Mr. Deputy Speaker (Mr. Michael Morris)I have to announce that Madam Speaker has selected the amendment in the name of the official Opposition and that there is a 10-minute restriction on speeches between the hours of 7 pm and 9 pm.
The Minister of Agriculture, Fisheries and Food (Mr. William Waldegrave)I beg to move,
That this House takes note of European Community Document No. 5097/95, relating to agricultural prices for 1995–96 and related measures; congratulates the Government on its robust negotiating stance on the Common Agricultural Policy since 1979, its leading role in achieving reform of the CAP, its continuing pressure for further radical reform and its determination to ensure that EU agricultural spending is effectively restrained; welcomes the Government's key role in the negotiations which secured an effective agreement on agriculture in the GATT Uruguay Round; endorses the Government's drive to spearhead urgent and continuing efforts to combat fraud and illegal state aids throughout the EU; notes that UK farm incomes rose by 6.9 per cent. over the last year and that Government spending on hill livestock compensatory amounts and agricultural research and development has been maintained; and supports the Government's intention to negotiate an outcome on the 1995–96 price proposals which takes account of the interests of the United Kingdom, producers, consumers and taxpayers alike.The debate has come over the years to have two separate but equally valid functions. First, the House has before it the latest proposals for the annual price fixing in the European Community, so that it can advise the Minister of its views before he or she goes to Brussels to negotiate. Secondly, the occasion fulfils the need for an annual general debate on agriculture, and gives the Minister the chance to give an account of what has happened in the past 12 months or so in this important industry. Any such report and statement of policy must inevitably deal with European agricultural policy issues wider than just the price fixing, since so much of agricultural policy is determined by the common agricultural policy, and so many of the improvements that we want involve changes to the CAP.It is logical, then, to start by restating what we would like for British agriculture, British consumers and the British food and drink industry, and by setting out what we have been doing to enable those objectives to be met, both domestically and in Brussels.
Briefly, we believe that British farmers could do an even better job for our consumers and for the food and drink industry, which uses their raw materials, if they could compete more freely in a world in which there were fewer subsidies, fewer constraints on production and trade and more freedom for enterprise and efficiency to be rewarded. That means that we need a radical change in attitudes to agricultural trade, not just in Europe but in the United States, Japan and in many other countries, too. We want freer trade, the dismantlement of state aids and subsidies for production, and the ending of quantitative controls over farmers—set-asides, quotas and the rest—not just here but around the world.
We know perfectly well that that cannot be achieved overnight, as the hon. Member for Edinburgh, East (Dr. Strang) rightly told the Financial Times today, and that unilateral gestures, even when they are available, do little good if they just disadvantage our people. We believe that clarity about where we are going and in what time scale 167 is vital if damage and disruption are to be avoided to an industry that has been led in a different direction since Labour's Agriculture Act 1947.
We also believe that there must be a growing recognition of the importance of the environmental role of farmers, and proper incentives for them in this field. We should recognise that good stewardship of the land is a valid output of our farming industry, which no one else can deliver, and that, in some cases at least, they should be paid for it.
It is these objectives, domestic, European and worldwide, that have formed our policy since 1979. In 1979, we inherited a CAP with few constraints on expenditure or on its potential to create food surpluses. Since then, very important steps have been taken to begin to get the situation under control. The super-tanker has begun to respond, very slowly, to a change in course.
Mr. Tony Banks (Newham, North-West)Notwithstanding what the right hon. Gentleman has just said, is not it a fact that we are now spending more money on the CAP than we were in 1979? To what extent does he believe that the absurdities of the CAP are undermining the whole concept of the European Union?
Mr. WaldegraveIf the hon. Gentleman waits just a moment, I shall give him some figures that might give him some pause, but I agree that sorting out agricultural policy, which must be sorted out, will do more to restore sensible support for the European Community than almost anything else.
Here are some figures. It is pretty useless nowadays, I have to say, to challenge the Labour party on its record in government. It is such a long time ago that half the population was not born when the Labour party were in government. I have woken up the hon. Member for Edinburgh, East, and that may be a good thing, but it may not be entirely to his advantage.
There are some exceptions. Most of the people who brought this country to a halt in 1979 are safely grazing in lush pastures down the Corridor, in another place, mooing and lowing gently, weighed down with honours. However, the hon. Member for Edinburgh, East has not been allowed to escape. He was there throughout the period from 1974 to 1979 in the Ministry of Agriculture, Fisheries and Food. He has been kept in his crate and there he remains to this day.
I shall not bore the House with too many figures. I have just three sets. Between 1974 and 1979 expenditure from the CAP budget—this is the point in which the hon. Member for Newham, North-West (Mr. Banks) was interested—in real terms increased by 61 per cent. or, on average, by 10 per cent. a year. From 1979 to 1994, expenditure from the same budget has increased in real terms by 38 per cent., or 2.2 per cent. a year. But far more to the point, from 1988 to 1994, expenditure has hardly increased at all—by 1 per cent. or virtually nothing in average terms each year. That represents a huge shift in policy terms. The ship is starting to change its direction.
It may be tempting for the hon. Member for Edinburgh, East, hearing those figures, to defend his record by attempting one of those somersaults that have been a feature of Labour policy recently. Perhaps when he was arguing for all those subsidies all that time ago he was working for the farmers; he was the farmers' man. Unfortunately, that argument does not work. Total income 168 from farming in real terms fell between 1974 and 1979 by 32 per cent.—an average drop of 7.5 per cent. per annum. Since 1979, total income from farming has gone up by 10 per cent. In fact, since 1988, it has gone up by 21 per cent.
Most remarkable of all—I know that the House does not care for figures, so I simply give this third set—is the statistics on food prices. Between 1974 and 1979, food prices went up by 4 per cent. in real terms. That is, they went up that much faster than general inflation. In contrast, between 1979 and 1994, food prices have fallen by 20 per cent. in real terms. To put it another way, since we have been in power, food has become one fifth cheaper relative to other goods.
Mr. Nigel Spearing (Newham, South)Has not the right hon. Gentleman missed out some of the most important facts in his biased view of history? Is it not true that between 1973–74 when we joined, and 1979, we were in the transitional period of the CAP, so food prices of course went up, as did expenditure? Did not the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) take people into the Common Market without telling them clearly that we would lose control of our own agriculture, our own agricultural prices and the use of our own soil?
Mr. WaldegraveThe hon. Gentleman unwittingly makes my point for me. The Labour party, of which he was a loyal and redoubtable supporter—
Mr. Elliot Morley (Glanford and Scunthorpe)Distinguished.
Mr. WaldegraveThat is correct. The Labour party took the agricultural policy and did nothing whatever about it. Through those years there were no controls on overall budget or on the growth of stockpiles and food mountains. Now, we sometimes have to listen to lessons from Opposition Members about how they would change it all overnight. They did nothing about it whatever.
Mr. Nicholas Budgen (Wolverhampton, South-West)I hope that in reviewing agricultural prices my right hon. Friend will refer to the system of quotas and area payments, which is another way of considerably benefiting the farmer. My right hon. Friend will certainly know, but the House may not know, that the milk quota is now worth something approaching £2,000 for each cow in milk, that even sheep quota is valuable, and that area payments for arable farmers are now running at about £105 an acre. Those are all ways in which the distortions of the CAP indirectly benefit the farmer to the disadvantage of the taxpayer.
Mr. WaldegraveI am in some difficulty because my hon. Friend is making somewhat eloquently a later section of my speech. He is entirely right. We must get rid of such distortions. The best of our farmers would far rather be allowed to compete in a world market without those constraints, even if it were in exchange for lower prices.
