Select Committee on European Union Minutes of Evidence


Examination of Witnesses (Questions 880 - 899)

WEDNESDAY 23 JANUARY 2008

Lord Rooker and Ms Sonia Phippard

  Q880  Viscount Brookeborough: One could say that it is all very well for Defra, settled in London, and that most of England is an entirely different type of countryside to those areas on the periphery, the devolved areas—being Scotland, Northern Ireland and Wales. To what extent do you think that the environment should continue to be appreciated, as a result of some grazing or some farming in those areas? If that is so, can a future Pillar II in lieu of Pillar I sustain it? Or are you saying—which is undoubtedly true—that animals produced on the Isle of Skye, the Hebrides or the hills, cannot be produced in England?

  Lord Rooker: First of all, if you take the situation regarding, let us say, Northern Ireland, they have a land border with another Member State; obviously, the consequence is vastly different schemes. I think that the thrust will be towards eliminating the subsidies for which they are paid for no particular purpose.

  Q881  Viscount Brookeborough: But there is a purpose where sometimes the environment requires some of this marginal land to be grazed, rather than simply left.

  Lord Rooker: In that case it ought to be part of a scheme to do it and based, for England's purposes—it is slightly different in Northern Ireland, Scotland and Wales—on some kind of scheme, some kind of arrangement with an end output, so that you have something you can measure; as opposed to now: simply saying, "I've got an area of land that is farmed, in good agricultural condition, and I demand my money". That is not quite the long-term vision that we have. In Pillar II and also through the RDAs, we have lots of arrangements for environmental works and stewardship of the environment. I freely admit that, in the hills, there is very little you can do. The sheep do a really good job for us to make sure the landscape is maintained, as man-made. The city-dwellers like it. They will be the first to complain if we allow it to be covered in bracken. Therefore, there is an environmental benefit to farming the hills, and by and large done with sheep. However, that is something you can measure and I think that is a much better purpose. I think that farmers are much more comfortable in having the money flow when there is an output, because the output is there. It may not be the output in terms of tonnes of sheep meat to market, but we measure it in a different way and it is much more acceptable to the public as well.

  Q882  Lord Plumb: May I ask a supplementary? If the Lisbon Treaty goes through, qualified majority voting will include agriculture, which it has not done in the past. A lot of these countries, structurally, are beginning to think in terms of development and therefore using the Pillar I fund for structural development. In fact, it should not be available for Pillar II use. Will there not be a difference of opinion here at the end of the day, when you get around the table before May and other countries say, "We must continue this fund for a considerable amount of time, in order to make our structural improvements effective"?

  Lord Rooker: I might be wrong, and I will take advice from Sonia, but I do not think that the May issue is relevant. It is long-term, abolishing reliance on Pillar I to Pillar II. That is part of the budget post-2013; that is not relevant to the health check, which we will be looking at from May to the end of this year. It is a much longer period for discussion with the 15 Member States plus the new entrants to the EU. It varies, particularly with some of the new Members; the structure of their farming is completely different. However, if they all joined on the basis that there is a load of money out of Pillar I, then they will be sadly disabused because there will be a different arrangement. It is best that they share the lessons we have learnt, in a way, from running the CAP the way we have done, which has been anticompetitive and not beneficial. However, this is a long-term discussion, after the health check and then into the Budget, which will be post-2013. We are therefore talking about 2015-2020 for that kind of arrangement, and I suspect there will be a phasing-in and a phasing-out. It is not something that we are under pressure for to deal with this year. It is useful to let the landscape be painted, though, so that people know where the UK is coming from. We are not alone in this. At the end of the day, we will have to face the World Trade Organization and other matters, keeping our farmers and food producers competitive and able to compete on a global scale. At the present time, we are not able to do that.

  Q883  Lord Palmer: You virtually answered my question in your opening remarks and in replying to Lord Brookeborough but, in your opinion, what proportion of Pillar I spending should be transferred to Pillar II and what proportion should disappear altogether? I think I understood you to say that basically 100% should go almost at once.

