Examination of Witnesses (Questions 875
- 879)
WEDNESDAY 23 JANUARY 2008
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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