Several hon. Membersrose—
Mr. WaldegraveMany of my hon. Friends are rising, but I think that my hon. Friend the Member for Worcestershire, South (Mr. Spicer) was the first.
Mr. Michael Spicer (Worcestershire, South)My right hon. Friend began his excellent speech with the assertion that we needed radical reform, which he defined in terms 169 of abolishing state aid and protectionism. Is not that an argument not so much for reforming the CAP but for its abolition?
Mr. WaldegraveNo. I shall explain why in a moment. I should proceed because so many of these excellent points fit well with the structure of what I am about to say. However, I cannot resist my hon. Friends the Members for Ryedale (Mr. Greenway) and for Norfolk, North (Sir R. Howell).
Mr. John Greenway (Ryedale)My right hon. Friend was comparing the records of the previous Labour Government and this Government, but he omitted one crucial fact. To suggest that food prices rose by 4 per cent. in real terms between 1974 and 1979 obscures the huge rate of inflation during that period. Food prices in the shops rocketed then, as every housewife knows.
Mr. WaldegraveThat is true. There was no supply side policy; it was a policy of cartels and incompetence in the management of the economy in general which led to that situation.
Sir Ralph Howell (Norfolk, North)My right hon. Friend has given us some interesting figures going back to 1974. However, would not he be able to prove his point even better if he went back to 1960, when we were spending 1 per cent. of GDP supporting agriculture, since when it has fallen. Only one quarter of 1 per cent. was spent on total support for agriculture in 1988 and even now it is less than half of 1 per cent. from both the EC and in the United Kingdom?
Mr. WaldegraveMy hon. Friend makes a fair point. We should remember that the concept of agricultural support was not invented with the CAP. We have had agricultural support in Britain since the beginning of the second world war. It was formulated in the Agriculture Act 1947. It is worth reminding people that we should compare the costs of that deficiency payment system with the current system if we are comparing the overall cost of things. My hon. Friend makes a fair point.
Mr. WaldegraveI give way finally to the hon. Gentleman.
Dr. StrangI have a genuine inquiry. I agree with the hon. Gentleman's latter point. However, I cannot understand the figures that he quoted earlier in relation to the costs of the CAP. I mention in passing, and I shall repeat it later, that CAP spending in Britain in real terms has increased by more than 180 per cent. since 1979. I do not want to make great deal of that now, but I cannot understand why he is talking about no increase or an increase of 1 per cent. when, as he knows, the effect of the MacSharry changes was hugely to increase much of the expenditure—all the expenditure on set aside and the arable payments. The right hon. Gentleman's figure is inexplicable, unless he is referring to agriculture as a proportion of the total European Union budget, which I do not think that he is. That is quite a different figure. Other sums are going up there as well.
Mr. WaldegraveIf I may make one digression, I am reminded of the famous story of an American professor 170 who said to Professor Durac that he did not understand the connection between x and y in a particular equation that Durac had written on the board and Durac continued with his lecture, thinking that that was a statement of fact which required no answer. The point is that expenditure went down in 1994. The figures are correct. I suspect that the hon. Gentleman's figures go up to only 1992 or 1993. If he looks at the latest figures which are all published—
Dr. Strangrose—
Mr. WaldegraveThis is unprofitable. The figures are in the Library. I assure the hon. Gentleman that the figures that I have given are correct.
On the other hand, since 1979, and more particularly since 1988, the figures reflect the beginning of a huge shift in the cost and direction of the CAP in which no one, either here or in Europe, would deny for one moment that Britain has been the prime mover. As a result of our efforts, the monster has stopped moving. Now we must start a radical programme of slimming.
The change has not been caused only by the valiant battles of my predecessors as Ministers in the Agriculture Council. A turning point was the imposition of overall control on agricultural spending in 1988, an achievement led by Lady Thatcher. The agricultural guideline ensures that agriculture expenditure will fall progressively as a proportion of the European Union total. It cannot be breached except by unanimity, and we will not sanction such a breach.
Mr. BudgenThe proposal relating to the overall proportion sounded very good at the time, but considerable additional expenditure on other items—particularly the regional and social fund—was then envisaged: as long as the other expenditure rose nicely, it was inevitable that agriculture expenditure would decline as a proportion of the total.
Mr. WaldegraveThat is true—and expenditure that is declining as a proportion is not the end that I want to achieve. Let me use my analogy of the big ship changing direction: this ship is changing direction. Before, agriculture was driving the budget up; that is no longer the case. We have much more to do, however. I am not arguing with my hon. Friend about that.
Incidentally, the pledge that I have just given—that we will not allow the guideline to be breached—is not one that the Leader of the Opposition could give. That would imply that he was vetoing a European Community measure; that he was alone—and he keeps saying that he will not be isolated in the Community. That strikes me as a weakening of the negotiating position that is essential to this issue and many others.
The second watershed was the inclusion of agriculture in the general agreement on tariffs and trade for the first time in the Uruguay round. Britain was a leader in what was originally a minority group in calling for that. If it had not been achieved, we would not have secured the 1992 reforms of the common agricultural policy—which are now being phased in over three years, of which this is the last. Those reforms were driven by the need for European agriculture not to bring the GATT round to a halt.
I am far from saying that the mechanisms used in the 1992 reforms were wholly right; they were not. We wanted the price cuts to hold back over-production, but 171 not the quotas or the bureaucracy. But—and it is a big but—those reforms started a process that has helped radically to reduce stockpiles, has reduced the consumer cost of the CAP by about £8 billion—with £1 billion of that gain coming to the United Kingdom—and has, via the so-called peace clause, prevented the EU from increasing support for commodities above the 1992 level in the future.
My party currently seems to be very self-denying in terms of claiming credit for its achievements. I do not believe that without our commitment to controlling public spending we would have got the guideline; nor do I believe that without our commitment to free trade we would necessarily have got agriculture into the Uruguay round, or secured the right outcome from the round itself. Those are our Government's achievements, and we should be proud of them.
As I said earlier, however, this is only the start. I am not asking the House to endorse the CAP today—far from it—but I ask hon. Members to recognise and support our objectives for reform and the success that we have achieved so far in a battle that will move into a crucial phase during the next few years, with a new GATT round in 1999 and the proposed entry of the central and eastern European countries.
Mr. Tony Marlow (Northampton, North)I would like also to be able to congratulate the Government on what they have achieved, but it does seem rather difficult to do that at a time when our farmers must take more of their land out of production than farmers in any other European country, and our farmers must pour their milk down the drain while our milk manufacturing facilities are having to close.
Our farmers seem to have to put up with much more bureaucracy. The IACS form is an example. Under the integrated administration and control system, 24 separate documents could have to be filled in in Britain; nothing like that happens in Spain, Portugal, Greece or Italy. Why do our farmers get the wrong end of the stick every time, whereas all the other European farmers seem to get away with murder?
Mr. WaldegraveThe answer to that is that they do not. No one compels any British farmer to set aside any land, but if a British farmer wants to accept large subsidies for arable production, he must do so.
Quotas are a different matter. It is quite wrong for us to be controlling what is still over-production of milk in the European Community by means of quotas; we should be controlling it by means of lower prices. It should not be thought, however, that when that comes—as it must and will—it will be wholly welcome to dairy farmers. Dairy farming is the sector of British farming that is most profitable in terms of pennies per hectare.
