HL Deb 29 January 1973 vol 338 cc405-18

3.34 p.m.

EARL FERRERS

My Lords, if it would be to the convenience of your Lordships, perhaps I might intervene now to repeat a Statement which is being made in another place by my right honourable friend the Minister of Agriculture. The Statement is as follows:

"With permission, Mr. Speaker, I would like to make a Statement about the arrangements which have been agreed to enable the United Kingdom and the other new Member States to adopt the Common Agricultural Policy. Decisions on the main points outstanding were taken at the meeting of the Council of Agricultural Ministers last week. This was the last of a series of meetings at which the steps necessary to implement the agricultural provisions of the Treaty of Accession have been worked out with our partners in the Community. The House has been informed of the progress at various stages of these long and com- plex negotiations, but I would now like to report on the latest decisions.

"Throughout these discussions the Government has had very much in mind the need, first, to ensure a smooth transition from our existing system of guaranteed prices to the Common Agricultural Policy, and, second, to maintain a fair balance between the interests of producers and consumers. For consumers there will be no general increase in food prices when we adopt the Common Agricultural Policy next month. During the year we shall be taking the first steps towards the Community's prices; but at the start prices in the shops should not be directly affected. Consumers should secure some advantage from the agreement to use a 'reference rate', based on the average market rate for sterling in the first part of January, to convert United Kingdom C.A.P. prices in units of account into sterling. As a result, prices in sterling terms will not go up as a result of the continued floating of the pound.

"In addition to the question of the parity of sterling, account had to be taken of the rise in world cereals prices since the agreement reached last July. Because of this the intervention price of cereals has been increased in sterling terms; but, given current world cereals prices, market prices will not be affected. At the same time, the compensatory amounts for cereals will be temporarily abated so that they do not exceed the Community levy on third country imports. These measures have been taken into account in the transitional arrangements for pigmeat, eggs and poultry. At current cereal prices the compensatory amounts between the United Kingdom and the Six for fresh pigmeat carcases will commence at around £40 per ton in February and reduce to about £25 on June 1.

"In addition, the Council agreed to our existing bacon stabiliser being phased out between now and June l and the feed formula by August 1. We also announced the abolition of the flexible guarantee. For eggs and poultry compensatory amounts will be of the order of 1.3 pence per dozen and 0.8 pence a lb. respectively.

"The transitional arrangements agreed for sugar will provide sugar beet growers with the equivalent of the current year's guaranteed price. At the same time, they will ensure that the obligations in respect of the import of Commonwealth sugar covered by Protocol 17 of the Treaty will be met in full. I am in touch with the refiners about the detailed arrangements. It was also agreed that the special arrangements for subsidising the price of sugar to consumers will be phased out by July 1 instead of coming to an end this month as originally intended.

"These, and other measures decided in Brussels last week, need to be looked at alongside the arrangements for other commodities which were agreed last year. Together I think they constitute a fair and balanced settlement which will allow us to adopt the Common Agricultural Policy with confidence.

"The Commission and Council Secretariat are engaged in carrying through the administrative and legal procedures needed to give affect to the Council's decisions. They now think that it may not be possible to complete this by February 1 and are discussing urgently with us and our partners this afternoon the possible need for a short period of deferment. Our preparations have been made on the basis that we shall adopt the Common Agricultural Policy on February 1 and we would prefer that date. But there were a number of technical matters arising from the decisions reached last week which had to be resolved and if as a practical matter some deferment is essential for the sake of the smooth adoption of the Common Agricultural Policy, it would be unrealistic not to accept the need for this."

My Lords, that concludes the Statement.

3.39 p.m.

LORD HOY

My Lords, we are grateful to the noble Earl for repeating the Statement made in another place; and he will understand if we had a little difficulty in following it in view of the very short notice we had, because our copy of the Statement did indeed arrive very late this afternoon. I do not blame the noble Earl for that; but, simply because the arrangements were in fact such as they were, it did arrive very late indeed. Despite that there are a few questions I should like to put to the noble Earl. In the second paragraph the Statement says: Throughout these discussions the Government has had very much in mind the need, first, to ensure a smooth transition from our existing system of guaranteed prices to the. C.A.P.… Is it not a fact that what is meant by "a smooth transition" is represented to-day by the highest increase ever in the prices of food in this country?

Is that in fact what he is saying in this Statement? A little later on in the same paragraph the Statement says: For consumers there will be no general increase in food prices when we adopt the C.A.P. next month. While it may be true to say that there will be no general increase in prices, will there not be some specific increases in prices of certain commodities? Is it not a little misleading to use the world "general", when food prices are going to move up in certain specific instances?

