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Lord Prior: My Lords, I am grateful to the Minister for giving way. Can he explain how, if the costs of production of many of the commodities produced by farmers are now not being met by the price obtained by farmers, and the subsidy as such is to be removed from production to some other kind, farmers will sustain themselves if nothing is done about controlling imports or if there are no other methods for raising the price of those commodities?

Lord Whitty: My Lords, it is not the Government's responsibility to determine the price of food and we are living in an increasingly globalised world. There is no going back on either of those points. Clearly there will continue to be a need for some significant structural adjustment in the farming sector. Not all farmers will survive. There will be a reduction in the total number of farmers.

There will be a concentration, in particular, on farming markets where we can develop products which will give a return to farmers over and above the return they will get from the generalised environmental and landscape support. That will give them a base income from which to work. But, over and above that, there is no reason why farmers should operate any differently from other small businesses. They will have to go for the market where the price is right over the medium and long term. That still means some serious adjustment.

I have only 20 minutes to respond to the debate. If noble Lords intervene now I am unlikely to be able to respond for the other departments.

Earl Peel: My Lords, perhaps I may seek an assurance from the Minister that there will be a radical review of the return that farmers will receive for delivering environmental goods to the public. At the moment, the existing schemes do not reflect a proper return on capital and labour. I hope that the Minister can assure the House that in future such schemes will do that and that farmers will be paid properly for the services they will be providing to the public through the public purse and the switch from pillar one to pillar two.

Lord Whitty: My Lords, as has already been made clear, the switch into what Sir Donald Curry originally called the "broad and shallow" scheme, or the entry level environmental scheme, will be without the overload of bureaucracy which many of the current agri-environment schemes have developed. It will also not depend on the principle of income forgone, on which those schemes are based. Therefore, there will be a return to farmers in return for the improved environmental output.

Clearly, we are not working on the basis of guaranteeing any particular profit level or return on capital, but that would make a contribution towards a

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more profitable farming sector. Over and above that, an adjustment to the farming sector towards meeting what are the demands of consumers rather than a structure of Brussels subsidies will enable it to operate to greatest economic effect.

As regards my department's other areas of responsibility, they include those relating to broader rural areas and the diversification of agriculture. I support looking carefully at the returns that we can get from developing, for example, bio-fuels and alternative crops and products. We should look at the structure of fiscal incentives as against other fuels. We need to look also at issues of how we use land, how we make it easier through the planning process and elsewhere to diversify the use, for example, of redundant farm buildings, and look at the planning process as regards the use of agricultural land. Certainly, a greater flexibility on both of those fronts is necessary if we are to be able to sustain an effective and growing prosperity within our rural areas.

In regard to the broader environmental aspects of my department's brief, I draw noble Lords' attention briefly to two Bills before us, both of which have been largely welcomed. They are called the "WET and water" Bill which is slightly misleading. The "WET" Bill deals with waste and emissions trading and is an important contribution both to the more effective use of our resources and not using landfill to the grotesque extent that is currently the case within this country for the disposal of waste, and makes a contribution through the market towards reducing CO2 emissions through an effectively-based emissions trading scheme.

The noble Lord, Lord Ezra, raised some detailed points on the energy contribution to our environmental objectives. The right reverend Prelate the Bishop of Hereford and others raised the broad strategy on climate change. We have a detailed policy on climate change to which energy, the contribution of renewable energy and, indeed, CHP, including micro-CHP, will make a major contribution. Further work on the direction of energy policy is now under way. We intend to publish an energy White Paper dealing with those issues and the medium and long-term objectives of energy policy to take account of the need posed to us, for example, by the Royal Commission for a 60 per cent reduction in carbon emissions by 2050.

I now move on to other parts of the debate. A good deal of time was spent on dealing with the issues of regional government. Taken together with our Bills on planning and local government I believe that there is a widespread misunderstanding of what the Government are trying to do. The Government believe that certain aspects of planning, transport and spatial development are best dealt with at regional level. Past governments have also believed that because we already have regional transport plans and regional spatial development plans which are dealt with by groups of county and unitary authorities. It would be better if that were dealt with by a democratic process rather than an indirect process which tends to relapse into Buggins' turn in terms of the priorities of the various county and unitary authorities.

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That is one reason why we would like to see democratic control of those regional institutions. The other reason is that some people want them. How many people want them will be the subject of a referendum. No region is being forced into it; every region will be able to have a choice. When they have that choice, they must also consider the implications for the current structure of local government within their region.

