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Lord Geddes: My Lords, can the noble Baroness advise the House when repairs are expected to be completed on the cargo ship concerned? If those repairs are expected to take a long or even a medium length of time, what arrangements for supplies to St Helena have been made for the period following Christmas?

Baroness Amos: My Lords, I can tell the noble Lord that it is anticipated that the repairs will take around three months. The ship that has been chartered to take cargo from Brest to St Helena will be used to provide an interim service between St Helena, Cape Town and Ascension Island. Following that, the managers of RMS "St Helena" will look at when they can put the original timetable back into place.

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Lord Cledwyn of Penrhos: My Lords, is there any possibility that an airport could be built on St Helena?

Baroness Amos: My Lords, air access is an issue that has been raised by the St Helena Government. Indeed, DfID has funded a programme to examine the feasibility of air access. We are now looking at the possibilities of that and we shall know within the coming year the extent to which we will be able to look seriously at that project. Cost is clearly a major consideration.

Baroness Rawlings: My Lords, I was pleased to hear the noble Baroness's clear reply. No doubt, if this is to be a success story it will be claimed by the Foreign Office, but if it is a failure it will be DfID's responsibility. Can the noble Baroness tell the House what co-ordination there has been between the Foreign Office and DfID over this very serious matter? When did they last meet to discuss the issue?

Baroness Amos: My Lords, I assure the noble Baroness that this is the response of Her Majesty's Government. We are committed to joined-up government.


3.23 p.m.

Lord McIntosh of Haringey: My Lords, after the debate on reform of the common agricultural policy, my noble friend Lady Farrington of Ribbleton will, with the leave of the House, repeat a Statement that is being made in another place on local government finance.

Local Government Bill [H.L.]

Baroness Farrington of Ribbleton: My Lords, I beg to introduce a Bill to make provision with respect to the functions and procedures of local authorities and provision with respect to local authority elections; to make provision with respect to grants and housing benefit in respect of certain welfare services; and for connected purposes. I beg to move that this Bill be now read a first time.

Moved, That the Bill be now read a first time.--(Baroness Farrington of Ribbleton.)

On Question, Bill read a first time, and to be printed.

CAP Reform: ECC Report

3.24 p.m.

Lord Reay rose to move, That this House takes note of the report of the European Communities Committee on A Reformed CAP? The outcome of Agenda 2000 (8th Report, Session 1998-99, HL Paper 61).

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The noble Lord said: My Lords, this afternoon we move from the partisan hurly-burly--even at moments it seemed the partisan fury--of a debate on the Address in the new "reformed" House of Lords to what I hope is the serener atmosphere of a debate on a report from one of your Lordships' all-party European sub-committees. The subject of CAP reform, although of very considerable importance, is one on which there is little difference in fundamental policy between the political parties in this country. Accordingly, there was not much trouble for us in producing a unanimous report.

I should like to start by paying a tribute, and placing on record my thanks, to some absent friends. Four of the members of the sub-committee that produced this report were hereditary Peers who have not survived into this Session and so are prevented from taking part in our debate today. These are my noble friend Lord Gisborough, and the noble Lords, Lord Grantchester, Lord Rathcavan, and Lord Redesdale. Their contributions to this inquiry, and to others before it, were immensely important. The House will miss them and I hope that we shall see them back here one day.

I should also like to thank the rest of the sub-committee for their invaluable support, as well as our specialist adviser, Professor John--now Sir John--Marsh, a much loved and admired veteran of many a House of Lords committee inquiry, whose intellectual grasp, robust free-market philosophy and lucidity of thought and expression I hope is reflected in this report. Finally, I should like to thank our Clerk at that time, Mr Jake Vaughan, a young man wise beyond his years.

The subject of CAP reform is one that Sub-Committee D has had to live with for some time, largely of course because it never takes place--at least in any measure that we would consider adequate. When the Commission brought forward its Agenda 2000 proposals two and a half years ago, we conducted an inquiry which focused principally on the agri-environment and rural development measures contained in those proposals.

