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Lord Beaumont of Whitley: My Lords, perhaps the noble Lord will wait until the spokesman from these Benches speaks. He will then discover that I intend to say absolutely nothing of the kind and that I entirely agree with everything that he says.

Lord Bruce of Donington: My Lords, I am overwhelmed with the genuineness of the support which, I am glad to say, I knew I was receiving from the Conservative Benches and, to some extent, from my own. However, to be able to conquer the Liberal Democrat Benches is a victory indeed!

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Let us get down to the serious aspect: is it important or not? If it is important what are we going to do about it? My old chief, Aneurin Bevan, always used to say,

    "Silent suffering evokes no response".
My suffering is indeed vocal and loud and I hope that it may attract some support.

The difficulty is that this report is the result of a transition period. The evidence was heard by the members of the committee in February this year, before the change of government. The report was printed in March, before the general election. But, of course, the election might have gone the other way. What is therefore interesting is to discover whether there has been a change of opinion since. Let us make no mistake, according to the committee the position of the Commission is under very severe challenge.

The report rightly deals with the Commission's dismissal of the various alternatives put to it by members of the committee as well as by Her Majesty's then Government. Presumably, they are shared by Her Majesty's present Government, although we shall hear later about that. One of the options dismissed, according to paragraph 21 of the report, is gradual disengagement from support of the tobacco sector. Another option dismissed was area aid payments. The disadvantage that the Commission identifies with the system of aid per hectare is the difficulty of checking areas. It can say that again! It has been flying helicopters about and conducting aerial surveillance, but still the damned elusive Pimpernel cannot be photographed.

Direct income support seems to be one way of converting a social need into some kind of amelioration, but the Commission rejected that. I pray your Lordships give sight to paragraph 23 of the report, which states:

    "The Commission also expresses doubts about the 'social and political acceptability' of an 'extraordinary situation in which farmers would be financed by public funds provided that they did not farm'".
They are already doing it! Set-aside payments are made to other sections of the farming community, which in 1994 amounted to £612 million in the United Kingdom alone. This sudden objection in principle to aid repatriation is a little mysterious. Naturally, we would expect objections from the eight other member states named by the noble Lord, Lord Reay. The simply reason is that they are the ones getting money for nowt. They would not object, would they? Indeed, how can one amend the CAP without a unanimous vote to do so? On the face of it, that would appear to be very difficult. The noble Lord, Lord Donoughue, in reply to the report on behalf of his ministry, is not very hopeful. I shall not read out the relevant passages. They are expressed in a surfeit of moderation of which he would disapprove. Nevertheless, he does not hold out much hope.

What hope would I, as a Member of your Lordships' House, wish to be made available? It is very simple. I believe that the leader of my party, the right honourable gentleman the Prime Minister, is right when he says that we should be more concerned with people than with institutions. He has the ball at his feet. If the Prime Minister goes to the general Council, as established under the treaty, or to the European Council,

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or elsewhere, he will be in a position to exert his authority by direct talk with the people themselves over the heads of the bureaucrats in Brussels who seem to believe they can do anything they like without reference to anyone. I believe that the ball lies at the feet of my right honourable friend the Prime Minister and I for one am confident that he will use it to the utmost, not only with the public at large but in the moribund meetings of the Council of Ministers whose agendas are largely dictated by the Commission and received by other Ministers with a degree of acceptance which would not find ready appreciation within any democratic society.

4.27 p.m.

Lord Harris of High Cross: My Lords, I have great pleasure in taking part in this debate on an outstanding report. In one respect, the noble Lord, Lord Bruce, was uncharacteristically modest when he quoted the cost of the European Union at £3.5 billion as the net cost. I thought that we had been taught to say that the net cost was an understatement because the gross cost, which is perhaps twice as much, includes a lot of money that we pay to the Union and it pays back to us for things that we would not think worth doing with our own money. But otherwise, the noble Lord gave a good account of himself, as usual.

I wish to take the opportunity to compare two documents: the report of our sub-committee and the report from the Commission to the Council. The contrast is one of chalk and cheese. The document from the Commission is larger and weightier. It is verbose; it is full of gobbledegook; it contains a great deal of technocratic mumbo-jumbo; and it is special pleading. Of that there is no question. As I tried to work through its pages, forwards and then backwards, I asked myself who would read this stuff if they were not paid well to do so. Would any student take this document and work his way through all the stuff about flue cured, light air cured, dark air cured, Basmas, Katerini and Koulak? The Commission has experts in tobacco--they have all this useless expertise at their fingertips to ornament this report. It is really not worth devoting time to perusing it.

Now I turn to this document by Members of your Lordships' House. I looked at who were the 11 Members. As far as I can tell, there is not a declared smoker among them. They know nothing about air cured, flue cured and Basmas tobacco. There is not even an economist among their number, as far as I know. And yet the committee has produced a report which would do credit to a Ph.D student. It is an outstanding piece of economic analysis and argumentation.

There is only one false step in the report, which comes at paragraph 39 where it states:

    "Our view has not been greatly coloured by considerations of the harm done by tobacco to human health".
The last sentence of paragraph 39 states:

    "Nevertheless, considerable political will will be required if radical reassessment of the tobacco regime is to be achieved and sensitivity to public health arguments--no matter how ill-founded--could assist in creating it".
Therefore, there is a suggestion to play up the health issue. That is rather naughty. We did not need paragraph 39 in such a good report.

