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12 Dec 2002 : Column 456—continued
4.15 pm
Mr. David Curry (Skipton and Ripon): There is a part of the Gilbert and Sullivan opera XIolanthe" that refers to the ability of parliamentarians to move almost anything. There is reference also to a parliamentary pantechnicon. The motion is the closest thing to a parliamentary pantechnicon that I have come across during my time in the House. It literally includes everything—and the kitchen sink. I suggest, Mr. Deputy Speaker, that even with your ingenuity you would find it almost impossible to rule anyone out of order if he or she were discussing almost any subject. However, I do not wish to challenge you, Mr. Deputy Speaker, on this matter. In effect, we have before us a motion of confidence in DEFRA. That makes it plain why we will vote against the motion.
We talk about farm incomes, but we never distinguish between various categories of farms. In broad terms, there is a large set of farms that are mainly in the hands of part-time lifestyle farmers. They make only a small contribution to production. These people farm not intending to make a profit, or not minding if they do not make one. That is an increasing tendency. I see no reason why policies should be devised round the economic needs of people in that category.
The second category is that of small full-time farmers who find life difficult. It was interesting this morning when Lord Whitty was challenged by John Humphrys on XToday". He talked about livestock farmers going out of business. At present, arable farmers are going out of business. Livestock farmers who were caught by foot and mouth have, to a significant extent, stuck in there. That is partly because the habit of survival is perhaps the most deeply ingrained.
Thirdly there is the large-scale commercial farm. There are a few such farms that produce overwhelmingly the largest amount of foodstuff. There is a choice to be made when it comes to the sort of farm for which we have policy in mind. It does not get anybody anywhere to talk about farm incomes as a broad average, no matter whether the figures are good or bad. A little more differentiation would help our analysis.
I shall focus on the heart of emerging Government policy. That is the same theme as the hon. Member for Sherwood (Paddy Tipping) chose in his introductory remarks. There is the move from production subsidy to subsidy for public goods and the environment. We are talking about two sorts of subsidy. We give the impression that public goods are a good thing, and then we slide across, as it were, and say, for example, Xsupport for", or use a euphemism. We are still, however, talking about subsidy; we are simply redirecting subsidies. To start with, we might just as well get the terminology correct. The mechanism is the modulation which gave the hon. Member for Braintree (Mr. Hurst) so much analytical difficulty in his early days when meeting farmers.
Indeed, it means something different from its first manifestation. It originally meant trying to hit large farms in northern European to benefit smaller farms on the continent. XSubsidy" has therefore had a new lease of life. I personally regret that jargon.
We are moving towards entry level schemes. They are intended to be undemanding. The Minister emphasised that they are not high access schemes or difficult to get into. They are the starting point; that is why they are called broad and shallow. They are going to be trialled for two years. All that one discovers in a two-year trial is whether the Government can administer the scheme. We will learn nothing about the environmental benefits of the schemes in two years. We should not fool ourselves. We will find out a little about their acceptability to farmers and the Government's capability of administering them, but they are only for a trial area and we therefore may not learn much.
There is however a legitimate question about the value for money of the broad and shallow entry level scheme. What will it mean to the farmer? Will it make a significant difference to his income? Will it have any incremental benefit to the taxpayer as the consumer of that sort of product? If the access point level is so low, what will we get for our money?
I assume that the purpose is to tee up the farmers for other schemes. I therefore welcome the fact that the Government state for the first time in the document that is released today that the roll-out of the schemes will depend on the trials. On every previous occasion, the Government said that roll-out would follow the trials. However, for the first time, they state that that will happen provided that the trials work. I do not know whether that signals a genuine change or whether language has simply slid from one expression to another. However, I welcome it as an improvement.
