European Standing Committee A |
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Alun Michael: It is important for us to be clear. I shall put my understanding of the situation, and perhaps we can agree. The Committee is asked to note the documents before it today. There may be amendments, but we do not suggest that the Committee should sign up to having noted a document in the form that it might reach by the end of negotiations. I assure the hon. Gentleman that if the Committee agrees to take note of the documents, that will refer only to the form in which they are before the Committee. Mr. Francois: I thank the Minister for that intervention, but I have heard that point in similar terms from other Ministers. I have served on this Committee for several years and I am trying to put across to this particular Minister this afternoon, as he is not a standing member of the Committee, that we often find ourselves in this position. Sometimes, the Minister on duty on the day will say, “This does not commit the Committee or the House in any way; we purely ask it to take note of these measures.” We agree to do so, and it is subsequently stated that European Standing Committee A took note of them. Therefore, we have to be careful. I mean no disrespect to the Minister; the weakness is not any fault of his person, but a weakness in our procedure. Column Number: 30 As my hon. Friend the Member for North Shropshire said, we are, in principle, in favour of some reform of the common agricultural policy, as, I think, are members of the Committee from both sides of the House. As ever, in such matters, the devil is in the detail; this afternoon, the devil is in the extent of the detail. Generally, when one wants to reform something, one wants to make it easier and simpler. Most people who want to reform something do not, as a rule of thumb, want to make it more complicated. The problem with this procedure, particularly what is before us today, is that we are talking about something with 34 measures and three axes, so we do not seem to be making it simpler. The Minister set an acid test when he said that if I was sceptical about this matter, he hoped that he would be able to assuage my scepticism. I have to be honest: he has failed his own test. The policy is still incredibly complex, and farmers will have to deal with what we politicians and our counterparts in Europe come up with. Unfortunately, it seems to me, from what I have heard this afternoon, that we are not succeeding with reform because we are not producing a simpler system that is easier for farmers, who have to deal with a welter of paperwork as it is, to understand. Despite the Minister’s best efforts this afternoon, I remain somewhat sceptical, and that may be reflected in the vote. 3.49 pmMatthew Green: I start by saying how pleasant it is to have the Conservatives back in the Committee, as they completely failed to turn up to our last sitting. I should also like to reassure the Committee that the practice of grasping greasy pigs in the dark appears to be restricted to the north of Shropshire; I have never heard of it in the south. On a more serious note, I asked the Minister a series of fairly technical questions, and I should like to flesh out why I believe that they are important. Next week, the new environmental stewardship schemes will be launched, and that could involve a considerable expansion of pillar 2 expenditures. If the Government reach their target of 70 per cent. enrolment into the entry-level stewardship scheme, expenditure will expand. It will be paid for by increasing the modulation in England from 5 to 10 per cent. in 2006. Clearly, many of us hope that the schemes will be successful, and that there will be a big take-up. However, farmers considering entering them will want to be confident that they will be financed for the foreseeable future, or at least in the medium term. That is why the level of financing in 2007 is so critical for the future of the schemes, and for their success in attracting take-up. We have teased out in Committee the fact that the Government’s position is to restrict the budget to 1 per cent. of gross national income, whereas the Commission has proposed a budget of 1.14 per cent. I share the pessimism of my hon. Friend the Member for St. Ives about whether the Government will get it down to 1 per cent. I suspect that we will end up with something between the two figures; that is the nature
Mr. Paterson: The hon. Gentleman is absolutely right to follow this line, but the Minister gave me a categorical assurance in questions that the single farm payment is sacrosanct. He said that he did not think that the environmental payments would be touched either, even if there were a shortfall in funds, which, the Commission says bluntly in the document, would have to be made up by national Governments. I think that he has made that clear. However, it is the nub of the question. Will the farmers receive the single farm payment all through the period, as well as the environmental payments? Matthew Green: The point is that, if the overall budget is reduced from 1.14 per cent. of gross national income to some other figure between that and 1 per cent., we cannot have both pillar 1 and pillar 2 effectively ring-fenced. [Interruption.] I realise that the Minister might have implied that when he said that he is optimistic rather than pessimistic, but potentially one of the budgets has to give. The concern is that, first, the Government have indicated no area to which the reduction can apply and secondly, because the overall level of pillar 2 funds is small—only 3.2 per cent.