WEDNESDAY 10 JULY 2002

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Members present:

Mr David Curry, in the Chair
Mr David Borrow
Mr Colin Breed
Mr David Drew
Mr Michael Jack
Mr David Lepper
Mr Austin Mitchell
Mrs Gillian Shephard
Mr Keith Simpson
David Taylor
Mr Mark Todd

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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.

Chairman

Good morning. Lord Whitty, you are the Parliamentary Under-Secretary in the Lords, responsible, among other things, for the food chain and the environment. Mr Paul Elliott is Director of the Rural Economies and Communities Directorate and Mr Jim Dixon is the Project Manager for the Policy and Corporate Strategy Unit. Welcome to the Committee. Lord Whitty, yesterday you and I were at the Great Yorkshire Show.

(Lord Whitty) Yes.

I visited the DEFRA stand. It was rather like visiting a cathedral after all the gates had been closed and the congregation had gone home. There was an enormous stand, staffed with extremely zealous and able people, but it was absolutely deserted. The reason why it was deserted was that there was nothing in that stand that any farmer visiting the Great Yorkshire Show would have found useful. It was full of placards talking about earth, fire, water, air and such blather words that have now taken over at DEFRA, and there was practically nothing that a farmer would say was applicable to him. I understand that exactly the same criticism was made about the Royal Show. Does that indicate that somehow DEFRA appears to have floated off into some kind of Nirvana of aesthetics and lost touch with the industry with which it is supposed to deal?

(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.

The only people who were not there were the customers. I went there three times.

(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.

If you had gone down to the sheep lines, there was a little stand - a DEFRA stand - all about the national scrapie plan. That is of immediate relevance to farmers as it concerns their business and their future. That was heavily subscribed. Would it not have made sense for DEFRA to drop the blather - I have used that word before - about what the new DEFRA is about? It is an agricultural show, a county show so should you not talk about matters of relevance to the local clientele?

(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.

I shall not pursue that line. I was not bothered about the design, but I wanted to understand what it was saying about the way in which DEFRA was projecting itself. It seems to me that it was not projecting itself as the department that is involved in the daily activities of people. A little while ago this Committee produced a report on Covent Garden and its future. Since then we have kept in touch with Covent Garden in order to find out what happens. The story that we are being told is that they are constantly failing to get any sort of decisions out of DEFRA about the future of the market, or about other topics such as cooling towers or pollutants. The Environment Agency orders the market to take actions which involve expenditure, but they can never get decisions from the department. It seems that one of the consequences of the fundamental spending review is that the department freezes and there is a total inability for six months before spending decisions are announced and no one ever gets any sense out of it. Is that unfair or are they just unlucky?

(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.

When a problem arises that no one can foresee and Covent Garden is ordered by the Environment Agency to take remedial action, what is the response of the department? Does it say that everything else must be put on ice, or that you must improvise measures to paddle through for the next two years? There seems to be a short-term approach to this.

(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.

It would love to take responsibility, but it is not allowed to because it needs your permission to do things.

(Lord Whitty) It needs our permission and it needs the Treasury's permission for major capital expenditure. That is true.

Mr Jack

I want to follow up on the Chairman's questions on Covent Garden and the Horticultural Research Institute. In this Committee's report on both of those organisations, we have addressed the legislative requirements needed to regularise and, in the case of Covent Garden, to give it flexibility to go beyond what it is doing now and yet your department in the past five years has singularly failed to secure any parliamentary time to address the legislative requirements and to regularise the public bodies of the Covent Garden Authority and the HRI. Those issues have been around for a long time. Why have you failed to do that?

(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.

The question I asked was about why, in the case of HRI and Covent Garden, you failed to acquire time in the legislative programme.

(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.

With respect, they want a Bill to sort out their status with reference to the employment of their staff. That was dealt with in our previous report.

(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.

Mr Simpson

Minister, do you think that the department has an image problem?

(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.