If we follow this path, we must find a method of getting value for money. We do that by creating a market in environmental goods. I want the scheme to be run as a marketplace. I do not want it to be based on income forgone. There are insufficient incentives for farmers in that. If the schemes are to be sensitive to local and regional needs, the only way to proceed is not through a great national agenda, but through farmers making a contract with the Government to buy into specific programmes, for which they perhaps volunteer. The Dutch can manage that and it should not be beyond English wit to do the same.
We should use the accompanying enhanced schemes, such as stewardship, which is currently under review, to support the main policy developments. The Government speak a great deal about joined-up policies. We have a chance to try to use the initiatives as an element to join up the programmes. I have two specific points in mind.
First, let us consider the requirements of the water framework directive, which the Select Committee is currently considering. It has enormous implications for farmers in the control of diffuse pollution—that is, run-offs from agricultural land. Few farmers have the remotest idea of the sort of requirements that may be placed on them. The Select Committee got the impression that people who live in urban areas have
even less idea about it. It makes more sense in getting value for money and minimising the ultimate costs to prevent the incidence of on-farm pollution than to clean it up at the point of discharge. That means that #10 spent upstream may save several thousand pounds downstream. That money ends up as a charge on the water user. Therefore the public who put in an investment of #10 upstream may well save several thousand pounds in tax or water bills downstream.Secondly, I should like the money to be used to promote integrated crop management. That is a conservation grade of agriculture, not an organic production or even an alternative, but a method of trying to minimise the use of pesticides and fertilisers. It is a form of farming that tries to maximise the benefit to the environment and, for example, to bird species. The evidence appears to be that it enables natural habitat to be re-established much more quickly than people imagine. This is a whole-farm concept, and it would be a useful way of trying to bend a particular programme towards a broader objective, thus obtaining a multiplier effect in terms of value for money.
We must also ensure that the schemes do not proliferate. There is always a tendency for this to happen, because people say, XHang on, we must make this one sensitive to particular circumstances"—which I endorse—but then the schemes tend to multiply and confusion arises in the minds of the farmers or other takers of the schemes as to which one they should choose and whether it is going to be bureaucratically complex. The administrative costs then mount up in the Department. I know from my own experience—and I do not imagine that things have changed much over the years—that the sheer administrative cost of running some of these schemes bulks very large indeed in the Department's budget. I also know that the Department is going through a fairly agonising process of trying to match its resources to its public service agreement targets at the moment—a fact to which I am sure the Minister is very much alive. There is some scope for rationalisation of the schemes. We have talked about whether the organic scheme might be brought within the framework of stewardship, and I still think that there is something to be said for doing that.
A final factor in the question of joined-up government is whether the schemes will qualify for the green box in the ultimate negotiations in the World Trade Organisation. After all, if we are shifting subsidy from production-related to non-production-related—the strict economist would say that there is no such thing as a non-production-related subsidy, but, for the sake of the negotiations, one can make a distinction—it is important that the present schemes that are in the so-called blue box, which is production-related, should be replaced by schemes capable of conforming with the rules of the World Trade Organisation. It is important that we bear that in mind when framing them.
That takes us straight to the schemes coming from the European Union, and to the mid-term review, because modulation is part of all that. There is now a serious question mark over whether dynamic modulation—which simply involves taking more money off farmers to put into environmental schemes: a progressive tax—is to go ahead. The impression that we got when we were in Brussels was that Brussels was pretty well reconciled to that item on the agenda slipping, at least in the present
negotiations. Some Ministers have also told us that they have the same impression—indeed, that they rather hope for that outcome.This is important for the United Kingdom for several reasons. First, we are depending on that mechanism in Brussels, as Lord Whitty told us, to fund for ourselves some of the enhanced programmes that are going to move us more towards the support of public good benefits in agriculture. Secondly, the Government will need to look at how our own programmes for shifting from production to environmental support—our own domestic modulation—will sit with the European model, and, in particular, at the redistributive effects that they will have in the United Kingdom. There will be such effects between one farm or area and another. We must also consider the implications for British farmers if we alone are taxing their production aids, or if we are doing so at a much higher rate than is being done elsewhere.
