Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 875 - 879)


Lord Rooker and Ms Sonia Phippard

  Q875  Chairman: Good morning. Having finished wine, we are now on the CAP reform: the health check and looking forward. Use your opportunity now, if you want to say a few general things to begin with.

  Lord Rooker: I would like to, actually. I am conscious that the last couple of times I have been here I have not, because there has not been the need or I have not come prepared with a statement. However, given the nature of your inquiry and, in a way, the position of flux that the Government and the UK are in, it is a fairly short statement but it would set the scene for the other remarks that I am probably able to give in answer to your questions. Obviously, we very much welcome the inquiry. Given the nature of what you might want to know about today, there is a lot that I will not be able to comment on until we have seen the full legislative proposals in May and here we are, in January. At that point, we will consult our stakeholders of course, and there will be a full consultation; but obviously there is a good chance today to comment on the overall direction of travel. As you know, the Secretary of State set out a clear vision for farming at a conference last November, just across the river, outlining what we would like to see for farming and from farming. The industry earns its rewards from the market for quality, safety, environmental and animal welfare standards. We want it to be profitable and competitive, domestically and internationally; an industry that works together to meet the challenges it faces and to manage its risks; one that embraces environmental responsibilities, because those who own, manage and work on the land are at the front end of dealing with climate change; and certainly we have to manage the water and the soil better than we have probably done in the past. We see all those as issues which are essential for long-term economic success. We want an industry that is valued and rewarded by society for the environmental goods that it provides. We think that the Common Agricultural Policy reform is a key element in achieving the vision for UK and European Union farming. The CAP as it stands is expensive, wasteful and inefficient in providing ongoing support for farmers. It definitely distorts global markets, weighs farmers down with regulation—and I suspect most of you know that—and it certainly acts as a disincentive to farmers to maximise their competitiveness. Our long-term vision is to see the elimination of Pillar I of the CAP altogether, leaving public subsidy targeted at specific public benefits, such as the environmental enhancement through Pillar II. The health check is an important step in the process. You appreciate that it will not touch the overall size of the CAP budget, but it does offer scope to revise some of the distortions in the Common Agricultural Policy. We therefore very much welcome the Commission's health check paper, in so far as it is in line with our own vision. It has the potential to bring benefits for farmers and to improve the delivery of the environmental benefits, and we have to make sure that the proposals in May are ambitious in that regard. In order to bring such benefits, we believe that the health check legislative proposals should be underpinned by the following principles and aims: to reduce the regulatory burdens; give farmers greater control over business decisions; to cut further the trade and market-distorting nature of the CAP; to direct policy and public spending towards delivery of targeted public benefits. This will be a process of negotiation between ourselves, the Commission, other Member States and the European Parliament; and we hope that the Committee appreciates the need for caution in revealing what are our red lines and end-game tactics at this particular stage, in January 2008. There is no secret about what our feelings are on many aspects of the CAP. For example, we want to see an end to coupled payments in all Member States to create a more level playing field and give farmers full autonomy over their production decisions, so that they can compete in a global market. We would like to see the phase-out of export subsidies and intervention, the abolition of milk quotas, and the abolition of set-aside. We obviously have to ensure that we mitigate the environmental effects of aspects of set-aside. These measures have distorted trade, increased costs to consumers, and inhibited farm competitiveness. We would further like to see modulation of funds from Pillar I to Pillar II towards targeted rural development schemes. Beyond the health check, the Budget review—which will come much later, of course—provides the important opportunity for the European Union as a whole to examine the CAP closely and to consider how that policy should be shaped post-2013, to make sure that it is fit for purpose, delivering, we think, a greater benefit for European Union taxpayers, in line with our vision. In particular, the CAP continues to cost European taxpayers substantial amounts of money. In 2005, Pillar I of the CAP cost the European Union Budget more than €42 billion and placed an additional burden on consumers. We will engage with other Member States, the Commission and the stakeholders in the coming years to ensure that negotiations on the next Financial Perspectives address these concerns. I hope that statement gives a flavour of how we wish to proceed, in somewhat general terms but also with some specifics; because the timetable we are involved in is such that—while the health check document was in November last year—it will not be until May this year that we get the legislative proposals. We intend to get political agreement by, say, November; and I understand that it is agreed that there should be a conclusion of the health check exercise during the French presidency, which will end on 31 December.

  Q876  Chairman: Thank you very much indeed, Minister. As you have said, we are here talking in January, waiting for legislative proposals in May, and I recognise the difficulty that creates. This is a public, on-the-record session. Would it be helpful if we were perhaps slightly more informal and stopped the public record for a ten-minute review at the end of the session?