However, we took time to express in our report disappointment with the failure of the proposals to go anything like far enough to prepare EC agriculture to enable it to compete in a world without subsidies, and towards making the CAP, in the words of the Prime Minister--which we quoted in the report--

    "less of a manifest absurdity which discredits Europe".

The report we are debating today was produced some 14 months later, after we had briefly interrupted our inquiry into organic farming in order to see what the Commission's Agenda 2000 proposals looked like once they had been through the Council of Ministers and once they had received the final seal of approval from the Heads of Government at the Berlin Summit in March.

We had a single evidence session with the then Minister with agricultural responsibilities in your Lordships' House, the noble Lord, Lord Donoughue, who was accompanied by an extremely capable official

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from MAFF, Miss Kate Timms, Head of the Agricultural Crops and Commodities Directorate, and we are indebted to them both.

We found that after a long period of negotiation the Council of Farm Ministers finally reached agreement on 11th March this year on a package that represented a considerably less radical reform than that originally proposed by the Commission, with concessions having been made to the anti-reform forces in all commodity sectors. Indeed, so disappointing was the outcome at first seen to be in this country that the Prime Minister's spokesman virtually disowned the deal reached by his Minister of Agriculture and promised a better result when the Heads of Government met in Berlin later in the month.

However, the Berlin Summit produced an even weaker reform package. Noble Lords may remember the way in which President Chirac, himself a former French Minister of Agriculture, single-handedly renegotiated the CAP deal right through the night. I myself suspect that his triumph was only possible because it was considered essential to maintain French co-operation during the Kosovo crisis and the NATO action against Serbia. So the abandonment of a more viable CAP reform emerges as another melancholy consequence of that expensive intervention.

Appendix 2 of our report sets out the details of the Berlin deal and compares them with the Commission's original proposals. There will, of course, still be cuts in commodity intervention and support prices, although in the case of dairy products, these are not to start until 2005. Milk quotas are not to be touched until 2006. The cuts in support prices enable the Government to argue that the agreement will benefit the UK consumer to the tune of £1 billion a year once the reforms are fully implemented in 2008. However, these cuts are offset for the farmer by increases in direct payments which will cost the taxpayer up to 50 per cent of the savings to be enjoyed by the consumer. Moreover, the length of time over which the price cuts will be introduced will make any fall in consumer prices virtually imperceptible. Many of the regimes, such as the sugar regime, for example, will remain untouched. So consumers will continue to pay far more than they need for food.

We are left with a deal that we and the committee consider to be deeply disappointing. It sends the wrong signal to the farming industry, thereby misdirecting investment which is bad for the Community's taxpayers and consumers, and leaves a CAP that will have to be reformed again, as the Minister agreed, before enlargement of the European Union can take place.

The incompatibility of the existing CAP with the completion of the enlargement process is moving into ever-closer focus, especially since the President of the Commission announced last month to the European Parliament that the Commission would recommend to the Helsinki European Council in December the opening of accession negotiations in 2000 with the second-wave applicant countries of Bulgaria, Romania, Latvia, Lithuania, Slovakia and Malta.

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The irresistible force is moving ever closer to the immovable object. What is the Community to do? Is it to extend agricultural price support to those countries as well as to the first-wave applicant countries--Poland, Hungary, Czechoslovakia, Estonia and Slovenia--thereby pushing up agricultural prices in those countries and, as a consequence, depressing consumption and at the same time stimulating production there? Is it also to extend direct payments--arable area payments, headage payments and so on--to the farmers of those countries at untold cost to the Community's taxpayers? Or instead will it force the applicant countries to accept a two-tier CAP in which £30 billion continues to be spent each year on the farmers of the present 15 member states of the Union but none, or vastly less, on the farmers in the new member states? Such an arrangement would make no economic sense and would be like scrapping subsidies to less favoured area in this country and replacing them with subsidies to the south-east. That is why we say that there needs to be further CAP reform before enlargement can take place. Judging from their reply, I believe that the Government are still of that opinion. Even for transitional arrangements to be feasible, there needs to be a commitment to reform.

