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Lord McIntosh of Haringey: My Lords, I am sorry that the noble Lord does not like factual answers to his Questions. I should have thought it was obvious from the Answer I gave that the Government have always supported the European Central Bank in its primary objectives. We did so at the meetings at which the European Central Bank was set up. Our assessment is the factual one that it has been achieving that primary objective. He is asking me to speculate on matters which are not the responsibility of Her Majesty's Government. I am surprised that he should do so.

Lord Barnett: My Lords, perhaps I may revert to the Question on the Order Paper. Whatever the assessment of the Government on the work of the ECB, is it not irrelevant in the sense that, while we are outside the eurozone, there is nothing we can do about it? Would it not be better if the Government at least gave an indication of when we might expect a referendum to let the public decide?

Lord McIntosh of Haringey: My Lords, in a Statement made by the Chancellor in October 1997, the Government made clear that the decision on whether or not to enter the euro is primarily an economic one and would be based on economic considerations. It is unlikely that there will be a stable resolution of those economic considerations during this Parliament.

Lord Renton: My Lords, perhaps I should make clear that I did not consult my noble friend before asking this

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Question. Bearing in mind the effects that the decisions of the European Central Bank can have upon the economy of each of the European countries which have the euro as their currency, can the Minister make clear to whom the bank is answerable and responsible?

Lord McIntosh of Haringey: My Lords, the European Central Bank was set up with the agreement of the 11 European countries in the eurozone. There is a Council of Finance Ministers of those 11 countries. The relationship between the European Central Bank, the 11 Finance Ministers and their governments is well established.

Lord Marsh: My Lords, does the Minister agree that it is unfair to criticise the European Central Bank and that it deserves congratulation? Can he confirm that no other central bank in history has had to cope with 11 different governments, all with differing views, and with trying to keep one interest rate? Is it not amazing that the ECB has not done even worse than it has?

Lord McIntosh of Haringey: My Lords, I neither congratulate the European Central Bank nor condemn it for what it has done.

Lord Ezra: My Lords, the Minister mentioned the Finance Ministers in the 11 eurozone countries. What are the relations between those 11 Ministers and the Ministers of those countries which are within the European Union but not in the eurozone? There have been recent reports of differences of opinion. Are those reports correct?

Lord McIntosh of Haringey: My Lords, the Ministers of the 11 countries in the eurozone have regularly met together since the euro was first established. The finance Ministers of the 15 countries in the European Union meet together in ECOFIN, as they have done since and before the euro was established. I am not aware of any general disagreements between them. If the noble Lord has a specific question in that regard, perhaps he will put it to me.

Lord Desai: My Lords, does my noble friend agree that the Bank of England is a member of the European system of central banks and that we can make our contribution through that institution?

Lord McIntosh of Haringey: My Lords, yes. We can and do make our views known through the European system of central banks.

Lord Lamont of Lerwick: My Lords, does the Minister agree with Mr Prodi's statement in Denmark that it is not possible for a country to withdraw from the European single currency, or with his statement in the Spectator that it is possible for a country to withdraw from the single currency?

Lord McIntosh of Haringey: My Lords, I was aware of the statement of Mr Prodi that it was possible to withdraw. I was slightly surprised when I read it. It has

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always been our understanding that it was an irreversible decision to enter the European single currency.

Lord Stoddart of Swindon: My Lords, does my noble friend agree that there are constitutional issues involved in whether or not we enter the euro, as well as financial and economic ones? Also, can he say whether we are converging towards the five tests for entry or diverging from them?

Lord McIntosh of Haringey: My Lords, we have always recognised that the joining of monetary policy in the European single currency is a pooling of sovereignty. That is clearly a constitutional issue. As to the changes in the adherence to the five economic conditions, the Government will make an assessment of that in due course. It is not appropriate to do so at the moment.

Lord Campbell of Alloway: My Lords, why did the Minister kick a relevant question of my noble friend Lord Renton of Mount Harry into touch?

Lord McIntosh of Haringey: My Lords, I am not very good at sporting metaphors. I do not understand the question.

Sheep Farming

2.52 p.m.

Lord Geraint asked Her Majesty's Government:

    Whether the state of the sheep industry is satisfactory.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, we recognise that the strong pound and low prices have severely reduced sheep producers' incomes. However, since the early autumn prices have recovered substantially and are now 5 per cent above the level of 12 months ago. The more significant and sustained increase in returns depends on all elements of the food supply chain working together to respond effectively to consumer demand. The support system needs reform to reduce reliance on subsidy and to make the sector more market oriented. Our implementation of the rural development regulations will also help to strengthen marketing and collaborative approaches.

Lord Geraint: My Lords, I am grateful to the Minister for that reply, but is she aware that it is estimated that farmers' incomes this year are dropping by £50 per week? Unless the Government lift the ban on sending our mutton carcasses to Europe within the next few months, we are in for a bad period in the autumn when sheep farmers will be selling their produce.

Baroness Hayman: My Lords, I appreciate the concern of the noble Lord, Lord Geraint, about farmers' incomes. Sheep farmers in particular have

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had an extremely difficult time. There is not a ban as such on the export of whole carcasses. The problem is that, since the BSE-related legislation on specified risk material, spinal cord must be removed from sheep over 12 months old. Splitting carcasses to remove the spinal cord is not acceptable to customers in France, which was our main market for mutton. We have managed to negotiate arrangements with France for whole, unspoilt ewe carcasses to be sent direct to listed cutting plants in France under official controls. The spinal cord is then removed under France's regime, which is similar to our own. But the industry has made representations that the requirement for consignments to be sent direct to premises creates difficulty for the trade and we therefore proposed to France a system of export in sealed compartments or cages within vehicles so that deliveries can be made en route.

Lord Cledwyn of Penrhos: My Lords, I am interested in what my noble friend said, but is she aware that in Gwynedd and Anglesey, for example, the sheep industry is in considerable difficulties? In particular, the wool industry is in great difficulty at present. Can the Minister say how hard the Government are working to help that area to get out of those difficulties?

Baroness Hayman: My Lords, it is in recognition of the problems in the sheep industry that there has been support for that sector in each of the packages of aid announced by this Government, most recently in the £22 million agrimonetary compensation and the £60 million for the hill livestock compensation allowances, which support hill farmers, a great deal of which goes to those involved in sheep production.

I understand my noble friend's point in relation to the difficulties in the wool market. Prices there have recovered slightly compared with last year. The board's price indicator at mid-February stood at 70p per kilogram compared with 62p per kilogram in 1999. But my noble friend will be aware that wool is not an agricultural product. It is not supported through the CAP. The wool guarantee was terminated in 1993 and therefore the mechanisms to support the wool trade in times of difficulty, such as it is experiencing at the moment, are simply not there to implement.

Lord Elton: My Lords, if wool is not an agricultural product, can the Minister tell us what it is?

Baroness Hayman: My Lords, I am trying to restrain myself from saying that it is what you get when you fleece a sheep.

Agricultural products are listed in Annexe 1 to the Treaty of Rome. Wool is not included in Annexe 1 to the Treaty of Rome, ergo it is not an agricultural product.

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