Agriculture Bill [Lords]

§ The Minister of Agriculture, Fisheries and Food (Mr. John Selwyn Gummer)

I beg to move, That the Bill be now read a Second time.

Our farmers and our food industry want to be able to compete effectively in the European Community and elsewhere in the world. The Bill will help them to do so by removing present disadvantages and bringing the industry up to date.

When the milk marketing scheme was introduced 60 years ago, its very characteristics as a monopoly were hailed as the salvation of producers. Times have changed, however, and the scheme is now the farmer's gaoler not his saviour.

What was essentially a commodity market for whole milk, butter and Cheddar cheese is now a sophisticated consumer market. Who would have thought 60 years ago that nearly half the liquid milk sold would be skimmed or semi-skimmed? In just over a decade, consumption of these types of milk has gone from 1 per cent. of the England and Wales liquid market to 44 per cent. Who would have thought, too, that butter consumption would have fallen away dramatically, while consumption of cream, yoghurt and fromage frais was rising steeply? Indeed, who in this country would even have heard of fromage frais in 1933?

There have been other changes, too. Our home market now reaches over much of western Europe, which means that, if United Kingdom-based processors are to compete, they must supply what the consumer wants, or others will do so instead. Farmers know better than anyone that we cannot produce as much milk as we should like, or even as much as we can use. Therefore, restricted by quota, we simply have to put our milk to the most productive use. We cannot go on exporting bulk commodity products and getting low prices for them, and importing huge quantities of high-value processed products, giving those who export from other countries the benefit of our market, while we do not get the proper benefit of theirs. It is ridiculous that these low-value exports should have had a priority call on the nation's milk supply, but that is part and parcel of the present system.

§ Mr. Dafydd Wigley (Caernarfon)

The Minister is absolutely right. The creamery in my constituency could produce four times as much cheese as it does if it had the milk. Does he accept that, whereas in the 1930s undoubtedly the state monopoly of the Milk Marketing Board worked wonders and saved the industry, there would be real dangers if we now replaced it with a private monopoly without safeguards? Can he give an assurance that, with regard to such things as national milk records and milk testing, there will not be a monopoly in the hands of Milk Marque; there will be an even-handed approach to all companies and an even pricing regime; the assets of the milk marketing boards will not be automatically transferred; and particularly that the confidential 790 information that they have will not remain within Milk Marque, giving it an advantage in the marketplace over other companies?

§ Mr. Gummer

The hon. Gentleman is right in his assessment of the change and of the need to make sure that, after the change, there are not unsuitable monopolistic preferences for one organisation rather than another. When the milk marketing boards produce and present their proposals, I shall look at them very carefully, and it will certainly not be my intention to give an unfair advantage to any organisation, although I shall want to ensure that there is proper continuity between the present and the future. I cannot rule on propositions that I have not yet received, but the hon. Gentleman knows me well enough to realise that I would have no intention of putting individual producers in a position in which they were unable to make a fair and reasonable decision for themselves.

As the hon. Member for Caernafon (Mr. Wigley) has said, the real question is not whether the scheme should go, but how it has lasted so long. It was excellent to begin with, but it is increasingly out of touch with reality. That is not simply the Government's assessment; the boards have long recognised that the scheme was falling apart at the seams in the face of changing markets, legal challenges and commercial pressures. Nevertheless, those 60 years of history meant that it was not easy for the boards to propose the ending of the scheme and that deserves recognition and praise.

We now have proposals for change from all five milk marketing boards. The Bill seeks to build on their initiative by enabling them to submit formal reorganisation schemes for Ministers' approval. That approach reflects the Government's desire not to sweep aside what producers have built up over the years, but to give their boards a major say in the future shape of the industry.

It has been my view all along that there is a balance to be struck between the veritable fact that these boards have had the support and encouragement of producers for many years—they have done many good things; it would not be right for us to ignore their experience or not to listen to what they have to say—and the fact that there are very real problems in the market at the moment, so we cannot, of necessity, agree in advance to accept everything that the boards suggest. There has to be a balance, and the hon. Member for Caernarfon was perfectly right in trying to reach towards such a balance; that is what we are seeking.

§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Many of us represent rural constituencies which are extremely difficult to pronounce, as the Minister knows only too well. My constituency is Carrick, Cumnock and Doon Valley.

The Minister says that he does not accept everything that is put forward, but the Scottish milk marketing board put forward a scheme for a vertically integrated co-operative supported by the NFU and the producers. I was given to understand that the Under-Secretary of State for Scotland, the hon. Member for Dumfries (Sir H. Monro), who is sitting next to the Minister, also supported it. Yet because it was referred to the Monopolies and Mergers Commission, the Government said that it could not go ahead, and the whole thing was rejected. That was 791 taking no account of what the producers think. Why have the Government taken such a dictatorial attitude in Scotland?

§ Mr. Gummer

I do not want to start a note of dissent, and I want to stress what a mild-mannered person I am on these issues. It is all right for the hon. Gentleman to say what he did, but I thought that he supported the Monopolies and Mergers Commission and wanted there to be an arrangement whereby the consumer was protected. It was not the Government who rejected the scheme; the Monopolies and Mergers Commission's recommendation suggested that what the board proposed was not conducive to consumers' interests. That is not for me to gainsay. Since the statement was made, my hon. Friend the Under-Secretary for Scotland has in no way suggested that we should override the Monopolies and Mergers Commission. Had he or I done so and told the House that we did not agree with the Monopolies and Mergers Commission on this issue, hon. Members on both sides of the House would have objected.

§ Mr. Foulkes

Will the Minister give way?

§ Mr. Gummer

I should move on, as I think I have been clear on the issue, but I shall give way to the hon. Gentleman.

§ Mr. Foulkes

I shall not argue that there should be another Monopolies and Mergers Commission inquiry, but did not the Government refer the scheme to the Monopolies and Mergers Commission because they did not want it to go ahead? Were they not under pressure from Robert Wiseman in Scotland, which wants to undermine the scheme? No doubt that company has some influence in Scottish Conservative circles and is trying to undermine the scheme that the NFU suggested, which is supported by the vast majority if not all the milk producers.

§ Mr. Gummer

The hon. Gentleman is not right. The board went to the Office of Fair Trading which referred the matter to the Monopolies and Mergers Commission. The hon. Gentleman should not see conspiracy where there is public accountability of a sort that has always had bipartisan support. I suggest that we accept that the proposals by the marketing boards ought to form the basis of the way in which we proceed, but that does not mean that every detail of the boards' present proposals will necessarily be approved.

There are important considerations to be taken into account as laid down in the Bill. There is the allocation of boards' assets, as the hon. Member for Caernarfon said, and the prospect for the development of competition, the interests of consumers and producers and whether the proposed trading practices of successor bodies take account of the interests of milk purchasers.

The boards' proposals must be considered on their merits when they are formally submitted to Ministers. For that reason, I am not able to tell the House whether I find any particular element of the England and Wales boards' proposals acceptable. The Secretaries of State for Scotland and for Northern Ireland will find themselves in the same position in relation to their boards' proposals and many elements of the present scheme mean that that is inevitable because of the quasi-judicial position that Ministers have in the administration of a scheme which will remain in force until it is replaced.