Parallel to the pressures for reform resulting from the approach to enlargement are those from the new WTO round of negotiations due to start next week in Seattle. The CAP's production-distorting subsidy regimes will certainly come under attack, and the expiry of the peace clause in 2003 will give other countries the chance to challenge the compatibility of the CAP with existing trade commitments, let alone any commitments that may be negotiated in future. Any deal seems certain to result in further CAP reform measures, as last time, but whatever they are, their effect on the ground is, on past experience, at least five to 10 years away.

The CAP is widely seen to have damaged the environment by its over-stimulation of production. An effective redirection of some of the resources currently dedicated to production towards the protection of the environment should be likely to meet with general approval. We welcome the fact that the Berlin agreement contains a new rural development regulation which brings together rural development and agri-environment measures, and that member states will be required to offer farmers agri-environmental programmes, such as our Countryside Stewardship and Environmentally Sensitive Area Schemes. However, we deplore the imbalance between the amount of money available from the Commission for such schemes, which we calculate to be some £8 million plus, and the £3 billion spent annually in this country on the CAP regimes. The amounts available for environmental purposes are, in our opinion, pitifully inadequate.

Cross-compliance, or the attachment of environmental conditions to the payment of CAP subsidies, is permitted under the agreement and, on the face of it, might be an attractive way to have an environmentally friendly policy at little expense.

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However, as a committee we have always been opposed to lending production payments a spurious legitimacy in that way. I am pleased to see from their reply to our report that the Government think likewise. We feel that it would simply further entrench the existing production subsidies and that environmental goals should stand, and be paid for, in their own right. Also, as the element of incentive to the farmer is absent from such arrangements, the policing of these unpopular conditions would require an ugly new bureaucracy.

But there may be other ways in which the agreement gives discretion to national governments to develop resources for environmental schemes. One such is modulation, where within a national financial envelope, national governments may reduce by up to 20 per cent the production subsidies paid to farmers, according to certain criteria. If I understand it correctly, production subsidies could be reduced by up to this percentage across the board to all farmers within a member state, and the proceeds, provided they were matched by funds from the national treasury, could be used to boost agri-environmental schemes. When the Minister winds up perhaps she can confirm whether that is the correct interpretation and, if so, whether the Government have yet taken a decision to move in that direction. Perhaps the Minister can also indicate what other decisions the Government have taken so far in those other areas where they have freedom to exercise national discretion.

The Government have also argued that the Berlin deal, which covers the future financing of the Community as well as CAP reform, was good for Britain because Britain was able to keep its Fontainebleau rebate. We say that it would be better to reform the CAP and remove the main reason why the rebate became necessary in the first place.

We hope that further reform will come. It would be better for agriculture itself in the long term if efficient farmers were given the chance to compete freely in the world--there is much efficient agriculture in this country and in Europe--and if the less efficient received support in a form which the public were happy to endorse. There are reasons to believe that real reform must come one day, but it has not come yet, and I am beginning to ask myself how many of us will still be alive to see it happen. I beg to move.

Moved, That this House takes note of the report of the European Communities Committee on A Reformed CAP? The outcome of Agenda 2000 (8th Report, Session 1998-99, HL Paper 61).--(Lord Reay.)

3.38 p.m.

Lord Tomlinson: My Lords, the Select Committee, in particular Sub-Committee D and the noble Lord, Lord Reay, are to be congratulated on having produced a most cogent report. In so far as the EU gets the agricultural aspects of Agenda 2000 wrong, it creates circumstances which will make enlargement of

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the European Union to the east not only more difficult politically but more costly financially. This is one of the reasons why the report is so timely.

In his evidence to the Select Committee, the noble Lord, Lord Donoughue, said of the Berlin agreement:

    "We believe the outcome represented a greater step in the direction of reform of the European Union Agricultural Policy than in fact had been achieved in the last two decades".

That may well be so. If it is correct it is a clear critique of the lack of any real action in the past two decades rather than words of praise for what happened in Berlin.

