Examination of Witnesses (Questions 20
- 39)
TUESDAY 1 JULY
2003
RT HON
MARGARET BECKETT
MP AND MR
ANDY LEBRECHT
Q20 Mr Mitchell: And as a prominent
food consumer myself, what is going to be the effect, say, in
five years for consumers? Will they see reduced prices? Will the
benefits of this reform be passed on to the consumer? Will they
have access, as they do for manufactures, to cheaper producers,
more competitive producers overseas?
Margaret Beckett: Yes. In five
years' time we shall be beginning to see the impact. That will
not be because of these reforms specifically, although they might
have something of a marginal impact, but it will be an issue that
will come up as we move into the WTO negotiations. On the one
hand, and this is where again Oxfam slightly misses part of the
plot, it seems to me, because there is no longer going to be an
incentive to over-production, the chances are high that there
will not be those food mountains that we used to have to pay to
dump on world markets. It will have an effect on subsidies in
that respect; it will have an effect on the general world market
position. We do think that all of this will assist in getting
us closer to world prices and that as an approach is gaining credibility
and ground.
Q21 Ms Atherton: We talked a bit
about bureaucracy and, if there is one thing a Cornish farmer
hates more than a Devon farmer, it is bureaucracy. I would like
to know what your analysis and the Department's analysis is of
just how much bureaucracy might be reduced. Secondly, when you
have been writing your memoirs, as I very much hope you have,
what do you think you will in time think was the greatest possible
missed opportunity and the greatest achievement?
Margaret Beckett: I must turn
to Andy on the issue of how much bureaucracy he thinks we might
be able to save, on the presumption that we went for a fully decoupled
system.
Mr Lebrecht: There are two forces
going in two different directions. As far as decoupling is concerned,
total decoupling means getting rid of about nine different schemes,
each with different rules, and retention periods and checking
arrangements, etc, and replacing them with a single scheme. Once
that scheme is in place, and it will take a bit of work to get
it in place, that should involve a very significant reduction
in bureaucracy on farmers. The other point, and this was touched
upon earlier, is the question of cross-compliance. There will
be a requirement for farmers receiving a single income payment
to meet certain environmental and welfare standards. Inevitably
the enforcement of that will involve a certain amount of bureaucracy.
Those are the two opposing forces.
Q22 Ms Atherton: So we are going
to end up much the same as we were?
Margaret Beckett: No.
Mr Lebrecht: I do not think that
should be necessary at all.
Margaret Beckett: Not if we can
help it. Secondly, you asked me what would I think was the greatest
missed opportunity in these negotiations. I suppose perhaps the
price cuts issue, not being able to persuade people to do more
on that, but that is because they do not see it as a closed book
and they see it as something that is going to recur, and so in
that sense it is not the end of the world. The greatest achievement?
Q23 Chairman: Survival.
Margaret Beckett: Not just survival,
although that is a factor. I am trying to think how long ago it
is, but when I first worked for the Labour Party what was a closely
guarded secret for many years was that I became the Secretary
of the Agriculture Committee. We had never had one before. I was
the last person to be employed so it is the usual thing: you get
the job nobody else particularly wants. I had to write a pamphlet
to try and explain how the CAP worked and I have been in favour
of reform of it ever since. It is a career goal to see the CAP
reformed and I never thought I would have the opportunity to be
the person who did it.
Q24 David Burnside: Perhaps, Secretary
of State, you will give a commitment to come to the House every
year and report on overall budget numbers and bureaucratic standards
within the European Union and report on whether they are falling
or rising. It will be interesting to see how often you come to
the House of Commons to report falls. Just a general point, and
this is complimentary. In regions like Northern Ireland we appreciated
the involvement and consultation with the UFU and, whether it
is our devolved or our direct Minister, Ian Pearson, it worked
very well this time. I do want to pass that on. The UK did negotiate
on a national basis and overall, as far as we are concerned in
Northern Ireland, the UFU is generally happy with the deal. Could
I just comment on two points, and this is a little bit more controversial?
In recent years—and this does not affect all sectors—the
movement between the pound and the euro has become more acceptable
to the industry within Northern Ireland. It is not a major concern.
The obvious historical reasons on exporting were there which led
people towards a political view. At the present time there is
no demand for any movement from the way exchange rates are operating
between the pound and the euro and that is from direct experience
of talking to a large number of farmers in Northern Ireland. You
might want to comment on that. Going back to the national point
of negotiation, since Austin did not raise it, it is a pity that
we cannot achieve national success on our fisheries policy on
behalf of the fisheries industry in the UK in the same way that
we have achieved reasonable success recently on the devolution
of the CAP.