  Lord Rooker: I have no objection to that, if we are in a position to be able to assist the Committee. That is what we are here for. We are from the Government. We have come to help.

  Q877  Chairman: That is very worrying! Two of the specifics that you have mentioned—the abolition of milk quotas and set-aside—we have almost subconsciously ticked the boxes on those and seen them as having been achieved, in the bag, as it is. That is the general impression we have had from everybody we have spoken to. There is that assumption around. Perhaps I could go beyond that and look at the extent to which there is a shared vision at a UK level. We have taken evidence not just from the English but from the Welsh, the Irish and the Scots—a delightful experience!—and what I am asking you really is the extent to which you think that, in approaching CAP reform and the health check, the devolved administrations are signed up to the type of vision of the Common Agricultural Policy that was in your 2005 document, and is clearly still driving policy with Defra ministers. I suppose the specific question is whether the devolved administrations are equally keen to get rid of Pillar I direct payments as you are.

  Lord Rooker: It would be daft for me to sit here and say that we are all 100% in agreement, bearing in mind there have been political changes in all three of the devolved administrations since the Vision document. A year ago, the administrations were completely different. There was still direct rule in Northern Ireland, so there was a government direct-rule minister. In Wales there was a slightly different coalition arrangement, as indeed there was in Scotland. In fact, therefore, the agricultural ministers in the four countries that make up the United Kingdom are all from different political parties. That does bring a slightly different perspective. Generally speaking, though, in terms of reform, we are rowing in the same direction; indeed the new administrations are looking at their views. I am not saying that they would be exactly with us on all the minutiae of the detail, but in terms of wanting to get reform, better value for the taxpayer, I do not think there is a major difference. There clearly will be differences, maybe with the speed of process, say, to abolish Pillar I and moving to Pillar II, and the issue of the use of national envelopes, which Scotland uses now in one respect but nobody else does. There is the issue of modulation. There will probably be different views on that. However, I am not aware, from my daily existence or the discussions I have had with them relating to other matters—essentially, disease control in food animals—that we have major fundamental differences that will inhibit our negotiating as a UK Government with the other Member States.

  Q878  Chairman: Do you think that you will be able to incorporate it in the UK, with the Scots' emphasis on national envelopes and their concern to maintain something like the beef calf scheme and things like this?

  Lord Rooker: Certainly as far as reform is concerned, whether it is the national envelopes or looking at other aspects, what we do not want through the back door are a load of new schemes which are all there as support mechanisms, putting back the worst of the CAP. We are on guard for that. Quite clearly, in the present situation, with what occurred during the summer of last year in the meat industry, I fully understand why the Scots and the Welsh were taking a slightly different view about support mechanisms, particularly with what happened on the hills. They are quite entitled to do that, as long as they pay for it. We do not rule differences out but what we will be very mindful about and watchful of—and this also applies to other Member States—is that we do not want to rebuild support mechanisms: production subsidies being put in through the back door, really.

  Q879  Viscount Brookeborough: In your Vision—and you have just made it clear again that you would like to see the end of Pillar I, namely no direct payments and no market management—if there is to be a compromise in the future or as part of a transition process, and there were to be a residual level of Pillar I expenditure, what in your view should it and could it be spent on?

  Lord Rooker: Our objective is to see the end of Pillar I. Going back to the old-fashioned way of running the Common Agricultural Policy, Pillar I is money straight into the bank for no particular purpose whatsoever. Unlike the Pillar II programmes of environmental goods, environmental benefits, it simply distorts the market; it distorts businesses; and shields people from the realities of competition. Our objective, therefore, is to do that. We are some years down the road; we are not talking about this in respect of the health check. This is for the future. We are talking about 2015-2020. That is some considerable way away. By and large, the general view—and we have always made this clear, there is no secret about this—is that we do not see a long-term future, for the foreseeable future. I cannot really speculate on what they might be used for. Obviously, moving from where we are now to, let us say, the abolition of Pillar I, there would be substantial transition periods. No one is talking about turning this off overnight. That would be catastrophic for some businesses; for others it would not make any difference, because they are getting such a tiny amount. From the public's point of view, however, there is more and more exposure as to what their tax money is being spent on. If we can show as a government, and indeed the farming industry can show, good environmental benefits—mitigating climate change, the way we are looking after the soil, keeping the water clean—these are all good things that can be pointed out; whereas at the moment for Pillar I you cannot directly show any public benefit for what is, for England, £1½ billion. It is not an insubstantial amount of money.

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