§ 7.17 p.m.
§ The Parliamentary Under-Secretary of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington) rose to move. That the order laid before the House on 31st March be approved [15th Report from the Joint Committee].
§ The noble Baroness said: My Lords, the order referred to in the Motion before the House gives effect to the provisions of European Community law on the repayment to beef producers of Community special premium. Before discussing the order itself, I should perhaps remind the House of the provisions of the Community scheme.
§ A premium of 40 ecus—currently £29.19—per head is payable on male cattle up to a limit of 90 head per producer in any calendar year. Premium payments may be made only once in the lifetime of any one animal. In order to minimise the risk of double payment, animals on which premium is claimed must be permanently marked.
§ Member states have the option to pay the premium either on farm or else at slaughter and on sale through live auction markets for slaughter. In the last case, animals on which premium has been claimed must be slaughtered within 21 days of sale.
§ As my right honourable friend the Minister of Agriculture, Fisheries and Food announced on 6th March, we considered that, at least in the first instance, we should operate the premium scheme at slaughter and at live markets in Great Britain. The order therefore gives effect to those provisions of Community law relevant to that option.
§ The order is made under Section 5 of the Agriculture Act 1957 which empowers Ministers to make orders requiring the marking of produce; the keeping and production of records relating to the purchase and sale of produce; and to provide for powers of entry for authorised officers to inspect land or premises used for the production or sale of such produce.
§ The order contains 10 articles—the basic scheme rules. For the sake of brevity, I do not intend detailing the contents of each article. Naturally I am willing to answer any of your Lordships' questions to the best of my ability. However, at this stage I must bring two matters to the attention of the House. The Joint Committee on Statutory Instruments found a minor error in the drafting of Article 2. 464 Paragraph 2 of that article was intended to have the effect of excluding officers of the Meat and Livestock Commission who act as agents for the Intervention Board from the powers of entry conferred on authorised officers of the board by Article 9. By an oversight what should have been a reference to Article 9 in this paragraph appears as a reference to Article 8. As such it is meaningless since Article 8 does not refer to the board at all. We have informed the joint committee that we shall put this matter right at such time as the order needs to be amended for other reasons.
§ Secondly, Article 6 is intended to implement a requirement of Community law that animals in respect of which premium is claimed at live markets must be slaughtered within 21 days of sale. The Joint Committee on Statutory Instruments has pointed out that the provision as drafted in this order does not fully meet that requirement, because it appears to offer the Intervention Board some discretion in deciding whether there should be a time limit for the slaughter of marked animals and, if so, what that time limit should be. Moreover it makes observance of the limit conditional on notice of it having been displayed in the market at the time of sale. We accept that the Joint Committee is right in this regard and we have undertaken to amend this provision at such time as the order needs to be amended for other reasons.
§ In the meantime, however, we are satisfied that the provision as drafted will have the effect intended by the Community provision, since every approved liveweight centre will in practice display a notice advertising the requirement that marked animals must be slaughtered within 21 days of sale. Such errors are clearly unfortunate, but they are testimony, if one were needed, to the speed within which we were forced to introduce a workable scheme. I should not wish to give the House the impression that we consider this to be an ideal scheme. It is, as I am sure noble Lords will realise, quite a complicated scheme to administer. The principal reason for the complexity of the scheme is the existence of the headage limit, which requires us to compile a register of claimants and to keep a running record of the number of animals in respect of which each applicant has claimed on all production units run by him. We argued strongly against the headage limit during the negotiations on the beef reform package in the Council of Agricultural Ministers, but the Commission and most other member states insisted on retaining it. That being the case, we had no option but to implement the scheme accordingly and in a very short timescale.
§ Although the Agriculture Council reached agreement on the reform package at its meeting on 23rd-24th January, the detailed rules for the operation of the scheme were not published until 21st March. But the scheme had to be in place on 3rd April. It was primarily for this reason, though not solely because of it, that we decided to operate the scheme in Great Britain at the slaughter stage. This enabled us to build on the administrative structures in existence to operate the beef variable premium scheme and to make a relatively smooth transition to the new arrangements. Of course there 465 have been teething troubles. The documentation for the scheme was necessarily designed quickly and some aspects have needed to be clarified in the first weeks of the scheme. There was some temporary disturbance of marketing patterns and price levels reflecting the anticipated ending of the variable premium. But that was an understandable reaction by producers to the reduction in the level of payments. The new arrangements have worked reasonably well and have not themselves given rise to significant market disruption. Much of the credit for smooth transition must go to those most closely involved in operating the scheme on the ground, the auctioneers at liveweight markets and the staff of the Meat and Livestock Commission and abattoir owners at deadweight centres. We are very grateful to all concerned for the way in which they have co-operated.