I believe that the policy that I am presenting is supported by forward-looking farmers. Indeed, it is supported by the National Farmers Union, which knows what must be done in the long term. My hon. Friend must be a bit careful when seeking a cheer from British farmers: they are familiar with the other side of the coin.
Dame Elaine Kellett-Bowman (Lancaster)Does my right hon. Friend agree that the effect on our farmers would be devastating if we did not secure reform of the CAP before the entry of the central and eastern European 172 countries, to which he referred? Given their huge areas, they will be appallingly difficult competitors if we do not get it right in time.
Mr. WaldegraveAs so often, my hon. Friend has made exactly the right point. Indeed, I was about to deal with it.
Mr. Edward Garnier (Harborough)Will my right hon. Friend give way?
Mr. WaldegraveI think that I had better proceed with my speech. Perhaps I shall cover the point that my hon. Friend was about to make.
Our next objective must be to use the time that we have before those central and eastern European countries are ready to join to ratchet down the cost further, to make the policy one that will be affordable after they have joined. That was the point made by my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman). It is not so much pressure from the financial guideline as currently drawn that will help us in that regard; our first calculations show that the entry of at least the so-called Visegrad Four countries could probably be financed within the guideline on present, post-MacSharry policies. However, there would none the less be a large increase in cost. Moreover, the extra money "affordable" within the guideline would be completely wasted because it could not be used, under the GATT, to do anything other than destroy or permanently store the increased production that an unreformed CAP would produce in the central European countries. It could not be used for subsidised exports, for example.
I believe that the House, and all sane people, would regard such an outcome as absurd and unacceptable. It would be far better to return the money to the taxpayers, and to set prices at a level that avoids over-production in the first place. We must sort out the problem before those countries join. That means steadily lower prices, which in turn will mean dismantling—over time, and with due warning—the superstructure of controls and quotas that MacSharry introduced to restrain production at a time when the Community would not accept the alternative of greater price cuts. I can agree with one phrase in the Liberal party's amendment, among a number with which I disagreed. There must be due warning, so that the industry has time to adjust.
Mr. D. N. Campbell-Savours (Workington)May I ask the Minister to depart from his speech for a moment, and take us for a canter around Europe? Could we consider what will be the reaction of other European countries such as Italy, France, Belgium, Germany and Spain to the radical proposals that the Minister is presenting?
Mr. WaldegraveI cannot resist the hon. Gentleman, as is often the case. I believe that in the next stage, according to the laws of arithmetic, the result of the interaction of the GATT with the CAP and budgetary concerns will demonstrate to other countries that the change is now unavoidable. After all, the same thing happened when both the last two changes to the CAP were made: external pressure on the Agriculture Council led to change.
The other countries that will respond fall into two groups. The group that does not want the change argues that we should postpone all action until after the entry of 173 the Visegrad Four—have transition periods, hope for the best, all that kind of thing. Another growing group that firmly includes Sweden, Holland and Denmark, alongside us—interestingly, there is increasing support in France—holds that European agriculture is efficient enough to live much nearer to the world markets, and that we will head for a cliff edge if we do not act in time. That would be far more destructive to farming, and far more damaging to those who work in the industry. Although I would be wrong to claim that there is a majority in favour of my proposals, there is a significantly influential minority, represented in the Commission and among serious academics who, after some time lag, influence policy in Europe. The battle is not lost, but the battle would not have a chance of being won if it were not for the external constraints driven by GATT and the entry of the other countries.
The next stage will deliver lower prices in return for restored freedoms. But I must urge the House to believe that the slogan "repatriate the CAP"—I return to a point to which several hon. Members have referred—will not help us to get the outcome that we need. We cannot accept British farmers having to face subsidies for production elsewhere in Europe or, indeed, America, which they do not get at home, with free trade dismantling any protection for their goods. That is why we need a continuing CAP, with more not less rigorous action to rule out illegal state aids; a CAP which matches the single market with a single, simpler, cheaper, regime of support, which is, incidentally, increasingly focused not on production aids but on environmental gains.
We do not want repatriation of agricultural subsidies any more than any other kind of subsidies. We want fewer subsidies. We want our industry, which is one of the most efficient in the world, to be able to compete fairly and win prosperity from its own efficiency in the single market which we, after all, fought so hard to create.
In the meantime, as we prepare for the next forward moves, we are in a period in which the consequences of the previous changes are still working through, which makes the Commission's proposals this year fairly uninteresting. They involve very little change over and above those which result automatically from the 1992 reform. They include some welcome small steps further in the right direction, but the Commission should have gone further to reduce support prices across the board. It has missed an opportunity to signal to farmers and growers the intention to continue along the path set by the 1992 reform, as continue it must.
The main proposals affecting British farmers concern milk, sugar and cereals. In the milk sector, the Commission has proposed a 2 per cent. cut in the intervention price for butter, but no cut in quotas. That is welcome so far as it goes. The United Kingdom is only 85 per cent. self-sufficient in milk, so our producers and dairy industry would suffer disproportionately from any quota cut. I have urged the Council to adopt a larger cut in the butter intervention price so as to relieve pressure for quota cuts in the future.
I am also pressing for provision for the milk quota to be leased across member state boundaries. I regret that that suggestion has not commanded widespread support, but I shall stick to it. I shall nevertheless continue to press for measures to relieve the particular difficulties which 174 our shortage of milk quota poses. That will be especially important if the Commission's report on the implementation of milk quotas in Italy and Greece, which is expected shortly, recommends that the quota increases granted to those countries in 1993 and 1994 should be repeated for 1995 and subsequent years.
For cereals, the Commission is proposing to reduce by two months the period during which intervention is open, as well as to cut the monthly increments in the intervention price in response to reduced storage and interest costs. I welcome those measures to reduce the role of intervention and encourage farmers to rely more on market price signals.
The Commission's failure to propose cuts to sugar support prices, which are indefensibly high, is particularly disappointing. I nevertheless welcome the proposal to reduce the level of storage refunds in response to falling interest rates across the Community. We shall seek to get the best deal from this unsatisfactory proposal on quotas for our producers, who are not, after all, the cause of the surplus which the Commission rightly wants to cut.
No change has been proposed in the levels of beef support beyond those determined in the reform, nor in the level of the sheepmeat basic price. I shall be pressing for changes to both those complicated regimes to reduce unnecessary bureaucracy. Expenditure on the beef special premium is controlled by overall national quotas, known as regional ceilings. Yet there is also a 90-head limit on claims under the scheme.
Mr. Christopher Gill (Ludlow)Does my right hon. Friend agree that it would far more satisfactory from everybody's point of view and would certainly encourage a better quality of beef if all the support was given to the suckler herd instead of being spread across all beef production, which includes those dreadful beef—no, they are not beef animals—those dreadful Holstein animals?
Mr. WaldegraveFor a moment I thought that my hon. Friend was getting at the dairy industry and farmers. I know that he speaks with great knowledge. I am not sure that he would be universally supported by the agricultural industry, but he makes the serious point that if a great deal more Holstein-derived beef came on to the market for other reasons, we might see a fall in the beef premium for the specialist beef producers, which would be very unfair.
As I was saying, we do not need the 90-head limit. It imposes a considerable extra burden. We would much rather get rid of the individual quotas on sheep annual premium and suckler cow premium and replace them with regional ceilings, as apply in the beef special premium scheme to which my hon. Friend referred. Such a scheme, which would need to be signalled well in advance to give farmers time to adjust, would remove a significant bureaucratic burden from the industry.
In most other sectors, the Commission has proposed no change in the support prices. As I have said, I think that that is a lost opportunity. It has, however, proposed a cut in the basic pig meat price to bring it slightly closer to market reality, which is welcome.
