greater flexibility for how we use the modulated money than is currently the situation. If we do that we do not necessarily need the compulsory modulation as proposed by Fischler. Either way we would be moving money through some sort of modulation propose away from the first pillar to the second pillar. The precise terms of that may not be yet clear in the middle of the autumn but at least the general direction will be clear.
(Lord Whitty) We will obviously provide a degree of greater analysis than has been possible so far, but the problem about doing it in the way you describe is that there are swings and roundabouts for individuals as well as whole groups. Farmers who currently are receiving substantial subsidies for production, whether it is sheep or grain, if they adapt their methods as appropriate, they might be losers on that front but gainers on another front so you are not necessarily saying there are whole groups or geographical areas of sectors of agriculture which will be winners or losers. It depends how good and effective particular farmers and particular quarters of land management are.
(Lord Whitty) Clearly part of the Ministers' briefing as they go into these negotiations will be the differential economic impacts and differential environmental impacts of different potential mixes of the Fischler package. This will be a moving programme during the negotiations, so I suspect that is not document which will be very meaningful to anybody who is not directly involved in the process. Certainly there are economic assessments going on as from today when we got the detail of Fischler as to how that would impact on different sectors of agriculture, and there will be different views from different sectors. There may be different views from different parts of the United Kingdom as to what the balance of advantage is. In broad brush terms then that will be communicated. If you are asking will every dot and comma of the shifts in negotiations be reflected back in a public document, that would be quite damaging to us in negotiation terms and probably impossible to do. At the end of the process there should be something that indicates, "Okay, that is the package we expect to see and that is the impact we expect to see on British farming."
(Lord Whitty) I have indicated some hesitations about that particular aspect should that choose to be the position in two minutes' time.
(Lord Whitty) I think the correct perception is that if they both feel that at this point in the process then clearly we are taking a fairly balanced approach to this. The fact that none of them see quite where we are getting to means that the process is relatively new. I read the whole of the CPRE evidence to you and glanced at it and it did start out by staying there was a clear sense of direction from the top but their concern was that this not reflected through the organisation as a whole, which I think is fair. I think it is also true that a lot of farming elements do not relate easily to a department which is no longer a department for farming. I think the more progressive amongst the farmers recognise that was not possible to maintain in any case and it is situation to which they are going to have to adapt. As to the internal culture, there are structural and superstructural lags no doubt but we have given for the ministerial and management board level a pretty clear sense of direction. We want that broader department. We want those who are very heavily involved and focused on agriculture to take a broader view. We also want those in other parts of the Department to recognise the importance of farming in delivering our broader objectives.
(Lord Whitty) I think there are two, possibly three, changes in the situation which are going to make a complete French veto of these propositions very difficult. The first is that the looming prospect of enlargement is going to put a serious strain on the Common Agricultural Policy as is. The budget cannot sustain simply transferring the Common Agricultural Policy to Poland and other countries in its present form. At roughly the same time they are going to have to try to reach agreement on CAP reform, they are going to have to take a decision on enlargement. You cannot have compatible decisions - you can but not on such a big issue as that at a European level. The second is within the WTO although there are elements in Europe using the United States' Farm Bill, which is pretty much a disaster for those who want a more liberalised world trade, as an excuse for saying liberalised agricultural trade is never going to happen. I do not believe that to be the case and the Americans will be committed to liberalising trade and you have got to have a WTO trade negotiation pretty much advanced during the course of this year and that will involve a removal of production-related subsidies. Part of what Fischler is about is to take the kind of subsidies which the EU give at the moment, which will be out of compliance with the WTO, into an area of general support for rural areas, which would not be out of compliance with the WTO, quite apart from the need to reduce the total burden. Those two are huge issues which we are coming up against the rocks on. The third is that, despite President Chirac's position in the French elections and so on, across Europe and across political parties in Europe there is a view that the electorate will not sustain much longer the direct subsidy of farmers and that in the long term, if we are to continue to support the farming industry in land management, it has to be on a much broader basis than has been the position in the past and not a subsidy for production. That probably applies more in the Northern European states than the Southern European states but even in states like Italy and Portugal there is some recognition of that direction as well. That will not click in as soon as the other two but it is an important perspective on the views of the other Member States as well as the UK. Therefore I think the situation is qualitatively different. I would accept, however, the issue is how fast but I do not think the issue is any longer what is the direction. The direction will be along the lines that Fischler is proposing although some of the details will be argued about. Hopefully, from the British point of view, certainly from the DEFRA point of view, a significant amount of that will be achieved through the mid-term review. If it is not in the mid-term review it will be in 2006 and it will be more complicated to do it then because of enlargement. That is the direction; it is only the question of pace with which that is the produced. So there has been a sea change over the last 20 years. It is the nicest thing I have ever heard Mr Fischler say about the European Commission.
