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House of Lords

Wednesday, 15th December 1999.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Southwark.

Lord Ewing of Kirkford: Personal Statement

Lord Ewing of Kirkford: My Lords, with the leave of the House, I wish to make a personal statement. Yesterday afternoon I intervened in the debate on the Question in the name of the noble Baroness, Lady Cumberlege. On reading my intervention, I have come to the firm conclusion that it was untimely, ill-thought out and may well have caused offence, which I pray your Lordships will accept was not my intention. I apologise sincerely and unreservedly to your Lordships' House in general and to the noble Baroness in particular.

Noble Lords: Hear, hear!

EU Tobacco Subsidy

Baroness Jeger asked Her Majesty's Government:

    Why does the European Union continue to subsidise the growing of tobacco; and how much was spent on this subsidy in the last financial year.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman): My Lords, Her Majesty's Government strongly disapprove of the common agricultural policy support regime for tobacco introduced in 1970 to support production in disadvantaged areas of the Community. We have argued consistently that the Community should progressively disengage from support for tobacco production on the grounds of health and cost. We shall continue to press for further progress in that area. In the year ended 30th September 1998--the last year for which figures are available--just over 870 million ecus were spent on tobacco premia.

Baroness Jeger: My Lords, I thank the Minister for her reply. I have asked the same Question in the House for about seven years. Every time I receive a similar Answer: that the Government do not approve of subsidising tobacco growing, but because of the CAP we are bound to dish out money for it. Does the Minister realise that there is a contradiction here? Quite rightly, we spend millions of pounds on campaigns to stop people smoking in this country and to stop advertising and yet we ask the British taxpayer to pay taxes to subsidise the growing of tobacco. I believe that that is unsupportable.

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Does the Minister realise that much of the tobacco that is grown in Europe is substandard? According to the World Health Organisation, a great deal of that tobacco is exported to the poorer countries of the world, where, as the WHO also tells us, smoking is increasing. I hope that some thought will be given to the ridiculous situation of sending subsidised tobacco to the poorest people in the world while spending millions on telling our own people not to smoke.

Baroness Hayman: My Lords, I have considerable sympathy with the points made by my noble friend. We have to recognise the contradictory nature of paying premia for a product that gives rise to such grave health concerns and which damages so many people's lives and health. My noble friend says that she has asked this Question for seven years. As she will know, there was some reform of the tobacco regime in 1992 with the introduction of a clawback arrangement of 1 per cent of the premia. In 1998 there was a modulation of the premia according to quality and a quota buy-back system for growers wishing to leave the sector. The clawback arrangements were increased to 2 per cent.

However, I recognise what the noble Baroness says about the quality of the tobacco that is grown and the way in which it is exported. The Government recognise and share the concerns. They have done all that they can and will continue to work in that area, but being part of a union where there are eight producer nations means that it is not so easy to make the progress that we would like.

Viscount Waverley: My Lords, is it the intention that all subsidies, including those that are camouflaged, will become illegal under World Trade Organisation rules?

Baroness Hayman: My Lords, the outcome of the latest WTO negotiations is so clouded as not to allow me to give an absolute Answer to the noble Viscount at the moment. However, I shall write to him on that issue.

Lord Pearson of Rannoch: My Lords, I apologise for putting the matter this way, but can the Minister answer the Question on the Order Paper? Why does the European Union continue this absurd folly? In relation to the second part of the Question, can she say how much the United Kingdom contributes to the £700 million or £800 million that go down that classical "Euro drain"?

Baroness Hayman: My Lords, I tried to answer the Question. I was asked how much was spent on the subsidy in the last financial year. I gave the last available figure which, as the noble Lord may be interested to know, was 2.5 per cent of the overall CAP payments. I cannot work out the British share of that amount in my head, but I shall do so back at the office and write to him on that point.

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I also said that the reason that the CAP support regime was introduced in the first place was to support production in disadvantaged areas of the Community, to maintain farmers' incomes and to reduce surpluses by adapting production to market needs. I imagine that that is the same reason that it is supported by those countries where tobacco producers operate now.

Lord Bruce of Donington: My Lords, is the Minister aware that, according to recent authenticated reports, this area of expenditure was the subject of considerable fraud which brought into disrepute the whole way in which these funds are administered, both centrally and regionally? Will my noble friend agree that once again this is the result of qualified majority voting applying to all European expenditure and the allocation of resources? Will she agree also that any further endeavour to introduce qualified majority voting ought to be resisted with the support, I imagine, of the entire United Kingdom population?

Baroness Hayman: My Lords, I always hesitate to answer on behalf of the entire United Kingdom population in these matters. My noble friend is absolutely right that this matter is governed by qualified majority voting and that fraud has been a serious problem in this sector. The reforms in 1992 to which I referred reduced the opportunity for fraud by eliminating intervention and export refunds and by simplifying the premium arrangements, reducing the categories of tobacco on which payment was made from 34 to eight. The member states were also required to set up national control agencies in order to oversee the payment of premiums, the administration of the quota system and the contractual arrangements. Expenditure is going down in this area but, as I said before, we still believe it is too great.

Baroness Trumpington: My Lords, does the Minister realise that she has my sympathy on this occasion, as well as sympathy for the noble Baroness who asked the Question? I spent a great many years answering in her place on this subject. As far as I remember I was told that most of the money goes to Greece for areas where they can grow nothing else.

Baroness Hayman: My Lords, the noble Baroness recalls well. Greece is one of the areas, together with France, Germany, Spain, Portugal, Belgium, Austria and Italy, that receives subsidy in this regard. It is a major problem because major investment is often required to help people to change. The alternative crops are often themselves in surplus, like olive oil and wine. Added to that, tobacco still attracts the highest premiums per hectare under the CAP regime. Changing things is therefore not an easy task.

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NHS Financial Deficit

2.45 p.m.

Lord Clement-Jones asked Her Majesty's Government:

    What they anticipate the NHS financial deficit will be in this financial year.

The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, the latest forecast of income and expenditure for health authorities and NHS trusts is a deficit of £197 million.

Lord Clement-Jones: My Lords, is not the Minister being unduly reticent in his reply? Some of the forecasts that have been made have been of a deficit this year of £400 million with an accumulated deficit of over £1 billion, with worse to come next year. Is it not time, rather than denying the extent of the deficit or preventing it being published by finance officers of the NHS, for the Secretary of State to accept that the NHS is severely under-funded and that he should do his best to secure greater funding in the Comprehensive Spending Review next year?

Lord Hunt of Kings Heath: My Lords, the figure I have given is the best forecast we have. I believe the noble Lord is referring to the accumulated deficit of £1 billion talked about by the Healthcare Financial Management Association. I am glad to say that it is indulging in realms of fantasy. The House will well know that, in relation to resources for the NHS, through the Comprehensive Spending Review we have put in a large amount of additional growth money--4.9 per cent increase in real terms this year. Through that we are enabled to provide real improvements to the National Health Service. Thirty-seven new hospitals are either being built or are in the process of being built. There is much greater access to services. The NHS is undergoing a fundamental modernisation programme which we are funding.

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