Meanwhile, however, there is a different area of action to open up: the area of fraud and enforcement of the rules. We have been at the forefront of pushing the Community towards a much more rigorous approach to the control of 175 fraud. That matters, of course, not only in relation to the CAP, but the CAP is particularly vulnerable and still accounts for over half of Community spending.
It was, of course, the British who saw to it that the role of the European Court of Auditors was strengthened and ensured that its reports and recommendations should be properly considered in Brussels. In our previous presidency, we pushed through the integrated administration and control system, which although neither my hon. Friend the Member for Northampton, North (Mr. Marlow) nor anybody else would claim is other than unpopular, is an essential part of ensuring that we can secure fair controls right across Europe. If we did not have such a detailed scheme, there would be nothing for us to press to enforce. I shall be able to give my hon. Friend some examples of where, because that system is in place, the rules are being enforced right across the Community. I do not know how we could do that without such an underpinning structure.
The 1992 reform helped to reduce one kind of fraud at least, by reducing the role of export refunds and intervention, which have shown themselves to be targets for fraudsters. I very much hope that the Council will soon adopt a new proposal—sometimes known as the "blacklist" proposal—which will further tighten controls in that area. We must vigorously sustain the fight against fraud. I particularly welcome Commission initiatives which introduce tough penalties for those who, it has been proved, have benefited from aid to which they are not entitled.
We have also been pressing the Commission to use to the full its powers to disallow—not to reimburse from the Community budget expenditure improperly incurred by member states. As a result, the Commission disallowed a total of 1.5 billion ecu, about £1.2 billion for 1991, which is the last year for which decisions have been taken. That represented about 5 per cent. of CAP expenditure.
Mrs. Cheryl Gillan (Chesham and Amersham)Does my right hon. Friend agree that technology is extremely important in combating CAP fraud? I congratulate him on the press conference, which he held in conjunction with the Department of Trade and Industry, at the British National Space centre on 17 January, where it was announced that the spot satellite was to be used for the first time on earth observation and remote sensing, which will help us to combat fraud throughout the European Union.
Mr. WaldegraveMy hon. Friend, who is extremely knowledgable about this subject, is entirely right. The results of some of the early remote sensing satellite pictures in some of the southern countries of Europe have been very interesting and much acreage has turned out not to exist. Such a system will turn out to be a very useful weapon in reconciling people's claims with reality.
Dame Elaine Kellett-BowmanSome of the remote sensing has to be used with a little care. For example, if one is trying to deal with the output of olive oil, one must know that an irrigated olive tree produces between 10 and 100 times as much oil as a tree which is not irrigated. So one must be a little careful in trying to combat fraud in the production of olive oil.
Mr. WaldegraveMy hon. Friend is perfectly right. The use of remote sensing will be most powerful in 176 measuring hectareage, which is mainly linked to cereal production, and in areas where a farmer is claiming subsidies per hectare.
That is a powerful tool that the Commission has for obliging member states to put in place effective controls against fraud. I shall give the House some examples. Greece has been disallowed about £45 million for having inadequate controls on cotton expenditure. Substantial penalties will be applied to Italy and Greece in respect of grain frauds that have been uncovered. Those actions by the Commission—which I wholeheartedly support—send a clear warning to member states that poor controls will be heavily penalised.
Our record in the United Kingdom is good, but we too must ensure that our own controls are effective. There has been some publicity recently about off-contract deliveries of milk designed to avoid attracting super-levy. Although the so-called "black milk" problem is considered to be relatively small, I have instructed the intervention board to ensure that its anti-fraud unit actively investigates any information that it receives. If regulatory offences have been committed those involved will be prosecuted, and will also face a much higher levy bill as a consequence.
Part of the disallowance that I mentioned relates to the past failure by Italy, Spain and Greece to implement milk quotas, and the United Kingdom's action in the European Court resulted in a 50 per cent. increase in the disallowance originally proposed by the Commission. People have criticised my right hon. and learned Friend the Chancellor of the Exchequer over the deal, but I believe that they are wrong.
Let me remind the House of the facts. We had taken European Court cases against the Commission's original decisions—decisions that would have led to a total disallowance of about £1.6 billion over five years. We thought that far too low. Despite our requests, not one other member state joined us in bringing the case.
There was, of course, no certainty about the outcome of the case; few litigants can ever expect that. Italy and Spain had counter-claimed, taking their own cases to the European Court and claiming that the disallowances imposed by the Commission were too severe. In any event the case would not have come to a conclusion for a considerable time.
In those circumstances the "out of court" settlement amounting to a total disallowance of £2.5 billion—about £1.2 billion more than the countries concerned received under the milk regime during the same period—was a good outcome. The deal also established the vital principle that the Commission could act only in accordance with the regulations adopted by the Council, and establishing that had been a major objective of the court proceeding.
Mr. BudgenMy right hon. Friend will agree that it was disgraceful that three of the countries in the European Union were found to have made no attempt whatever to impose the agreed milk quotas. Will he now tell us whether, after all the Chancellor of the Exchequer's generosity on behalf of the British taxpayer, those three countries have now set up a proper system for reducing milk production, as they agreed to do?
Mr. WaldegraveMy hon. Friend is unfair, for once, in that he says that the Chancellor of the Exchequer was 177 generous in that business. As a lawyer who has practised for many years, he would have advised his client to accept such a deal, because it was a good one.
Mr. BudgenWhat has happened now?
Mr. WaldegraveOn my hon. Friend's second point, the Commission must now come to the Council. It has not yet put the proposals before the Council, although I believe that they will be put before us at any moment. The Commission will have to convince the other members and myself that the proper arrangements are in place. I suspect that there will be a difference between the three countries, and that Spain will be better prepared than the others.
Mr. BudgenHow long will all that go on for?
Mr. WaldegraveMy hon. Friend must restrain himself. The proposals will be before the Council in time for the proper decisions to be made, and we shall consider them. I shall certainly bear in mind the need to convince my hon. Friend and other Members of the House that we have taken the right decision.
Mr. Campbell-Savoursrose—
Mr. Marlowrose—
Mr. WaldegraveI must press on. Other hon. Members will be able to make speeches in due course.
It is essential that we press the Commission to fulfil its responsibilities to ensure that each and every member state obeys Community rules. As a result of our efforts the Commission declared illegal state aids by the French and Irish Governments—"Stabiporc" pigs aid in France, and the market development fund aid to mushroom growers in Ireland—and required that they be repaid. I shall let the House know of one or two other anti-fraud cases now in hand.
In one case "high-quality" beef was exported, with high export refunds, from two member states to the United States. The consignment passed customs but was never delivered, because the United States food health authorities declared part of the consignment unhygienic. It was then purchased at a very low price by an associate of the exporters and sent with false health certificates to two other member states as offal, with minimal import duty. After passing through a fifth member state, it was then exported to Africa as high-quality beef, once more with high export refunds. The organisation of the fraud involved companies in four of the member states through which the consignment passed.
Secondly, consignments of butter, sugar and milk powder en route from the Czech Republic to Morocco and Algeria via Spain, with Czech transit documents, were cleared as having reached the Spanish quayside for export, using a fake Spanish customs stamp. In fact they had been sold in various places inside the Community, avoiding import duty of about 20 mecu.
Thirdly, in September 1994 the Commission identified serious irregularities in the compensation paid to hill farmers in Corsica. All payments to Corsica under the heading involved have been suspended while the Commission and the French authorities make further inquiries.