Following on from what the Chairman said, I have been to a number of shows and at the Royal Show you had exactly what the Chairman said, but at another show the main focal point of the image of DEFRA was this vast complex span. I do not know how much it cost. I can well appreciate that the department has a wide remit and wants to emphasise diversity and rural affairs, but in that stand I had to search to find anything to do with farming. It was hidden away around the side. It struck me that if a Ministry of Defence stand did not mention the Armed Forces, people would regard that as not typically focused. Do you think that that is a fair impression?

(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.

I think we may disagree on that. If the Ministry of Defence was called the ministry for the Armed Forces I could understand that. The Ministry of Defence has a broader remit. The impression that I had was that when Ministers were at the Royal Show they were not interested in the farming element. You can correct me, but I felt that they went out of their way not to go near any animals.

(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.

In the culture change that has taken place in DEFRA, you are saying that you do not want it to be seen as the ministry for farming. Where does farming fit into it? Do you think that farming has a core element, not only in terms of food production, but also in terms of managing the countryside, diversity and that kind of thing that is so important in terms of your aims?

(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.

This Committee was very disappointed when the Permanent Secretary came to give evidence on a not very good annual report and he could not answer all our questions. We found that agriculture - we were studying the future of agriculture - was very much a small part of the report. I come back to the point that all Members of this Committee appreciate that farming not only has to change, but that old-fashioned farming is probably dead and buried. There is an image problem. To do all the things that you want to do, it seems that farming has to be a core element, or perhaps we are wrong. Do you think that the countryside, the environment and everything else can be developed and so perhaps reduce farming to being more like a national park with most of our food coming from overseas?

(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.

Mr Lepper

When we looked at the department's annual report a few weeks ago, most of us felt that it was strong on aspirations. There is nothing at all wrong with that. Central to those aspirations was sustainable development. Recently, as a department you have published a sustainable development strategy. Could you say something to us about how in a year's time you feel that the department and the rest of us will be able to measure the success of that strategy? What will be the indicators that will tell us whether that strategy has succeeded or is succeeding?

(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.

Other Members may want to follow up on what you say about farming. I believe that I am the only Member of the Committee who comes from an almost wholly urban constituency. I was surprised to find that I have a rural post office, on the University of Sussex campus, which is protected. However, I represent an urban constituency. I would be interested in how DEFRA sees itself promoting sustainable development over the next year and into the future in an area such as mine where we have people living in city centre households.

(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.

One theme that we have heard consistently over recent weeks, and indeed since the department was created, by outside agencies who come before us, is a concern that DEFRA at the moment does not have sufficient impact on the work of other departments of Government. You have mentioned transport policy and planning policy. You have rightly said that delivery on those policies is the responsibility of another department. However, from what we have heard we have acquired a feeling that some of those links that should exist between DEFRA and other departments to ensure that environmental concerns - concerns about sustainable development - are informing the policies of the other departments, are not as strong as they should be. For instance, when the CPRE appeared before us last week, Mr Hamblin said that the Cabinet Office website, which lists cost-cutting issues, sustainable development and the Sustainable Development Unit is absent from that list. Could you comment on that?

(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.

And with the Office of the Deputy Prime Minister?

(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.

Those discussions are at ministerial level?

(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.

Colin Breed

Sustainability, by its own definition and nature, looks a long way into the future. There is a feeling that there needs to be a greater recognition of striking the balance between the needs of today's generation and safeguarding the interests of future generations. How can that balance be struck between those competing environmental, economic and social needs of today and those of what we perceive to be the needs of future generations?

(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.

To what extent does DEFRA devise investment plans that would impose greater spending today in order to achieve the long-term objectives of sustainability?

(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.

Do you think that investment spending plans for sustainability for future generations is something that should be increased and, if so, what would you propose to do about that?

(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.

Mr Taylor

A moment ago you said in relation to the environment, on which I want to focus, that a lot of the responsibility will lie with other departments. I am paraphrasing what you said. In earlier evidence to this inquiry the CPRE observed that "the environment is becoming divorced from other Government policy decisions". Friends of the Earth at an earlier inquiry said that "environment officials and Ministers have been marginalised, and distanced from the big decisions". Finally, the RSPB said in earlier evidence that DEFRA could become a "policy ghetto for green issues". Do you feel divorced and marginalised in a Smith Square-esque ghetto on the environment?