I have no doubt that the Agenda 2000 deal struck in Berlin has some marginal benefit, even for consumers. I also have no doubt that my right honourable friend the Prime Minister would have liked a substantially more radical outcome. But when one concludes with an agreement where the European Council itself is less radical than agricultural Ministers, and agricultural Ministers are less radical than the Santer Commission, perhaps one can say with reasonable confidence that the Berlin solution will prove inadequate to deal with the problems.

As the noble Lord, Lord Donoughue, said in evidence to the Select Committee,

    "it is very hard to identify specific improvements between Brussels and Berlin. In a number of areas, it could be argued that matters went the other way".

In respect of each of the criteria examined by the Select Committee there remains cause for concern. Do the Agenda 2000 proposals promote economic efficiency? Far from it. I believe that they enshrine economic inefficiency, mock the market mechanism and leave burdens to be borne by farmers despite a high level of subsidy which exceeds the total that goes to the rest of British industry. It even further burdens consumers; and it is costly to the budget, failing producer and consumer alike, serving, as I said earlier, to enshrine economic inefficiency.

Does the CAP reform facilitate enlargement? Far from it. I believe that it threatens enlargement. It shackles the European Union financially; and to extend the costly agricultural regimes to current lower cost producer applicant countries would be prohibitive budgetarily in circumstances where there is unlikely to be any agreement to change the own resources base of the European Union. That means that fundamentally it threatens enlargement itself.

Do the so-called reforms of Berlin help us to meet our international obligations? Again I agree with the noble Lord, Lord Reay, and the report that the response must be in the negative. We who are possibly not honouring our existing WTO obligations are producing substantial obstacles with the Berlin agreement to the radical response that we expect to see coming from the next WTO round. I believe that we have already placed obstacles to progress in Seattle. It requires no vision to see that we have worsened our relationship with the Cairns group; and we shall start with an immediate battle as soon as Seattle opens.

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Does it enhance and protect our environment? Looking at the Berlin Summit agreement, there are no reasons to suppose that it will do so any more in the future than in the past.

One could continue. The so-called "reforms" fail adequately to limit over-production in agriculture. This leads to the continuation and extension of subsidised disposal of surpluses which in turn distort world markets, and damage the third world and its aspirations to self-sufficiency. The surpluses and their disposal are a standing invitation to fraud and the fraudsters.

We in the United Kingdom often talk about the need for the European Union to fight fraud more vigorously. Are we necessarily doing that as well as we could in our own country? Our Intervention Board was criticised substantially two years ago by the National Audit Office and the Public Accounts Committee. I ask the Minister to consider whether in her opinion the recently advertised post for a head of the anti-fraud unit of our own Intervention Board is likely to be adequate. The salary offered is £30,000-plus; and a person is sought with his or her own motor car which can be available for work. That seems a rather pathetic response to the issue of dealing with fraud. I do not necessarily ask my noble friend to reply today. However, perhaps the noble Baroness will look at the matter in a more leisurely way and give someone at Reading the invitation to pull his or her finger out and get on with the job of being as vigilant in the public interest in the United Kingdom as we always demand that Brussels should be.

It is a valuable report. In getting agricultural reform wrong we shall damage the European Union budget, our interest in enlargement; the third world interest; the fight against fraud, and our interests in the next World Trade Organisation round. That is a flush hand that no government should be proud of holding.

Berlin leaves no room for complacency. Agricultural reform must remain a constant objective of the Government. But sooner rather than later the rhetoric of reform needs to be matched by quality of decision.

3.46 p.m.

Lord Jopling: My Lords, I declare an interest in that I am a farmer in the north of England. All noble Lords who have been associated with the Select Committee would like to say how grateful we are for the kind and generous remarks of the noble Lord, Lord Tomlinson, about the report and the committee so ably led by my noble friend Lord Reay. It is a great disappointment that he will no longer be chairman in the future.

All my life in Parliament--it is now quite a long time--I have heard people talking about the need to reform the common agricultural policy. Having spent four years of my life at one period as a member of the Council of Agricultural Ministers, I can describe trying to get sensible reforms to this centrepiece of the activities of the European Union as horse work. The management of the common agricultural policy has been dogged forever by a long history of total

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irresponsibility in the way that prices have been set. Over the years, the problem has been that prices were increased in order to provide a continuing livelihood for inefficient farmers, usually in some other countries of the Community other than our own. At the same time those increased prices provided an attractive incentive for efficient farmers throughout Europe hugely to increase production and create the surpluses which have bedevilled the whole system.