178 Fourthly, a mission to Italy the same month revealed a fraud worth 2 mecu concerning fruit and vegetable processing enterprises and Community funds. Legal proceedings have been opened in Rome. I give those examples, which are merely the latest, to show that at long last the battle against fraud is beginning to make some real headway.
Mr. GillWill my right hon. Friend give way?
Mr. WaldegraveI think that I had better press on, because I am almost at the end of my speech.
At the beginning of my speech I promised to report on the other main agriculture policy events of the year, but I fear that I must do so very briefly.
On farm incomes, as I said earlier, the news remains good. The latest 6.9 per cent. rise in total income from fanning came on top of substantial rises in the previous two years.
Deregulation of the milk industry last autumn has opened up an over-regulated market to real competition. The same is happening with agricultural tenancies, and the Agricultural Tenancies Bill is currently before the House, to the delight of all parties in the industry—almost the only carping voice comes from the Labour party. As for the Agricultural Wages Board for England and Wales, I concluded that we should heed the advice that we received from most people in the industry and keep it. In the latest public expenditure round—a very tough one—we protected research and made no further cut in hill livestock compensatory allowances.
We have secured a 3 per cent. cut in set-aside, while our long-running campaign to ensure that land put into forestry and agri-environmental schemes can count towards set-aside has at last reached the point where firm proposals are on the table. We have widened yet again the range of our domestic agri-environmental schemes, with six new environmentally sensitive areas, a new habitat scheme and a new countryside access scheme. Total expenditure on those schemes will rise to about £100 million by 1996–97. We have also begun the consultation with the Secretary of State for the Environment that will lead to a new White Paper on the rural economy later this year.
We have, of course, faced the difficult and emotive issue of live animal transport, which we have debated several times in the House recently and may debate again soon. Work to secure a proper outcome, with the abolition of veal crates and tougher rules on transportation, continues.
It is always rash to say to a farmer that things are going well. When my father was a junior Minister in the Department that I now represent, he had on his desk a cartoon of two farmers leaning on a gate with a sheet of water in front of them. One fanner was saying to the other, "If the floods recede as fast as this we're going to have a very nasty drought on our hands." I have learnt not to say to farmers that things are going well. None the less, they are.
There remain huge tasks ahead of us, above all in securing the change that we need in the CAP and in securing it in an orderly way that does not make life impossible for the industry. But I believe that the Government have every right to ask the House to reject the Opposition amendment, which, incidentally, for the second year running, forgets to mention the words 179 "farmers" and "agriculture", and to endorse our agriculture policies with some pride—pride in what we have achieved, and confidence that our direction for the future is the right one.
Dr. Gavin Strang (Edinburgh, East)I beg to move, to leave out from "measures" to the end of the Question, and to add instead thereof:
but believes that the CAP continues to fail consumers, taxpayers, the rural economy and the rural environment and that the Government is not doing enough to make fundamental changes to an unacceptable policy.".In opening the debate, the Minister rightly said that it has two purposes. It addresses the common agricultural policy price proposals and it is the traditional annual debate that used to follow the old agricultural price review before we joined the European Community. That was essentially a stock-taking exercise and an opportunity for the Minister to defend the price review and the agreements that he had reached with farmers' unions for the year ahead. I intend to treat the debate in the same way.Like the Minister, I believe that we must accept that Europe is crucial to agricultural policy. All the major strategic decisions are made in Europe, and of the spending on agriculture in this country, expenditure through the framework of the common agricultural policy is about four times the Government's domestic expenditure on agriculture.
The Minister said that the industry is doing relatively well, and I am happy to agree. In fact, that is an understatement because across the industry there has been a significant rise in farm incomes, which we warmly welcome. That rise occurred against the background of the depressed incomes of the 1980s, and I think that most people in the wider community still do not appreciate how badly agriculture did during the 1980s and how much investment was depressed.
The Minister would probably accept that there are still some sectors which, to put it mildly, we would like to see doing better—the pig sector, the fruit sector and the upland sheep farming sector, which are not doing well enough—but returns for cereals and milk, major commodities, and potatoes are very good.
It is important that we continue to understand that the increase in prosperity is not a consequence of the Government's policy—far from it. The major factor in the increased returns for British farmers is what we still rightly call black Wednesday. It all goes back to that debacle in the autumn of 1992 when the Government were humiliated and had to abandon their policy of trying to stay within the ERM. It is important to dwell on that point so that people fully understand what happened. It was fundamental to the long-term prospects for British agriculture, and it explains why many farmers, who may be doing well now, are still uneasy about the future.
The Minister reminded us today that the 1992 MacSharry reforms produced an agreement to cut the cereal price. Other price changes were agreed, but the crucial decision was to cut the intervention price for cereals. To compensate cereal growers for that, direct payments to farmers were to be introduced along with set-aside and farmers were to have an arable payment scheme, which included set-aside payments. In other 180 words, if a farmer had 100 acres of grain, he would get paid so much per acre of grain and so much for the set-aside, the land left fallow.
What happened in the United Kingdom is very different from what was envisaged under MacSharry, and very different from what happened in Germany. In the UK, the increase in the sterling green rate and the devaluation of the pound meant that we did not have a reduction in cereal prices. By and large—I am happy to be corrected on this—it is fair to say that cereal prices in the past two or three years have not changed for UK farmers, although they have, in the main, been above the intervention price.
There has been a huge change in the incomes of growers as a result of the arable and set-aside payments. The effect of the devaluation of the pound was massively to bump up those payments, and that is the crucial factor. Farmers did not experience a price cut and they received much more enhanced compensation payments than had been envisaged at the time of MacSharry.
The arable area payment for England, which began in 1992–1993 at £140 per hectare, increased to £247 per hectare for 1994–95. The set-aside payment in 1992–1993 was £253 per hectare; in 1994–1995 it was £313. There has been a huge increase of money into the cereal sector.
Mr. MarlowWhat is the hon. Gentleman's conclusion? Is he saying that farmers are far better off because of white Wednesday, or that farmers should not have the payments?
Dr. StrangI shall come to that later. I am not saying that price cuts could be made in Europe without some attempt being made to alleviate their short-term effect. What happened in the United Kingdom was totally different from what was intended by the Council of Agricultural Ministers.
Mr. BudgenI am trying to understand the general drift of the hon. Gentleman's remarks. He says that some sectors of agriculture are doing badly and require more investment. Is he offering more public support in the form of taxpayers' money to sectors of agriculture that are complaining? How is that consistent with reducing financial support for the agricultural sector?
Dr. StrangI shall come to that. [Interruption.] The Member for Hertfordshire, North (Mr. Heald) will not be disappointed when I do.
The massive boost to British agriculture in the past few years is a direct consequence of black Wednesday. The Government cannot claim credit for the increase in farmers' returns because they and previous Conservative Governments have implemented policy changes that have tended to be inimical to British agriculture. I intend to dwell on some of those changes.
Before I do so, I wish to be fair and to describe two exceptions to those changes. The first is the decision to reprieve the agricultural wages boards. The decision to close them was inspired by Tory dogma, and it was opposed by the whole industry. We know from history, however, that that was not necessarily sufficient to ensure that the boards survived. The Minister decided to reprieve the boards, which were of great importance to the Labour party and it would be churlish not to thank the right hon. Gentleman for that decision.
The second exception is in relation to animal welfare. As I have explained, we do not think that the Government have gone far enough, although we had a constructive 181 debate on the Adjournment on a Wednesday morning recently. I acknowledge that the right hon. Gentleman has adjusted the British Government's position on animal welfare, and has moved us towards a more pro-animal welfare position. There is still some way to go, but I welcome that fact.