(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.

Name one or two early successes on the environment.

(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.

In some key respects the performance indicators may be arguable, but what about domestic recycling? Is not our record one of the worst among the European developed nations?

(Lord Whitty) It has been, yes.

Is it heading in the wrong direction?

(Lord Whitty) No. It is heading in the right direction, but not as fast as we would want.

What is that code for?

(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.

How many more incinerators, heaps of scrapped fridges and burnt out unrecycled cars do we need to trigger DEFRA into more energetic action on that front?

(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.

Mr Jack

It is not a directive; it is a regulation.

(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.

Mr Taylor

You do not feel politically excluded in your new role in relation to the environment?

(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.

Mr Jack

Can you list the three main sustainability policies and challenges for DEFRA and likewise the three main environmental challenges? Can you tell me whether you think that the department is sufficiently resourced and equipped to deliver those within a reasonable timescale?

(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.

The second part of the question was whether you are equipped with the resources to deal with that. I ask that because in the context of another inquiry in which I am involved on behalf of this Committee, namely, the disposal of hazardous waste. As we were leaving the landfill site at Warrington, those in the private sector commented about how relatively well paid they were compared with the officials in the Environment Agency who are essential to delivering a number of the environmental policies and objectives of your department. It made me wonder whether your department was properly resourced to achieve progress on that very broad and indeed crucial canvass that you have just painted. Do you worry that you may not be resourced adequately?

(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.

Chairman

It must be like old times, coming from your background.

(Lord Whitty) Yes.

Following on from that question, the old MAFF was battered and a new department was created. It was emphasised that the new department was more than the sum of the constituent parts. There was a mission statement, the annual report, that tried to convey that to us. Do you believe that the officials who work in the new department are all equipped to discharge the new responsibilities?

(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.

How extensive is the training programme?

(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.

How far further down the line does that stretch? Are there some officials who are not retrainable? When there are mergers in the commercial world one often finds that there are major shifts in personnel and manpower. I wonder whether in DEFRA you have come to the conclusion that everyone is capable of doing the new job, or whether there has to be a major retraining programme and that some people may just not be able to do the job.

(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.

Let me ask a related question. When you look at the environmental issues, they are clearly defined. Agriculture and fisheries are fairly well defined. When one gets into an area like rural affairs, everything becomes much more nebulous. You are largely dependent on other departments delivering the rural affairs agenda. It has a specific context which is the rural affairs programme. Are you confident that the disposition of officials in DEFRA down the line reflects the priorities that you want or is there still a lot of what one may call moving the geometry to try to ensure that the manpower is marshalled behind the priorities?

(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.

This question relates to the evidence given by English Heritage. The historical environment is obviously a very important part of the broader environment and the impact that the foot and mouth disease had on tourism emphasised how interdependent all the elements are. Their assessment was that DEFRA was not equipped to take on that dimension. I know that the department is strapped for cash because it has always been strapped for cash and that may well run across all departments. There are problems in trying to grasp this wider role and in ensuring that you are not spread too thinly to be able to deliver effectively.

(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.

Mr Borrow

Following on from the issue of rural affairs, many parish councils in my area welcome the rural White Paper and some of the ideas in it. However, they have expressed concerns that there is a slowness of pace in implementation. Do you share that view?

(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.

One of the phrases that is in vogue is "rural proofing". There seems to be an assumption that your department is responsible for rural proofing, and not just for the range of responsibilities of your own department, but also of the policies and workings across Whitehall. The rural White Paper is largely delivered outside your department. Do you want to make a comment on that? You have received some criticism on the failure adequately to "rural proof"many policy areas within and outside your department.

(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.

On the process of rural-proofing itself, I can remember years ago as a local councillor, when it was quite fashionable to do an equal opportunities indication of every policy, all the policy documents would come to committee and there was a little paragraph at the bottom saying "the equal opportunities implications are ..." I always got the impression that the report had been written and somebody at the end had said, "What are the equal opportunities implications of this policy?" whereas what should have happened is that the report should have been written by the Houses of Parliament or whoever with that policy in mind in the first place. To what extent in terms of rural-proofing you are confident that reports, both in your department and other departments, start off with rural-proofing in mind rather than something that is then added on at the end to see if the policy complies with it rather than the policy being prepared with that in mind in the first place?