  Lord Rooker: No, I have not implied that at all. I do not carry around all the figures for the UK in my head but, in terms of England, as I have said, it is just over £1½ billion. I am not proposing that overnight we withdraw £1½ billion from what is, in effect, support to farmers in England. No, this requires long-term change. I do not have a figure and the reason, as you will appreciate, is that there is an objective to reduce the proportion of the EU Budget spent on the CAP. It is around 45% or something of that order. It is a phenomenal amount of money. There will be a view amongst Member States, I suspect, that we have seen Pillar I go, and " ... Right, we'll have that money" and that gets moved to Pillar II and maybe other schemes. There will be some countries, and treasuries in some countries, that will say, "Hang on a minute. Perhaps we don't need to raise taxes as much. We'll have that money and take it off the budget". There will be all kinds of negotiating arrangements. At the present time, I understand that Pillar II—if you take all the various schemes—is about 20% of the CAP funding. The single farm, direct, inefficient payments form 80%. What we want to do is get rid of those. I am not in a position to say how much of that we would like to see go over the Pillar II and how much we would like to see wiped off the budget altogether; but there will be discussions about this, because there will be an attempt to reduce the overall size of agriculture in the EU Budget. That is not a very precise answer, I am afraid, but it is the one I can give you with some safety for my own skin!

  Q884  Chairman: We did invite the Treasury to come along and talk to us but, they did not seem to be particularly keen to do so.

  Lord Rooker: I had a chat earlier about that. For all practical purposes, I am the Government and I speak for the Government. I have a standard phrase here, and you read it in a letter that you have had from the Economic Secretary, that "No decisions have been taken on how the Government intends to approach the Budget review or the Commission's process". I cannot go any further than that.

  Q885  Viscount Brookeborough: You seem to be quite optimistic, Minister, that maybe there would be a reduction in the total budget, but what we have seen in other sectors—be it the wine sector—is that actually the deal in the end was that there would be no reduction in the budget; it would merely be used in different ways, be it a different Pillar.

  Lord Rooker: Yes.

  Q886  Viscount Brookeborough: Do you have good grounds, from discussions with other countries, for feeling that we will succeed?

  Lord Rooker: No, we just have our vision and our attempt. The opportunity does not come along very often to have a look at the fundamentals of the EU Budget. The last one was dealt with and this will be dealt with at, let us say, a much higher political level than my humble position. You are quite right: it will probably be the result of trade-offs on other issues when the time comes.

  Chairman: Let us move on to rural development.

  Q887  Baroness Jones of Whitchurch: You have emphasised several times now the importance that you see in Pillar II in the future, and you have talked in particular about the increasing environmental responsibilities that you see being carried out under Pillar II. In fact, we were talking before you arrived about what Pillar II really meant and what rural development really meant, and of course it is much broader than just the environmental aspects. There is the economic aspect, the cultural aspects, and others as well. Do you think that we are in danger of overloading Pillar II with a whole lot of new responsibilities, way beyond what it was originally intended for, and really way beyond agriculture in the way that we had originally envisaged it?

  Lord Rooker: In some ways, the way Pillar II operates—the concept and the operation, as I understand it—is flexible enough and broad enough for us to deal with virtually all the objectives that we would want to deal with. We look at it through, on the one hand, the stewardship schemes that are funded through Natural England and the rules there relating to the work that is done by farmers in respect of the environment; but also money is channelled through Pillar II, through the Regional Development Agencies, through various organisations that would not be related to the environment but related to rural life in general. There is a host of schemes out there. In fact, they are so complicated that people set up businesses to explain the schemes to people. In some ways, I do not see that as a criticism; it shows that we think Pillar II is broad enough and flexible enough certainly to be able to cope with the Rural Development Programmes that we would wish to operate. Indeed, we have a very substantial Pillar II Rural Development Programme over the next five to seven years, running into nearly £4 billion, reaching all kinds of activities. We do not see a threat of it being overloaded. I do not deny that, if Pillar I goes—and we are obviously talking about a decade ahead—and Pillar II changes substantially, then certain Member States, and we would be no different, would start to look at delivery mechanisms. As we are now, do we have the machinery of government right for delivering these programmes? Obviously, if we have a different system we will have a look at it; but, at the present time, it is flexible enough and broad enough to achieve our objectives. However, I am not saying that would be the case if, for example, half of Pillar I was saved for the taxpayer and the other half went over the Pillar II. That would be a substantial amount of money—I am just thinking aloud on that—and you would start to look at how you deliver such programmes. Would the present arrangements be sufficient, and also what would the programmes be? At the present time, however, we do not have a problem with it.