§ Mr. John Marshall (Hendon, South)

Has my right hon. Friend seen that it was pointed out in The Grocer of 20 March 1993 that Milk Marque had asked processors to say by 15 April this year how much milk they would want in the year 1994–95? Does he not realise that within Milk Marque there are those who have been monopolists and wish to remain monopolists, and who are rather indifferent to the interests of the industry and the consumer?

§ Mr. Gummer

I have seen the point that my hon. Friend raises. I hope that he has seen the press release by the milk marketing boards correcting the interpretation of what they have done and making it quite clear that they have no intention of acting in a way that would be contrary to the consumers' interests. I can assure my hon. Friend that I will make sure that they continue in those terms and that the boards have recognised that that must be made absolutely clear.

My hon. Friend has raised an important point and I hope that hon. Members on both sides of the House will read carefully what the milk marketing boards have said, so that there is no mistake about what was meant by what they said and how they mean to proceed. I assure hon. Gentlemen that I shall make sure that there is no such mistake.

I am, however, confident that we shall achieve an orderly change to the more competitive marketing structure within which producers and processors alike will be able to take advantage of normal commercial freedom.

For the first time in 60 years, producers will be free to sell to whomever they want, and processors will be free to buy direct from producers or other groups. I welcome the fact that a number of competing organisations seem likely to be set up. Both Northern Foods and Nestlé announced important initiatives in this respect. It is in everyone's interests for a truly competitive market to develop, not only in Britain, and to enable those competitive bodies to sell throughout the European Community.

I do not mind at all if people in Britain buy dairy products produced in the rest of the Community, as long as we are selling at least as much in the rest of the Community. This is not a "buy British" campaign; it is a desire to see that the French have the opportunity to buy fine British products, just as we have the opportunity to buy what the French produce. We must put ourselves in a position to be able to do so effectively.

The ending of the milk marketing schemes will amount to a major deregulation measure, replacing bureaucratic control with freedom of action, and will liberate much creative potential, which is suppressed at the moment, and help our processors and producers to challenge foreign competitors to provide what the consumer wants.

Two years ago, the present change in attitude would have been unthinkable. At that time, the majority of producers were full of apprehension about the idea of change. Now the debate is not about whether change should take place, but about the form that it should take. Many producers are actively considering the new opportunities that are about to open up for them and the Labour party has changed its view on the matter, in response to that changed attitude. There is a growing consensus on the subject.

§ Mr. Brian H. Donohoe (Cunninghame, South)

At several meetings with the Scottish Dairy Trade Federation and farmers' organisations, I have heard great concern 793 expressed about what will happen to the boards' assets on their dissolution. Can the Minister give some information or a sign of what he intends to do with their assets?

§ Mr. Gummer

The hon. Gentleman is right to point out that concern, but I cannot make a decision until I see the proposals of the English and Welsh boards and until my hon. Friend the Under-Secretary of State for Scotland knows the views of the Scottish boards. We shall then seek to make a decision that properly reflects the interests of the various parties. We have already made a statement in England and Wales about the future of Dairy Crest's assets, which will be entirely separated from the milk marketing boards for England and Wales. A decision will have to wait until we know the boards' proposals, as they will propose different things. As that is the way in which the law is set out, it is right for us to follow that course. I assure the hon. Gentleman that I shall carefully consider the proposals and the concerns of producers, who make up the boards and have an interest in how their assets are dealt with.

Although there has been a great change in attitude on milk, the situation is different with potatoes. I appreciate that producers and others have had less time to think things through and to accept the idea of ending the potato marketing scheme.

§ Mr. D. N. Campbell-Savours (Workington)

rose—

§ Mr. Gummer

I shall not give way yet, as I have some comments to make which I am sure that the hon. Gentleman will want to hear.

§ Mr. Campbell-Savours

Before the Minister goes on to the subject of potatoes, could he tell us whether he has ruled out any arbitration procedure on price in the deregulated milk market?

§ Mr. Gummer

In advance of the boards' proposals, I would not like to say that I have ruled out anything of that sort, but I see no role at the moment for further statutory interference in the way in which the market will operate. I shall certainly not be dogmatic, as I am not a dogmatic person, but I would not want to suggest to anyone that I have that high on my list of priorities, and I do not think that I should be led down that route, although the hon. Gentleman may be able to change my mind.

On potatoes, I appreciate that there has been less time to think things through and to accept the idea of ending the potato marketing scheme, but I think that the House will agree that, in a single market, where there is no possibility of restricting imports, it would be ridiculous for our growers to be shackled by a quota system while everyone else in Europe could grow what they liked, where they liked and for as much as they liked.

I can suggest only one example to the House. Just suppose that my hon. Friend the Minister of State and I returned to the House from a meeting in Brussels saying that we had triumped and reached an agreement on vining peas, whereby every country in Europe could grow as many vining peas as it liked, except the United Kingdom, where production would be restricted. I do not think the House would regard that as a triumph. Hon. Members would say that the agreement discriminated against the United Kingdom. They would say that it would not be long before pea processors found that they had better 794 move their processing factories from the United Kingdom, where production was restricted, to somewhere that it was not.

Frankly, I have not been fighting against discrimination for two and a half years—after those proposals of Mr. MacSharry—to reintroduce it and to cause this country self-inflicted damage, and that would not be an acceptable way to meet the needs of the potato industry.

§ Mr. Alex Salmond (Banff and Buchan)

rose—

§ Mr. Gummer

I shall be happy to give way, but, before the hon. Gentleman gets too uptight, I just want the House to recognise that one could replace the word "potatoes" with any other agricultural or non-agricultural product. Producers in this country have to compete in a single market and one cannot prevent imports, so it would be difficult to suggest that it would be beneficial to them to reduce their ability to compete, and it does not make sense.

§ Mr. Salmond

Has not the Minister almost conceded that the vehemence of the attack by him and the Minister of State on the potato marketing scheme is not widely shared in Scotland? In fact, many of us believe that it is not even shared in the Scottish Office. Are we going to hear the viewpoint of the Scottish Office, or is the Scottish Office Minister going to sit there with his face a picture of misery while the Minister once again rides roughshod over Scottish interests?

§ Mr. Gummer

As this is the United Kingdom, I hope to apply myself to the loss of market share for the Scottish seed potato industry, which is a matter of great concern to the United Kingdom as a whole, as it is an important part of the potato industry and an important export earner.

I hope that the hon. Member for Banff and Buchan (Mr. Salmond) will listen carefully, because I am not speaking merely on behalf of England and Wales but for the entire United Kingdom. Ministers representing the United Kingdom, including Scottish Office Ministers, are committed to a healthy potato industry throughout the United Kingdom.

The hon. Member for Banff and Buchan is a member of that great European party, the Scottish National party. Is he proposing that the single market—on which the Scottish nationalists are so keen and which they are supporting throughout Scotland and to everyone else who would hear them—will work better if one country suggests that its producers should be uniquely shackled to a system that does not affect any other country? I have rarely heard such an argument for nationalism before. It is nationalism without any advantage to the nationalists.

§ Mr. John Home Robertson (East Lothian)

rose—

§ Mr. Gummer

I shall not give way to the hon. Gentleman for one moment, as I want to read my next paragraph, which might help him.

I wish to examine carefully the proposals put forward by those who do not like my suggestion. In the single market, we need to enable our producers to compete on level terms with their continental counterparts.

§ Mr. Home Robertson

What about a level playing field?