Sir Don Curry put forward the argument, in his report, that we should go to 10 per cent. modulation in the absence of a major CAP reform—which always seemed to me like whistling in the wind—and then, perhaps, even to 20 per cent. I note a very guarded tone in the Government's response to that argument, as though they had not really committed themselves to going that far. There may be a case for doing so, but not until they have done the analysis, to which I referred, of the impact of such a measure, both internally and in terms of our competitive position.
My right hon. Friend the Member for Fylde (Mr. Jack) and other hon. Members have mentioned the retail industry. Here, again, I notice a coyness in the Government's response. I am usually glad when the Government are coy about things. I have a certain inbuilt coyness when it comes to interfering with the marketplace. I want to say to the Minister that I see no reason why we should not see a consolidation of the retail sector. There is more competition in Britain than in many other densely populated markets—Holland, for example, has only two such retailers. The regional importance of retailing in Britain is perhaps slightly different from the national picture.
It is fairly obvious that Safeway has a XFor Sale" sign over it at the moment. It is believed that Sainsbury's would have been for sale to Asda had the right offer come along. There is speculation that Sainsbury's and Safeway may have to put something together to hold off the relentless advance of Asda, which is breathing down Sainsbury's neck. Tesco keeps telling everyone that it would be intolerable to have any further merger, but of course that would create a much bigger competitor to Tesco. I see no reason why there will not be further consolidation of the retail sector. I am not sure whether there are any serious competition grounds to prevent that. If it were to happen, there would be even more cut-throat competition, and the playback, as it were, for the production of farmers would be even more acute.
The Government must take a pretty hard look at the implications. The consumer gets good benefit from competition among retailers. I find it difficult to choose which pre-packed, pre-washed, mixed special salad to buy at my local Tesco. It is rather like getting a free vote: it tends to confuse me. As my right hon. Friend the Member for Fylde said, the farming industry believes that it faces a monolith in terms of purchasing power.
There are ways into that market, but they must be explored and sustained. With the current level of the pound, the incentive is to purchase overseas.I wish to press the Minister on another point. The Curry report referred to a policy on nutrition. The Government are guarded about that. I have attended conferences at which people have talked about the need for a dramatically interventionist Government policy to tackle problems such as obesity. It is argued that there should be different codes for different foods according to salt or sugar content, this, that and the other. I would be interested to know whether the coyness of the Government's response shows a reluctance to go down that path—I hope that it does—or whether lurking behind that phrase about nutrition is the intention to take a much more interventionist stand.
Several hon. Members have mentioned the World Trade Organisation. The WTO at the top end and the consumer at the other are the great drivers for change in agriculture. The Government talked about enlargement as one of the levers for change. That was never very plausible, as it was clear that we would never have tried to stand in the way of enlargement to get change in agriculture, because we would were too strongly in favour of enlargement for broad, macro-political and geo-political reasons. The WTO is an imposer of change.
On reflection, I do not necessarily subscribe to the view that the budget deal is permissive, as I think that world circumstances could turn it into a tough deal. We must get support for the new member states. Sugar and milk regime reform may come out of the budget proposals. The Schröder-Chirac deal could turn out to be tougher than people think. A short perusal of the commentary in the French press disabuses us of any idea that President Chirac has won vast plaudits from his own agricultural community for this deal. It says that this is the death of farming as we know it, and it cites the number of farmers, farm workers and farm holders who are going out of business. Exactly the same cycle as we have had in the United Kingdom is reproduced elsewhere.
It is legitimate to ask what is left of the mid-term review. If the dynamic modulation is gone, the main thing left is decoupling. It is important to press ahead with decoupling, although not necessarily with the agenda as it stands. It is an important complement to our national policy. If we are to be joined up, we must join up national policy with the broader European policy and—dare I say it?—we must be joined up across the internal frontiers of the United Kingdom. There is an increasing dislocation of policy across the national responsibilities within the UK.