The divergence between efficient and inefficient farmers does not necessarily mean large or small farmers. Other factors so often come into the issue. For instance, some farmers find themselves borrowing heavily. They need higher prices in order to compete with efficient farmers who do not owe anyone anything. One has always had, as it were, two different industries within one according to the amount of borrowing by individuals.

At the same time, the CAP has long been bedevilled by the fact that many member countries could merrily agree to irresponsible price increases with the happy knowledge that those higher prices were costing their own national budget nothing. At the heart of the problem, as it has been since the beginning of the CAP, is the tragedy that the increased costs of the CAP did not cost each state at least something. So often, they have been able to agree to higher prices, knowing that they would receive all the benefits and incur none of the cost. Therefore, of course they have always held up their hands to vote for higher prices. It is the higher prices that have created the surplus and the run-away expenditure that has caused nearly all of the difficulties.

In that context, I have always marvelled at the unashamed way in which some Ministers pursue totally irresponsible policies towards the CAP. I shall give just three examples. I remember the time when the German Minister totally refused to contemplate accepting--even to the extent of threatening the veto--any reduction in the level of support prices. Happily, that attitude is now behind us and a reduction in support prices is on the agenda, which in the days when I was involved with the Council was not contemplated by the Germans or others who covered themselves in the skirts of the Germans. A second example was the unashamed way in which, on one occasion, Luxembourg Ministers showed us huge new plantings of vines in the Moselle Valley at a time when we were struggling to find a way of controlling the massive cost of the wine lake surplus with which we were all faced. The final example was our old friend the tobacco regime. Hundreds of millions of pounds were spent in producing varieties of tobacco which had no known demand anywhere in the world. There cannot be anything more lunatic.

As I said, it has been horse work attempting to introduce some responsibility into the CAP over the years. No one knows that better than my noble friend Lord Williamson, who has massive experience as Secretary-General of the European Union. We look forward to hearing his comments. I recall, in 1986, when the British presidency was in existence, having to

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keep the Council of Ministers in continuous session for 91 hours in the face of Christmas in order to inject some form of responsibility into the milk, grain and beef regimes.

In recent years we have seen a gradual move towards more responsibility. The runaway financial burden has been gradually brought under better control. It has a very long way to go. It has been brought under control mainly by means of budget controls imposed by the council of the Heads of Government. It has been helped by a number of other issues, not least various approaches to encourage the environmental policies of the common agricultural policy which are so important and need to be encouraged.

Now we are embarking on yet another effort, following the faltering attempts to bring about the proposals of Agenda 2000 at Berlin. We have now moved on to the Seattle talks, which are the precursor of the new world trade round. In those talks, the CAP will be a major target for negotiators from the United States and the Cairns Group. Their prime target in the talks on the agricultural sector will be the European Union's export subsidies.

My message to the Government is that I hope they will be very tough with the United States in particular, whose representatives like to give the impression that these unfair subsidies exist only in Europe and that the United States is squeaky clean. Many noble Lords will know of my political connections with the United States. I have had the honour to be secretary of the British-American Parliamentary Group for the past 12 years. There is no greater friend of the United States in this House than I. However, at the same time I believe that the United States should be sharply criticised where it deserves criticism. In passing, perhaps I may say that I have never understood how Canada has the gall to be a member of the Cairns Group; over the years it has had its own farm subsidies and yet happily criticises European subsidies.

A point that is not generally understood is that farm subsidies in the United States are greater on a farm-by- farm basis than they are in the European Union. That surprises a considerable number of people. The farms are bigger, but they receive more money in subsidy than farms throughout Europe. The United States applies massive farm subsidies. Perhaps I may give an example. In the Agricultural Appropriations Bill signed by President Clinton on 22nd October last, a total of over 69 billion dollars was consigned under the farm appropriations programme. That included almost 9 billion dollars for what was described as emergency farm aid. That is on top of 16 billion dollars already paid out in 1999.