§ Mr. Gummer

I shall come back to that in a moment, as there was a ten-minute Bill on the subject this afternoon.

During the past 10 years, imports of processed products, which are the growth area of the market, and of 795 seed potatoes, which are particularly important to Scottish growers, have been growing. We need to reverse that trend, and I am sure that our growers can do so if they are freed from the shackles of the quota system.

Several claims have been made about the existing scheme which need to be countered, and I wish to list them before the hon. Member for East Lothian (Mr. Home Robertson) intervenes and doubtless produces an extra claim.

The first claim is that the high consumption of potatoes in Great Britain is somehow linked to the existence of the Potato Marketing Board. The argument may seem obviously ridiculous, but I hear it regularly as I travel around the country to listen to people arguing the case. Our potato consumption is due to our historic dietary choice, and it is higher in the Republic of Ireland, which has no Potato Marketing Board. I do not think that, if we got rid of the board, or changed its functions, the people of Britain would cease to eat potatoes. That argument is bureaucratic and I think that most Conservative Members would find it unacceptable.

The second claim is that our high degree of self-sufficiency in fresh potatoes is somehow due to the board; that is just not true. That self-sufficiency is due to the fact that our producers have the advantage that it costs up to £35 per tonne to bring potatoes across the channel and, therefore, our competitors clearly start at a disadvantage with what might be inelegantly called dirty potatoes. The problem arises with the processed product, because as the value of a product rises compared to transport costs, the home producers' advantage falls. Therefore, it is not surprising that we have a high proportion of the fresh potato market, but import many processed potatoes. Surely that shows that, wherever the added value is sufficient to counteract the transport costs, our producers do less well. The effect is caused by transport costs, not the operation of the board.

The third and most persistent worry of those who wish to retain the status quo is that removal of the quota system will lead to instability in the market. The evidence does not suggest that our quota system leads to greater stability here. [Interruption.] I see that the hon. Member for East Lothian does not agree. However, I can tell the hon. Gentleman that I started off by believing that the system created stability. I had always believed that to be the case, because I had never checked the figures. I thought that I should do so.

If we compare the year-on-year prices changes in the United Kingdom with those in the other main producer states—France, Germany and the Netherlands—we see an interesting pattern. Between 1979–91, our prices were more volatile than all the others in no fewer than three years. They were more volatile than at least one of the other countries in five years, and the least Volatile in only four years. That is hardly a convincing case for the retention of a board—

§ Mr. Campbell-Savours

What about prices and contracts?

§ Mr. Gummer

I know that the hon. Gentleman's knowledge of potatoes is immense, but I shall come to the issue of contracts and prices in a moment. I am now dealing with the volatility of prices, which is a matter of considerable interest. The board always raises that issue when it argues that consumers are protected because we 796 have a system under which our prices are much less volatile. They are not. The board apparatus has not done anything to make prices in this country less volatile than those of our major competitors.

The fourth argument is that, without the board, prices would fall dramatically. The price of potatoes for processing will have to be governed by competition, whatever we do. No board will make it possible for Britain to have higher prices for potatoes than the Dutch, Danes, Belgians, Germans or French. A single market is all about competition; if other people can produce something cheaper than we do, we cannot protect ourselves in a single market by running a bureaucratic scheme. Some people might like to do so, but we do not have to propose that suggestion—the Scottish nationalists certainly cannot do so, as they are in favour of the single market and are as enthusiastic about it as I am. I am pleased about that—it is the only thing that I can find in favour of the Scottish National party.

We must accept that the price of potatoes for processing will be fixed by the competition, not by any board. That means that the price of dirty potatoes will continue to be protected by the channel, but not the price of processed potatoes. Perhaps we should consider carefully the proposals that I understand the hon. Member for Workington (Mr. Campbell-Savours) has been working on. I put it like that because his proposals in Committee, when we discussed the potato scheme, were in skeleton form. The hon. Gentleman's proposals have also been discussed around the country as he has travelled around to try to discover whether he can make them work. I have tried hard to put together such a scheme, which is designed to distinguish between dirty potatoes and processed potatoes, with the board controlling one category but not the other.

I am looking forward to seeing how the hon. Gentleman has changed the scheme since it was first revealed. The difficulty of dividing processed and non-processed potatoes is that there is generally no difference between them. Some potatoes that are grown for processing turn out to be unsuitable for processing, so people sell them in different forms. I do not know how we would deal with potatoes for export under such a scheme. Are we to colour the potatoes, with green ones for those controlled by the board and blue ones for those that are not? Doubtless a bureaucratic mechanism can be contrived whereby we can continue to have a board that does not do anything about a situation that needs nothing done to it as the function is already served by the channel.

I realise that the Labour party is keen for the Government to get in on the act, and that it is not easy to leave the channel to its own devices. Therefore, if the hon. Member for Workington brings forward his proposals, we will listen carefully to see whether they can be used. However, I suspect that the Labour party—although it would like to gain support among those who are still unconvinced of the need to change the board—knows in its heart of hearts that the board's quota arrangements no longer fulfil a useful purpose. Therefore, we need to move towards a freer system.

§ Mr. Home Robertson

Surely the people involved in the potato market—be they producers or consumers—are better judges of what is best for that market than the Minister is, as a politician. The Minister has repeatedly 797 said that the scheme is "shackling" potato producers in Britain. Is he suggesting that the producers, who want to maintain the scheme, are masochists?

§ Mr. Gummer

I should have thought that the best judges were the people buying the product. They have made it clear that future investment will be where the potatoes are available and the product should be as available in this country as it is in Holland. We do not even need to ask the processors about that, as we automatically know the answer.

Even if you, Mr. Deputy Speaker, think hard and long, can you produce a single product that you could say would be protected in a single market by the fact that one part of that market had to restrict the production of the product and, at the same time, expect the consumer to buy the product where it is least available? The idea goes against every rule of economics.

§ Sir Peter Tapsell (East Lindsey)

My right hon. Friend keeps arguing as though no one in continental Europe wants to restrict their product and the other 11 countries are unanimous in wanting a free market. He knows that that is not the case, and many of the European countries want a heavier potato regime than we have.

§ Mr. Gummer

My hon. Friend is right about Portugal, which has a heavier regime than we do. But we do not generally compete with Portugal for potato sales. No country in the Community has ever suggested that we should spread the British system throughout the whole of the Community. Most countries in the Community are clear that they want the lightest possible potato regime and the greatest competition.

I know my hon. Friend's views on other matters, and it seems odd that he should suggest that we should continue with such a proposition in a single market. He would be right to say that it would be worth while to argue about whether we should have a controlled or a non-controlled system if all the other 11 countries—or a significant proportion of them—wanted a system such as we have here. As someone who believes in a freer market, I think that, even in those circumstances, it would be better to have a less-controlled system. I cannot find anyone in the Community who is at all interested in having a system in which everyone is controlled.

There are those who would like Britain to continue with her system as long as they do not have to have it as well—that is one of the problems. Some people have suggested to me that we should agree to have our system. They say that, although the Commission may not like it, the rest of the countries will sign up to such a system—of course, they will. If I were a competitor, I would immediately sign up to an agreement that restricted my major competitor to a quota system.