Mr. Mark Robinson (Somerton and Frome)Will the hon. Gentleman give way?
Dr. StrangNot on the subject of animal welfare. My hon. Friend the Member for Glanford and Scunthorpe (Mr. Morley) will deal with that matter when he speaks. I will not give way on the agriculture wages boards either, as I merely mentioned the two subjects in passing.
I am grateful to the Minister for making available to us the Department's annual review, which is to be published on Thursday. The major event, as it rightly points out, was the decision to deregulate the milk industry after 60 years and to eliminate the milk marketing schemes. The Opposition do not believe that any of the evidence that has emerged since the abolition of the milk marketing boards justifies any alteration in our stance. We opposed the abolition of the boards, and said that—at the very minimum—the Government would have a responsibility to lay down an appropriate structure that would operate in the best interests of the industry.
The Government have abdicated their responsibility, although I know that that decision predates the term in office of the present Minister of Agriculture, Fisheries and Food. We are still concerned about the closure of manufacturing capacity, and we see no evidence that the abolition of the milk boards is resulting in an increase in the production of high-value milk products, as the proponents of the changes on the Conservative Back Benches suggested. On the contrary, we are still worried about the reduction in capacity, which is not in the long-term interests of milk producers, although they are benefiting from the sharp price increase that has resulted from deregulation.
Before I move on to the CAP, I want to say a few words about the damage that the Government have done to the long-term prospects of British agriculture by attacking what I would call the public services, expenditure on which has nothing to do with Brussels. It is wholly funded directly by the British Treasury. It is mainly very positive expenditure that brings great benefit not only to farming but to the British people. I refer, for example, to agricultural training.
Anyone who goes about the country and knows anything about agriculture must be aware of the number of people directly involved in agricultural training who have lost their jobs. Expenditure on the agricultural training board has been slashed. The new ATB Landbase is only a pale shadow of the previous board. In 1992–93 the Government spent £6.7 million on the agricultural training boards. In 1994–95 the ATB Landbase contract was for just £4 million.
The state veterinary service—I hope that the Minister will listen to this—has a tremendous history. It has been peopled by some of the most dedicated vets and civil servants in Britain. It is a tremendous asset to the country. It is in the front line. It is not less important but more important now because of the increased risk of animal 182 diseases coming in from central Europe. The Minister nods his head. Let me remind him what the Government have done to the state veterinary service. The number of vets employed by the service has fallen from 580 in 1979 to 403 in 1994—a 30 per cent. cut. We are talking not about money but about real resources. We are talking about what the veterinary service is about—vets.
Instead of fewer state vets, we should have more. I hope that the Minister will abandon the dogma that has bedeviled the service and demoralised vets. We will pay a price for it if we do not reverse the cuts. The price will be a costly one if some major disease that is prevalent in eastern Europe comes into Britain. Such diseases could easily come to Britain through the European Union.
The Agricultural Development Advisory Service is a great service. Colleges in Scotland and the former national agricultural advisory service in England, which became ADAS, served the industry well. Anyone who has spoken to any employee of ADAS will be aware of the destruction and demoralisation of the service by Government dogma and successive cuts. ADAS is a Government service, not a private consultancy. There are plenty of private consultancies about. We are all for them if they can earn a living. ADAS is a Government service that is supposed to help our farmers and give them independent advice, which they do not get from fertiliser companies or compounders. It is supposed to give them advice on all the things that we should encourage farmers to do. It is now required, according to the latest figures, to recover 63 per cent. of its costs from consultancy. The service has been pushed so far down that we do not know what its future is. I hope that the Minister will try to minimise the damage. He will never reverse the cuts, but I hope that he will not go for complete privatisation of ADAS.
Mr. WaldegraveMy hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) asked the hon. Gentleman about his demands for further expenditure, which he has failed to answer. We have demonstrated how many billions of pounds flow into British agriculture from consumers and taxpayers. The hon. Gentleman says that, on top of all that, we must add further taxpayers' money. Surely an industry with that amount of underpinning and support can pay for its own training.
Dr. StrangThe valuable state expenditure on services such as state vets, of which the Minister has complete control, is being squeezed, but the expenditure that we want to cut has increased since 1979 by 180 per cent. in real terms. That expenditure is under the CAP in the United Kingdom. We want to slash two thirds of it. I shall explain that to the right hon. Gentleman in a few minutes.
Mr. BudgenThe hon. Gentleman damages himself by getting so over-excited. Let us take the example of a dairy farmer—this may be embarrassing to my right hon. Friend the Minister. Since the introduction of milk quotas, dairy farmers have been given a quota under the common agricultural policy that is worth about £2,000 per cow and rising. Some dairy farmers have retired and simply leased the quota. They have found themselves in a comfortable way of life. Such people do not need further subsidy so that their cowmen can be trained at the expense of the taxpayer, do they?
Dr. StrangI agree with the hon. Gentleman. I do not want to digress for too long, but I shall make two points 183 about quotas. First, the United Kingdom share of the total European Union milk quota is too small—I shall not go on about the increases that were given to Italy and Spain, for which I have already criticised the Government and I do not accept the Minister's defence—not because we do not have enough quota to meet our needs but because we are a relatively efficient producer of milk.
Quotas were introduced because there was a surplus of milk as a result of the CAP market support arrangements. We want those arrangements not merely tinkered with but eliminated. Intervention buying of skimmed milk powder and butter still occurs on the continent. Surely the hon. Member for Wolverhampton, South-West (Mr. Budgen) understands that. We must have quotas because we have an overarching policy that drives up the price of milk and milk products, whether or not it can be justified by the market.
Mr. BudgenSurely the hon. Gentleman realises that to most people outside the House the common agricultural policy is an utter nonsense and distortion. The hon. Gentleman looks at each point at which some slight reduction in state aid has taken place. He describes such reductions as a gross scandal and as taking the bread from an impoverished section of the community. We are meant to regard farmers in the same way as single mothers in a deprived area of Bristol or Wolverhampton. That is rubbish. The more that we examine the hon. Gentleman's proposals, the more it is obvious that he wants a great deal more money to be spent on agriculture.
Dr. StrangI think I know what this is about. I shall not give way again. The hon. Gentleman is one of the Euro-sceptics. I have a document here entitled "Not a penny more". The hon. Gentleman's name is not on it, but two of his leading hon. Friends' names are on it. The document is clear. It makes a frontal attack on the CAP. It says:
Under the Common Agricultural Policy only £40 out of every £100 reaches them. The rest of the agricultural subsidy is swallowed up by fraud, bureaucracy and huge food surpluses which are dumped on world markets at give-away prices.I intend to make a proposal that will end that.If the hon. Member for Wolverhampton, South-West is to be true to the position that he has taken and vote accordingly, he should vote for our amendment. That also applies to his hon. Friends. They do not agree with me on most things, partly because I am Labour and they are Tory; everyone in the House of Commons knows that. We now understand that all these interventions are an attempt to justify the Euro-sceptics' intention not to vote in the way in which they have argued for the past few months.
The most important cuts are the slashing of expenditure on research and development. I accept that all the cuts took place before the right hon. Gentleman became Minister of Agriculture, Fisheries and Food. The former Agriculture and Food Research Council has been replaced by the Biotechnology and Biological Sciences Research Council. The number of scientists was cut by 41 per cent. between 1979–80 and 1993–94. If we examine expenditure on research commissioned by the Ministry, we can see that Government-funded agricultural research and development has been slashed. We shall pay a long-term price for that. One of the reasons why we have had such a buoyant and successful agriculture industry over the past few decades is because of the investment that we have been prepared to make in that area.