(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.

In terms of whether it is working you would regard the comments of the Countryside Agency as crucial to the view as to whether or not your Department is operating properly in this area?

(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.

Chairman

Do you not think that occasionally the Countryside Agency produces some wonderfully interesting documents which should you wish to qualify for Mastermind they would no doubt be extremely useful but, quite frankly, at the end of the day they are not much use to anybody? Is it useful to know how many miles you are from a shop or how many miles you are from a post office or how many miles you are from this that or the other? It does seem to produce extraordinarily picturesque maps but at the end of the day when I go to the countryside it is mainly because I want to be as far away from anything as possible. I am desperately anxious that DEFRA should not bring them any closer to me. Does this not illustrate the difference between action and activity?

(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.

But there are lots and lots of different statistics. I am very happy to accept that point. We have talked about sustainable development, we have just talked about rural-proofing. You have been talking about mainstreaming it through government. Do you not think it might be easier to mainstream some of these things through government if more of the traditional structure of cabinet committees survived with Secretaries of State of sitting on them and there were rather less of this incredible accretion of task forces, action groups and goodness knows what, all of which are supposed to be cross-cutting and joined-up government but at the end of the day perhaps the Secretaries of State do not spend quite as much time with this clearly focused as they might do in a more traditional structure?

(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.

I would be fascinated to know the frequency of their meeting.

(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.

Mr Jack

I was going to follow up with the same question the Chairman asked and ask how often does the Rural Affairs Sub-Committee meet? It might also, without trespassing on confidential matters, be helpful to the Committee to know what it has been doing, in other words, what are the great matters that have gone before it. If we could have that, it would be helpful. I want to turn now to focus on agriculture and horticulture and just for the record I asked you, Minister, about HRI and I have been to my office and got hold of the two reports which this Committee has produced. In our seventh report on this subject under HRI status - this was during the reporting in evidence session with the Chairman and Chief Executive of HRI - we wrote in the report: "Primary legislation is required to 'establish HRI as a statutory corporation with functions and powers to enable it to carry out its remit'..." That seems pretty basic. We follow that particular matter up with Baroness Hayman when she was in charge. In fact, I refreshed my memory. I had an exchange with her and in the course of that exchange the Baroness was kind enough to talk about the legislative strategy which the old MAFF had looked at, including the use possibly of a Private Member's Bill or possibly even the use of a Ten-Minute Rule Bill to regularise this important but small piece of legislation. That first report was on 5 July 2000. It is a matter that has been around for a long time and I have to say as a member of the previous Government we were probably derelict in not doing that as much as the current Government is derelict in not doing it. Given it is so fundamental to the carrying out of HRI's functions, why has no action been taken to deal with this issue in the light of two select committee reports which have both shone light into the area?

(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.

I do not want to dwell on this point but I would remind you in the same paragraph from which I quoted, MAFF gave evidence to the Committee that a draft Bill was in existence, so you have thought about it but you have decided to do nothing. The reason I mention that is I want to move you into the field of horticulture because it tends to be the "Cinderella" of agriculture and yet in those parts of the United Kingdom where it is important, it is a major employer, it is very big business, it is highly sophisticated, it is unsubsidised. Where does it figure in DEFRA's priorities? What would you say are your top three tasks, objectives, hopes for the industry? Where does it rate against agriculture?

(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.

You have got a new Department and I am a tomato grower, a lettuce producer, a fruit man and I am saying to you, "Minister, what is new DEFRA going to do for our industry that hasn't been done before? Where is the gain from DEFRA in having you looking after our industry? What are you going to do for us?"

(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.