§ Dr. Gavin Strang (Edinburgh, East)

I think that the Minister might at least acknowledge that the Conservative party is deeply divided on the issue. Is he aware that an amendment to the draft European Community potato regime was carried in the Agriculture Committee this afternoon? That amendment was moved by the Conservative Member of the European Parliament for 798 Lancashire, Central. The amendment explicitly provides for the maintenance of the national organisations. It stated: At its request, a Member State may be authorized to grant an organization established or maintained for the purpose of stabilizing the market in potatoes in the whole part of the territory of that Member State. It goes on to refer to the right to estabish production quotas for, and to levy contributions from, potato producers. It provides for a future for the Potato Marketing Board—and it was successfully moved by a Conservative Member of the European Parliament.

§ Mr. Gummer

Well, he is wrong—utterly wrong. The proposal would do grave damage to the British potato industry.

§ Mr. Campbell-Savours

How about that?

§ Mr. Gummer

I do not think that the hon. Gentleman always finds every member of his party worthy of support. I have often sat here when he has been squirming while the hon. Member for Bolsover (Mr. Skinner) outlined his alternative economic policies. Although the Conservative Member of the European Parliament in this case is a man of excellent ability and remarkable standing on all other issues, on this one I beg to differ with him.

§ Mr. John Marshall

Will my right hon. Friend confirm that over the past decade there has been an increase of 300,000 tonnes in the imports of processed potatoes to this country, at a cost to the balance of payments of £125 million—a considerable cost to employment in the food processing industry?

§ Mr. Gummer

I can certainly confirm that. That is why, if we left the potato system as it is, we would find ourselves with a steadily decreasing part of the section of the industry which is growing, but holding on to our dominance in a section of production which is bound to decrease.

§ Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

Has not my hon. Friend the Member for Hendon, South (Mr. Marshall) hit the nail on the head? If a major part of the 550,000 tonnes of exported produce were repatriated to this country, it would enable our growers to grow 30,000 more acres of potatoes.

§ Mr. Gummer

My hon. Friend is right, but we can do that only if the processors understand that there will be a continuous supply and that they will not be hindered in ways that they would not encounter elsewhere. McDonald's uses 80,000 tonnes of potatoes in this country already. It would be extremely good if, as it expanded throughout Europe—it expects to open nearly 1,000 restaurants in Europe in the coming year—at least some of that expansion came from British-produced potato chips.

§ Mr. Home Robertson

And why not?

§ Mr. Gummer

If the company has the chance to process and produce in countries where there are no restrictions on acreage instead of in a country in which there are such restrictions, it will go to the countries where there are no restrictions. If the hon. Gentleman cannot see the obvious economic sense of that statement, I can understand why he is a socialist. Any fool can see that that will apply if production is restricted in a single market. The hon. Gentleman is a socialist and a farmer. He is also a 799 landowner, I understand—although that is perhaps more difficult to understand. Perhaps I have discovered the answer, however: he is economically wrong. He may be socially and culturally right, but he is economically left.

§ Mr. Home Robertson

I am flattered to be described as a socialist, but cannot the Minister grasp the fact that, if there is a wonderful increase in potato sales, I have no doubt that the marketing board would cheerfully increase the quota and the basic acreage. That would overcome the problem.

§ Mr. Gummer

The hon. Gentleman has a wonderful new economic theory, which is that the only way supply can expand to meet demand is to put in place a board that would decide when demand is going to increase so that it can tell the producers when they can increase the supply. That theory has been tried in the Soviet Union and elsewhere for a long time, and it does not work. It is the market that operates in these cases, not bureaucratic groups of people who think they know best.

§ Ms Jean Corston (Bristol, East)

rose—

§ Mr. Home Robertson

She is a socialist, too.

§ Ms Corston

Indeed. Is the Minister aware of the possible consequences of the sort of uncontrolled market which he says he favours? I cite the case of New Brunswick, where the potato industry has been virtually destroyed by companies such as McCain, which dictate the sort of potatoes that must be grown, and that means in practice the mighty chip and the crisp? Meanwhile, the Secretary of State for Health encourages people, in "The Health of the Nation", to eat potatoes of a quite different sort. Is the Minister saying that our potato market must be structured so that only the potato processors get what they want?

§ Mr. Gummer

I think that the House is beginning to discover what the alternative is. It is that my right hon. Friend the Secretary of State for Health shall lay down the kind of potato which it is good for people to eat, whether they like it or not. Then she shall lay down the way in which those potatoes shall be cooked and processed. No doubt socialist councils will send inspectors out into people's homes to discover whether they are cooking potatoes in the requisite vegetable oil and to see that they are not using animal fats. They might also check on the number of chips fried per person per week, to see whether it is below the national maximum stipulated. No doubt there will be special derogations for those who work in heavy industry and who therefore can deal with more animal fat than can those of us in sedentary occupations.

The hon. Lady is on to the same thing that Opposition Members always want—telling other people what is good for them.[Interruption.] I know that the hon. Member for Workington is worried about the people behind him—I would be, too. He has never been outflanked on the left before. The people of Workington had better get ready for reselection. They must look for someone who is more red-blooded—perhaps a woman who will be unreconstructed in her desire to tell the people of Britain how to eat their potatoes.

§ Sir Peter Tapsell

My right hon. Friend is being characteristically extremely amusing, witty and clever, but when all the clever economics have been voiced, the fact remains that there are many thousands of potato 800 producers in this country, most of whom have always voted Conservative. As the Minister of Agriculture, Fisheries and Food, he needs to take their views seriously. No amount of witticism will impress them. All the producers in my constituency believe that their livelihoods will be put at risk if there is unlimited capacity throughout the EC to grow potatoes. Potato producers on the continent of Europe think the same. It is only the Ministers whom my right hon. Friend meets at Councils in Brussels who do not hold that view.

§ Mr. Gummer

My hon. Friend is perfectly right to raise that serious issue. I am trying to distinguish between the obvious nonsense that the hon. Member for Bristol, East (Ms Corston) introduced to the discussion and the serious issue that he raises. Many people who produce potatoes—there are many in my constituency, just as there are in my hon. Friend's—are concerned that if the board disappears there will be an uncontrolled market in which they will find it difficult to compete. I understand that.

I must tell my hon. Friend as forcefully as I can that he is not right to say that the other countries of Europe want a controlled system like ours. Some farmers might like that, but in the end it is Ministers who decide what is best for the industry—[HON. MEMBERS: "Big brother."] Not at all. All the French potato producers in the world may think one thing, but if they cannot convince their Minister, in the end he will vote as he thinks right—

§ Sir Peter Tapsell

They have just voted him out.

§ Mr. Gummer

So they voted out the one person whom they might have persuaded to agree with this proposal. They have got rid of a socialist—on second thoughts, a fellow traveler—who has been thrown out all the more forcibly for that. He got a bit closer to the hon. Member for Bristol, East in his proposals. However, the French have now voted in a Government who will find it difficult to believe that the future of France lies in adopting the British potato regime. That is one thing that I do not think the new French Government will wish to do.

If there were an alternative that was supportable by the rest of Europe, my hon. Friend's argument would at least be worth continuing. I doubt, however, that I would be on the same side as him because I am not sure that the House would want ever further complications in the CAP. My hon. Friend is often one of those who point to the absurdities of having an over-regulated CAP system in other sectors. Therefore, I ask him to apply to the potato industry many of the strictures that, from time to time, he has perfectly reasonably raised about the rest of the CAP. It would not be sensible for the Government and the country to extend into another sector the very part of the CAP that, in every debate, both sides of the House object to because it is over-complicated, over-bureaucratised and over-expensive, and ends up with the taxpayer and the consumer paying even more.