§ I recognise that most of those directly concerned with the scheme would greatly have preferred us to operate the scheme on-farm. Given the entirely new practical arrangements which that would have entailed, I am confident that had we chosen that course at the start the results would have been chaotic. However, our minds are not closed to the possibility of moving to an on-farm scheme in the future. As my right honourable friend the Minister said on 6th March, we shall, in consultation with other agricultural departments, conduct a review of the practicability and cost-effectiveness of moving to an on-farm scheme in due course. In this review Ministers will take account of a range of issues including the costs and administrative consequences of payment on-farm as against payment at marketing for slaughter; the relative impact on the industry of the two different means of administration; the possible transitional problems of making any change from the present arrangements; and the fact that the Community will be reviewing the slaughter option after two years.
§ Despite the understandable concern felt by many in the industry about the new scheme, the order which we are currently considering has enabled us to meet our obligations under Community law in due time without causing market disruption. Without prejudice to any decisions about future arrangements which might apply, I commend the order to the House. I beg to move.
§ Moved, that the order laid before the House on 31st March be approved [15 th Report from the Joint Committee].—(Baroness Trumpington.)
§ Lord Carter
My Lords, the House will be grateful to the Minister for explaining this order. As she says, it puts into legislation a Community decision to end the beef variable premium and to replace it with the headage premium. This is not the place or the time to go into the merits or the demerits of the change, but it is worth noting in passing that according to a Written Answer to a Question in another place on 2nd May the Minister of Agriculture was asked to provide the details of the actual amount paid to beef producers in the last available 12 months of the variable premium and to give his estimate of the total amount of the new premium which will be paid to the producers in the first year of the premium's 466 operation. The Answer from the Parliamentary Secretary was:Our provisional estimate of the amount of beef variable premium paid to United Kingdom producers, net of drawback on intervention and clawback on exports, in the financial year 1988–89 is £103 million. Our current estimate of the likely expenditure on the beef special premium in 1989–90 is £44 million".—[Official Report, Commons, 2/5/1989; col. 80.]That is a reduction in the income of beef producers of £59 million in the first year of operation.
As the Minister said, this order was criticised by the Joint Committee on Statutory Instruments in its 15th report on the defective drafting of Articles 2(2) and 6. Besides the defective drafting, there has been a great deal of criticism of the records and forms which are required under the order. I am sure that the Minister will be aware of this. I have a briefing from the NFU which I do not propose to read in detail, but it seems that there are ambiguities in the records that producers are required to keep. Certain matters which appear in the schedules as required do not appear on the records which are required under the scheme. If these are requirements under the rules of the premium, why do not the forms accommodate all the points in the order?
Secondly, and perhaps the more important point, is this business of the recovery of premium, payments. There is a paragraph in the regulations which sets out the powers of the Intervention Board to recover premiums from producers who have contravened the rules of the premium scheme. But there is a marked ambiguity in the application form which does not make clear whether when the producer fills in the number of animals for which he is applying, that figure is inclusive or exclusive of animals which are on that form. Does the producer have to include the total number he has applied for previously or the numbers he knows have qualified for the premium? Some could have been rejected for the scheme.
That is a crucial point because of the recovery powers under the order in the event of a transgression. We should like to know how the Ministry will deal with producers who entirely innocently contravene the rules of the premium scheme because of the ambiguity of the application form. Will they be penalised and will there be provision for an appeal?
The order came into effect on 3rd April; therefore the criticisms are now dated. How do the Government propose to deal with them? We know that many cattle are sold on the farm to dealers. How will the Ministry ensure that the premium finds its way to the producer in the price that is paid? The Minister said that in the first instance the scheme was set up to pay at the point of slaughter. We assume that the eventual intention is to move towards the payment of the premium on the farm. That will ensure that the premium goes to the producer, as it should.
§ Baroness Trumpington
My Lords, before the noble Lord sits down, can he repeat his first question? I did not understand it because I was being spoken to as he put it.
§ Lord Carter
My Lords, it was about the sale of cattle on the farm to dealers. Who will be eligible for the premium? How will the Ministry ensure that when cattle are sold in that form the premium will find its way back to the producer?