I would find it helpful if subsequently, Lord Whitty you might like to flesh out on a piece of paper with more specificity some of the areas you mentioned. You have been kind enough to identify areas where you feel more should be done by your Department and I would be quite interested to know how that agenda is going to be taken forward. I was very interested in your comment where you alluded to the overall economic performance of horticulture because one of the criticisms that has been put to us in the context of this particular inquiry has been for example the CLA told us there was no sign in your new Department's vision of the recognition of the importance that profitable farming plays in a thriving countryside. Would you care to respond to that challenge? Should you revise your vision to give greater prominence to the question of profitable agriculture in the same way that you allude to the need for horticulture to be economically successful?

(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.

If that is what you have been saying to farmers, then perhaps the National Farmers' Union remain to be persuaded. They told us they were deeply concerned about DEFRA's failure to give proper weight to the future of farming. They coupled that with comments about the slow response to the Policy Commission. I will come on to that as a separate subject because I think it has enmeshed itself in the announcement of the mid-term review and I would like to take those two items together. Have you you had any feedback from the NFU about this particular subject because that is what they have told us? You think you have convinced them that farming is a high priority for DEFRA but they are telling us it is not.

(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.

You have been carrying out a further consultation. I know you have travelled the country to take the views of farmers about the Commission. Just so we can get some idea in terms of your future activities, when do you expect DEFRA will give some kind of definitive statement on Curry and will that definitive statement contain a work programme so that we can identify with those bits of the Commission's findings that you wish to be associated with as a Department, how you are going to take that forward or will that agenda be identified by some kind of resource manpower implications? This inquiry is concerned about your future and your activities and it would be nice to be able to say, "This is what DEFRA say about Curry and this is how they are going it achieve it." Will your response be as comprehensive as that?

(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.

Does not the Commission imply two things. Firstly, with Herr Fischler's proposals it is quite clear that the politics of the German elections are going to slow up any meaningful discussion about these particular matters. His proposals contain quite a substantially different model of modulation plus degressivity from the proposals in Curry but they travel a parallel route. Does that effectively mean that what your report in the autumn is going to do is it will pick out the bits you can associate yourself with now and leave the central part of Curry on ice until some time in the future when the Community comes to a decision about the Fischler mid-term review?

(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.

Chairman

I just want to clarify this. Even assuming that, let's say, in the Spending Review you get whatever amount of money you are going to get, you could not really announce in the autumn, could you, a Curry package with a ten per cent level of modulation for example, without knowing what the outcome of the Fischler negotiations would be because, as Michael says, they are pushing in the same direction but with different mechanisms. You could not ask farmers to deliver a ten per cent modulation if then they are going to be faced with the conversion of their support into a fixed sum which then becomes degressive with a cut-off point to it. The timings just do not work, do they? It is not an approach, it is saying in terms of the coincidence of the two negotiations, you could not deliver Curry until the Fischler thing has been cleared and that has got to be the first consideration?

(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.

Mr Jack

What are you going to do to enable us all to understand more clearly both the effects of Curry and Fischler in terms of what I would describe as the winners and losers' game because in different parts of agriculture and different parts of the United Kingdom some people are going to have to give up something and other people are potentially, in the case of pillar two projects, going to be the gainers and all so far we have had are what I call broad brush, global assessments on the impact on UK farming as a whole. It would be very interesting to know in more detail how these proposals are going to affect different parts of the country and, going beyond the current subsidised sector of agriculture, which will be, by definition, the losers because they will give up something and which people in subsidised or non-subsidised rural development will be the winners. Are you going to provide us as a Department with some meaningful analysis so that we can get to grips with the implications for the UK of the Fischler proposals particularly.

(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.

Are you going to be producing any kind of discussion because a document crossed my desk - and I forget immediately who sent it I think it was Harper Adams Agricultural College - which tried to assess the impact on a series of case studies and, quite rightly, they picked up on the point you just picked up on that farmers may adjust their cropping mix to take into account a new set of circumstances. These are major changes. Are you going to be doing anything in terms of the request you made for officials to guide you about the line to take when you go to the Council. To negotiate this you are going to have a picture as to these various matrixes of movement and impact. Is that something you are going to prepare and is DEFRA planning to make it public so we can get a better understanding of both the modulation impact out of Curry and indeed the similar proposals out of Fischler?