§ Mr. John Greenway (Ryedale)

Will my right hon. Friend give way?

§ Mr. Gummer

I ought to continue, or there will not be time for others to speak. I had a short speech to make, but it has been interrupted on many occasions.

It is an irony that we have among our processors some of the best and most efficient companies in the world. What a terrible thing it would be if their investment were increasingly to go outside the United Kingdom. We must 801 beware of falling into the situation of the dairy industry, where the high added-value products come increasingly from abroad, and we are left with the commodity end of the business. I am not prepared to be seen as the Minister who was so unable to confront short-term fears that he allowed an industry to destroy itself.

The House will wish to know that there will be a number of additional arrangements to be made to make the transition as smooth as possible. First, we shall not be seeking to reverse the amendments made in another place. There will merely be some tidying up of the wording. Secondly, part IV accomplishes what the Government announced in 1988—the ending of the potato guarantee. Unlike the enabling provisions of part II, ending the guarantee is a decision that has already been taken, and it will be carried out as soon as possible after Royal Assent. It is a decision already accepted by the industry and not, as far as I am aware, contentious. The third detailed point is that, as I have already pointed out, the Bill will enable the non-regulatory functions of the Potato Marketing Board to be carried out by a successor body.

I hope that the House recognises that we have to make some such change in any case, because if the European Community were to agree to a lightweight regime—the signs are, as I have tried to explain to my hon. Friends, that that will be the case—it would mean that the system would fall. It would not be able to continue. I do not want that to be the result. I want to have a system that will allow a satisfactory transition from one regime to the other. I hope that the industry will then face up to the question whether it wants a continuation of the board, which would deal, as it can, with the marketing and promotion of potatoes in generic terms and research. That would be done if a development council were the successor body to the board. If Ministers saw substantial support for that idea in the industry, they would be able to make the necessary order to allow the Potato Marketing Board to continue as a development council.

That would also enable the board to have levy-raising powers but, as there are some doubts about those powers, clause 52 improves the position by making it possible for a levy to be collected via an intermediary. That would also be helpful should the milk marketing arrangements be followed by a desire for the industry to have a development council. I am concerned that there should be no philosophical bar to the ability of the industry to decide that it wanted corporately to do some of those things for itself.

Part 3 deals with marketing grants.

§ Mr. Christopher Gill (Ludlow)

Will my right hon. Friend give way?

§ Mr. Gummer

I will give way, but it must be for the last time.

§ Mr. Gill

Could my right hon. Friend obtain clarification of the reference on line 4 of page 13 to section 53(4) of this Act", given that on page 27 there is no clause 53(4)? I do not expect him to know the answer, but it would be helpful if he could obtain it.

§ Mr. Gummer

I am always pleased to give way to my hon. Friend and never more so than I am now. I shall seek an answer, and I regret it if there has been a mistake.

In the detailed consideration that the Government have given to the marketing of both milk and potatoes, we have shown our concern to improve our ability to compete and to give our producers and manufacturers a better opportunity to win a larger share of the market for added-value products. In the same spirit, we introduced our marketing grants in April last year, following the seminar called by the Prime Minister in November 1991, which concluded that there was a need for farmers to develop professionally run marketing enterprises on a competitive scale.

For example, the opportunities presented by our supermarkets can be fully seized only by businesses big enough to negotiate satisfactory terms and to deliver the required quantity and quality consistently. There are some signs that, in other countries in the Community, the organisation of agricultural businesses and food processing is such that they can compete more effectively to sell into this country than we can into theirs. That is one reason why the marketing grant is so important.

Unfortunately, the existing grant scheme has its limitations, particularly in our ability to involve the businesses downstream of the producers, which are crucial to the success of the industry. Part III will enable us to introduce something more satisfactory. I have no doubt that groups of milk and potato producers will be among those applying for grant.

In part IV, there are a number of other items that the House will want me to refer to. The first is the wool guarantee. The Government announced, more than four years ago, their decision to end the wool guarantee. Clause 48 implements that decision. The guarantee was introduced in the 1950s with the reasonable aim of stabilising sheep farmers' returns from wool. Conditions are now different. Developments on the international wool market, where huge price changes can result from decisions taken in China, Russia, Australia and New Zealand, mean that the guarantee can no longer operate effectively when it is used entirely as a stabilisation measure. The sheep farmer now relies essentially on the return that he gets from the market, enhanced by the direct payments on breeding animals in the shape of annual ewe premiums and hill livestock compensatory allowances—payments which, for 1992, will total around £495 million.

In the light of the substantial support to the sector, continued Government intervention is unnecessary and simply cannot be justified. The marketing arrangements for clip wool, including the statutory monopoly on purchase, will be retained. The scheme has been administered effectively by the British wool marketing board, which will have an opportunity to build further on its achievements after the guarantee has ended.

I hope that the House will recognise that we have tried to look at each of these and get the best answers for Britain—not to apply to it some predetermined philosophical position. That is why we have insisted on keeping the scheme, because it is the one way in which we can deal, in an international market, with similar schemes that represent other people in other countries.

§ Mr. Campbell-Savours

Unbelievable.

§ Mr. Gummer

The hon. Gentleman must accept that what one believes is the believable, and that is entirely believable. We shall listen to his speech at the end of the evening and see how one can go beyond the bounds of belief rapidly and never return.

A further belated recognition of changed realities is the abolition of the annual review of agriculture. It is a relic of the days when farm prices were fixed in consultation between the Government and the farmers' unions. Since we have joined the Community, the focus has switched to the CAP, and in that context our close contacts with the farmers' unions and other bodies will continue. The Government will also continue to publish an annual report on agriculture, as the Bill provides. I am sure that the House will agree that that is a sensible measure to bring the legislation up to date.

Of the Bill's remaining provisions, those relating to Northern Ireland will be found in clause 57, which lists those parts of the Bill that will apply directly to the Province. They include the termination of the wool guarantee. Clause 55 deals with the procedure for extending various other provisions to the north of Ireland. In that respect, I can confirm that it is the intention of my right hon. Friend the Secretary of State to introduce an Order in Council to apply the provisions of part I so as to end the Northern Ireland milk marketing scheme.

It is the Government's purpose to do all that they can to enhance the conditions in which our food and farming industries can compete. We have identified a clear need to encourage groups of farmers and others to work together to improve the marketing of food and agricultural produce. As with the milk marketing boards, we have come to the clear conclusion that the statutory monopoly should give way to a better method of marketing milk and milk products.

Increasingly, the same conclusion comes to anyone who looks at the place of the Potato Marketing Board within the new European single market. It is not surprising, therefore, that there is mounting support for the proposals that the Government have put forward this evening.

Our aim is to help the industry do its job better, to liberate it from the shackles of the past and to realise its potential. At a time when there is so much talk of restrictions and quotas, this is a move to set the industry free. I commend the Bill to the House.

§ Dr. Gavin Strang (Edinburgh, East)

There can be no doubt about the importance of the Bill to agriculture, but it is also important to the food industry and to consumers, of whom there are millions in Britain.