  Q888  Baroness Jones of Whitchurch: Could a lot more of that be done by individual Member States? Why do it at a European level anyway?

  Lord Rooker: That is part of the other issue. Looking at the budget, I keep seeing this word "subsidiarity" and occasionally I ask, "What have we got back? What do we do now that was done for us by the EU some years ago?". Examples are given, but there is a lot more that we ought to be able to do that does not distort competition, and actually makes it fit for purpose in the individual states. We see that here. Given the fact that it is a devolved issue in the UK, we have enough experience of dealing with different programmes in Wales, Scotland and Northern Ireland, and we can build on that. It can be dealt with at a local level, therefore. I absolutely agree with that. There is no reason at all why Brussels should be dictating the details of Rural Development Programmes—as long as you have a programme, and the big picture is bought into, that we want the European Union to be concerned about the economy, if you like, and quality of life in rural areas.

  Q889  Chairman: Several decades ago, when I had a professional interest in rural development, my conclusion was that, if you were serious about rural development in a broad sense, the last thing you should do was to put money into it through farmers or agriculture. Surely the problem with Pillar II is that it does not give you that broader flexibility to put money and support into the rural economy beyond the farming/agricultural route?

  Lord Rooker: That may be true, but the experience we have through the RDAs anyway, outside of Pillar II work, is in creating and sustaining rural business and innovation, to make sure that all our towns and villages do not look like chocolate box lids, where people commute in and out and there is no vibrancy of life. That is exactly the opposite of what we are trying to do, but we are not necessarily using Pillar II for that. However, if in the EU context rural development became bigger then, as I have said, we would look at how we would deliver that; but we are not relying exclusively on Pillar II for the work that goes on there. You are absolutely right. I have forgotten what the figure is now, but it is confined to 1 or 2% of people involved directly in agriculture—who live in the rural areas. I think it is 25% of people who live in rural areas, although the definition can be argued about. So there are lots of other issues that have to be dealt with. The social infrastructure in those areas has to be maintained and enhanced. That is important, and it does not necessarily come through Pillar II.

  Q890  Viscount Ullswater: You have almost answered the question I was going to ask, which was basically, if you are going to get rid of Pillar I, why not just have a Rural Development Programme and scrap CAP altogether? Perhaps I can phrase it in a slightly different way, however. If this is the trend—and in your Vision I think that is the direction in which you are looking—what sort of percentage of Pillar II, however it is funded, would go back into agriculture under the sort of scheme Lord Brookeborough was mentioning, namely access to marketplace for cows from the Orkneys, grazing the uplands, or the public benefit of keeping the landscape and the environment? What sort of percentage of that do you think would go back into agriculture, back into the farming side of things?

  Lord Rooker: I cannot give a percentage, but I do not envisage reductions in that area. Obviously, the public good that the public will pay for in terms of the landscape, looking after the water, the soil, and the visual amenity, if you like—there is a case for doing more on that. That can really only be delivered through the farmers in that sense, when you are looking at that aspect of it. I do not envisage less, therefore; but I am not in a position to put a percentage on it. We have something of the order of half the farmers in England signed up to stewardship schemes now. We are getting a lot of benefit from it and it has been a good experience for them to be in those schemes. In fact, for the High Level scheme—mainly because of financial restrictions—we had a queue that we could not accommodate, because of the budget problems that arose last year. Do not get me wrong: I am not seeking to come here and say that we want to chop off this source of funding. There is a public good argument. There will always be people—I suspect those who control the overall budgets—who might start to question, "What is the public good of looking after this?" and I think it is the job of everybody else who is involved in this to put a price on protecting the landscape. However, the effects of climate change and mitigation are upfront for everyone to see. All this is very much tied in with that: making sure that we grow the right crops, look after the soil, protect the water—where water will be a serious problem long-term. I cannot put a percentage on it, but I do not see any less than that. However, I am not in a position to play with any figures, because I have no information in that respect.