(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."

Chairman

It will be important for policy because there are some large dairy farms which will find themselves within that 300,000 euro ceiling which at the moment would not be counted towards it. The policies themselves might need changing.

(Lord Whitty) I have indicated some hesitations about that particular aspect should that choose to be the position in two minutes' time.

Mr Borrow

During the evidence that the Committee have got on this report we seem to have received two batches of ideas. We have had comment from the CLA and from the farmers saying the new DEFRA is ignoring farming and Michael Jack referred to that. We have had a number of other organisations that have made a comment and if I read a quote from CPRE, which is typical of many we have received, it says, "This will be a particular challenge given the cultural 'inertia' that appeared endemic in the former MAFF and the dominance of staff, in terms of numbers and resources, focused on the agricultural sector." There seems to be from many organisations the perception that DEFRA has not really changed from the old MAFF with another brand name focused on agriculture, yet from some of the farming lobby perception the new DEFRA is very new and is ignoring farming. What do you think is the correct perception for the Committee to arrive at at this point in 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.

Mr Mitchell

People are getting fed up with the Common Agricultural Policy because every party at every election promises fundamental reforms of the Common Agricultural Policy and nothing ever happens. I just wonder what DEFRA's position is. Does it have a fall-back position or an alternative approach which can be urged on Europe because each time we get even a moderate reform from the Commission, like Agenda 2000, it is promptly vetoed by Chirac at the Berlin Summit and then this morning on Radio 4 I wakened up to Commissioner Fischler proposing a quite sensible reform package and then somebody with a French accent coming on saying, "It is a load of rubbish and it will not work," and we are clearly back in cancellation mode again. Here we are mutely hanging on with no alternatives of our own, sitting there awaiting the outcome of these struggles in which sense and reform have always lost out in the past.

(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.

That is right - and I hope it is - but it does mean that our negotiating position is essentially Fischler's. We do not have an alternative or a fall-back position. We are not proposing to up the ante by putting forward a strong alternative or mobilising, for instance, consumers across the Community against this monstrosity.

(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.

Let me move on to the other monstrosity, the Common Fisheries Policy and DEFRA gives us platitudes on that. It says "a reformed Common Fisheries Policy giving a sustainable future for our fishing is a key concern", which is right on, passionate stuff but what progress has been made with building up alliances with other states to reform the CFP in the way we like it to go, which is often very different to where Spain would like it to go or even Denmark would like it to go?

(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.

The worry would be again while we have got devout wishes we do not have a clear alternative set of proposals and just as fishing now seems to be relegated to a minor part of DEFRA's interests and preoccupations so when it comes to the British Government's preoccupations it is an even smaller and less important thing and one on which the Government is always inclined to make concessions to gain ground in other areas. Whether it is asylum speakers or an argument over regulations, fishing is always the card that is sacrificed.

(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.

That is true certainly but the worry is it is being abdicated to the devolved department in Scotland which is playing a much more active role in defending fishing and supporting fishing. There was 25 million provided for decommissioning there compared to 6 million for the fishing industry here, which is only half as big as the Scottish industry, and indicates a different sense of proportion and a more strenuous pursuit of the interests of fishing in Scotland than by DEFRA?

(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.

Mrs Shepherd

Could we turn to the question of food. The British Retail Consortium said: "The importance DEFRA placed on the promotion of a competitive and integrated supply chain which is responsive to the needs of consumers is welcome. " Talking of platitudes, I wonder what you think that means?

(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.

I am sorry, I just do not understand that statement.

(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.

How are you going to do that?

(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.

It seemed to us, certainly, when we were taking evidence from other organisations, and in particular the retailers, that your new organisation, which is to do with the supply chain, would help educate consumers. Is that your vision?

(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.

When we talked to the retailers they were quite enthusiastic about consumer surveys that they had done. They were rather modest about the size of the surveys, in other words rather modest about whether or not we could take them seriously, but they tried to tell us that their consumers were overwhelmingly concerned with supply chain issues rather than price. Would that be your impression?

(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.

What evidence do you have for that statement?

(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.

How important is provenance actually to the average consumer?

