Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Harris of High Cross: My Lords, I am the chairman.

Lord Rea: My Lords, as the chairman of Forest, he also finds this regime insupportable.

With 10 other speakers discussing this short report I shall add only a little from an outsider's point of view. I was not a member of the Select Committee. But as a doctor and as a member of the British Medical Association I do have a particular position on the regime. Considering the short time available, the Select Committee, under the able chairmanship of my namesake, spelt with a y, the noble Lord, Lord Reay, produced a cogent even trenchant report but one that is also constructive. It is not simply a "hatchet job"; it is a careful demolition which considers the structure that is to replace the building whose foundations the committee shows to be so shaky.

I am asked by the British Medical Association to express its support for the Select Committee's report. The association would probably agree with the truth of paragraph 39--which was quoted by the noble Lord, Lord Harris of High Cross--that cutting Community production,

However, I believe the association would go further than the final sentence of that paragraph which states that,

    "political will will be required ... and sensitivity to the public health arguments--no matter how ill-founded--could assist in creating it".
I agree with the noble Lord that that statement about ill-founded public health arguments is unfair.

While little of European Union tobacco production is consumed in Europe nearly all of it is eventually consumed in the developing world. To say that ending Community production would lead to its replacement "from elsewhere" avoids acknowledging the actual situation in which strong, bad quality tobacco from Europe is currently contributing to the rapidly growing epidemic of tobacco related sickness and death in the less developed world. Not only are we supplying them with a dangerous addictive substance; they also have to pay hard currency for it, although admittedly far less than it costs us in subsidising its production.

As all three noble Lords who have spoken so far said, the report on the regime contrasts with other Commission reports. The noble Lord, Lord Reay, referred to the well known argument between two branches of the European Commission. One talks of ways of reducing tobacco consumption and another talks of ways of propping it up within Europe--not to mention Her Majesty's Government's position where

9 Jun 1997 : Column 790

the banning of tobacco advertising is only one of a series of measures which will be taken to reduce consumption of cigarettes and other tobacco products. The noble Lord, Lord Harris, is right to say that banning tobacco advertising in itself does not have much effect; it has to be combined with other measures which the Government will bring in.

It is possible, with a slight stretch of the imagination, to compare European Union tobacco production with South American cocaine production or Asian opiate or heroin production. The production of crops of all these addictive substances persists despite the strong opposition of their governments because of the high price which the products command in relation to alternative crops. Efforts to persuade Thai hill farmers or Colombian peasants to grow other crops tend to fail because even if they are subsidised they bring in much less income. The price of the dangerous controlled addictive drugs is artificially high largely because of their illegality and their subsequent scarcity. In the case of European tobacco, which of course is a perfectly legal product, the reward to farmers is artificially high solely because of the regime which is funded by the taxpayer.

It is completely clear to the Select Committee--and to other noble Lords who have spoken this afternoon--that the solution should be to divert the subsidies going to tobacco production to other products or other ways of encouraging alternative economic activity. Unfortunately, however, that is not the way that eight out of 15 European states see it. We are informed that to divert subsidies to growing fruit or vegetables would upset other areas of the CAP. Fruit and vegetables for instance, have their own regime and there is a problem already with surplus production. To give higher subsidies to tobacco growers to divert production to fruit or vegetables would seem unfair to existing farmers who oppose any measures to increase overall European production of vegetables or fruit. However, I suggest--and the Select Committee also suggested--that the answer may well lie in that sort of direction.

As many noble Lords will know, it is interesting that fruit and vegetables are now recognised as not merely pleasant to eat but also, in contrast to tobacco, are highly beneficial in the prevention of cancer and coronary heart disease. If any group of products deserves a subsidy-- I know that many noble Lords do not agree with subsidies--or other means of encouragement to consumers, it is fruit and vegetables. I might also add olive oil and some of the other seed based oils which have health giving effects. Olive groves might well flourish in some, although not all, of this difficult terrain. However, that would be a long-term project. Of course, other transformations of land use, with the growth of small industries and the amalgamation of plots that are too small to be viable, would be logical progress.

The Select Committee has put forward its view as to how small farmers who grow tobacco should be gradually weaned onto other occupations. However, all that is some way ahead. The important task at present--and one which the Select Committee report tackles well--is to persuade more European Union states that

9 Jun 1997 : Column 791

the current situation is illogical and deeply flawed. As two noble Lords have already said, the report states that it is,

    "a scandalous waste of taxpayers' money".
The recommendations of the European Commission were effectively demolished by the noble Lord, Lord Harris. They are weak; they do not go far enough. I hope that Her Majesty's Government will continue to try to persuade at least all the non-tobacco producing states, and eventually some of the tobacco producing states too, to join with the United Kingdom and Sweden to move for a rapid scaling down and replacement of the regime.