  Q891  Lord Brooke of Alverthorpe: Perhaps I may refer to A Vision for the Common Agricultural Policy, the 2005 document. Following this through, understandably you cannot put figures on it, but in Chapter 3 you did in fact pose a whole series of questions. The first range of them was on the topic we have just been covering. You go on to say, "Indeed, the rural economy could benefit significantly from shifts away from general agricultural support towards more targeted rural development". We are now nearly three years on since that was first written. I am wondering, therefore, if you are in a position to put a little bit more flesh on the bones there. While you cannot give figures, can you give some views on the targeted topics you would want to go for, beyond the ones you have just mentioned—because they were essentially of farming?

  Lord Rooker: Actually, I do not think I can help. I do not think that I have come with a list on that, unless I have misread my notes. The fact is that we have only just announced the new programme. I think there was a delay in the Rural Development Programme because of the problems in Europe about getting the budget agreed. The €3.9 billion programme was only announced—that is for England, by the way, which would double the size of the previous programme—and I think this is probably the first year that we are involved in that. I am not in a position to give a report back on that. Obviously, there will have to be a report back because it is a large programme. This was announced just before David Milliband would have left the Department, if I remember rightly. I cannot give you a list now, unfortunately, because we are in the first year of that programme, which, as I say, is twice the size of what we have done previously.

  Q892  Lord Brooke of Alverthorpe: I am coming new to the subject and I have been reading—

  Lord Rooker: I am brand-new to the subject, by the way!

  Lord Brooke of Alverthorpe: I mean in Europe. I am just wondering when, on the Chapter 3 questions, the Government will have reached the stage where it will start to answer some of the questions.

  Chairman: Let us move quickly on!

  Q893  Lord Plumb: I am not brand-new to the subject! I was quite impressed by your comment about the stewardship scheme and the fact that farmers have responded very well. I think it is encouraging that there was a queue of farmers wanting to come in, who found it difficult to get in. However, last year on the Entry Level scheme there was a decision to stop the management tools, and a lot of people who applied to get into the Entry Level scheme this year have been denied the opportunity to follow it through. The Entry Level scheme, of course, is seen to be the second pillar, if you like, of the stewardship scheme as a whole. I think that a lot are beginning to find the benefits of that—and I do speak from a bit of experience of it—and are disappointed that they cannot get into the scheme because the management tools have gone. Why?

  Lord Rooker: I do not know. I will have to find out and write on that. It is one that I cannot give a direct answer to. I just plead guilty. Even though I am farming Minister, it is not part of my day job, in terms of Natural England. This was a policy that was not decided by the UK Government in the first place.

  Q894  Lord Plumb: I do know that.

  Lord Rooker: It was something we had next to no control over, really.

  Q895  Lord Plumb: As I understand it, it was a decision taken in Brussels.

  Lord Rooker: In Brussels by the Commission, yes.

  Q896  Lord Plumb: I have asked the question there and I have not had an answer. I just wonder where this was blocked. It seems strange to me, because it was such a good scheme.

  Lord Rooker: I do not know the background to the Commission decision, but I will certainly make it my business to find out and report back to the Committee with an answer.

  Q897  Chairman: I have to say that if Lord Plumb cannot get it out of the Commission—

  Lord Rooker: I was going to say that, but I decided against it!

  Lord Plumb: That is not for the record!

  Q898  Baroness Sharp of Guildford: If we are looking at the current budget envelope, in a sense the division between the monies in Pillar I and Pillar II are important—as we can see from what you have already been saying—because to some extent the current spending under Pillar II does help to effect the transition from Pillar I to Pillar II here. How do you respond to the accusations that have been made that the UK Government is partly responsible for insufficient funding being available under Pillar II, because it pushed cuts through in the last budget deal under the UK presidency, which meant that in effect there was not really enough funding there under Pillar II?

  Lord Rooker: First of all, in reality we ended up, as far as our own programme was concerned, with double the size of the programme in England. We had the presidency at the time and it was a question of trying to get compromises in order to get the decisions through. I do not accept that we therefore have to take any blame for that; on the other hand, we do take responsibility for being in the chair at the time. We had 25 Member States and we had to try to find a workable solution. That was our responsibility. However, the reality is that David Milliband announced a programme that was double the previous programme in respect of England. I do not think it is a question of blame and responsibility. We had responsibility because we had the presidency and our job was basically to bring the 25 to the table and get as good a deal, where people were as content as possible. That means give and take, at the end of the day.

  Q899  Baroness Sharp of Guildford: Making trade-offs and that sort of thing.

  Lord Rooker: It does.


 
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