I hope that the Government do not allow the Americans all the best arguments. We should be prepared to point out the massive scale of agricultural subsidies in the United States during the period that I have mentioned. I hope that the talks that are beginning to take place in regard to the world trade round will be successful and will carry on the gradual work of bringing the CAP under control. However, I rather suspect that the final words of my noble friend

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Lord Reay are true. He doubted whether that would happen in his lifetime. I doubt that it will happen in my lifetime either.

3.58 p.m.

The Duke of Montrose: My Lords, it is with some trepidation that I rise to speak today, in the midst of so many noble Lords who have spent years looking at the broad perspective of agriculture, and at the CAP and the support that it receives. I have been involved for most of my life in livestock production and spent nine years on the central council of the Scottish NFU, so my perspective may be slightly more constrained. I was interested to read the report and pleased that the issues were so clearly outlined. It sets out the criteria that presumably the UK Government would like to pursue.

It will assist my argument to repeat the criteria which were declared for the CAP and I hope that your Lordships will not mind if I do so. They were similar to those declared at the beginning of the policy in 1962 and I took them from the Agenda 2000 report, which your Lordships will have read. The first aim is to improve competitiveness--which, although it may not be effective, is a stated aim--to achieve lower prices and deal with food safety and quality. The second aim is a fair standard of living for the agricultural community. The third is to achieve stability for farm incomes. The fourth is the integration of environmental goals. The fifth is to provide alternative income and employment opportunities for farmers. The sixth is to contribute to the economic cohesion of the European Union.

The common agricultural policy has come a long way from its beginning. I obtained from the Library figures issued by the ILO. As regards the earlier criteria, the available figures relate to agriculture, forestry and fishing, but I shall concentrate on agriculture. They show that in, say, France in 1946 7.5 million people were employed in agriculture. The latest figures--those for 1994--show that 1 million people are employed. Your Lordships can see that a massive change has taken place in France's economy. Similar figures relate to Germany, but in the UK the number of people employed in agriculture has decreased from 1.1 million to 0.6 million.

In terms of a percentage of the employed workforce, in France the number has fallen from approximately 40 per cent to 4.7 per cent and in the UK from 6 per cent to 2.1 per cent. The scale change has been similar in both countries, although the French are perhaps a generation behind us in reaching the desired levels of efficiency.

In the EU, the average employment in agriculture is 5.5 per cent. According to the Agenda 2000 report, a fall of 2.3 per cent per annum is envisaged during the next 10 years. That scale of change, from the historical perspective, is equal to that I described earlier.

The rate of social and economic upheaval which the rural economy can withstand should be at the forefront of our thoughts when considering any changes to the CAP. I am not in a position to propose

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the policies which that criterion should engender, but we must pay great attention to it. If the policy as outlined in Agenda 2000 is to achieve such a change, we cannot dismiss the plan for reform even if we wish it to be modified and produce better results.

That is not to say that there is an easy solution to the present crisis. The forecast on which the Government's policy is proposed appears to be, in world terms, an increase in demand and firm agricultural prices. But we must contrast that with the present UK price collapse which will require some genius, as well as much money and effort, to remedy.

I should like to believe that when we go to the WTO meeting, that when the Government consider future policy, at the head of our priorities should be that the change should always be sufficiently graded so that the rural economy and those who gain a livelihood from it have time to adjust.

4.3 p.m.

Lord Willoughby de Broke: My Lords, I thank my noble friend Lord Reay for his chairmanship of our sub-committee. I join him in thanking our specialist adviser, Professor John Marsh, for his lucid expose of some of the problems which face the CAP.

The report is short, concise and says it all in a few pages. However, like my noble friend Lord Jopling, I am a little depressed. In preparing for the debate, I looked back on 10 years of reports on reform of the CAP. We had reports in 1991, 1994 and 1996. I was a member of the sub-committee which reported in May 1998 and we have the latest report before us today. We have five reports; we have listened to vast numbers of witnesses laboriously interviewed; we have bookshelves of documents and written evidence; and we have thoughtful and well-written conclusions after hours of committee time. But to what end? Here we are, still talking to ourselves. No one else seems to listen to us.