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Unfortunately, it will not have any influence on the Greeks or Italians. The Greeks are believed to be the most heavily smoking nation in the world. I do not know whether we have the figures for China but that is the information I have from international sources. The Greeks' expectation of life is well up in the upper decile as, to a lesser extent, is the Italians', who are heavy smokers and who enjoy rather longer life expectations. I notice also that in Italy there has been a ban on the advertising of tobacco since 1962 and yet smoking rates there have continued to go up rather than down.

The Select Committee's report, in particular from paragraph 42 onwards, is devastating and does not put a foot wrong. It says that the Commission wants the Greek and Italian farmers to switch to higher grade tobacco because their low-grade tobacco fetches low prices. But the Select Committee asks why we expect them to be any better at competitively producing higher rather than lower grade tobacco? What is the point of it?

The report goes on to say that the Commission does not consider fairly the possibilities of gradual disengagement. In its wretched document, the Commission talks of disengagement as an instant process, leading to great distress and so on: therefore, it would be politically unrealistic. Paragraph 44 refers to converting the holdings from tobacco into other crops. The Commission says that the tobacco crop is important because it generates high gross profit margins per hectare. Our chaps say that is true but some 80 per cent. of the revenue of the producers is accounted for by subsidy. They ask what is the point of producing a high net revenue if the whole thing is subsidised by the taxpayers, as the noble Lord, Lord Bruce of Donington, told us.

In paragraph 45, the report states that the Commission rejects the disengagement of the Community because the Community market organisation in tobacco might be replaced by national organisation. Our chaps say that that is a jolly good idea and can see great merit in such a development. Of course, we should repatriate those so-called regimes. I do not like this being described as a tobacco regime. "Regime" is a perfectly reputable word. There are health regimes and financial regimes and so on. But we should talk about the tobacco racket and not the tobacco regime. Let it be repatriated and let the countries indulge their liking for tobacco-growing with their own national moneys.

Paragraph 46 states that,

    "the Commission acknowledges that solutions to the socio-economic problems ... will need to be found outside agriculture. But this is not followed by any consideration of what those solutions might be".
Our chaps say that the serious weakness of the Commission's report arises from the rigidity of the structure in the Commission and that that,

    "is a serious impediment to rational policy-making."

If we are being rather harsh, the key issue here is that those indulgences cannot continue indefinitely. They cannot continue because new members will be joining us from Eastern Europe and they include a good many tobacco growers. Moreover, the World Trade

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Organisation, which took over from GATT, is very much opposed to those schemes which support production in that way.

A basic tenet of economic rationality, which I am sure the noble Lord, Lord Donoughue, would acknowledge, is that it is not efficient to give subsidies attached to output, thereby encouraging the continuation of a production which is not justified by being able to find its own market. If you are concerned with social, cultural and other considerations, then you are entitled to give subsidies to individuals and to actual people and to do that in a way which will lead them away from their wrong-headedness and misguided efforts to paths of virtue.

Therefore, terminable subsidies to individuals is one idea. It is a great principle of economics that we acknowledge legitimate expectations. Those wretched farmers, about whom we can work up a great deal of animus, are victims of a system which has led them to believe that they can continue doing what they have been doing for generations with their families at someone else's expense. To snatch the subsidies away from them would be unjust and upsetting. But perhaps we could say, "We will continue paying you for five years", possibly on a reducing scale. Then it is more likely that the farmers will discover for themselves more profitable outlets for their talents. They will find other crops for production which the Commission has mentioned are available. The Commission argues that there are those other prospects to which the farmers could turn but, in the meantime, the Commission continues to pay them subsidies to produce tobacco. The only way in which to concentrate the mind on finding more productive, fruitful and marketable production is to set a term to the subsidies.

Our committee talks about a 10-year period. I believe that five years is sufficient not to frustrate legitimate expectations. I hope to hear that the noble Lord, Lord Donoughue, with his great academic expertise, will go even further than the last Government in treating that kind of activity with the scorn and discouragement which we believe it deserves.

4.39 p.m.

Lord Boyd-Carpenter: My Lords, this has been a very useful debate because it has underlined what is one of the most astonishing situations with which your Lordships' House has been confronted. It is accepted now by all responsible opinion that smoking is dangerous to health and that the more people smoke the more sickness of one kind or another is produced. At the same time, it has emerged that the production of this dangerous commodity has been and is being heavily subsidised at the expense of the taxpayer. How quickly that situation can be reversed is a matter of judgment. However, that it is a situation which it should be the aim of all responsible legislators to reverse surely is beyond dispute. If we are to go on producing something permanently dangerous to health, surely at least we should do so only for a short time and we should make it quite clear that we propose to phase out all subsidy for its production.

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4.40 p.m.

Lord Rea: My Lords, prior to the intervention of the noble Lord, Lord Boyd-Carpenter, I was about to say how pleased I was to follow the noble Lord, Lord Harris of High Cross, and to find myself--for the first time ever, I think--in almost complete agreement with everything he said. He was speaking as the champion of the free market. However, we should remember that he is also the chairman or the president of Forest.

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