4.50 p.m.

Lord Wade of Chorlton: My Lords, I have the privilege to be one of the members of Sub-Committee D. I am most grateful to my noble friend Lord Reay for chairing our investigation into the tobacco regime and for the excellent way in which he presented our report. I am delighted that he has persuaded all noble Lords who have spoken of the excellence of the report and how important it is that we take the issue extremely seriously and encourage the Government to seek to persuade other members who will sit at the table in Europe to do something about it.

Noble Lords have spoken sufficiently about the problems regarding the tobacco regime and the enormous cost both to the European taxpayer and the individual British taxpayer to persuade us that something should be done. It will be more difficult for the noble Lord, Lord Donoughue, to persuade the other member states that something should be done. With the tobacco regime we are confronted with an issue which lies at the heart of some of the problems with the CAP. The policy has been used by individual countries to deal with social problems and problems of backwardness in rural areas. That was neither the basic nor the prime purpose of the CAP.

I shall refer to some issues which are not necessarily set out in detail in the report although we discussed how they might be addressed. The British Government now have to put forward positive proposals to their colleagues--who will not take kindly to any change--which will be just as effective in dealing with the long-term economic problems of those rural areas rather than continuing with a system which does not work. The tragedy of most of the CAP subsidy systems is that they hold those rural economic areas in a poor, dependent state rather than lifting them out of it and progressing to more wealth. The system does the opposite of what everyone believes that it will achieve. That applies not only to the tobacco regime but to the fruit and vegetable regime. The noble Lord, Lord Rea, stated that he would rather have more fruit and vegetables than tobacco. However, the fruit and vegetable regime pays for more fruit which is destroyed than is eaten. Clearly that is as ineffective as a method for producing fruit as it is for producing wealth for the people involved with it.

In this country we have some interesting examples of how we have sought to deal with the issue. Possibly the situation is not as bad. Our Rural Development

9 Jun 1997 : Column 792

Commission, although not referred to by the European Commission, is an example of how we have been able to tackle specific rural economic problems. The Welsh Development Agency has done tremendously good work in identifying some of the issues which need to be addressed in rural areas, establishing systems of training and re-education. They will be important in developing those economies.

Parts of Italy, Spain and Greece which grow tobacco are extremely poor areas. Many families live together in one house. They share their work; they share the ownership of the land. It goes back to a feudal system. The worst thing we can do is to develop a regime which holds them into that system and does not encourage them to use their own native initiative and entrepreneurship to move out of the system. It will be important to teach them some of the basic principles that we practise in this country. I would rather see our taxpayers' money going into training and the development of new technology than into the production of a crop that no one wants.

The basic problem is that throughout Europe there are pockets of rural areas where there is a lack of a rural economic policy to stimulate growth of the economy rather than supporting a product for which there is no further market. That should be the cornerstone of any proposals which the British Government put to the Commission. We need a positive rural economic policy. Not only shall we be confronted with the problem in Europe as it exists now; we shall be confronted with further serious economic problems within pockets of rural areas if the Community is enlarged. We have to consider infrastructure investment, the development of new technology, and better communications in rural areas, teaching the opportunities provided by a proper education system. If we have a policy which deals with those aspects of the rural communities, we shall have one on which we can build inward investment proposals which can bring finance into those areas.

Another key element is land ownership. Many rural areas of Europe are stuck with land ownership problems which make it difficult to develop the larger units which will be the key to economic success. That issue needs to be considered not only in the context of the tobacco regime but also many other problems.

I believe that the right way ahead is to establish the bond scheme, as the report proposes, and to look closely at the bond scheme's capacity not just to deal with tobacco but many other problems related to the CAP. The bond scheme would give the financial opportunity to bring about the end of the tobacco growing system. I would not be against the five year period put forward by the noble Lord, Lord Bruce of Donington. If people's minds are concentrated on the fact that the tobacco regime will stop, the more quickly they will consider other alternatives. Having been brought up in the agricultural community in this country, I am well aware how quick we are to adapt to changes once we know that they have to take place. If someone cuts off a tap on one side, by God! you work hard to ensure you can open a tap somewhere else which will keep body and soul together. The incentive of a period during which people know that the regime will stop, with a floating

9 Jun 1997 : Column 793

off period, will make the measure more effective. At the same time we should put forward specific proposals on the basis of the Rural Development Commission and the Welsh Development Agency to develop a rural economic infrastructure which can ultimately attract new investment and encourage new entrepreneurship.