—they have paid for the expansion in rural development by using the Agenda 2000 facility to switch funds from pillar 1 to pillar 2. Ours is virtually the only EU country that has switched funds or is in the process of doing so. That agreement runs out in 2006, and it needs to be renewed by agreement with the Commission if, as they propose, the Government are to continue to switch funds from pillar 1 to pillar 2. If they fail to achieve that, and/or if a reduction in the overall budget affects pillar 2—although the Minister has said that it will not—it could mean a reduction in the amount of money available in 2007 for the four stewardship schemes. Alun Michael: I am trying to follow with care the sums given by the hon. Gentleman. My understanding is that what might be called the 1 per cent. budget will give a 6.5 per cent. increase in the EU budget. He is talking as if the 1 per cent. will result in a cut in the budget. Have I misunderstood him? Matthew Green: I am referring to the difference between 2006 and 2007. I am not talking about this year’s budget—I accept that we have growth now—but about where it goes after then, its effect on the
I suggest that the Government are pushing simultaneously for a number of policy changes, but some of them are contradictory. The danger is that some of the Government’s objectives will undermine others. The Government’s overriding objectives in the negotiations are unclear, but it is important to farmers to know the Government’s position when farmers decide what schemes they should enter and what plans they should make for their farms for the next few years. I hope that the Minister will clarify the Government’s position and say which of those agendas they are pursuing, as they have potentially contradictory outcomes. I do not want to say more, except that I hope that the Minister will be able to throw a bit more light on the subject. I am not alone in having those concerns; I know that farming organisations and the CLA share them, and that they would like a clearer indication from the Minister as to the direction that the Government are taking. If the Minister can provide that today, we would be glad to hear it. 3.57 pmAlun Michael: I am grateful for the way in which hon. Members have approached the debate, because although several sought to question and challenge what I and the Government have said on the matter, they did so in a way that gave me greater confidence than is sometimes the case that they are genuinely trying to tease out information and ask questions because they are interested in the answers. That is a refreshing change, and I shall try to respond in like manner. I understand entirely that hon. Members want straight answers to their questions. However, as I indicated earlier, we are discussing these matters in the negotiations, and we cannot predict their outcome. We can say where we want them to go, and we can say what we feel optimistic about and when we feel there is little likelihood of achieving change. The alternative would be for the matter to come to the Committee only after a line had been drawn under the negotiations and the deal had been done. I therefore invited hon. Members to accept—they did—that we are debating the subject today without total certainty in the responses in order to be as open as we can with the Committee, the House and the farming industry about where we are and where we think we are going. Today’s sitting is, in many ways, a staging point, and the documents before us are not in their final form. We should acknowledge and accept that. Against that there are some things about which we can be certain. The hon. Member for Ludlow (Matthew Green) sees greater uncertainty in the likely position than I believe is the case, but I said a few moments ago that the 1 per cent. budget gives a 6.5 per cent. increase in the EU budget, and we believe that that is realistic and affordable. It is far closer to the right outcome than the increase of about 34 per cent. proposed by the Commission. Column Number: 33 Several questions were asked about how much confidence could be placed in the financing of agri-environment schemes. The Government’s approach is to meet the commitments that we enter into with farmers for the length of their agreement. The Government have no interest in preventing that from happening, and nor does the Commission. It is clearly important for the certainty of farmers’ approach to the project. Clearly, if the worst came to the worst, we could always meet our obligations through national funds, although obviously we would not want to increase the call on that quarter. It is worth pointing out that we have flexibility to modulate beyond 2006 to finance agreements that are entered into up to the end of 2006. We want flexibility to support the expansion of the scheme, and that is one of our objectives in the remaining stages of the negotiations. The extent to which funds are set has been referred to. Pillar 1 is fixed by the ceiling set for the single farm payment at around €43 billion. If the ceiling is at risk of being breached, the financial discipline mechanism, with which I shall deal in a moment, will cut payments at the EU level. Pillar 2 is not affected by