The next sentence reads: During the year we shall be taking the first steps towards the Community prices but at the start prices in the shops should not be directly affected. What does the noble Earl mean by the phrase, "not directly affected"? Does it not mean that while they may not be directly affected, indirectly certain prices may go up? We must have a definition of what the Government mean by that The Statement goes on: Consumers should secure some advantage from the agreement to use a 'reference rate', based on the average market rate for sterling in the first part of January.… Does not the noble Earl appreciate that this really is the worse reference point so far as Britain is concerned? Prices were at their very worst during this term. To use this as a reference rate would be a great disadvantage not only to Britain but to the consumers of Britain. I shall expect the noble Earl to explain what that means.

In paragraph 3 the Statement reads: Because of this the intervention price of cereals has been increased in sterling terms.… What he is saying is, clearly, that so far as cereal prices are concerned, they have gone up. The Statement goes on: but, given current world cereals prices, market prices will not be affected. I find it difficult to see how you can put up prices without the market price being affected. I cannot see how this squares —it may be that I am unable to understand it at such quick notice. But I am sure that we will be delighted to have an explanation of these two contradictory terms. The Statement continues: At the same time, the compensatory amounts for cereals will be temporaily abated so that they do not exceed the Community levy on third country imports. If they are not going to make this difference, why are they required to be abated at all? It can only mean because there is a difference.

The Statement on page 2—and I am sorry that I have to put all these points to the noble Earl, but they are extremely important to the farming community and to the consumers—says: fresh pigmeat carcases will commence at around £40 a ton in February and reduce to about £25 on 1 June. Where does this figure "£40" come from? Is it the prevailing rate? If so, how does it compare with the rate twelve months ago? Let us be able to understand, if we are going to take £40 as the prevailing rate at this moment, how it compares with the rate twelve months ago. We must not accept because we are taking £40 at this moment that £25 will be an advantage when we reach the first day of June.

In the next paragraph the Statement reads: We also announced the abolition of the flexible guarantee. This is in connection with the pig industry. I shall find it difficult to understand if the farming interests represented in your Lordships' House do not have something to say about this proposal; because the Statement goes on to say: In addition, the Council agreed to our existing bacon stabiliser being phased out between now and 1 June… In fact, they are agreed we ought to get rid of a provision that we had made in the interests of the bacon industry of this country. Then the Statement reads: We also announced the abolition of the flexible guarantee. These two things which are regarded as of absolutely first-class importance to the pig industry in this country have to go. This is what they have agreed to. If they are not going to be affected by price, how can the noble Earl square that opinion with the concluding sentence which says: For eggs and poultry compensatory amounts will he of the order of 1.3 pence per dozen and 0.8 pence a lb respectively. This is in fact, as I understand it, compensation for the prices that are going to be increased. If it differs from that, I shall be grateful if the noble Earl could tell me. It seems to me that the bacon industry is being sacrificed and the poultry industry is going to get a little compensation; but I do not know what it will amount to.

The Statement also says: It was also agreed that the special arrangements for subsidising the price of sugar to consusmers will be phased out by July 1 …".> I want to know two things—and the noble Earl will understand my position since for a long time I was responsible in a personal way for looking after the interests of the Commonwealth sugar-producing countries. We want to know what their position is going to be. If this subsidy is going to be phased out by July 1, what does this mean with regard to the price to the consumer in this country? If it is going to be phased out, it is said that it will be phased out for the consumers; and I should like to know what will be the result in increased prices to the consumers of this country.

Finally, the Statement says: The Commission and Council Secretariat are engaged in carrying through the administrative and legal procedures needed to give effect to the Council's decisions. They now think that it may not be possible to complete this by February 1 and are discussing urgently with us and our partners this afternoon the possible need for a short period of deferment. Obviously, that means that the legal decisions so far as all this is concerned are not going to be in the hands of this country but are to be taken in Europe and that after Europe has considered what they have done, they are going to tell us the results that they have arrived at. I am sorry to have put so many questions to the noble Earl, but this is a very important Statement and I shall be grateful for his answers.

3.47 p.m.

LORD HENLEY

My Lords, the noble Lord. Lord Hoy, has made some extremely valuable points with regard to the all-important question of the smooth transition; but I think that there are two things with regard to that smooth transsition which must be said. While there has already been a substantial rise in food prices in the shops, there has been at the same time in many cases a fall in the farm gate prices. This is something that the Government must watch. In fact, there is a great deal of room for manoeuvre because farm gate prices have remained remarkably steady while at the same time prices have gone up in the shops.