We are not laying a blueprint stating that we will abolish the counties; quite the opposite. We are saying that we need either to strengthen the counties or to strengthen the districts. If we have a regional authority, we do not want an additional tier; we want to look at the way that region will decide as a whole what the structure of its local and regional government should be. Therefore, when regions take the decision on whether they want a regional assembly, they also take a decision on the structure of local government beneath that level.

Likewise, on all the policies relating to local government and the planning Bills, contrary to what has been suggested today by the usual contingent from the Kingdom of Essex—that we are trying to be more centralised, bureaucratic and rigid—we are trying to provide more flexibility. We want to provide flexibility in relation to funding; flexibility to allow local authorities to raise capital; and flexibility to alter the way in which they approach their decision-making in respect of, for example, planning, regeneration and transport. All of those areas require more local decisions.

It is true, as the noble Lord, Lord Dixon-Smith, knows, that on occasion I have shown sympathy with his view that central government of all complexions occasionally legislates too heavily. However, this is a move in exactly the opposite direction. It is decentralising, deregulating and providing flexibility. I would have thought that noble Lords from both parties opposite—certainly the Conservative Party in its period of opposition—should be in favour of such moves towards greater flexibility.

I turn briefly to education, which I am sure my noble friend Lady Ashton will—

Lord Pilkington of Oxenford: My Lords, the Minister has imposed his own burden. Many of us are concerned about education. The House rises at ten o'clock, so I hope that he will not tie himself to winding up in 20 minutes. We want our questions answered.

Lord Whitty: My Lords, as I understand it, the House has agreed that all Front Bench speeches should be limited to 20 minutes. The noble Baroness and the noble Lord opposite observed that and it would be only right that I do so too—

Lord Pilkington of Oxenford: My Lords, I am sorry to interrupt. Questions were asked and they are

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important. We did not agree to that and I hope that the Minister will answer the questions on education. Two minutes is not enough.

Lord Whitty: My Lords, I appreciate that two minutes is not enough, but I would have had five minutes had there not been interruptions. The education questions related largely to the issues set out by my noble friend Lady Ashton at the beginning of the debate. They relate to our funding of higher education. In response to the noble Baroness, Lady Byford, the jury is out in relation to the longer term, but our manifesto commitment clearly stands for the moment as regards top-up fees. There is no intention to introduce top-up fees in the period of this Parliament and no decision to do so beyond that. But we will be looking at the whole issue of funding for higher education.

It is important to recognise that during the course of this government we have provided substantial additional funds for higher education. In terms of funding per student, while in the period 1989–97 that fell by approximately 36 per cent under the previous government, it rose in the first two years of this government and has remained static since. Therefore, the resources that the Government have allocated to higher education cannot be attacked in that way.

A number of points were raised, including by the noble Lord, Lord Pilkington, relating to vocational education. We provided an overall strategy in relation to that in the Green Paper, 14-19: extending opportunities, raising standards, published in February 2002. The intention is that we deliver to young people their individual requirements for qualifications, both through their schooling and through the wider education systems, and that vocational output from the education system will be as valid as it is, as the noble Lord, Lord Pilkington, indicates, in Germany and to some extent in France, more or less on a par with academic achievement. That is an important part of the mix of reforms that we have suggested and are pursuing in the 14 to 19 year-old strategy.

On teacher recruitment, referred to earlier today by my noble friend Lady Ashton, the latest figures show an increase of 9,400, indicating an increase since 1997 of 20,400 teachers in post over that period. The figure for teachers entering training has increased by 7 per cent over the past year. Understandable anxieties remain regarding the shortage of teachers, especially in certain disciplines. However, the overall picture is of substantial additional resources being put into teacher training and recruitment and teachers in post in schools.

We are reviewing the totality of higher education. We are examining not only the funding aspects but the diversity to which my noble friend Lady Warwick referred and the need to ensure excellence in all parts of the university sector, not merely in some parts of it.

The noble Lord, Lord Jenkin, referred to science education. I agree with him, and I commend the work that he himself has put in on this front. We are in the early stages of trying to turn around the situation—of

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trying to re-engage pupils with science education. The new GCSE course which starts this year is effectively a hybrid GCSE in relation to science, which is a new approach to getting relatively young pupils interested in science. We have also extended what was the science year into a second year, so that we can now focus attention on science in that further year.

The noble Lord, Lord Prior, referred to literacy. It is the one area of education about which I know something—which is probably why I have never been an education Minister. That is taken on board in the overall approach.

The noble Baroness, Lady Walmsley, referred to exclusions and truancy, which are continuing problems—although under the previous system pupils with special educational needs were seven times more likely to be excluded than the average pupil; whereas now the figure is three times that level. That in itself is an indictment of the previous system of exclusions. It is important, therefore—

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