The Bill will make fundamental changes to the way in which milk is marketed in Britain. For most people, milk and milk products, such as butter, cheese and yoghurt, are an important part of their diet. Annual household expenditure on milk and milk products is about £6 billion. About one seventh of what the average family spends on food goes on milk or milk products.

Consumers are entitled to ask whether the Bill will improve the quality of those foods. They are entitled to ask whether it will enable milk and its processed products to be marketed at lower prices. The answer to both those questions is an unequivocal no. The milk marketed in Britain is of the highest quality in Europe, and nothing in the Bill aims to improve that. The milk marketing boards 804 deserve a great deal of the credit for the hygienic quality of our milk. It is to be hoped that the new arrangements will allow those standards to be maintained in the future.

The abolition of the milk marketing boards and the pricing arrangements which operated with them will not reduce the price of milk—far from it. There is a real danger that, as a result of the new arrangements, there will be an unjustified increase in the price of milk for consumers.

The House does not often have the opportunity to debate agriculture and the food industries. Total annual consumption of food and drink in Britain is now in excess of £90 billion, £45 billion of which is accounted for by household food expenditure and the remainder by drink and meals out. About one eighth of household expenditure is accounted for by expenditure on food. For people on low incomes, the proportion of their income that goes on food is much higher. Food is not just another product; it is a basic essential, like shelter, water and fuel.

Agriculture is important because it is a provider of the raw materials for our food industries. Hundreds of thousands of jobs in those industries are dependent on agriculture, and millions of pounds of investment each year. Agriculture is also important as the core of the rural economy in most parts of Britain. It is not just the jobs of the farmers and farm workers that are important but all the other jobs which are created by the inputs into agriculture and the expenditure created in those rural communities. That is why it is vital that the Government should provide adequate support for our agriculture industry.

It has to be said, and it gives me no pleasure to do so, that times have been hard for the agriculture industry in recent years. We have seen a fall in investment. The Government's own publication, "Agriculture in the United Kingdom 1992", published only last week, states: The total stock of capital"— referring to investment in the industry— has gradually declined over a number of years and is slightly below its 1981–83 level. That is the measure of the extent to which the agriculture industry has been depressed for the past five or six years. It is a measure of the extent to which there has been under-investment in the industry.

There are some signs that things will improve in the future, primarily because of the devaluation of the pound, for which the Government can hardly claim credit, since they tried up to the last minute to avert it. Let us hope that that devaluation—black Wednesday, sometimes called golden Wednesday in the agricultural industry—and the subsequent alterations to the green rates, will lead not only to higher incomes for farmers and farm workers but to increased investment and an improvement in the overall jobs and standards of our agriculture industry.

Part II, dealing with milk marketing, is the most important part of the Bill. It is undoubtedly the case that the milk industry is vital to Britain. I have referred to its importance to consumers. The annual value of milk at the farm gate is about £2.8 billion. We have the best quality milk in the EC. Only Denmark has milk of comparable quality.

The milk marketing boards have provided a guaranteed outlet for British dairy farmers, no matter how remote their farms. They have also played a major part in maintaining a substantial doorstep delivery service in Britain. It is true that the amount of milk sold through the shops and supermarkets has increased, but the doorstep 805 delivery service is at a level much higher than in any other European country. That is of benefit to Britain and something that we should seek to encourage and maintain. The milk marketing boards deserve credit for that.

There has been a suggestion recently in some quarters that the milk marketing boards have not achieved the most for the producers, that the price obtained by the producers in Britain through the boards has been less than in some other EC countries. I reject that as a criticism of the boards. I have never accepted that the purpose of the milk marketing boards was to maximise revenue. The milk marketing boards existed to strike a balance between the interests of the producers, the processing companies and the consumers. The pricing arrangements were designed to do that. They are based on a negotiation between the Dairy Trade Federation and the milk marketing boards.

The milk marketing boards have an excellent record in Britain on milk testing, on-farm milk recording, artificial insemination and all the other schemes developed and maintained by the boards which have brought substantial benefits to the British milk industry.

The milk marketing boards were established by legislation enacted in 1931 and 1933. Since then, there has been a bipartisan policy with all-party support for the milk marketing boards. There have been changes in social and economic conditions and the functions and role of the milk marketing boards have been adapted to meet them. In the 1970s, the milk marketing boards were threatened by the EC. The then Labour Government, of which I was a member, decided as a priority to secure amendments to the appropriate EC regulations to enable the milk marketing boards and their counterparts in Northern Ireland and Scotland to continue. In that, we were supported by the Conservative Opposition.

I am pleased to see in his place the right hon. Member for Westmorland and Lonsdale (Mr. Jopling), a former Minister of Agriculture, Fisheries and Food. Speaking for the Opposition in a debate on agriculture in the House on 21 March 1978, he said: As to the future of the Milk Marketing Boards, the Conservative Party has consistently expressed its support for all our marketing boards, but we recognise that certain parts of the milk boards' activities might have to be altered. However, we believe that it is absolutely vital—we fully support the Government in their efforts—to preserve the basic functions of the milk boards and of the structure of milk marketing in this country. We think, above all, that it is right that the milk boards should preserve their powers to be the sole first buyers of milk and to have the right to pool prices. To put in another way what the Minister said, it is no coincidence that the United Kingdom is almost the only country in Europe to have such a statutory organisation, while at the same time it is the only one to have such a large market for liquid milk sold on the doorstep… However, I cannot think of any other issue on which the whole House would be unanimous in opposition but that of failing to get a satisfactory solution to the position of our milk boards."—[Official Report, 21 March 1978; Vol. 946, c. 1358–59.] We found that solution. I was privileged to be a junior Agriculture Minister in that Labour Government, and I remember sitting in the Council of Agriculture Ministers arguing for hours in an attempt to secure the changes in regulation which would enable our milk marketing boards to continue. We secured those changes, with the support of the whole House.

Since then, there have been some changes in the market place. In particular, we have witnessed the growth in low 806 fat milks. Although the Minister did not refer to that directly in his speech, he alluded to one of the problems which developed during the 1980s—the failure of the scheme to provide properly for the production of low fat milks. The Government were told of that problem as long ago as 1986.

In 1984, the milk industry adopted a system of non-binding arbitration. The first arbiter was the late John Silkin, under whom I had the privilege of serving when he was Minister of Agriculture, Fisheries and Food. In 1986, he produced the first non-binding report relating to milk marketing arrangements, stating: The question of low fat milk and other products now outside the Scheme and on-farm manufacture will in my view assume a much greater importance as time goes by to an extent where unless care is taken they may begin to threaten the existence of the Scheme itself. It is my opinion that it is to the interest of both the MMB and the DTF that a common course of action should be resolved between them. I would not regard the solution to this question as lying within the competence of this Opinion but I believe that an inquiry ought to be undertaken among all those concerned… It is my recommendation that MAFF should undertake an internal inquiry into the problem, which, as I stated…unless care is taken, might begin to threaten the existence of the Scheme itself". Of course, Ministers did not respond to that. Although they received regular representations from the Dairy Trade Federation, no action was taken. It is hard to resist the conclusion that the Government were happy to preside over the undermining of the scheme, because they wanted it to be challenged: for dogmatic reasons, they wanted to bring about circumstances in which it would be easy for them to wind up the boards, as they are doing today.