(Lord Whitty) If you are saying do we have a complete plan B if this completely stalled - and my last answer said it will not be stalled; it may slow down compared to what we would like but it will not stall - part of plan B in any case is the Curry Commission. Even within the present mechanisms (very marginally adjusted) of the Common Agricultural Policy we can do a lot and that is what Curry was telling us we could do, and therefore we do in that sense have a plan B, But plan B is in the same direction as plan A.
(Lord Whitty) I think the proposals on the CFP review were to a large extent in the direction in which we would wish to move and they were of course blown out of the water by the Spanish Presidency. Before they got to that point there was a majority, probably not quite a QMV but a majority of Member States supporting that view and it was only the Spanish Presidency that stopped something like that being adopted. We have had recent discussions with the Danish Presidency and although there are respects in which the Danish fishing interests are not quite the same, in general the Danish Presidency want to try and resolve this one and I think therefore we are still on course, if not exactly on time, in producing a fairly fundamental reform of the fisheries regime as well. It is, as you are only too well aware, one of the substantial disaster areas of the management of the EU and we put a high priority on getting it cleared up, regrettably too late for many British fisherman and some fish stocks. It is something we do give big attention to.
(Lord Whitty) I do not really accept that. It was not a negotiation during the Spanish Presidency; the Spanish Presidency effectively just blocked it. It was not there was a tradeoff or anything else. Most of the difficulties on the fisheries front have been within the Fisheries Council itself; they have not been traded off against other things. I think to some extent the proposed changes to put fisheries and agriculture together will release us from that solely fishing interests' determined approach to fisheries, but it is also true that if we do not get agreement on fisheries then it is very difficult to see what the direction of the British fisheries communities will then be because they are being seriously squeezed at the moment and unless we adopt a general approach to stocks both the environmental and economic effects will not be good. When you say it is a small part of DEFRA's responsibility, in some areas it is a very big part of DEFRA's responsibility and a very big part of the devolved administrations' responsibilities as well. Both the communities and the management of marine resources feature quite large on our agenda.
(Lord Whitty) The fisheries industry in Scotland does loom larger on the political horizon than in England, that is undoubtedly true, but that does not mean proportionately we do not take consideration of the interests of fishery communities and their future. I have seen figures which suggest - and I cannot quote them directly to you - that the balance of the sums of money given in Scotland and England are closer than the 25:6 would suggest because of the nature and age and size of boats in Scotland compared to England. I would not like to go much further on that but I will provide you with some information that I hope sustains that argument. It is certainly true that fisheries is a bigger political issue in Scotland than it is in England, that I would accept. What I do not accept is that DEFRA have lost sight of it.
(Lord Whitty) It probably means more or less what it says, that the food industry, at least most of the food chain is in a competitive situation, both in terms of internal structure and internationally.
(Lord Whitty) It means that we want to see it succeed as a competitive industry and that insofar as there is a government role in this we will help it to succeed in a competitive sense. I imagine that was why they welcomed it.
(Lord Whitty) There are a number of respects in which we need to ensure that, for example, regulations adopted in Europe do not differentially hit the British food sector. There are some areas of concern in that regard. We provide as far as possible that the structure of the food industry is a competitive one and that the export opportunities are given support from the various Government agencies relating to exports. Really the non agricultural part of the food industry is a very big employer and a very big investor and a very big contributor to the GDP but the relationship between us and most of the food industry is not any different from the relationship, say, of the DTI with the engineering industry. We want to see a free market thriving industry which is internationally competitive and provides what consumers want. That is really all that means and it is the relationship the industry want with us.
(Lord Whitty) It is part of it, yes. Part of the Curry Commission Report is that we should look at the food chain as a whole and look at inefficiencies and lack of transparency in the food chain would both help us eliminate economic problems in it and also ensure that the various stages of the chain could see what the reality of costs and quality was, and that particularly involves the consumer. Curry was concerned, very clearly, with quality indications to the consumer. Sometimes there was confusion from the various assurance schemes and the various labelling schemes and it made certain recommendations to try and tidy that up to the benefit of British produce.
(Lord Whitty) I think what the consumers are interested in is value for money, they are not interested necessarily in going to the lowest common denominator and the lowest price.