I believe that in this country we have a great opportunity to look more sensibly at alternative crops. I must declare an interest, being involved with Horticultural Research International at Wellesbourne. That organisation can bring tremendous expertise to bear in finding solutions in regard to crops and rotational systems which can maintain the economy of the area without continuing to absorb vast amounts of money.

I am delighted that noble Lords welcome the report. If the Government will act on it, it will be of benefit to a great many people.

4.59 p.m.

Baroness David: My Lords, first, I thank the noble Lord, Lord Reay, for an excellent introduction to the report and analysis of it. I thought that he did it brilliantly, if I may say so. I should like to thank him, too, for chairing the committee so well and getting the report produced in a remarkably short space of time with, it seems to me, a full account of all that we heard and talked about while we were in committee. I also congratulate my noble friend Lord Donoughue on his first appearance in the debate as a Minister in the Ministry of Agriculture.

It has become abundantly clear from the debate that the Commission's proposals are considered totally inadequate to reform the tobacco regime in any substantial or satisfactory way. There was condemnation of that regime by the previous Government. Mr. Baldry, then Minister of State, described current arrangements as,

    "a crazy regime and a crazy way to spend taxpayers' money";
and went on,

    "there must be a phased ending of the subsidised provision of tobacco".
The response of this Government to the report came only last week. They complimented the committee on its well-presented report--which it certainly is; shared our concern that the Commission's proposals fall far short of what is required; and agreed that if changes of the kind proposed are agreed, further substantial reforms will soon be needed. The Commission makes no provision for future likely pressures from the WTO for the decoupling of subsidies, and seems to ignore the implications for the CAP of the likely enlargement of the Community. Poland, Hungary and Slovakia all grow large quantities of tobacco--a total of 61,000 tonnes, which would be a substantial addition to the 333,000 tonnes which was the harvest in the EU in 1995.

So why is the Commission so timid? The pressure of course comes from the Mediterranean countries which are the big producers--Italy with 39 per cent.; Greece, 36 per cent.; Spain, 13 per cent.; and France, 8 per cent. So it is not surprising that the UK had so little support

9 Jun 1997 : Column 794

for more radical reforms. Only Sweden was in favour of disengagement from the sector; other member states were apathetic.

It was suggested by MAFF that the non-producer countries like Ireland might be influenced by an interest in the continuation of CAP support in other sectors on comparable social grounds to those applicable to tobacco, and that is no doubt true for other countries too. Another reason was that the tobacco regime is wholly funded from the guarantee section of the European farm guidance and guarantee fund, whereas any structural measures which might provide equivalent social support would require a degree of national funding. So we can look on the Commission's decision as political. It knows that the chances of getting radical reform through at the moment are minimal and therefore funk it. Our committee had very much the same experience when we reported on the fruit and vegetable regime in 1995--another scandalous regime crying out for reform but with very inadequate proposals from the Commission, for much the same reasons.

Of course we appreciate the socio-economic problems that the producing countries have. The noble Lord, Lord Wade, explained that very well. The Commission points out that the reconversion to other forms of employment of 200,000 jobs is not feasible without an extremely high social cost. The fact that so many farms where tobacco is grown are very small and run mostly by the family, often the whole family being dependent on the crop, does not make planning easier. What I still do not fully understand is why, as the tobacco crop has to be rotated, some of the crops grown in the intervening years could not be developed --although I do understand that the alternative crops could be fruit and vegetables, and, as I said, that regime has been condemned by us as scandalous and prone to fraud. We know that a great amount of fruit and vegetables are grown merely to be thrown away, as the noble Lord, Lord Wade, said.

The possibilities of fraud in the tobacco regime were decreased by the 1992 reforms when intervention and export refunds were abolished, premia were limited to provision within a quota and the number of premium rates reduced from 34 to eight, thus simplifying administration and reducing scope for fraud. But there is no doubt fraud still exists. It is significant that neither Italy nor Greece, the biggest producers, have yet, five years later, set up the national supervisory agencies provided for in the 1992 reforms.

What we have discovered in the course of a good many reports is that two commissioners (or even more) do not have a united front and work in harmony--sometimes they do not even seem to know very much about what is going on in the area of the other one--and communication seems minimal. In this case, we have Commissioner Fischler with responsibility for agriculture and rural development, and Commissioner Flynn, with responsibility for employment and health, where Commissioner Flynn argued that subsidies for tobacco production undermined the credibility of the Commission's measures to discourage smoking on public health grounds. The report we are discussing acknowledges the harmful effects of smoking on human

9 Jun 1997 : Column 795

health and the apparent contradiction between supporting tobacco production on the one hand and promoting anti-smoking measures on the other. But the report concludes that,

    "aid to tobacco growers has no impact on the level of tobacco consumption".
I am sceptical. I was reminded of a pamphlet I received the other day from the tobacco industry claiming that tobacco advertising had no effect on teenage smokers. Why, I wonder, do they go on doing it?

