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House of Commons

Thursday 9 June 2005

The House met at half-past Ten o'clock

PRAYERS

[Mr. Speaker in the Chair]

Oral Answers to Questions

ENVIRONMENT, FOOD AND RURAL AFFAIRS

The Secretary of State was asked—

Biofuels

1. Mr. Philip Dunne (Ludlow) (Con): What discussions she has had with the farming industry about biofuels. [2600]

The Minister for Climate Change and the Environment (Mr. Elliot Morley): The Department has had a number of discussions, both at ministerial and official level, with a wide range of stakeholders, including the National Farmers Union, the Country Land and Business Association and biofuel trade associations, which include farming industry representatives, individual farmers and agricultural businesses.

Mr. Dunne: Why do the Government not encourage farming diversification and renewable energy production by offering comparable non-fossil fuel support to farmers producing biomass and biofuel crops, instead of supporting more environmentally contentious diversification such as onshore wind farms?

Mr. Morley: There are not many farmers involved in onshore wind farm businesses, although some receive a rental income from them. There is a range of diversification available to farmers, in which biofuels play an important part. Farmers are allowed to grow biofuel crops on set-aside land, for example, and a 20p reduction in fuel duty is available to encourage the use of biofuels. We are also considering other measures to encourage their use, including a potential biofuel obligation on oil companies. About £50 million is also available to encourage the development of biofuels.

Paddy Tipping (Sherwood) (Lab): In his discussions on this matter, has my right hon. Friend talked to the Department for Transport and the Treasury? I hope that he will accept that, without further policy instruments, a further reduction in excise duty and the speedy introduction of the road transport renewable fuel obligations, the industry will not take off in this country. Is he worried about the import of Brazilian biofuels?
 
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Mr. Morley: My hon. Friend makes a good point. We are in close talks with the Department for Transport, the Treasury and other Departments. He will be aware that we are currently engaged in the climate change review, which is considering a range of options, including biofuels and the ways in which we can promote them. We have seen some successful experiments involving coal-fired power stations burning coppice willow, for example, which I very much welcome. His point about structuring the support to encourage the production of biofuels in this country, rather than encouraging imports, is also a good one.

John Hemming (Birmingham, Yardley) (LD): We are aware that biofuels are a sustainable mechanism for avoiding climate change. We are also aware that the Government are committed to avoiding climate change and therefore do not wish to see a massive increase in the use of fossil fuels. However, they are also committed to a substantial increase in air travel. What proportion of the increase in fuel consumption by air traffic will come from biofuels?

Mr. Morley: Let us draw a distinction in relation to the expansion of air travel. It is not being encouraged by the Government; it is a fact of life that we have to react to and take into account. The hon. Gentleman might be aware that we are pressing for the inclusion of aviation in the European carbon trading scheme, which will represent an important way of controlling emissions. Biofuels have a wide range of applications, and aviation is one of them, although we should not exaggerate their use in that way, because of the amount of land needed for biofuel production. However, it has enormous potential. The Government have set up a taskforce chaired by Sir Ben Gill to examine the role of biofuels and agriculture, which will give us important advice on how we take this issue forward.

Mr. David Chaytor (Bury, North) (Lab): Is not the distribution network one of the problems in respect of biodiesel? My hon. Friend will know that the network is heavily skewed towards the eastern part of the country, and that it is virtually impossible for those living in Greater Manchester and the north-west region to gain access to a biodiesel station. Will his Department talk to the manufacturers and distributors to ensure a more evenly balanced distribution network across the United Kingdom?

Mr. Morley: I know that my hon. Friend has taken a long and close interest in biofuels. There is a garage in my village that sells biodiesel—which I use, incidentally—but I am aware that that is not typical of the whole country. However, I am pleased to say that, as part of the approach to encouraging biofuels, a factory has been established in Scotland to produce biofuel, and a further factory is under construction in Teesside that will have a considerable capacity for producing biofuel. However, we need the distribution network as well. We need the manufacture and the distribution in place to encourage its use—a well-to-wheel approach, so to speak.