(Lord Whitty) I think the National Consumers Council and others would identify what they want is quality for quality and they want the cheapest and they are not necessarily all going to go to the lowest common denominator. Therefore the issues of quality and provenance and the conditions in which it is produced are important in some senses to consumers and in certain segments of consumers they are very important.
(Lord Whitty) I am not sure there is an average consumer. I think part of the problem is there are segments of consumers, if you take, for example, the growth of organic demand, there is clearly a segment of consumers which wants to see -
(Lord Whitty) No, more than that.
(Lord Whitty) It is a different figure from the one I have seen, it is less than 20 per cent.
(Lord Whitty) That is a segment of consumers which has led to a change in the supply chain and the way in which the retailers promote their goods, quite a significant one. There are other relatively small segments, but they all add up, which are concerned with provenance in the sense of where has it come from. Do they want British meat? A very large proportion of the consumers will say "yes", they will then put in a slight qualification of price but they would be prepared to pay some premium for British meat and want to see British meat on the shelves, for example. There is another sector which is concerned about the conditions in which the animals are kept and want to see some free range eggs, for example. All of these things mount up to some dimension of quality concerns beyond price which a lot of consumers have. It is true, also, that most consumers know about nutrition to varying degrees. One of the sad reflections, if you like, on our population is that the FSA survey shows 80 per cent of people know, broadly speaking, what they should be eating and only 20 per cent do.
Chairman: Is that not wonderfully reassuring.
(Lord Whitty) There is not an overall satisfactory quantification. There are a lot of surveys by the retailers themselves, by the manufacturers as well, mainly by the retailers though, by the FSA and by the National Consumers Council, all of which point in the direction of saying there is some significant element which goes beyond price in making a decision. I think part of the problem, in fact, is that one day we do and one day we do not. It is not as if there are 20 per cent of the population who are looking for high quality good provenance goods but when we are rushing at a lunchtime meal we take one decision, we go for the cheapest and most convenient, and when we are organising a dinner party on a Saturday night we take an entirely different view. I do not think there is a totally segmented area of the population. There is one area that we do have to pay particular attention to, which in a sense is segmented, which was referred to in the Curry Report and more particularly by the Consumers Council, which is the very low paid groups which (a) probably do have to go by and large for price and (b) probably live in areas where a range of choice is not accessible anyway. I do think there is a social dimension to this but in general people behave differently at different times. Therefore it is not easy, like "who are you going to vote for", you behave differently from one day to the next.
(Lord Whitty) We are the first line Government Department for concerns about Government policy as a whole for the retailers to come to. In that sense, again, we are no different than the Treasury sponsoring the insurance industry or DTI sponsoring the engineering industry. We are their first port of call in Government. The nature of our sponsorship will vary a bit across the sectors but depending on the degree of regulation, the degree of international trade and so on. Essentially it is no different but it is one which has been - because of the specific ministry - closer, even though the food end of the chain generally deny it, than has often been the case between the broad bulk of manufacturing and retail with the DTI but that is one of mutual understanding rather than any particular quality indications.
(Lord Whitty) I think that there is a conflict within the food chain and one that if part of Government policy is to ensure that we have production facilities for most areas of domestic agriculture retained then it is one that we think should be addressed by the food chain as a whole, which is why we are backing and trying to generalise the Code of Practice that the OFT introduced for the large supermarkets, to make that more general, and looking at toughening it up if necessary. That is why we are also looking at the inefficiencies within the food chain. At the end of the day there are some economic realities here. If, on the one hand, British farmers are not getting a price which allows them to survive and, on the other, the retailers are able to get chicken to the same standard coming in from abroad, which is a separate point, then we know what is going to happen. There are two answers to that. Our answer is we try and improve the quality of British production and encourage British producers to go into the value added markets. We will not be able to compete if we treat chicken as a commodity without adding various forms of value to it and the farmers will not either. There is a degree to which we have to focus. If I take the analogy of engineering again, by and large we have had to focus in those surviving areas of engineering on the high value added products. I think there is a lesson there in relation to farming and food production as well. At the near commodity market we will not in the long run compete in Britain, nor indeed in Europe as a whole, so we have to go a bit upmarket. That is not an immediate answer but that is the sense of direction we have to give to the primary producers. In getting there we also need - I think I would not mind using the term "equitable" - a more equitable relationship between the primary producers and the big processors and the big retailers and, indeed, the big caterers. We tend to target the supermarkets but actually 40 per cent of our food comes through catering and institutional food which tends to be of a higher import content and probably lower quality. It is there that there has been a big squeeze on our primary producers. This is partly what the Curry Commission was referring to and why we have set up the Food Chain Centre and why we have looked at better collaboration between farmers and other elements in the chain because you have to change the economic balance within the chain a bit as well as trying to get rid of the inefficiencies within the chain. There are some quite difficult points here which Government would like to give a steer to but at the end of the day the industry is going to have to sort it out. We will give a bit of help to farmers and a bit of help on the transparency of it and a bit of help in ensuring we are dealing with quality but at the end of the day this is an industry problem that Government can do relatively little to determine and influence.