Margaret Beckett: The only thing
I was going to say about the second of those is that the problem
there is that there are not many fish. With regard to the first
one, it is interesting you say the pressure is off to some extent.
I take that on board. There is some economic analysis kicking
around which shows a very close correlation indeed between the
movement of the exchange rate and farm incomes. That is just something
that we have to be mindful of, but I will share with you what
I shared with the Prime Minister when we were having our Cabinet
discussions on the euro, which was that one of the greatest single
influences on farm incomes was the movement of sterling; therefore,
there would be potentially unmitigated advantage to British farmers
were we to go into the euro, but I did not think he should nurture
any illusion that that meant that any of them would vote for it.
Q25 Mr Breed: On the dairy sector,
we had hoped that perhaps by 2008 we would begin to see the demise
of the milk quotas. That is now going on to 2014/2015. What effect
is that going to have on the milk quota regime and dairy farmers
in particular?
Margaret Beckett: That is one
of the other missed opportunities. We would have liked to see
much more reform in dairy, but we did manage, almost at the last
minute, to secure the freedom to decouple in that sector as well,
which had not been our expectation. We were due to have to wait
until some of the other changes were coming about.
Q26 Mr Breed: Another 10 years is
just unbelievable.
Margaret Beckett: Yes, I know.
Basically, there are those other than ourselves who would have
liked to see the end to the quota system but in the end it was
not high enough up anybody's list of bargaining points to be delivered
and there was strong resistance from other Member States.
Q27 Mr Breed: How will the compensation
for the price cuts in the dairy sector be funded, because there
will be price cuts in respect of butter, skimmed milk, etc?
Mr Lebrecht: The compensation
was agreed as part of the deal and can be funded and the whole
CAP as reformed can be funded, it is thought, until about 2007-08,
but there is a provision in the agreement called the financial
discipline mechanism which requires the Council to make adjustments
to direct payments in order to ensure that the budget is always
met. In other words, if the consequence of compensation is to
breach the budget limit, then there would be cuts in direct payments
in order to fund that.
Q28 Mr Breed: So it will stay within
the
30 billion total ceiling?
Mr Lebrecht: That is right.
Q29 Mr Breed: If we cannot budget
for these price cuts within that, somebody else will have to pay?
Mr Lebrecht: No; somebody else
in the sense of direct payment recipients across the board. The
proposition would be that direct payments would come down in so
far as was necessary to meet the budget shortfall.
Mr Breed: Bearing in mind how high the
dairy sector seems to have been on the current agenda, one wonders
how high it is going to be when we come to those discussions and
negotiations in 2007.
Q30 Mr Jack: I must just congratulate
you on your stamina in these negotiations. Can I ask if the agreement
that has been reached is bomb-proof from being opened up again
by heads of state?
Margaret Beckett: It should be,
yes, not least because heads of state met in the middle of it
and then the Agriculture Council came to a decision afterwards.
Q31 Mr Jack: So we are not going
to see another Berlin?
Margaret Beckett: I do not anticipate
it.
Q32 Mr Jack: But it is theoretically
possible?
Margaret Beckett: If I remember
correctly, the two kind of ran together, did they not? I do not
remember the timing of it.
Mr Lebrecht: I think the circumstances
are very different from Berlin. In the Agenda 2000 negotiation
the CAP reform negotiation was part of an overall negotiation
on financing of the Community which was to be settled at Berlin.
Therefore, there was an opportunity to re-open what the Agriculture
Council had agreed. There is no European Council scheduled now
until October—
Margaret Beckett: After Cancun.
Mr Lebrecht: —so there is
no opportunity for it to be re-opened and we do not see any Member
State seeking to re-open it.
Q33 Mr Jack: On the question of Cancun,
are we still not vulnerable, because clearly sugar is not part
of this, export restitutions remain, not just for that but for
other things? The changes that you indicated about reducing the
amount of surplus will not yet have bitten because the agricultural
cycle will not have gone sufficiently far round. Are we not vulnerable
for people attacking us on the question of subsidy in terms of
putting a surplus product on to the world market?
Margaret Beckett: I think perhaps
you had not come into the room when I made the point that Fischler
has explicitly said that he is going to come back on that
Q34 Mr Jack: I understand that, but
in terms of Cancun the vulnerability—
Margaret Beckett: Cancun will
be in one sense like CAP reform. It will be a negotiation. People
will point out the areas where they want change. There is no invulnerability
that we can provide but we have made substantial moves, much more
substantial, I am absolutely certain, having talked to people
about this over the months, than any of our negotiating partners
were expecting. I think they will be absolutely stunned by how
far the EU have moved and, as I said a moment ago, while I do
not have any quarrel at all with people saying, "Is this
good enough?", etc, etc, I hope nevertheless that the general
message that will come out from the European Union is, "We
have made bold steps and it is about time you did the same".