Mr. Mike Weir (Angus) (SNP): The Minister has talked about instruments to encourage the production of biofuel. The other side of the equation, however, is
 
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the use of biofuel. Given that previous grants for the conversion of lorries, in particular, to greener fuels have had to be withdrawn, what measures will he take to encourage the use of greener fuels and biofuel, particularly by the road haulage industry?

Mr. Morley: New EU regulation is to be introduced in relation to heavy good vehicles involving their manufacturing and emissions, which will improve the situation considerably. The big advantage of biodiesel is that engines do not need to be adapted to use it: conventional diesel engines can run on it, which is one of its great strengths.

Single Payment Scheme

2. Mr. Edward Garnier (Harborough) (Con): What steps her Department is taking to make interim payments to farmers who have yet to receive the single farm payment. [2601]

The Secretary of State for Environment, Food and Rural Affairs (Margaret Beckett): Payments under the single payment scheme are forecast to begin in February 2006, which is well within the regulatory window ending on 30 June 2006. We have not ruled out the possibility of making an advance payment, but there are real legal and practical difficulties in doing so, and we would not wish to take any action that would delay the main payment.

Mr. Garnier: I thank the Secretary of State for her answer, but, of course, farmers in my constituency are not so much concerned about regulatory windows as cash flow. In the first quarter of this year, farming debt in the United Kingdom stood at about £8.46 billion. Cash flow in the depressed agricultural economy is vital, and it seems to me essential that the Government do more than wait until February 2006 to help out hard-pressed farmers. I hope that she will provide me with better news.

Margaret Beckett: We are very conscious of the cash-flow issues for the farming community, which is why, as I have reported to the House previously, we have had discussions with the banks about some of the implications. Equally, however, while I know and am sensitive to the concerns of those who will not receive payment before February, a genuine balance is to be struck between trying to do something to ease that difficulty and doing something that would delay the main payment, as that, too, could cause cash-flow and other problems. We keep the issue under continual review, however.

Dr. William McCrea (South Antrim) (DUP): Does the Secretary of State accept that farming throughout the United Kingdom has faced tremendous challenges over the past few years, especially given the number of crises that it has faced? Is it not therefore vital that the Department is speedy in getting money out to farmers? Cash flow is just as much a major problem in Northern Ireland as in any other part of the United Kingdom. Will she encourage the Department to get the money out as quickly as possible rather than at the last moment as that makes farming more difficult?

Margaret Beckett: I completely understand and sympathise with the point that the hon. Gentleman is
 
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also making. The hon. and learned Member for Harborough (Mr. Garnier) raised the issue of making sure that payments are made and keeping on top of the issue. I assure the hon. Gentleman and the House that there are very frequent meetings to maintain pressure, update and try to be absolutely sure that we deal with the issue as speedily as possible. The whole House recognises, however, that we are in the first year of establishing what will ultimately make for a much simpler and, I hope, easily managed system. Changing to a completely new system is always difficult.

Mr. John Gummer (Suffolk, Coastal) (Con): Does the Secretary of State agree that not only this system but others that she has in mind, such as under the water framework directive, depend very much on farmers' support and understanding, and that the farming community currently has a very low regard for its relationships not only with the top of her Department but right the way down it, for which there are all sorts of reasons? Can she consider carefully ways of using farm payments so that farmers see that she listens and understands what their problems are; otherwise, I fear that there will be a knock-on effect for all the other things that she wants to do? There is a lack of confidence and support, and she must try to do something about it.

Margaret Beckett: I take the right hon. Gentleman's point, and I know that he has much experience in these issues. All I can say is that although, as he says, there are many short-term difficulties, he will know that the Department has embarked on a major reorganisation of the Rural Payments Agency and is now introducing a new system on top of that precisely because we understand the difficulties that people experience. I am confident, however, that what farmers want in every part of the United Kingdom is a system that will ultimately be simpler, more efficient and effective, and that will result in fewer forms, fewer inspections and less of the bureaucratic burden of which they, like every other business community, complain, and understandably so.