(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 -

Six per cent of consumers

(Lord Whitty) No, more than that.

That was the figure we were given in this Committee.

(Lord Whitty) It is a different figure from the one I have seen, it is less than 20 per cent.

Quite a bit less.

(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.

Mrs Shephard

I think so. In a sense the Minister is making my point. The point I am trying to make - and we got very unsatisfactory answers from the retail consortium to be honest and from the individual retailers who were clearly making their pitch for their caring qualities - and what I am interested in is quantifying how much interest there is in provenance as opposed to price? How much interest is there really? What percentage are we talking about of people who are interested in rearing conditions and all those sorts of things as opposed to price? Certainly the retailers did not give me satisfactory answers and I wondered, given your answers are quite vague but optimistic, you seem to have some notion, is there any satisfactory quantification?

(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.

I think that is a realistic answer. It would be nice if we had more of them, not only from Ministers but from all those who talk about the future direction of food production and interests and fortunes of food consumers in this country. Of course we want consumers to demand the best and to demand British produce but nobody has yet been able to give me any evidence which has satisfied me that they do. I have another question which is this. The British Retail Consortium calls for further definition of DEFRA's role as food retail sponsor to promote clear mutual understanding between food retail in Government and whatever. What is DEFRA's role as a food retail sponsor?

(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.

There appears to be a conflict between your role as a food retailer sponsor and your role as a sponsor of food producers, if you like. We were given one of the most striking statistics on this Committee that really impressed all of us and it was this: five years ago only four to five per cent of all chicken consumed in this country was imported and now it is 40 per cent. How do you resolve that conflict between your role as a food retailer sponsor, and that is clearly the desire of the retailers, and the chicken producers? Is there a conflict? What do you do about it? Does it matter? Especially given the assertions, and you have only mildly joined in on them, that people are very, very concerned about provenance.

(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.

I am interested that you come to that conclusion at the end because if that is the case and that is your view and this is the situation with the poultry sector, which after all is not a subsidised sector, what is the point? As far as I can see almost everybody we have taken evidence from has been mouthing these platitudes about people being interested in provenance and the quality and all of this stuff but they are not, that is it, and you have not been able to answer the question in any way.

(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 ----

They are not asking how has it been reared and has it travelled 5,000 miles.

(Lord Whitty) Some of them are.

They self-evidently are not.

(Lord Whitty) Some of them are and some of them are occasionally.

Where is the proof? If five years ago we imported four per cent and now we import 40 per cent surely that drives a coach and horses through what you are saying.

(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.

Chairman

I am going to take a couple of decisions in a minute. Two last questions, Lord Whitty. What are your priorities on research?

(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.

The 250 million figure is slightly misleading because about half of that is monitoring, is it not?

(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.

But it is important that your research expenditure should be directed towards the delivery of your broad policy aims, is it not?

(Lord Whitty) Indeed.

That it should be joined up, to use a well-known phrase.

(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.

A final question. If you look at your annual report there is an absolute constellation of quangos and bodies, many of whom have been around for quite a long time. Do you not think that now and again there should be a systematic policy of culling and reorganising, deciding whether they are still serving any purpose whatsoever, that there should be a ministerial order that says every year at least ten per cent should be abolished? How often do you review to see whether they are still doing what they are supposed to do, whether they are constituted to do what they are supposed to do, whether they are engineered to do what they are supposed to do and whether what they do is satisfactory?

(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.

Mr Jack

You have developed, if I may say, Minister, a delightful conversational way of answering many of our questions which indicates what you would personally like to see. You said in response a second ago to the Chairman's question "Well, yes, I think we should look at these agencies". Are these "we shoulds" that you have given us in many of your quite candid answers to us going to be crystallised into something - now the Department is, if you like, coming out of the implications of foot and mouth and can see with a year or so under its belt more clearly where it is going - with the sharpness that we might be seeking to turn these aspirations into plans? You have produced, for example, recently two documents full of some wonderful phrases, high minded aspirations. What we are searching for are the specifics. Is there going to be volume three with the "this is what we are going to do" answers in?

(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.