The thing about the CAP is that change is never as dramatic as its critics demand, but it is probably more constant than they realise. It grinds along undramatically, and the CAP as it is today is massively different from the CAP as it was even 10 years ago.
The review by Lord Haskins is enormously wide-ranging. Its terms of reference are encyclopaedic. It excludes the Rural Payments Agency, which is a pity, since some fairly drastic attention needs to be paid to it. It also covers regional development agencies, local authorities, English Nature and the Countryside Agency—it is particularly unhappy for any organisation
to have the word Xagency" stuck to it. It will extend well beyond the scope of Government. I suspect that it is a bit over-ambitious. I am not sure whether Lord Haskins realises what he is taking on. How many days a week will he devote to the task? How big is his secretariat? Is he alone, or are others helping him? How long has he to complete the job? The review, after all, goes to the heart of some of DEFRA's rural responsibilities, and spills out beyond that.Let me suggest one or two lines of inquiry. There is undoubtedly confusion about the providers in the business of what might broadly be called rural regeneration and economic developments. There is also confusion about the differentiation of schemes, along with a lack of definition in regard to the core tasks of bodies such as the Countryside Agency, the RDAs and the training and skills councils. If Lord Haskins could introduce more rationality, and more clarity and differentiation in terms of function, he would not just do a service to the consumer but do an administrative service to the Dept. A simpler architecture for purpose and decision making would be welcome.
If there is one thing that would help my rural areas it is broadband, which I think was mentioned by the hon. Member for Sherwood, but such high technology is not available to rural areas. People running companies tell me that they would be willing to locate in places such as Settle, which was at the heart of the foot and mouth outbreak—it would be a wonderful place for a cottage industry with three or four employees—but, because they cannot obtain the necessary technology there, they operate in Surrey, where they can. Technology is almost more important than anything else. It is not even possible to use a mobile telephone in large parts of the Yorkshire dales. If we are to have 3G—I must say that I am even more coy about that than about everything else I have mentioned today—it would be helpful to have mobile phone contact in the dales, although I will not intervene in planning decisions there.
I agree with what my right hon. Friend the Member for Fylde said about Horticulture Research International. We need decisions. The first stage of the review has ended; there are customers and people who might be involved in the reorganisation, and there are employees who need to know their fate. The sooner those decisions can be made, the better.
DEFRA contains some outstanding people. So, as a matter of fact, did MAFF: let someone fly the flag for MAFF for once. DEFRA administers some extraordinarily complex schemes, especially those related to the environment, which have major implications for businesses. The operation of the packaging directive, for instance, is a market-based scheme. The Department must make forecasts and specify targets for companies, and trading is involved. Such activity requires considerable statistical and economic skills, and the Select Committee genuinely doubts whether the Department can exercise the strength and depth that are needed. An analysis and some retraining are probably required.
There is a lot of sense in the Curry proposals. They make some extraordinarily heroic assumptions about CAP reform, and there is the occasional slightly dotty recommendation from, no doubt, a member of the panel
with a bee in his bonnet. There are also some curious omissions from the monitoring body that will be chaired by Sir Don. I think I am right in saying that the Environment Agency is not represented, although it will play a central role in managing the environmental activities of farmers. It is to be the nominated body, as I think the term is, dealing with the water framework directive.The Government's response to the report seems, on the whole, sensible and balanced, but I ask them to keep checking on value for money. My great fear is that if we move away from production subsidies, which have proved very difficult to dislodge, we will create a parallel structure of green subsidies—which are probably even more fiercely defended, because the environmental lobbies have a great deal more money than the agricultural lobbies or the political parties—and become frozen in a kind of immobility. I would like to see them flexible, digressive and, above all, based on a market. If we are talking about the farmer responding to the market, why should we define the market purely in terms of his productivity capacity and not in terms of other goods that he is seeking to make available to the public?
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