(Lord Whitty) If we go back to that, that is not incompatible at all. If they are looking for a decent bit of chicken, they are looking for ----
(Lord Whitty) Some of them are.
(Lord Whitty) Some of them are and some of them are occasionally.
(Lord Whitty) No, it does not because there is still a decision to be taken every day when you go into the supermarket: are you going to go for the top of the range chicken or are you going to go for the cheapest bit? If you are looking at the cheap range then you are going to take the cheapest of the cheap. If you are looking at the quality range you are probably going to take the cheapest of the quality. In some cases that will be British and in some cases it will not. People take different decisions, different people take different decisions and the same people take different decisions on different days.
Mrs Shephard: The statistics speak for themselves.
(Lord Whitty) DEFRA is the second biggest Government spender on research and there is a real question as to what the balance of that should be. I think some past decisions are questionable in that respect. One of our priorities, which is generally agreed, would be to do more horizon scanning research and try and look at where technology and industry and production are going to be in ten or 20 years' time and how we ought to get the industry in a regulative structure to that position. We do need to shift more into that long-term research. We also, regrettably but necessarily, will probably have to ensure a very adequate level of research to avoid disasters, or at least to make us better able to cope with disasters, and obviously the most acute of that is animal health. There are other areas of environmental problems where more research is needed in terms of being able to deal with the problems of potential disaster. Neither of those are obviously financed from the private sector and, therefore, there is a big Government role in that area. I think because of the nature of the agriculture sector and the horticulture sector and its largely fragmented role there is still a role, probably a reducing one over time, for trying to support that industry in keeping up with world technology because I think any individual firm is unlikely to be able to finance it and we do not yet have the collective mechanisms for the private sector financing it. I think that will be a diminishing role over time. If you are talking about scientific areas then I think there are some important centres of excellence issues we need to keep up: climate change, horticulture and botanical research, because we are responsible for centres of excellence in those areas, and there are other areas where the changing technology means that we are going to have to perhaps fund more research in those areas and less in the traditional production areas in future. Some of those are social. We have very little research based on the rural communities, the rural economy.
(Lord Whitty) Yes, it is monitoring. There are two sorts of monitoring. Some of it is monitoring directly in relation to regulatory powers and some of it is monitoring our disease status or our flood status or whatever in our management of disasters role, if you like, or avoidance of disasters preferably. Some of that scientific effort is directly for those purposes. It is still a big proper research budget and it is still one that we need to look at carefully as to how we change the balance and also probably how we deliver it.
(Lord Whitty) Indeed.
(Lord Whitty) It is also important that one of our policy aims is to maintain an excellence of science in these areas, some of which is funded directly by us, some of which goes through the universities and private sector.
(Lord Whitty) Well, at the moment, of course, most of them are agencies so we review them every five years and most of the NDPBs as well. Of course, that does tend to look at them as individual entities rather than, if you like, look at the constellations. I think there is something in the view that certainly we should look at all the scientific agencies and quality agencies together, which we are doing now, and likewise probably we should look at all the countryside and related areas together as to how we deliver our objectives. That does not necessarily mean that the objective is to reduce the number, it is to reduce the overlap and focus the effectiveness of them. There may be some conclusions that at present the present status is not necessarily the most appropriate. In some ways MAFF is slightly behind the rest of Government in the way that it deals with some of its agencies.
Chairman: Mr Jack wants a final sting in the tail, as it were.
(Lord Whitty) I trust there will be several volumes in the areas of policy, not too lengthy volumes but which will say exactly that, what we are intending to deliver and what we have delivered. I think it is important that we do focus on delivering those. Very much the developing DEFRA programmes, management performance priorities within DEFRA and Minister's priority is to turn this into delivery. In so far as you related that to the previous question then in relation to assessing the science agencies, we are engaged already in that process.
Chairman: Lord Whitty, gentlemen, thank you very much indeed, we have had a couple of hours, longer than that really. You have padded up with great effectiveness, and I come from a county of Boycott. You have been extremely helpful to us and we are most grateful to all three of you.