that, except that less would be modulated. It is worth remembering that, in October 2002, the European Council agreed a formula to limit EU 25 expenditure on market measures and direct aid for the period up to 2013. Such expenditure currently falls under budget subheading 1a of the financial perspectives for 2000 to 2006. It is also known as pillar 1 of the CAP, pillar 2—budget subheading 1b—being CAP rural development measures. I know that the hon. Member for St. Ives, who speaks the language, will know exactly what I am setting before the Committee. The numerical ceilings were formally agreed in November 2002, as set out in a clear table that I should be happy to share and to copy to members of the Committee. As part of the June 2003 CAP reform, a so-called financial discipline mechanism was introduced with a view to ensuring that from 2007, which is, as the hon. Member for Ludlow pointed out, the first year of the new financial perspective, the ceilings will not be exceeded. While the current financial perspective should ensure that the ceilings up to 2006 will not be exceeded, there is as yet no financial perspective in place for the period 2007-2013. Therefore, clearly, we shall have to return to the issues when we have greater certainty. The hon. Members for North Shropshire and for St. Ives both referred to the complexity of the system. I think that the hon. Member for North Shropshire said that excessive complication creates a fertile area for fraud. There is a danger there, but there are considerations to be balanced. We want, as far as possible, simple requirements and clear objectives rather than detailed regulations. That, as one of our negotiating objectives, takes things in the direction that the hon. Gentleman wants. However, we need audit requirements. Not only do we want to be audited
There is a trade-off between the national flexibility to meet the different requirements of agriculture in different parts of Europe and the requirement for clarity in the farming support, environmental and rural development objectives that are being pursued. Part of the challenge for us is to make sure that there is clarity about the objectives so that what is sought at a European level is as clear as possible, in a way that allows us to interpret the objectives in the simplest way possible for those who have to fill in the forms, make applications and meet the requirements. It is fair to say that the problem with the previous rural development regulations was to a great extent that it came out of a political decision taken towards the end of the period of negotiations when there was a certain amount of grumpiness in the European bureaucracy. Therefore, as the regulations came down to national level, it was extremely challenging to achieve simplicity. I hope that we will not have the same lumpiness in these regulations because we have drawn on the experience of recent years and had a much greater consensus view in this round of negotiations. I come to the way in which we ask farmers to sign up. We have sought to share the process with hon. Members on a variety of occasions, and I hope that they will be aware of the nature of the application system for the single farm payment. That is massive progress in that it sets out clearly what a farmer needs to do, the options he has and can sign up to, and what it means in practice on the ground to meet the complex objectives. Simplicity for the farmer does not mean that support for the environment is not complex, but by dividing the process up into a series of options, it will make the bureaucracy that has to be gone through a whole lot simpler for those making applications. Clearly we cannot get to the point of explanation for individual applicants until we are absolutely clear about the end of the negotiations with which we have to deal. However, I assure the Committee that we want simplicity—even if it is not found in the regulations—to be in the customer-facing aspect of what we present to farmers when asking them to meet the requirements. That involves the practicalities such as the forms they have to fill in and the audit requirements that they must follow. In other words, the simplicity of the system should be measured by what goes to farmers and what they have to do rather than by the papers we have before us today. The objectives of the European programme have to be quite complex. I return to the suggestion that we might have no money in 2007. Mr. Green: Less. Alun Michael: The hon. Gentleman says that it is not no money but less. Running out of money means that a point would come at which there was no money for some of the purposes. It is worth underlining the fact that we will continue to have modulation receipts to spend in 2007 and beyond. First, we have three years