The Government, in their response to the report, state that they are distressed by the lack of progress and that reform is needed now. The previous government and the government before them said the same thing, but I hear no echo of it in Paris, Berlin, Madrid or Athens. I am afraid that all the evidence shows that we are talking to ourselves; no one else listens. Our competitors, or partners according to one's taste, seem determined not to change anything. There may be an environmental tweak or a nod towards an "integrated rural policy"--whatever that may mean--but that is all. The message is loud and clear: reform is not the plat du jour--it is not even on the menu.

What kind of signal does that send to the candidate countries of eastern Europe? When enlargement first appeared on the political agenda, there appeared to be general enthusiasm to see the newly democratic eastern European countries "come home". That was

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the buzz expression. As my noble friend Lord Middleton said in a speech in this House on one of his own reports--he was then chairman of the Select Committee:

    "I have mentioned our 1994 report on the trade agreements with the CEEC and our conviction that no enlargement was possible without CAP reform".--[Official Report, 15/10/96; col. 1600.]

In the same debate, he went on to say (at col. 1603):

    "If it is envisaged that accession by the CEECs should begin in the year 2000, discussions on detailed CAP reform are needed now".

And so we go on.

However, as our report notes, the enthusiasm for enlargement seems to have evaporated. So-called "reforms" agreed in Berlin earlier this year do nothing to resolve the underlying problems. Meanwhile, the negotiations on enlargement grind on, rather like a lorry sinking into the sand very slowly. Some EU governments are telling us that it will take five, seven and even 10 years before some of the candidate countries are full members of the EU.

As the noble Lord, Lord Tomlinson, pointed out, the unreformed CAP is alive and well, and without reform there can be no enlargement. That seems to be perfectly clear. Most of the economies of the candidate countries are agricultural and the EU cannot afford to pay them the huge IACS payments which it makes to current members. Here, I declare an interest as a farmer and recipient of IACS payments.

So how is the circle to be squared? Are these countries to be offered a different, second-class deal to abide by CAP conditions, but not receive the subsidies--to implement in all their stifling and expensive detail the provisions of the acqui communautaire? And if the candidate countries are to be offered or forced to accept a different deal, because we cannot have enlargement with an unreformed CAP, surely that opens the door to present members of the EU to negotiate a special, separate deal.

If that is the case, we should seize the opportunity seriously to consider repatriating British agricultural policy to this country. We in Britain would then be able to decide how we want our agriculture to be developed and where we want to go with it. We should then have a chance of putting into practice what has for many years been recommended by the committees of your Lordships' House. After all, those recommendations have been endorsed by successive governments. They are the progressive elimination of milk quotas; the progressive reduction of production support payments; area payments to upland or less favoured areas rather than headage payments--they have been economically and environmentally disastrous, as we are now seeing with the low sheep prices; and, over time, a substantial and eventually complete transfer of funds from production support to environmental support.

All those goals are attainable and, if we were to achieve them, the funds are of course available. At present, as your Lordships are well aware, our gross contribution to the EU budget is about £9 billion per

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year. Broadly, about half of the EU budget is spent on the CAP. Therefore we should have about £4½ billion of our money to spend on our own agricultural environment. That amounts to about £85 million per week, which seems to me a fairly tidy sum.

In that way, with one bound Jack would be free. We should escape the iron grip of the CAP. We can reshape our agriculture; our environment would become more WTO compatible; and this Government would be able to enjoy telling our partners in Europe that we no longer require an agriculture-related rebate. That is something very communautaire to be able to tell our partners, if that is what we want to do.

The Minister is smiling, but I ask her to take this matter seriously and to think about it, as we are often enjoined to "think the unthinkable". Will she consider setting up a small MAFF think-tank and, if necessary, shut its members up in a room with an urn of Ministry tea until they come to a conclusion? Thinking the unthinkable is often the way forward. Today's impossibility is often tomorrow's reality.

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