It seems a disgrace and brings the Community into disrepute that we should be subsidising to the extent of £800 million a year a crop which has little market value, and spend just £1.2 million on smoking prevention. The Court of Auditors in a special report in March 1994 concluded that, if direct income aid were to be paid to all tobacco farmers equivalent to their annual net revenue based on the 1988-90 average, approximately half the EU budget could be saved. I have heard suggestions which go further. If all the tobacco farmers were bought out and direct aid given to the farmer then in possession for his lifetime and no more, that would be a better, healthier and final solution and end the scandal. I fear this will not happen, but I join in the condemnation of these weak proposals and hope that something better and more radical can be put in their place. I hope that we shall hear that from my noble friend at the end of this debate.

5.6 p.m.

Lord Brain: My Lords, like the other two members of the committee who spoke, I congratulate the noble Lord, Lord Reay, on his chairmanship and on his excellent introduction to our report. The members who spoke dealt with the report very well. I should be repeating a great deal of what they said were I to make a long speech about the report. However, when the BBC has the opportunity of a headline to the effect that the subsidy of tobacco production is a scandalous waste of taxpayers' money, it makes an effort to find somebody to express comments on behalf of the committee.

I happened to be at home, and therefore available on the telephone, the evening before the report was published. So shortly after seven o'clock the following morning I took part in the "Today" programme. In order to present some opposition to the report, the BBC found a Mr. Fernandez, a Spanish MEP who has served on the agricultural committee of the European Parliament. I thought it might help the House if I were to report some of the remarks that he made to me and to John Humphrys--and even when I was supposed to reply to John Humphrys!--about the topics. I shall also comment on remarks made by one or two other noble Lords as I do so.

First, Mr. Fernandez agreed, as we have said, that this is a social issue. He made no bones about it being an agricultural issue. He said the problem is that 170,000 people rely on the tobacco subsidy to stay on the land in those European states with their families and have no other major means of income. The noble Lord, Lord Rea, mentioned fruit and vegetables. If I were to mention olive trees again, I might hear the noble Lord,

9 Jun 1997 : Column 796

Lord Bruce of Donington, saying that there is yet again a regime riddled with fraud. There is a problem related to keeping people on the land.

The MEP thought that we as a committee were merely saying, "Pay them for doing nothing", and asking how are they to occupy themselves if we merely pay them? He tried to compare the issue with that of set-aside. I had to tell him that set-aside represents only 15 per cent. of a normal farmer's income, or possibly less, whereas tobacco producers receive 80 per cent. in subsidy.

He also made a comment about our suggestion that the regime would have to be changed when the next World Trade Organisation round took place. He said in effect that the WTO was an American-biased organisation whose aim appeared to be to allow one of the major American manufacturers to buy tobacco of the same quality as that produced in Europe at a much reduced price. I just let that one ride.

However, I would mention this to the noble Lord, Lord Harris of High Cross, concerning a point that he made--though I do not accept what he said. He said that the tobacco experts in the Commission knew nothing about the quality of tobacco. I think that that is probably false, but it is a point that he made. They think that it is wrong.

He made another point which I believe is important, and it concerns the large number of smallholdings. The noble Lord, Lord Reay, mentioned, as we mentioned in our report, that the average size of holding on which tobacco is grown is no larger than 10 hectares (25 acres), of which two-and-a-half to three acres is all that is down to tobacco. The noble Baroness, Lady David, mentioned the question of rotation. The Spanish MEP said that this was a result of the Napoleonic Code on land inheritance. I believe that that raises a major problem, which the noble Lord, Lord Wade, raised but in a slightly different way. In this report and earlier reports we have suggested that it may be possible to buy out the farmer. The problem is that the farmer may be farming quite a lot of land within that 10 hectares which belongs to the extended family as a result of the Napoleonic Code. We are in the position of buying out one generation without there necessarily being the means to transfer the money.

I know from having lived and worked in France how family ownership of land causes family problems. Opposite to where I lived for about six years there was a field of some five acres. It was never sold for building--although it was perfectly viable to be built on and was sold 10 years later--because, of the family of about 25 members, none could agree on the price or how to sell it. I could see this problem arising if one were trying to buy with a bond or whatever.

I would draw the attention of the noble Lord, Lord Donoughue, to this matter. I wonder whether there might be a case at some stage for one of the committees of this House to look at the implications of the Napoleonic Code and land inheritance for the development of the common agricultural policy.

Next Section Back to Table of Contents Lords Hansard Home Page