Whereas it is understandable that Members question what might happen in the worst-case scenario—I confess to having been a pessimist on occasion when we were in opposition and I was asking a Minister questions— it is also worth underlining the fact that there has been a degree of progress. Not only did we achieve overall decisions on CAP reform that were very much what we were seeking to achieve—and that went way beyond what most observers had predicted we would be able to achieve—but, from the UK’s perspective, there have been several successful changes to the regulations. Improvements in the simplicity and flexibility of the regulations in several measures will allow the UK to administer payments more easily. The hon. Member for St. Ives asked whether we would try to reopen the national envelope discussion. The simple answer is no, as we are not allowed to do so. The decision at the time was a one-off decision. However, we are negotiating within the European Union for flexibility to redirect funds from pillar 1 to pillar 2, and that could take the form of a national envelope rather than modulation if the flexibility is given to us. To answer in a purely factual way, we must be careful not to go backwards rather than forward in making funds available. I referred to the impact of the resolution before us. I do not expect members of this Committee to sign up to changes such that they are noting a different document. I underline the fact that we are noting, not agreeing. That is the stage that we have reached today. I underline also the remainder of the motion, which seeks the Committee’s support for
I hope that that overarching description of the objectives of the negotiation is not contentious. Hon. Members who discussed the need for sustainable farming and food production referred in approving terms to the rural development and agri-environmental objectives. The motion certainly does not go into great detail about the negotiating objectives, but I am sure that they will be discussed either here or on the Floor of the House in future. Column Number: 36 It was suggested that we need a simpler system of assessing public good, and I entirely agree; we want to achieve that. In England, we have been moving in that direction specifically through the entry-level stewardship and similar schemes, which will become the bulk of our pillar 2 spend. We are asking for 50 per cent. of pillar 2 funds to be spent in that way, and that could bring simplification for everybody. A question was asked about riding stables and other equine activities. As the Minister for the horse, I was particularly pleased that we were able to agree a change that grazing land used for horses, as distinct from specific riding stable or racing activities, would be included. I am fairly sure that the distinction does not allow us to go beyond land that is used for grazing—in other words, the general requirement—to more specific and commercial activities. Renewables are likely to be an important element of our next rural development programme. I assure hon. Members that it is a priority for Ministers. This is a complex area. We want a sustainable future, which means sustainability for farmers’ production as well as the use of renewables by a developing industry, one which needs support and nurturing, rather than subsidy, to enable it to get on its feet and be successful in the long term. Hon. Members cast some doubt on the question of future financing. Someone commented that only six countries support the approach that we hope to see taken. Our understanding is that six countries formally support it, and others are sympathetic. The six are weighty, however. France, Germany, the Netherlands, the UK, Sweden and Austria together pay about two thirds of the EU budget, so there is disproportionate weight behind the approach. An agreement has not been reached because other member states perhaps do not have an interest in the formula, but it is one of those issues on which we are optimistic that progress will be made during the discussions. The hon. Member for St. Ives referred to the ACP countries and the impact of the long-overdue reform of the sugar regime on them and our farmers. The Commission’s action plan to mitigate the impact of reform on the ACP countries was circulated in January, so it is available for consideration. We have discussed the sugar reform requirements on a couple of occasions, so I shall not go into any detail, but the time scale for sugar reform appears to mean that formal proposals are not likely before July. We are still waiting, and the Commission has stated that it wishes to wait, for the outcome of the EU’s appeal against the WTO panel findings on the existing regime, before coming forward with final proposals. As I have stated on several occasions, I understand fully the fears that sugar reform will hit British farmers hard. It will certainly affect some, but it is not necessarily bad news, given the efficiency of our industry. It is best to await the proposals before going beyond that general point. I thank the Committee for a constructive and thought-provoking debate. Every Member who has contributed has made the point that a number of complex issues must be addressed in the ongoing negotiations on the regulations. In particular, the
On the CAP financing regulation, the key point is the need to ensure the most efficient management of CAP funds. This debate comes near the end of negotiations on general text in the regulations, but some key issues still must be discussed and agreed. Many of the new proposals in the new regulations are welcome and in line with UK priorities. As such, I commend to Members the position that we have reached and the motion before the Committee. Question put:— The Committee divided: Ayes 5, Noes 2. [Division No.
AYES Dean, Mrs. JanetDhanda, Mr. Parmjit Hamilton, David Palmer, Dr. Nick Wright, Iain
NOES Francois, Mr. MarkGreen, Matthew Question accordingly agreed to. Resolved,
Committee rose at twenty minutes past Four o’clock. |
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