Mr. Hugo Swire (East Devon) (Con): No one would disagree with the Secretary of State's words. The problem is that the reality is somewhat different. Having just come up against the RPA and animal welfare office in trying to register my new sow, Maud, I can now empathise with the frustrations felt by farmers up and down the country. The reality is that the computer system used by the RPA is simply not up to it, and the animal welfare office to which I spoke asked weepingly whether I would raise the issue in Parliament, which I am now doing. What we and farmers up and down the country face is confusion over the next year until the Secretary of State gets a grip and sorts out the RPA system.

Margaret Beckett: It is precisely because we are sorting out the RPA system—which in itself is bound to cause difficulties—and, on top of that, implementing a new system that, understandably, there are problems and concerns. I entirely understand the anxiety that is being expressed.
 
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Since all I hear from Conservative Members are complaints, let me point out that the proposal announced by them at the general election to cut £118 million from the RPA's funding was unlikely to have helped.

Norman Baker (Lewes) (LD): That is certainly true, but does the Secretary of State recognise that there is significant concern about the operation of the RPA? What plans has she to investigate complaints from farmers who have received inaccurate forms and maps from the agency? Accurate forms and maps are vital if farmers are to claim the support to which they are entitled. Does the Secretary of State understand the low esteem in which the agency is held and the impact that this is having on farmers, and indeed on how her Department is perceived?

Margaret Beckett: I do understand that, but before we leave the issue it is only right for me to put on record that the RPA has found itself with an inadequate and unsuitable system. That system is being reformed and modernised, which involves an enormous amount of work. The RPA's staff have tried tremendously hard: like all Members of Parliament, they understand the difficulties faced by farmers.

To an extent—a small extent, perhaps—this is a two-way street. The RPA is trying to produce accurate maps that will form the basis of payments in future. There has been a 700 per cent. increase in the number of changes that have had to be made to maps that were originally drawn up on the basis of existing information. No one anticipated that. One reason for it is that farmers are now notifying the agency, literally in some cases, of parcels of land that have never been registered. Legally, they should have been registered under the previous payment system. Because a basis is being established for a system that will run well into the future, there are bound to be teething problems. There have been more than were expected, so the RPA has used extra staff and made staff work extra hours, including weekends, to tackle them. The situation is not easy for anyone, but we are working hard to deal with it.

Mr. James Paice (South-East Cambridgeshire) (Con): With respect, what the Secretary of State says is wrong. There was no obligation for landowners to register land if they were not seeking to claim integrated administration and control scheme money, headage payments or payments under a stewardship scheme. The problem has been caused partly by the fact that the Secretary of State changed the scheme and allowed registration of a lot of different land, such as land used for equestrian purposes.

The Secretary of State referred to payment by February. Her own published targets show that the Department does not expect the bulk of payments to be made until next March. To her credit, in the past she has shown barely concealed anger at the delays, but when she talks of a simplified system does she understand the huge anger in the farming industry? Does she realise how thin her case sounds when farmers know that farmers in other EU countries such as Germany are issued with forms a fraction of the size of those issued here? The German form has seven pages, whereas the English form has 17.
 
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Will the Secretary of State give an absolute assurance that no penalties will be imposed on farmers who could not complete their forms on time, or did so inaccurately, because they did not receive the correct information from the RPA?

Mr. Speaker: Order. Perhaps in future questions could be cut a bit.

Margaret Beckett: I take the point made by the hon. Gentleman. Of course land should not necessarily have been registered in quite the same way as it must be registered now. I am afraid, however, that there are parcels of land that should indeed have been registered in the past. We are not pursuing the matter, but the fact is that all that has greatly complicated the RPA's work.

The hon. Gentleman said that I had displayed barely concealed anger. I do not think that the anger was concealed at all, actually. I can assure the House that neither I nor any member of my ministerial team wanted to have to come here and say that we would be unable to begin making payments at the very start of the payment date.

The hon. Gentleman says that in other member states the forms are simpler. They may be in some cases, but the systems are not necessarily simpler and in fact we are not comparing like with like. In Germany, for example, there is a different structure and system in each Lander. We published what we hoped would be the payment dates, and we published the new date as soon as we knew that it would have to be a little later, to try to give people at least some long-term planning certainty. Many other member states that have not publicly commented on their payment dates are experiencing exactly the same difficulties as us.

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