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Lord Hoyle: My Lords, perhaps I may point out to the noble Lord that speeches should be limited to three minutes. He is now in his fifth minute.

Lord Mackie of Benshie: My Lords, I shall sit down in a moment. There are 20 minutes to go and I shall sit down in one minute. The closing speakers normally have a little longer than the other speakers.

Even the RSPB has said that a tax should not be imposed just now, with farming in a bad way. If it is saying that, the reason for imposing a tax does not come into it at all.

I shall close by quoting the CLA, which says what some people have said already:

8.31 p.m.

Lord Luke: My Lords, I thank my noble friend Lord Rotherwick for giving us the opportunity to discuss, albeit briefly, this vital matter.

We should recognise that the imposition of any form of taxation not only raises revenue but has an impact upon the behaviour of those being taxed. It is the duty

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of government to make sure that when economic instruments are used directly to influence behaviour the full consequences of imposing that taxation are both intended and equitable.

My noble friends have pointed out this evening with considerable force and eloquence that a pesticides tax could fall into a trap of double jeopardy. It could have an impact which is both unintended and inequitable. What the Government must consider after this debate is whether they should continue with their consideration of an extra input tax at all in the face of the arguments raised by my noble friends and others. How many bankruptcies, I wonder, are the Government prepared to see as the price they are ready to pay for introducing such a tax at this time?

I note, for example, that my noble friends Lord Stanley and Lord Rowallan pointed out the disastrous impact which such a tax would have on the potato processing industry in this country. My noble friends have argued most persuasively that a pesticides tax would undermine existing regulatory procedures, reduce the competitiveness of UK agriculture and horticulture at a most unfortunate moment and ignore the fact that two-thirds of any pollution is not caused by these industries at all.

Yesterday my noble friend Lady Anelay visited the Marden Top Fruit Show, which was mentioned by my noble and learned friend Lord Mayhew. She was most impressed to see the high quality of our fruit products and by the measures which our growers already take to avoid the unnecessary use of pesticides. Farmers and growers use pesticides to protect their crops from insect attacks and diseases. Pesticides allow producers to ensure that we have a consistent supply of high quality food. It is in the interests of every farmer and grower to use pesticides responsibly and safely. They make the valid point that, as efficient business operators, they do not waste money on expensive pesticide products by overuse or misuse. It simply is not in their interests to do so.

Do the Government seriously believe that there is a significant overuse of pesticides in this country? If so, when will they lay in the Library of this House the proof of that so that all noble Lords may peruse it?

The farmers and growers whom I have met on my visits to agricultural shows throughout the length and breadth of the country this summer all ask one fundamental question of the Government. Why penalise our farmers and growers with a tax which will make the playing ground of European and international competition even more uneven and unfair for our producers? Why open the floodgates to foreign, cheaper imports even further at the risk of encouraging the purchase of goods which are not always grown as safely or to the same high quality as our own? I look forward to hearing the response of the noble Baroness the Minister.

8.34 p.m.

Baroness Farrington of Ribbleton: My Lords, in responding to the Question from the noble Lord, Lord

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Rotherwick, I am grateful for the opportunity to explain the Government's position on the possible taxing of pesticides.

We made clear in our manifesto that what governments choose to tax sends clear signals about the economic activities that they believe should be encouraged or discouraged. Our starting point is that environmental pollution is to be discouraged. No noble Lord who has spoken tonight would disagree with that. Subsequently, the Government have made clear their general intentions in respect of environmental taxation in the statement of intent and are exploring the scope for using the tax system to deliver environmental objectives, often in combination with other measures.

However, just because we may consider that taxing "bads" rather than "goods" is inherently preferable does not mean that any such taxes should be imposed without very careful consideration. Here I refer to the point made by the noble Lords, Lord Stanley and Lord Wise, of whether taxes are the best way of achieving the objectives and whether they satisfy the fundamental tests of good taxation; that is, that they should be well designed to meet objectives without undesirable side-effects; keep deadweight compliance costs to a minimum; have an acceptable distributional impact; and we must have regard to the implications for international competitiveness.

The noble Lord, Lord Rowallan, the noble Earl, Lord Ferrers, and the noble and learned Lord, Lord Mayhew, referred to the needs of fruit growers. My noble friend Lord Hoyle was listening to the interests of that industry yesterday. What I should like to stress beyond doubt is that, as regards taxing pesticides, no decision has been made. Decisions on such issues are a matter for the Chancellor. However, I should like to explain the background to our interest before responding to the specific points and considering some of the implications which an instrument could have for the countryside and farming.

