Examination of Witnesses (Questions 20-39)
Ms Kitty Ussher, Mr Jean-Christophe Gray and Mr Paul
Bunsell
11 JUNE 2008
Q20 Lord Woolmer of Leeds: It is
very helpful for you to draw our attention to the headings, of
which I have spotted two, but what is the figure? You said that
more should be and less on CAP. What is the balance? Give the
public an idea. Is the ratio 50:1? Climate change is supposed
to be an enormously important problem.
Kitty Ussher: What I said was that I thought
the proportion spent on climate change—I am sorry, I am
not going to be able to answer your question precisely, but the
general point is that we think climate change is a more valid
area for EU work than the Common Agricultural Policy.
Q21 Lord Woolmer of Leeds: There
is one specific area of spend which our own Government is going
into with a very small, modest trial scheme, and that is carbon
capture and storage. A large number of European countries depend
heavily on coal, including ourselves, and we are going to for
the foreseeable future, and it is an area which every government,
including our own, have talked about this for years and nothing
has yet happened. Do you think that at the European level the
budget allocated to carbon capture storage project work addresses
the urgency which is needed in the area of coal-fired electricity
generation?
Kitty Ussher: I completely agree with you that
this is an issue which we need to explore, and I know that a commitment
to that effect has been made in the last Energy White Paper of
this Government. There is an amount in the EU Budget under heading
1a on carbon capture and storage research. It is a good example
of where, by working together, we can pool our resources to make
the necessary technological advance to make this possible. We
support greater budgets being allocated to carbon capture and
storage under the Framework programme.
Q22 Lord Woolmer of Leeds: You would?
Kitty Ussher: We would.
Q23 Lord Haskins: Broadly speaking,
this Budget, the structure of it, was determined really by the
Fichler reforms of CAP four or five years ago and the structure
of it was largely going to follow that right through into 2013.
However, one factor has come in which is the huge change in agricultural
markets over the last couple of years, which has very much changed
a lot of the assumptions behind the Budget. In other words, a
lot of the subsidies are no longer triggered, they are no longer
relevant, a lot of the import tariffs are no longer appropriate,
and there is a short-term situation here. I know this has been
reflected to an extent in the Budget, that they have taken it
into account, but I suspect they have not taken it enough into
account and that there is going to be more money available than
people expected. However, what concerns me is that the rural community
always thinks that if it does not go to farmers it goes to somebody
else and it should stay within the ambience of the rural society.
That is very much what is being pressed here. Do you think that
the modulation process should be accelerated, that if money is
saved on funding farmers that money should automatically go into
rural development, or might it be more sensibly used in the other
direction?
Kitty Ussher: We prefer rural development than,
obviously, direct payments, so I think the realpolitik of this
is important and we would support a shift from Pillar One to Pillar
Two in that regard. But fundamentally we think the whole Common
Agricultural Policy needs to be looked at from more of a blank
piece of paper, and this is what we will be pursuing in the 2008/9
Budget Review which is just gearing up.
Q24 Lord Haskins: So any money, therefore,
which is going to be saved from Pillar One because of the fact
the markets have changed, you would say would automatically flow
into Pillar Two?
Kitty Ussher: No, I am not being that specific.
I am saying that as a general point if it is a choice between
Pillar One and Pillar Two, we would always support modulation
through to Pillar Two, but we are not aware of a formal proposal
to do something in terms of food aid or having a direct response
to the rising food prices. I am very happy to talk to colleagues
if and when that is put forward, but if you will permit me, I
do not want to tie myself down to a definite answer on what will
be in the negotiation process. I think our principles have been
well laid out in terms of our attitude to the Common Agricultural
Policy and is well-known to our European partners.
Q25 Lord Haskins: So in a way governments
consistently have been sceptical about this CAP almost to the
point that other people get bored by it. This is the best opportunity
for looking at CAP reform that there has ever been and there must
be fertile ground for constructive thinking about it?
Kitty Ussher: I could not agree more, actually,
and I think there is a general point to be made that we want capacity
in global food markets to rise and so to have distorting payments
and subsidies in the EU system acts against the proper functioning
of the food market and equating supply and demand in a way that
can bring prices down in the long run. So I feel that rather than
saying, "Where should this money be spent?" which we
can have a debate about later on, the important thing is to use
this opportunity to really ram home the arguments which people
may be bored with but which are very valid from our point of view,
that we need fundamental reform of the Common Agricultural Policy,
because only then can we find a system where supply and demand
can more easily be equated without prices having to rise to the
extent which they are.
Q26 Lord Haskins: This, of course,
relates to the WTO negotiations?
Kitty Ussher: Of course.
Q27 Lord Haskins: And it relates
to the Irish referendum, which I gather is going to be lost because
Mr Mandelson is going to get the farmers to vote "No"
because of the farmers' attitude towards Mr Mandelson's views
of WTO reform?
Kitty Ussher: I think it strengthens the general
comment, the pragmatic, moral case.
Q28 Lord Haskins: As long as the
British Government deals with the issue in a non-patronising way
so that we actually have a sensible discussion, rather than find
ourselves out on our own making rhetorical statements at a time
when there is good evidence for people right across the EU accepting
the need for reform.
