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Matthew Green: I shall be brief, because much of what I would like to say has been said very well already by the hon. Member for South-East Cambridgeshire and my hon. Friend the Member for North Norfolk. However, I want to reiterate a few points.
I welcome the substantial change in the Minister's tone from when we debated the issue in January, when he was in a particularly bullish mood and was dismissive of any suggestion that our concerns had any validity whatever. He has moved to accepting that we raised some valid concerns. The Commission, too, has shifted. It is clear that the Government would love sugar reform to be in place when they have the joint presidency of the EU and the G8, because it could be heralded by the Prime Minister as a delivery by Britain.
Peter Bradley (The Wrekin) (Lab): A sweetener.
Matthew Green: As the Minister's Parliamentary Private Secretary says, it would be a sweetener.
I am sure that that is at the back of the Minister's mind. If so, he needs to recognise that a consensus is emerging and that the British Government do not seem to be on board with it. That consensus offers a way forward. There is recognition across both the sugar sector and non-governmental organisations that some reform is needed. There is also recognition—fortunately by everyone, including the NGOs—that an unfettered free market approach is not the way to go. That is a substantial and welcome change on the
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part of the NGOs. Bloomberg's interpretation of Oxfam's press release issued in September, after the August communication from the Commission, says:
''European Commission proposals to slash price guarantees for sugar refined in the European Union are too drastic and will increase poverty in Africa, UK-based aid agency Oxfam International said.
'The price must be higher' to protect African exporters to the EU, Penny Fowler, head of sugar policy at Oxfam, said in a telephone interview. The commission 'needs to go back to the drawing board.'''
That is Oxfam's view of the current position.
There are some ways forward. As I say, there is broad acceptance that reform is necessary. I just want to touch on some of the particularly contentious points, on which a strong steer from the British Government would influence the Commission's way forward. The first, critical, point, in terms of whether we end up with an efficient low-cost sugar-producing industry across Europe or an inefficient one, is how the quota cuts are implemented. If there are quota cuts across the board, they will damage efficient producers and inefficient producers equally, rather than influencing inefficient producers to move on to other areas so that the efficient producers can take their place.
Any quota cuts that are necessary should use the current Uruguay round formula, and should not be applied pro rata. That formula was specifically designed to apply smaller cuts to countries that, like us, are in deficit, whereas the pro rata cut would penalise the deficit countries just as much as the surplus-producing countries. This is a case of the Minister batting for Britain. If he defends pro rata cuts, in effect he will be defending French producers' interests over and above those of virtually every other country in Europe, and Britain in particular. I am sure that he would not want to be portrayed as doing that. This question is outside the bigger issue of the scale of the reform; it is about how the reform is to be implemented in Europe. That is critical.
The second issue—I am pleased with the Minister's response on this—is the order of reform. At the moment, the Commission is suggesting—''proposing'' is clearly too strong a word—that the 16 per cent. pro rata cut should come first, followed by tradeable quotas and then restructuring. There are clearly problems with that approach. Because of the investment that is needed in the industry—and the fact that cuts would be pro rata, across the board—there are a number of grave concerns. The Minister said that there might be some difficulties, but I was pleased that he suggested that he was willing to explore addressing this in a different order, with the restructuring first, followed by the tradeable quotas and then, if necessary, some sort of cut across the board. However, that may not even be necessary, because the same result may have been delivered through the restructuring and the results of introducing tradeable quotas.
I was pleased by the Minister's response to the idea that the quota should be tradeable between states—although that is a Commission proposal. Some countries in Europe are particularly inefficient. They
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probably need to get out of sugar production and transfer into other areas. To finance that transition, they can sell their quotas to companies in countries with efficient producers, and such companies can then keep their efficient plants going. That would be better than having unilateral cuts. This tradeable feature is important, and I am glad that the Minister said he supported it. It is a way of ensuring that the reform delivers a decent sugar market in the EU, instead of a particularly artificial one.
My final area of concern is compensation. It was touched on by both the hon. Members who have made speeches. My argument on this subject is, in a way, against my own constituency interests, because I do not represent many beet growers—although I do represent a few. Most of the many farmers in my constituency are engaged in other areas of agriculture, especially livestock. They would benefit if compensation were put into the general pool of the single-farm payment. However, I do not believe that it should be; the compensation for sugar should go directly to the beet growers who have been affected. The National Farmers Union, which represents all farmers, is also signed up to that position. In one sense, that is a brave position for it to adopt, but I recognise why it has done so.
The Minister could be more specific about the fact that he could agree to that. This is about how the UK will implement any compensation; we do not know the scale of it, and we are not asking to know. What we are asking for is some general principles about how the compensation might be applied, if there is any. I hope that the Minister can be a bit more definite about how things will happen.
I have a final point for the Committee. Fortunately, we have moved some way from complete free-market liberalisation of the sugar market. That is what happened in coffee, and the effect of it was that two countries—Vietnam and Brazil—now dominate the world coffee market. It destroyed coffee-producing economies in many of the least developed parts of the world. The similarity between coffee and sugar could be great. I am glad that there is now a consensus that has moved away from complete liberalisation to one of much more transitional changes. That should lead to some of the outcomes that we all want in terms of ensuring equity for other parts of the world, and also ensuring that we do not at the same time destroy an efficient, well run and well managed industry in this country.