As there is a substantial Conservative majority in the House, it is possible that the Bill will be given a Second Reading. As a constructive Opposition, we shall concentrate on the arrangements with which the Government—or, indeed, the milk marketing boards—wish to replace the existing system. Our first and fundamental criticism of the Government relates to their adication of responsibility for introducing satisfactory arrangements. Surely no food industry is more important to the country than the milk industry. It is highly efficient and a great national asset. In making such a historic change, the Government have an obligation to endure that it develops satisfactorily.

§ Mr. Gill

Who does the hon. Gentleman believe knows more about the milk industry—both production and processing—than the industry itself? Why should politicians decide such matters? I think that the hon. Gentleman is quite wrong.

§ Dr. Strang

We live in a democracy, and the way in which things happen is decided by Government and by Parliament. Of course, before introducing any replacement scheme, the Government should consult not only the milk marketing board and other boards but the Dairy Trade Federation, the consumer organisations and all interested parties. That is not in dispute. None the less, it is entirely inappropriate for the milk boards to introduce the new scheme. Although that scheme should be based very much on the views of the boards, open and public consultation should have taken place. Given the importance of the industry, the Government should have accepted their responsibility to present alternative arrangements, which should then have been dealt with by affirmative resolution in both Houses of Parliament.

§ Mr. Gummer

Would the hon. Gentleman apply the same argument to, for example, the car industry? Does he suggest that the Government should present proposals about the way in which that industry should conduct itself, or is it better for those in the business of manufacturing cars to run that business as they think best? Is it not rather curious to suggest that the milk industry does not know its own business? I thought that the hon. Gentleman believed that ours was the best milk in the European Community. Surely the producers of the best milk in the Community can decide how best to produce it.

§ Dr. Strang

If there were a national car marketing board with the statutory right to buy every car manufactured in the country, and if the Government were about to wind up that monopoly, I would indeed suggest that they introduce satisfactory arrangements to free the market and eliminate the monopoly.

I am not sure whether the Minister attended this morning's meeting at which Ministers examined the future of the coal industry, but I believe that there may well be a parallel not with the car industry, but with the highly regulated energy industry. When the Government sought to deregulate that industry, they tried to pretend that it was a genuinely free market; in fact, it was a market dominated by major companies and major vested interests. We are likely to see a milk market dominated by the successor to the milk marketing board—Milk Marque—which may involve 80 or 90 per cent. of producers. The Government should face up to their responsibilities. They should have had the courage to consult the industry, and to present their own proposals to free the market, if that is what they wish to do.

The European Commission has already told the milk marketing boards and the Government what they can and cannot do. The Commission has said—understandably, and I do not think that any hon. Member would necessarily dispute its view—that it would not be acceptable for the milk marketing boards and Dairy Crest, their processing arm, to be allowed to continue as a single body in a voluntary market. Such a body would be huge, not only in terms of the milk market in England and Wales but in terms of the European Community market. The Commission decided that the milk marketing boards and Dairy Crest should be separated.

At that point, the Government could have made a decision. They could have considered whether there was a case for integrated milk co-operatives, allowing the processing arm to be associated with the producers. They could have decided to set up a number of integrated producer co-operatives. I am not saying that that is the best solution; I am merely saying that it is very unsatisfactory that the Government never even considered it.

The Northern Ireland milk marketing board buys more milk than its Scottish counterpart. Surely there is a case for protecting the Northern Ireland board, which is fundamentally important to Northern Ireland's agriculture, and for helping to ensure that its processing facilities—which need help and investment—can be maintained. As my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) pointed out, the position in Scotland is ridiculous.

I refer to a report: it is not about the Scottish milk market, or about whether the processing arm of the Scottish board should remain with the board—it concerns 808 only whether the Scottish board could acquire a dairy from the Co-operative Wholesale Society in Glasgow. Anyone reading the report may be surprised by its conclusion. I must say that I was surprised. I thought that it made a very good case, on the ground that there is a real United Kingdom milk market—not only in processed products such as butter and cheese, but in the milk that flows across the border between Scotland and England. I was amazed that the Monopolies and Mergers Commission concluded that that merger should not take place. It is unacceptable that, as a result of that report, we are being told that the processing side of the Scottish milk marketing board must be split from the producer organisation.

The European Commission does not believe that the industry in Northern Ireland and Scotland is big enough to have a distorting effect on the market for milk in Europe. Having decided to get rid of the milk marketing boards and the statutory scheme—a decision with which we disagree—it is wholly unsatisfactory that the Government did not sit down, consult the interested parties and produce arrangements that were in the best interests of the industry, the processing companies and the consumers.

I must remind the House that the arrangements are not necessarily permanent. Mr. Leon Brittan sent a letter to the Minister in October 1992 in which he commented on the scheme put forward by the milk marketing boards to replace the statutory arrangements in England and Wales. He wrote: Against this background, and on the basis of the information made available to me, I believe that there are no grounds for action under Articles 85 and 86 with regard to the proposed new co-operative for an initial period of two years". It cannot be satisfactory for the milk marketing boards to set in place arrangements which are authorised by the Commission for only two years. As the Minister is aware, as soon as the legislation is in place, the Director General of Fair Trading will be entitled to investigate the arrangements for the marketing of wholesale milk in this country. He will be entitled to refer the arrangements to the MMC within two years. It is unsatisfactory for us to go down a road to so much uncertainty.

Much concern has been expressed about the future of the assets of the milk marketing boards, other than the processing arm, Dairy Crest, which will be floated off as a separate company. I am referring to the milk testing arrangements, the national milk records and to Genus which includes the artificial insemination service and the advisory services which have served the industry so well.

It is absolutely fundamental that every producer, regardless of whether he becomes a member of Milk Marque, should have equal access to those services. Those services have been built up by all milk producers, past and present. It would be unfair if the successor to the milk marketing boards were able to take over those services and operate them in a way which discriminated against non-members of Milk Marque. The alternative would be to transfer those activities to another body. I am not suggesting that, but perhaps that point should be considered in Committee. It is crucial that those facilities should be available to all milk producers.

Quota management is another important issue which must be addressed. As a result of the boards, we have a very efficient system of quota management. The big difference between today's milk industry and the industry of 10 years ago is that we have quotas. I accept that there 809 is alarmist talk about the effect of the changes because we have milk quotas. If a very powerful producer co-operative is established against a background of quotas, and there is an under-supply of milk in this country, that body might be able to ratchet the price of milk to unjustified levels. I can assure the Minister that the Labour party will be outraged if the price of milk for consumers is raised unnecessarily as a result of the arrangements.

The Minister described the milk boards as the milk producers' gaoler in this country. I do not know how the Minister can use that description. Only a few years ago, the boards had the overwhelming support not just of the consumers organisations and the Dairy Trade Federation, but also of the milk producers who control the boards. It is nonsense to claim that the boards are the producers' gaoler.

It is equally nonsense to claim that the Potato Marketing Board has shackled our potato producers. As my hon. Friend the Member for East Lothian (Mr. Home Robertson) said, it is amazing that the potato producers are determined to retain those shackles. The legislation in respect of potatoes is enabling. Many potato producers and, I suspect, the Potato Marketing Board, received a shock when they discovered that the Government were not simply planning to get rid of the Potato Marketing Board on the basis of EC legislation, but had decided, on the basis of their own independent judgment of what was best for the British potato industry, that the Potato Marketing Board should go.