184 I am disappointed by the way in which the Minister sought to present the figures for expenditure on the CAP and, as a consequence, I shall say a little more about them. In 1978–79 CAP expenditure in the UK was £337 million, and the projected figure for 1995–96 is £2,873 million—an increase of 180 per cent. in real terms. I take the year 1995–96 because the price proposals that we are discussing relate to the coming agricultural year. o suggest that there is some great success story here is misleading.
I shall give one or two more statistics that I had not intended to give, because we must nail this matter. The Minister will correct me if I am wrong, but he said that the 1994 outturn of the total European Union agricultural budget is lower than the 1993 outturn. In reality, total expenditure under the CAP has been ratcheted up year in, year out. I shall quote one or two statistics that I have converted into sterling from ecus. They are rough figures and I am prepared to concede plus or minus 10 per cent. The total CAP expenditure in 1980 was just over £7,000 million; in 1985, it was just over £12,000 million; in 1990, it was just over £19,000 million; and in 1994, it was just over £30,000 million. That 1994 figure is projected; the actual outturn may be somewhat lower. Even if the 1994 figure were just £27,000 million, it is still a huge ball-park increase. The projected figure for 1995 is more than £30,000 million.
Mr. WaldegraveThere is nothing more sterile than bickering about statistics, but they are important, as the hon. Gentleman says. Between 1974 and 1979, expenditure from FEOGA increased by 61 per cent. in real terms. Between 1974 and 1979, expenditure from FEOGA increased by 38 per cent. in real terms.
Dr. StrangMy final quote is from a letter for which I am grateful to my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson). The Minister's figures are flawed and I shall come back to them. The letter, dated 6 February, was from the Minister to my hon. Friend, and it said:
You request confirmation of the rate of increase in CAP expenditure between 1991–92 and 1995–96. Expenditure at 1991 was 31.9 billion ecu"—so let us say 32 billion ecu, to round it up—while the 1995 CAP budget has been set at 37.9 billion ecu"—so we could say roughly 38 billion ecu, an increase of 6 billion ecu. [Interruption.] Those are huge figures. Do not hon. Members realise that the expenditure was a fraction of that a number of years ago? The right hon. Member for Bristol, West (Mr. Waldegrave) sought to argue in his letter that that was no longer a problem and that CAP expenditure was under control.
Dr. StrangOh, yes. That is the impression that he sought to give.
Mr. Waldegraverose—
Dr. StrangIf the right hon. Gentleman is about to qualify that, I shall be delighted.
Mr. WaldegraveI am not about to qualify it other than to say that that is not what I said at all. I pointed out—the oil tanker is shifting—that there was a 61 per cent. increase in real terms under Labour and a 38 per 185 cent. increase over the whole period of this Government. What is significant is that between 1988 and 1994, it has increased by only 1 per cent., so the change is moving in the right direction.
Dr. StrangThe right hon. Gentleman is misleading the House—
Mr. Deputy SpeakerOrder. The hon. Gentleman might like to rephrase that.
Dr. StrangI accept that he is inadvertently misleading the House.
Mr. Deputy SpeakerOrder. The use of the word "misleading" is not acceptable.
Dr. StrangNo problem; I withdraw it.
I do not dispute the increase in expenditure between 1974 and 1979. As my hon. Friend the Member for Newham, South (Mr. Spearing) pointed out, that was a period of transition. I do not say that it was satisfactory, but we were moving from not being in the CAP to being fully in it. I challenge the Minister's figures for the real-terms increase in CAP spending, but he may have tried to exclude some countries and compensate for the enlargement of the European Union. If so, he should say so.
Mr. Waldegraveindicated dissent.
Dr. StrangLet me move on.
Mr. Gary Streeter (Plymouth, Sutton)Will the hon. Gentleman help the House by saying exactly where his figures come from?
Dr. StrangMy figures have only two sources: first, Government documents—the Government publish figures not just on their own spending but on European Union spending—and most of the figures that I quoted are from that source, including the letter from the Minister of State; secondly, the last two figures that I gave are from a European Union document and I converted those from ecus to sterling.
Mr. WaldegraveI have given the hon. Gentleman and the House figures derived from the Ministry in good faith, and I believe that they are right. If, as a result of the hon. Gentleman's amateur arithmetic, he turns out to have accused me wrongly—he backed down from accusing me of misleading the House only under pressure—will he apologise to me?
Dr. StrangIf the figures that the right hon. Gentleman gave are a fair representation of what has happened in relation to CAP expenditure, of course I shall apologise. I cannot understand this exchange because everyone sitting in this House of Commons knows that CAP expenditure has increased massively in the past few years. There is no dispute about that.
Dame Elaine Kellett-BowmanIt is slowing down.
Dr. StrangIt has slowed down for only one year. Even the hon. Lady must understand that the MacSharry proposals reduced the price effect of the CAP on the continent—less in the UK because of devaluation—but it did not alter the cost of the CAP to the taxpayer. On the 186 contrary, MacSharry would always have increased the cost of the CAP to the taxpayer and everyone acknowledged that at the time.
I am happy to make it clear that the Labour party wants an end to state intervention buying of agricultural commodities. We want an end to subsidising agricultural exports, which is some two thirds of CAP expenditure. The Minister spoke a great deal about fraud. Anyone who knows anything about fraud knows that the vast bulk of it derives from surpluses and the huge quantities of agricultural produce in store. Above all, it derives from the huge payments that are made to traders when they move produce across international frontiers. Interestingly, the examples of fraud that the right hon. Gentleman gave all related to the payment of export refunds and some related to agricultural commodities that had been taken into intervention. I emphasise that we want an end to that system of market support. We do not want an end to supporting our agricultural industry, but intervention buying and export subsidies should go.
I want to deal with the relationship between those subsidies and fraud, because if we ended that relationship we would tackle fraud. I must ask the House to put up with a long, important quotation from the head of the division of the audit guarantee section of FEOGA. He is a senior official of the Court of Auditors and is involved in the audit of all the market support money in relation to the CAP. He gave evidence to the House of Lords Select Committee on the European Communities, which, like our own Select Committee on Agriculture, provides a lot of valuable information to everyone interested in agriculture. That senior official was interviewed about fraud and he said:
Another example deals with agricultural expenditure. When considering export refunds (the export refund total amount this year would be about 8–10 billion ecu, which is substantial) the background of spending this money is the surplus of agricultural production in the European Community. To simplify, you could say that one wants to get rid of those surpluses; of course, not at any cost, but the Commission is pushing to get rid of the surpluses. Now we go in the same direction: the Commission wants to get rid of the surpluses; the Member States try to execute a policy to pay for the export refund; and the beneficiaries, the traders or manufacturers, play their role. It all gears into the same direction: spending the money. Of course, it does not mean that all traders would manipulate it. Not all transactions are fraud, but the problem is you create a kind of climate where, let us say, a little bit of a fiddle is more or less accepted. One should not be too critical of the traders because it could hamper trade; it could make it difficult to get rid of the surpluses. In such a climate you stimulate fraud, and that is a structural problem.Let me repeat that final sentence:
In such a climate you stimulate fraud, and that is a structural problem.The Minister may appoint as many bureaucrats as he likes to tackle fraud and we may have all the satellite surveillance to which the hon. Member for Chesham and Amersham (Mrs. Gillan) referred, but one will never end that fraud when such huge subsidies are paid on large volumes of produce that are traded across international frontiers. That is why the Opposition believe that we should get rid of agricultural export subsidies and state intervention buying. The Opposition have enunciated that policy for some time.The Government's motion takes the biscuit. After all the fraud and the record of wasteful expenditure, it calls on the House to congratulate 187
the Government on its robust negotiating stance on the Common Agricultural Policy since 1979, its leading role in achieving reform of the CAP, its continuing pressure for further radical reformand so on. That is an insult to the intelligence of the House. That is a criticism not of the right hon. Gentleman but of his predecessors. We all remember what his predecessor but one, now Secretary of State for the Environment, said when the Labour party attacked the MacSharry reforms as being hopelessly inadequate. In reply to my hon. Friend the Member for Workington (Mr. Campbell-Savours) he said:The hon. Gentleman has not grasped the fact that British Ministers have won their battles in the European Community and that the CAP reform is designed on what Britain wanted. There was no single major element of our negotiating list that we failed to secure in those negotiations."—[Official Report, 25 March 1993; Vol. 221, c. 1228.]That is what the then Minister of Agriculture, Fisheries and Food said less than two years ago.What about the current Minister's immediate predecessor, now Secretary of State for Education? As I said last year, she had a great reputation as the voice of the Norfolk barley barons in the Agriculture Council. She tinkered with and argued about little concessions on set-aside, but made not the slightest attempt to reform the CAP radically.