Kitty Ussher: I will pass that on.
Mr Gray: Could I just add very briefly, on the
specifics of modulation you will probably be aware that in agriculture
councils under the French presidency the Common Agricultural Policy
healthcheck will be discussed and one of the proposals there is
to increase compulsory modulation rates within that. More widely,
as the Minister mentioned at the start, the Common Agricultural
Policy and the importance of reform is an extremely important
part of the debate on the Budget review which has just started
in the last year or so in Europe.
Q29 Chairman: In your Explanatory
Memorandum, you note that you work with like-minded Member States
to scrutinise closely the efficiency of the EU agencies. When
we discussed this briefly during the last oral evidence session
we could not really think of many like-minded states. Who are
our natural allies in this?
Kitty Ussher: I am delighted to be able to report
that we found quite a few in the end and were able to agree cuts
to allocations for agencies in the context of the 2008 Budget
negotiations. I was sitting around the table at Budget ECOFIN
at the end of November last year and there was actually an encouraging
consensus on the need to bear down on agency costs as part of
that. It was the net contributors you would expect to be particularly
vocal in their support—Sweden, the Netherlands, Austria,
France and Germany in particular.
Q30 Chairman: One must hope that
they will all still be there this time.
Kitty Ussher: I would hope so, yes.
Q31 Chairman: Have you made any progress
on agency costs?
Kitty Ussher: Yes, we have. As I have just said,
we did quite substantially in the context of the 2008 Budget negotiations.
I think I am right in saying also in the context of the discharge
of the 2006 Budget-
Mr Gray: Yes. Paul, I think, is the expert on
this one.
Kitty Ussher: It was also mentioned in the conclusions.
Mr Bunsell: Two things which were achieved were,
firstly, that last July a joint declaration was agreed between
Parliament and the Council requesting the Commission to provide
budgetary estimates on the staffing and the surpluses of agencies
along with its PDB figures for those agencies, and that enabled
greater scrutiny of agencies, and indeed we have seen the growth
of agency budgets slow down, possibly as a result. Secondly, quite
rightly, as the Minister says, in February Council conclusions
on discharge we agreed language which pushed for a review of the
efficiency of these agencies.
Kitty Ussher: Great progress. It is possible.
Q32 Chairman: But not yet cost-cutting?
Kitty Ussher: We did get some specific costs
cut in the current budget that we negotiated last year.
Q33 Lord Woolmer of Leeds: In the
draft of the Budget for 2009 how do the figures for agencies compare
with last year's?
Kitty Ussher: I am not sure I have the exact
figure, but Paul does.
Mr Bunsell: I do not have specific figures,
but in terms of commitment appropriations they are pretty much
stagnant. In terms of payment appropriations, they have decreased.
Kitty Ussher: We will continue to bear down.
We are emboldened by our success so far and believe there is scope
for further -
Q34 Chairman: If you could write
to us with the exact number, if it is not available now?
Kitty Ussher: Yes, we will write.
Chairman: Thank you very much.
Lord Watson of Richmond: I have a question about
the impact of the Lisbon Treaty, although Lord Haskins has just
explained to us that it will fall because of Mr Mandelson's intervention
in the Irish debate tomorrow.
Lord Trimble: I think the French Parliament
has just said there is likely to be more power.
Q35 Lord Watson of Richmond: More
power! Time will tell. Not very much time will tell! As you are
aware, some Members of the European Parliament Committee on Budgets
have pointed to a confusion really around whether the annual budgetary
cycle will in fact be subject to national Parliaments' subsidiarity
check procedure which is being introduced by the Lisbon Treaty.
It would be interesting to know what the Government's view is
on this.
Kitty Ussher: We do not have formal legal resolution
of it at the moment. However, I would say that it looks as if
it is all right, we think, the reason being that the Budget is,
of course, the process rather than the specific spending and we
think that the intention behind the new subsidiarity process concerns
the actual spending lines, the actual policies as opposed to the
Budget process.
Q36 Lord Watson of Richmond: Yes,
but your reading of Lisbon is that the subsidiarity test would
be applicable?
Kitty Ussher: To the Budget, no. I cannot give
you 100%, but it looks as if it is not.
Q37 Lord Woolmer of Leeds: The timetable
for the 2008/9 Budget Review has been extended by the Commission.
Do you think the Budget Review is still a priority for the Commission?
Kitty Ussher: Yes, I do. All the indications
that we have at working group and indeed at Ministerial and Commissioner
level are that it is extremely valid. We think the reason the
timetable was extended actually makes the converse point, that
it is an indication of the amount of interest there is out there
and they wanted to make sure that they were consulting properly.
So without prejudice to the results of it, we think that people
are committed to it.
Q38 Lord Woolmer of Leeds: So the
Commission will have received a lot of feedback in the Review,
will they?
Kitty Ussher: What they say is that the amount
of interest triggered across Europe is such that they wanted all
interested parties to be able to contribute and have their views,
so they therefore extended the deadline.
Q39 Lord Woolmer of Leeds: I should
know, and I apologise for the fact that I have forgotten, if I
did know, has HM Government submitted any views on this?
Kitty Ussher: An enormous amount of informal
views. We have not submitted a specific publication at this point.
We are just working out the best way to respond.
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