We do not accept that. We agree with the Minister that the last thing we want is an EC regime for potatoes which includes intervention buying. Open-ended state buying is the bane of the common agricultural policy. We absolutely agree that there should be no question of the Government agreeing to a new potato regime which would allow intervention buying whereby the taxpayer buys potatoes when the market is over-supplied.

However, I do not accept the Minister's arguments. I do not accept that it is automatically a mistake for the producers in this country to choose to manage their market against the background of free trade in potatoes in Europe. There is already a free market in potatoes in the Community. As the Minister has said, the board has accepted that the last vestige of state support for the potato industry—in respect of the contribution that the Treasury is willing to make to part of the Potato Marketing Board's support buying programme—should be removed.

§ Mr. Michael Jopling (Westmorland and Lonsdale)

I am enormously puzzled by what the hon. Gentleman has just said. He said that he would oppose a new potato regime in Europe which involved intervention buying. So far as I am aware, the Labour party has always supported the powers that the Potato Marketing Board currently has, and which it has had since the war, to support the market through acreage quotas and intervention buying. Why has the hon. Gentleman suddenly become the first Labour spokesman in my lifetime to speak against intervention buying for the potato sector?

§ Dr. Strang

I am happy to respond to that point. It is one thing to have a support buying programme financed 810 by a levy on producers. When the Government remove the guarantee, it will be wholly financed by the levy on the industry. We believe that that is correct and appropriate.

As the right hon. Member for Westmorland and Lonsdale (Mr. Jopling) will acknowledge, we have always opposed intervention buying in terms of the CAP. He would probably agree that the old deficiency payments system based on guaranteed prices served this country better than intervention buying. We need only consider the beef market and the hundreds of millions of pounds that are spent buying beef, storing it, freezing it and taking it out at some point in the future. I could refer to other excesses of the CAP, all of which relate to intervention buying.

§ Mr. Clifton-Brown

I am still rather confused. Is it Labour party policy that the taxpayer should subsidise a potato buying-up scheme?

§ Dr. Strang

It is not our policy. We go along with any Government proposals to remove taxpayer support from the potato industry. However, the Potato Marketing Board should stay in place, and the production target area and quotas should be continued, as should all the other work that the board does. That is what the producers want. Against the background of a light EC regime, such a course should be possible.

We shall consider the Minister's arguments very carefully. We shall give close consideration to the reasons for the increased imports of chilled and frozen chips. I am sure that the right hon. Gentleman will acknowledge that it is in this area that the increase has arisen. One company accounts for 60 per cent. of production in this field. That company has excess capacity in the Netherlands, and there has been penetration of the German market, which does not have quotas, just as there has been penetration of the British market. We shall consider all the arguments objectively. The last thing the Opposition want is constraint of opportunity to invest in processing and thus to create wealth and jobs.

However, we are not persuaded by what we have heard. We agree with the Potato Marketing Board and with potato producers that the board should be allowed to continue. Developments this afternoon in the European Parliament show that there are Conservatives who agree with us and that that Parliament's Agriculture Committee is of the same opinion. It may well be that the Commission can be persuaded to add its support, and then it will be up to the Agriculture Ministers in the Council of Ministers.

I should like to deal now with the removal of the wool guarantee—a decision with which we do not agree. Our judgment is that it is particularly unfortunate that the state-guaranteed price for wool is to be removed. Many hon. Members know that the wool market grew enormously in the 1980s. But then China and Russia withdrew from the market, and there was a huge increase in wool production in New Zealand and, in particular, Australia, where intervention buying was operated. Massive quantities of wool are now held in intervention stores in Italy, and these overhang the market. When prices start to rise, this wool is released, and prices come down. The collapse of the house-building programme in this country has also resulted in a reduction of the demand for wool. Thus, this is the very worst time for removal of the guarantee, which will damage our hill farming industry. 811 We are concerned that the price a farmer will receive for a clip from a hardy breed will be so low as to make it hardly worth his while. That will not be in the interests of his flock or of the country. There is a very real danger that this change will result in considerable damage to the sheep industry. I hope that it is not too late for the Government to think again and to consider a compromise arrangement whereby there could be some element of continued state support, even if only for a few weeks, to enable the Wool Marketing Board to continue to provide a realistic guarantee. I agree in general with what the right hon. Gentleman said about the board, which has an excellent record with the collection of wool from producers. The board has the support of buyers also.

Clause 44 relates to grants for group marketing. We support the provision. I had hoped that the Minister would announce the provision of some extra money, but in view of the state into which the Government have got the public finances of this country, it is not surprising that there is no such provision.

Finally, I refer to a minor but historic provision tucked away in schedule 5. The right hon. Gentleman himself referred to the repeal of that part of the Agriculture Act 1947 which made provision for an annual review of agriculture. Hon. Members on both sides of the House will remember the importance of the annual review. The negotiations between the farming unions and the Government preceded the setting of national support prices. After we joined the European Community, this became less and less significant, and it is not now practicable to think in terms of an annual national review.

However, the review was indeed a valuable exercise. The agricultural support policies encompassed in the 1947 Act and in the legislation of the 1950s served this country well, enabling people to buy food at world prices. Farmers and farm workers were provided with an effective system of support, and the taxpayer was given value for money.

How different the situation is today. Now, in this country and in the rest of the EC, food is sold at prices well above world levels—indeed, well above levels in the United States. Thousands of millions of pounds are spent on the most inefficient agricultural support system imaginable. Huge mountains of food are bought up, and sometimes commodities are dumped on world markets, to the disadvantage of developing countries, while the common agricultural policy fails to achieve even an adequate means of supporting farmers and the rural economy generally.

The Bill does not address any of the real issues facing the agriculture industry. At best, it fails to confront all the important issues facing agricultural producers and consumers; at worst, it creates arrangements which will be unstable and may in the long term damage consumers and producers. We believe that the milk marketing boards should be adapted, not abolished. We believe that those boards, the Potato Marketing Board and the wool guarantee could still play an important and valuable role in our agriculture industry. For those reasons, the Opposition will vote against the Bill.

§ Mr. Michael Jopling (Westmorland and Lonsdale)

The hon. Member for Edinburgh, East (Dr. Strang) has a good deal of knowledge of agriculture but he got himself into an awful muddle. His apparent opposition to support buying—he said that he would not support a future potato regime 812 that involved such buying—goes wholly against the history of the Labour party in government since the war. Throughout its years in office, the Labour party promoted a support-buying regime for the Potato Marketing Board. Labour Members may say that that system was inherited, but I remind the hon. Gentleman, whose memory seems to be very short, that one of the first actions of Fred Peart, when he became Minister of Agriculture in 1964, was to introduce legislation to deal with the marketing of home-grown cereals.

Indeed, my maiden speech was delivered during a debate on the Cereals Marketing Act 1965, which set up the home-grown cereals authority, with its reserve support-buying capacity. That mechanism, which was introduced by the then Labour government, was never used, but it was available. The price of cereals never dropped to the level at which the scheme would have kicked into operation. The hon. Member for Edinburgh, East really must do his homework and must remember what his party stood for in the past.

I want to begin the substance of my speech by making two points. First, I hope that my right hon. Friend will forgive me for intervening in a debate on agriculture. As he