The right hon. Gentleman has been in office for only a few months. He has appointed a committee of intelligent men and women—no doubt they are enlightened people—to consider the CAP. We will need a lot more than that if we are to tackle the enormity of the wasteful expenditure inherent in the CAP.
The Opposition's amendment to the motion is quite clear, because it states:
that the CAP continues to fail consumers … and that the Government is not doing enoughto change it. I have spelt out the radical changes that we would like to be made to the CAP, so the choice is clear. I urge this honourable House to vote for our amendment.
6.4 pm
Mr. Peter Atkinson (Hexham)The hon. Member for Edinburgh, East (Dr. Strang) is right that the terms of the Opposition amendment are clear. But what did he say in his speech, which lasted for about 40 minutes, about how the Opposition propose to reform the CAP? I made a few notes of his speech and although he argued that radical reform was necessary, his only attempt at reform was to launch a diatribe on fraud.
We all agree that fraud should be tackled, but the hon. Gentleman devoted the rest of his speech to an arcane argument about various figures and criticised the Government for abolishing the Agricultural Trading Board, the state veterinary service and so on. My hon. Friends and I had expected the hon. Gentleman to provide us with some details of what the Opposition propose to do to reform the CAP—some of my hon. Friends might even have agreed with him. Apart from his attack on fraud, however, we were not offered one Opposition reform.
Mr. BudgenMy hon. Friend is rather unfair. Surely it is plain that the hon. Member for Edinburgh, East (Dr. Strang) proposed to make the CAP even more expensive. He offered considerable aid from the taxpayer to large sections of the agricultural community, many of which are doing quite well.
Mr. AtkinsonI agree entirely.
In recent months, we have had several debates on agriculture. Farmers throughout the country will listen to today's debate and I am sure that they thought that they would, at last, learn about what the Opposition propose for British farming. I suspect that other hon. Members are as baffled as I am about the Opposition's intentions.
The Government deserve congratulations on what they have done to turn the titanic CAP around. [HON. MEMBERS: "It is early days."] I accept that, but the farming community can live with the Government's measured approach. We marched the farming sector up the hill in 1947 to make it farm in a particular way, so if, towards the end of the century, we are to march it down again, we must do it in a way that does not bankrupt farmers and ruin British agriculture. Farm incomes have improved and although not all sectors of farming are prosperous, farmers have been able to invest properly to restructure in order to face the full rigours of moving closer to the world market in future years.
The Government deserve credit, because my right hon. Friend has done a great deal to make the CAP more workable and has made it easier for farmers to adjust to the new regime.
It will be enormously complicated for British farming to move closer to world market prices. The proposed United States Farm Bill is important because we must be aware of what is happening in other parts of the world. GATT has become much more significant to Britain, in addition to the CAP, so we can no longer say that we are alone in Europe. We must bear in mind overseas pressures and the further developments in other countries.
Agra Europe magazine has considered the implications of the United States Farm Bill. If the Republican Senate is successful in removing set-aside from American farms, the amount of cereals produced in America will increase to such an extent that it could lead to 25 per cent. of British cereal farmers going out of business. British agriculture must be in a strong position to face such world competition.
One issue on which the hon. Member for Edinburgh, East did not dwell, on which I hoped that he would dwell more fully, was that of hill farms, which is important for me as I have a hill farming constituency. He did talk for a second about the problems that confront hill farmers, of which there are many, but he did not discuss the issue of animal welfare and animal exports; he said that he would leave it to the hon. Member for Glanford and Scunthorpe (Mr. Morley), who will sum up for the Opposition. That issue is of extreme importance to hill farmers and livestock farmers because any unilateral decision to do anything about the export of animals or the transport of animals will have a devastating effect on their income.
My hon. Friend the Member for Ludlow (Mr. Gill) asked what would happen if a great many dairy bulls came on to the market to be raised for meat. He called them horrible Holsteins, which I think is extremely unfair, but it gives an idea of the problems that could confront hill farmers who rear, as it were, proper beef, in all those markets if those dairy bulls were not exported and instead came on to the market to be fattened. That is of enormous significance to hill farmers, yet not a word did we hear about what the Labour party proposed to do about that.
Mr. StreeterDoes my hon. Friend agree that the hon. Member for Edinburgh, East (Dr. Strang) said three times during his speech that he would come to a certain issue later, and failed each time to get anywhere near that issue?
Dame Elaine Kellett-BowmanSurely he always does that.
Mr. AtkinsonI agree with my hon. Friend the Member for Plymouth, Sutton (Mr. Streeter), and that is why I was disappointed with the speech by the hon. Member for Edinburgh, East. He was very good. He whizzed around the Dispatch Box and shouted and became quite excited at one stage, but we did not hear that he proposed to do anything radical.
Mr. GillI am grateful that my hon. Friend listened to my intervention in the Minister's speech. Does he recognise that the fact that so many of those animals are undesirable for the beef industry, and much else that goes on in the agricultural industry, is as a result of the regime? It is not as a result of a farmer taking a proper commercial decision in terms of supplying a real market or of supplying a customer. So much of the decision-making by the farmer is influenced by the intervention regime and the common agricultural policy, rather than by the customer. We have to return to consideration of the customer.
Mr. AtkinsonI agree entirely with that. I believe that we cannot get to where my hon. Friend wants to go, which is where I think that most Conservative Members want to go, unless we do it in a slow and measured way. That is why I argue in support of the Government and the way in which they have tried to restructure the common agricultural policy; I hope and believe that that is the way to get to where the hon. Gentleman wants to go.
Repatriation was mentioned by one of my hon. Friends on the Conservative Back Benches. I believe that a repatriation of those decisions would be extremely damaging for British farming. Although it is superficially attractive, it would succeed in closing off an important market, especially an important export market for livestock, which is important to hill farmers such as those in my constituency.
Mr. BudgenThat depends, does it not, on the overall relationship that we are likely to achieve with Europe if we achieve, at the next intergovernmental conference, a significant loosening in our relations with the European Union. We hope that we will be able to loosen the common agricultural policy and at the same time retain our right to trade with the countries in the European Union. The hill farmers