§ Lord Hooson
My Lords, I am also grateful to the noble Baroness for explaining clearly this dubious scheme. It appears that beef producers' income is bound to go down as a result of the scheme. I believe that the money available would have been better directed at the prime producers of the beef rather than the fatteners.
I was intrigued to learn—and perhaps the noble Baroness can explain it—about the sexual discrimination against the female of the species. Why should she be deprived of the extra £30 per head when she goes to slaughter, poor dear? Is that a Common Market decision? According to the terms of the order are ancient bulls included among animals fattened on the farm, however old they are when going to slaughter? It appears to me that they probably are.
The noble Baroness expressed the fear that there may be teething troubles. The scheme is much more likely to have ear troubles, because the explanatory note to the order states:Authorised officers at deadweight centres are authorised to remove ears of carcases when they are marked and to take possession of such ears when an offence under section 7 of the Agriculture Act 1957 is reasonably suspected".The mind boggles at the possibilities.
Is it not true that many Common Market regulations in relation to agriculture lend themselves to fraud? The requirement is that the animals be fattened for at least two months on the farm from which they are finally sent for slaughter before the headage can be paid. Most people know that often dealers eventually grade the cattle and take them to slaughter. The requirement that they be grazed by the final owner for two months appears to lend itself to fraud. I hope that the noble Baroness will be able to tell us about that matter.
§ Baroness Trumpington
My Lords, if I cannot tell your Lordships now I shall write to you. I listened carefully to the comments made by the noble Lords, Lord Carter and Lord Hooson. I know that my right honourable friend the Minister will read with great care the points that they made. We have not closed our minds to alterations. I shall certainly bring to his attention the point about the difference between the variable and special premiums.
I recognise the fact that there have been problems with the completion of application forms. In the main they relate to the declaration which the applicant must make of the number of animals for which he has claimed premium. In reprints of this form we shall make it clear that the declaration is intended to be exclusive of the animals included on the current application form and applicants will not be penalised.
The punching of holes in animals' ears is now enshrined in Community law. We know of no satisfactory alternative method of ensuring that animals on which payment is claimed at live markets 468 are not re-presented for a premium at deadweight centres. That is one of the factors in trying to avoid fraud.
§ Lord Carter
My Lords, if the noble Baroness will give way, it is not the punching of the ears but their removal which is mentioned in the order.
§ Baroness Trumpington
My Lords, yes, but it is the same kind of point. I remind the noble Lord that the ears are not removed until the animals are dead, and it is one way of preventing fraud. The different rules apply to animals which are exported. The Commission requires that the producers should be able to claim premium on those provided that the animals are at least nine months old and they have been kept by the producer for at least two months.
All those concerned with the buying and selling of animals or carcases in respect of which premium has been claimed are required to keep records of their transactions. These records are essential for the follow-up checks which we are required to carry out on farms. Their purpose is to establish the fact that applicants for premium are engaged in the business of fattening cattle for slaughter and that they have sufficient means for production to have fattened for at least two months the number of animals on which premium has been claimed. In order to carry out the checks we need powers of entry, which we have obtained. They are rather wider than usual but have been approved by the Home Office. They enable inspectors to enter on land which a producer had rented under a short-term let or licence and on which he claimed to have produced beef, even though the applicant's interest in the land did not exist at the time when the inspection was made. Therefore, we are taking many measures in order to deal with the possibilities of fraud.
The subject of dealers was raised by the noble Lord, Lord Carter. The premium is payable to the producer who declares that he fattens animals and not directly to dealers.
I do not know whether the noble Lord, Lord Hooson, would like me to enlarge on heifers. All I know is that they are all meant to be virgins. The ending of the beef variable premium scheme results in a significant loss of support for heifer beef because heifers are not eligible for the new special premium. Neither the Commission nor other member states were prepared to consider extending the special premium to heifers. Since most member states operate the premium scheme on farm, inclusion of heifers would give rise to difficulties of control. How can one reasonably be expected to distinguish between a heifer which has been raised for beef and one being raised as a replacement for either the beef or the dairy herd?
I hope that I have answered noble Lords' questions.
On Question, Motion agreed to.
The Earl of Dundee
My Lords, I beg to move that the House do now adjourn during pleasure until 8.10 p.m.
Moved accordingly, and, on Question, Motion agreed to.
§ [The Sitting was suspended from 7.40 to 8.10 p.m.]