We are determined that consideration of the case for any instrument is as well informed as possible. That point was stressed by the noble Lord, Lord Mackie. In the context of listening to the noble Lord's reference to factors that could affect the bird population, perhaps I may say that my noble friend Lady Young of Old Scone had intended to take part in the debate. Unfortunately, there has been a problem with the aeroplane on which she was due to return and she was not able to get back in time. I found the noble Lord's comments very interesting but have enough of a rural background myself to remember that along with the mint was often a lot of ragwort in other fields close by.

We issued a discussion document on the potential pesticides instrument in the context of water pollution and commissioned a significant amount of research to examine the potential role. In this context perhaps I may answer the question of the noble Lord, Lord Rotherwick. The Ecotec Report will be published when its methods and findings have been fully considered. It is the Government's policy generally to make available research work for public consideration.

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All relevant government departments have been involved in steering that work and the consultants have been asked specifically to consult as closely as possible with the main interested parties, including the NFU and the British Agrochemicals Association.

There is a growing body of evidence which suggests that pesticides can have harmful effects on wildlife and terrestrial and aquatic eco-systems. Although the current statutory approval system ensures that no products pose "unacceptable risks", residual risks remain. Given that uncertainty, governments have adopted a precautionary approach and developed a pesticides minimisation policy to limit their use to the absolute minimum necessary for the effective control of pesticides compatible with the protection of human health and the environment. Several noble Lords referred to that. That long-standing policy has therefore been to minimise the use and impact of pesticides.

Pesticides are used because of the benefits they bring in terms of pest control--noble Lords, with a variety of detailed knowledge, have spoken of that--and in the case of agriculture to increase the quality and yield of crops. As other noble Lords have said, farmers believe they are economically better off using them. However, there is reason to believe that pesticides are being over-used and that alternative approaches are available. The Government wish to investigate the scope for such action. Economic instruments are potentially capable of securing the best balance between minimising costs to producers and maximising environmental benefits, while complementing existing policy mechanisms. Such instruments could secure reductions in pesticide use. I note the points made by several speakers this evening on the way in which the industry itself is seeking to reduce the use of pesticides and to use them more efficiently and effectively.

It is clear that while the introduction of an economic instrument might generally be welcomed by those looking solely from an environmental point of view, such a prospect is regarded as a threat by others, particularly by the farming community and those in the agrochemical industries. We are looking carefully at the possible impact on all those involved in the manufacture, sale and use of pesticides. However, it is accepted that farming is one of the sectors most likely to be affected. As the noble Lord, Lord Rotherwick, said, this is a key concern. I assure him that we are examining it in considerable detail and are taking into account the complex interactions between the response to an instrument of manufacturers, distributors, food retailers and consumers, as well as the characteristics of the farms such as crop type and current pesticide usage. Noble Lords have spoken with knowledge and in detail about aspects of farming in that context.

It seems clear that if a tax were to be introduced, then in the short-term, before farmers take steps to reduce use, income and profits could be adversely affected. Detailed examination of ways of limiting adverse effects and encouraging positive reactions to an instrument are particularly important in this context.

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The noble Lord, Lord Monk Bretton, drew attention to what is happening in other countries. That is an important factor to be taken into account during this consideration.

The noble Lord, Lord Stanley, said, somewhat despairingly, as did another noble Lord who spoke, that he was not sure whether we recognised the problems facing sections of the farming industry. We take seriously the difficulties that have been experienced recently by parts of the farming industry. We have taken action. For example, we have provided £85 million of agrimonetary compensation and spent £950 million in 1997-98 on BSE-related measures.

However, the rural economy is now less dependent on agriculture and its traditional industries than it once was, with less than 2 per cent. of the workforce employed in agriculture. Therefore, we are working also to address the needs of rural communities as a whole and are working out how best to build the rural dimension into all aspects of wider policy-making. The current position in the farming industry makes that all the more important.

To sum up, we are looking at the possible use of an economic instrument consistent with our pesticide minimisation policy. As the noble Lord, Lord Monk Bretton, said and as the contribution of the noble Earl, Lord Clanwilliam, demonstrated, in considering those factors it is clear that there are a range of views within the industry which are not always totally in agreement with each other. Any instrument would be only one element additional to complementary measures or indeed an expansion of current measures; for example, training and advice to farmers and agricultural workers, referred to by the noble Lord, Lord Mackie, which could also be introduced.

I stress yet again that no decisions have been made. Before taking any decisions we shall weigh up all the relevant factors, including the results of the research which we have commissioned, the responses to the earlier discussion paper and the points raised this evening.

There may be other detailed questions to which I have been unable to reply. I shall seek to write to noble Lords, for example, with details on the points raised about the potential for an impact on the potato industry. My friends in the farming community in Lancashire would forgive me not at all were I to do any less.

[The Sitting was suspended from 8.46 to 8.51 p.m.]

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