Q35 Mr Jack: Can I ask you a question
about what economic analysis you have done, or are planning to
do, about the effect of these changes? Is it not the case that
an argument can be put that, rather than giving the flexibilities
that you alluded to earlier, the concept of the single farm payment
might actually lock up agriculture because farmers will look at
their farming activity in the reference period and say, "I
cannot really afford to change. I have got to continue with the
current regime to maximise my level of payment", and there
will be others who will say, "I would like to change to something
else but I cannot. This system does not allow me to move between
the arable and the non-arable sectors". It seems to me that
there are problems there in locking up agriculture rather than
freeing it up. What analysis have you done on that?
Margaret Beckett: We commissioned
an independent analysis of the potential for a scheme of this
kind before we went into the negotiations. Who did we get it from?
Mr Lebrecht: We commissioned it
from a number of organisations.
Margaret Beckett: And so too did
the Commission. I understand that a number of other Member States
did the same, and I think you will find that everybody who has
done an economic analysis of the impact of moving to a decoupled
system does come out with the view that it has economic advantages
and does not share the view that in some way it restricts people
and ties them down. I do not think I have had the opportunity
to say this to the Committee before, but my understanding is that
part of the impact that people who have been going round talking
about the potential of these schemes have experienced is that
if you are talking to farmers who are older farmers there is a
tendency for them to identify the difficulties and the problems
that change will cause, but that when you are talking to younger
farmers they begin very speedily to identify the opportunities.
If we thought that it would be a scheme that would tie farmers
up and tie their hands in the decisions that they make then we
would not be in favour of it. We believe that it will create much
more room for manoeuvre than they have now.
Q36 Mr Jack: If you are looking for
overall environmental improvement from the farmed land in the
United Kingdom, how are the horticultural growers to make their
contribution when they do not appear to have any additional money
so to do?
Margaret Beckett: We are looking
to general improvement of the environment and I suppose in many
ways we are looking at it more from other sectors because these
are the sectors that have the greater impact. Leaving aside the
issue of specifically how will horticultural growers be affected,
if you look at the overall package it is generally accepted that
there will be a potential for environmental improvement from the
breaking of the link of the subsidy and production. Secondly,
very much in the margins of the agreement about set-aside, we
have an acceptance of the use of margins, which I know that a
number of the environmental NGOs feel is potentially a very important
and useful contribution, so in a variety of ways there are some
environmental benefits, but also of course we will be looking
at what schemes there are, what is the future for agri-environment
schemes and so on in the future.
Q37 Chairman: Secretary of State,
first of all, I hope you can get information out to farmers as
soon as you are able under the title, "What does this mean
for me?", because I can just imagine farmers being utterly
perplexed. When you first read this through it looks like Sanskrit
and a lot of farmers will be saying, "What on earth does
this mean for me?", and the sooner we can answer that the
better. Two slightly more detailed questions. We have got the
deductions for national modulation and then we have got the national
envelope, so we have two sets of deductions. Is there a bracket
within which you wish to maintain the differentiation between
what British farmers are levied and what other farmers are levied,
within and without the UK?
Margaret Beckett: Where there
is a perfectly legitimate and reasonable concern is that already
there is a percentage for modulation, there is a percentage for
the national levy, etc, but if we get the organisation right maybe
that will have less impact than it otherwise might. Basically,
these are issues on which we shall be talking to stakeholders.
Q38 Chairman: But you have accepted
at any rate that farmers are obviously concerned that they see
themselves being levied, and particularly if there are differential
levies within the UK, they will clearly be concerned about that
issue.
Margaret Beckett: I go back to
the point that I made before, that there is a limit to the scope
for that kind of differentiation.
Q39 Chairman: Secondly, you have
said that the payment will be based on land use but transferable
by sales separate from the land. How are you going to allocate
the single payment between landowners and tenants? Will farmers
be permitted to sell the income stream which a single income payment
will generate, and what guidance will you and potential purchasers
be given about that sort of scheme? It is detailed but it is none
the less a fairly fundamental concept.
Margaret Beckett: There is a whole
annex about that in the review.
Q40 Chairman: If you wish to reply
in writing that will be fine. I just want to register the importance
of the question.
Margaret Beckett: That might be
a good idea. The point that I think is important to make is that
the whole idea is that the subsidy will go to the user of the
land, go to the active farmer, if you like, and that we thought
was very much the right approach. There are slightly different
rules on sale and leasing.
Chairman: So if you put houses on your
land you are not going to get the single payment any more?
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