I think that the Minister is coming with us. However, we would welcome a bit more evidence that he takes on board some of the concerns being expressed, which are about the detail of the change rather than its general thrust. It would be very welcome if the Government could make it clear that they are behind these principles, and it would give huge reassurance to people in the industry who are currently facing complete uncertainty.
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Alun Michael: The debate has been interesting and the range of issues raised illustrates the challenges we face in getting the reform of the sugar regime right.
Hon. Members have raised issues ranging from direct constituency interests to sugar production and industrial issues more widely in the UK and their place in the agriculture industry more generally. Bioethanol and the protection of producers—particularly in the African, Caribbean and Pacific countries, who would be affected by the regime—have also been discussed. I am pleased that the debate has been so wide.
I am interested in the fact that the hon. Member for South-East Cambridgeshire began by describing himself as not naturally a sympathetic man. That is not an accusation that I would ever have made. He said that he came in hope; it is the role of the Opposition to live in hope. The Government's role is to be asked questions that cannot be answered until we have reached the proposal stage. I have to put up with that and to try to be as clear as I can in responding, without guessing at what will be in the proposal.
Our approach is to be ambitious in seeking reforms that are sustainable not only for the short term, but for the long. The hon. Gentleman referred to the review in 2008 that I mentioned. I make it clear that we want the parameters for that set as part of the proposal, so that it is quite clear that it is not a review that opens up the whole affair, but an attempt to fine tune the regime. Therefore, it can be considered sympathetic to industrial and other concerns, rather than seeking to define everything in response to the proposal when the Commission brings it forward.
I hope that that is useful clarification. We want what the hon. Gentleman seeks: sustainable reform and reforms that allow the industry to try to be sustainable by being able to plan ahead and see a long-term future.
The hon. Gentleman and, in particular, the hon. Member for North Norfolk sought greater clarification of the Government's position. The hon. Member for North Norfolk said that the House of Commons does not scrutinise legislation as effectively as he would like.
Norman Lamb: European legislation.
Alun Michael: Sometimes that applies to other legislation, but I take the point that the hon. Gentleman was specifically talking about European legislation.
We are clear about what we want. I would have expected Conservative and Liberal Democrat Front Benchers to be aware of our position, as we have set it out consistently on a number of occasions—not just publicly, but in terms of the European dimension. As I said at the beginning, we cannot answer specific questions that depend on the outcome of the WTO appeal and the nature of the specific proposals that come forward from the Commission.
I want to be quite clear about what we have said about our approach. At the Agriculture Council in July, where there were tremendous achievements by the UK in terms of the generality of reform of the
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CAP, the Secretary of State welcomed the Commission's clear and bold approach, which was clearly in the spirit of the 2003 and 2004 CAP reforms. She advocated greater initial deregulation of the internal EU sugar market to increase competition and to facilitate restructuring. To some extent, that goes to the issue of the order of events, which the hon. Member for Ludlow referred to.
The Secretary of State stressed that we are conscious of the concerns of the EU's preferential suppliers, particularly the ACP countries, over the impact of the proposed cuts. It is important to consider appropriate transitional measures and to work with producers to ensure that assistance is effective and targeted. She also emphasised that there should be no false signals in relation to the intention artificially to prolong dependence on the protectionist and unsustainable EU sugar regime and she urged the EU to begin the reform process now, while acknowledging that further decisions may need to be taken later in the light of external factors. Those are all things that I referred to either in response to questions or in my initial remarks.
The Secretary of State noted that the delay would prolong uncertainty and make reform harder to achieve, so the Commission should come forward with legislative proposals as soon as possible. At November's Agriculture Council, she reaffirmed the UK's belief that the current regime is unsustainable. There is general agreement on that. She also broadly supported the Commission's approach as a step in the right direction and stressed that reform is necessary for the EU to meet its external commitments and for the successful conclusion of the Doha round.
The Secretary of State also stressed the importance of the action for ACP countries, which the UK has pressed hard on, and she argued that more could be done to increase the competitiveness of the EU sugar market. Those views and starting points—those approaches that inform our attitude to the reform of the sugar regime—have been reinforced time and again.
We conducted a full consultation exercise in December 2003 and January 2004, seeking views on the Commission's earlier options paper. A further consultation will be undertaken once the Commission's detailed legislative proposals are available. There would be a danger of consultation overload if we consulted further on what is effectively a refinement of the previous communication before we have the outcome of the appeal and clarity on the proposals.
The hon. Member for North Norfolk and others referred to the regulatory impact assessment, which will be submitted once formal legislative proposals are available. Until more detail is known about how price and quota cuts will operate, it is not possible to say what the impact on the UK will be. However, we have published the Cambridge report, with its illustrative options, and we are undertaking work to inform that regulatory impact assessment so we can respond to firm proposals as soon as possible.
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It is also important to understand—I am sure that Committee members do—that there will be negotiation once the proposals emerge. It is not a question of the proposals emerging, us commenting on them and that being the end of the story. One problem is that a majority of countries are disinclined to go along the lines proposed by the Commission, which poses a challenge to the Commission and to the UK as a country that wants to be progressive on the nature of the reforms that come forward.
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