Secondly, it is important to say that for historical reasons the farm gate prices in this country have been very much lower than they probably should have been. I need only draw your Lordships' attention to the fact that farm wages are so much lower than those of any other industry in the country and to the fact that the return on capital, both fixed and working, in the agriculture industry is of an altogether different order from the kind of profits expected in other industries. These are things which I think needed to be said, and said again. I know that the Common Agricultural Policy has in the past run into difficulties. I hope that as we come into it now, we shall be able to teach the others something.

With regard to the details of the Statement, the noble Lord, Lord Hoy, has asked all the questions which I think probably need to be asked. I hope that the noble Earl will be able to satisfy us on some of them. There is one small point upon which again I am looking to the producer rather than to the consumer. I think that we are likely to be in difficulties with regard to the egg and poultry compensatory amounts. It may be that we shall have to look at the emergency action which we are allowed under one of the sections of the Treaty of Rome—I am not sure which one. I think it may be that we shall run into difficulties with eggs and poultry.

3.50 p.m.

EARL FERRERS

My Lords, I am grateful to the noble Lord, Lord Hoy, and the noble Lord, Lord Henley, for what they have said. I am bound to say that as one who claims that he had difficulty in following the Statement, the noble Lord, Lord Hoy, seems to have done extraordinarily well and to have taken in a great amount of detail. I shall try as best I can to answer the questions which he put, but he will appreciate that he put a great many questions, though I appreciate that they are highly relevant. If he found difficulty in following the Statement, he will agree that the impact of individual figures is a very difficult and complex matter to discuss.

At the outset, the noble Lord criticized the Statement for saying that it was hoped that there would be a smooth transition from the existing system of guaranteed prices to the Common Agricultural Policy. He asked how one could measure that against what was happening during a period when food prices were the highest ever. The noble Lord, Lord Hoy, is correct in saying that there has been very substantial increases in food prices, but I would assure him that this is not because of our joining the European Community. It so happens that the two things have come together. The point I wish to draw to the attention of the noble Lord is that whether world food prices have gone up or down, what we are anxious to do is to ensure that the transition from one policy to another may be as smooth as possible.

The noble Lord, Lord Hoy, also said that what was contained in the Statement would ensure a substantial increase in the price of food. It is, of course, perfectly true that the prices of some articles may go up. Equally, it is not inconceivable that not all food prices will go up. According to our latest estimates, over the next six years the price of food relative to our joining the Common Market is likely to be in the nature of 2 per cent. per annum. That does not mean that the price of food which will be affected by circumstances other than the Common Market will be restricted to that increase.

The noble Lord referred to the bacon stabiliser and the feed formula for bacon, and also the sugar subsidy, being phased out, and he implied that that was a wrong thing to happen because, as a result, British producers and consumers would be adversely affected. It has always been known that, under the terms of the European Community Agreement, when we joined the Community these various subsidies would have to be terminated. The point I wish to make is that it is not intended that they should be terminated upon our accession, which they could have been, but that they will be phased out over a period, which is a distinct concession to the consumer, albeit not one of great duration. The noble Lord referred to the reference rate in the Statement. This is the rate of exchange from units of accounts into pounds and has nothing to do with the price index. He said later that the pig meat compensatory amount would be £40 reducing to £25. That again is a direct concession—if one may use that word—to home consumers, because it will mean that food which comes from Common Market countries will be less expensive for us at the beginning; and therefore prices will not be moved up immediately on our accession because the compensatory amount due to the European producer will be higher at the beginning than at the end. My Lords, I have answered some of Lord Hoy's questions. Doubtless he will say that I have not answered them all. But I hope he will be able to consider these answers with care and perhaps we may be able to return to the matter in detail later.

LORD HOY

My Lords, I am grateful to the noble Earl, Lord Ferrers, for what he has said, but it has not proved very satisfactory. Is he saying that poultry prices in this country will rise substantially? I know that they are to be offset by this limited compensation. The noble Earl said that I said we were wrong to get rid of the stabiliser and feed formula. I am trying to draw to the attention of your Lordships the fact that when I was responsible, or partly responsible, for agriculture in this country I was always told by noble Lords opposite that it was essential for the bacon industry that we have the stabiliser and the feed formula. The noble Earl said that my Government threw out of the window what not so long ago was regarded as essential to the industry. I want to know what is going to happen not only to the industry but also to the consumer.

Regarding sugar, the noble Earl repeated my question but he did not give an answer. Can he say—one would like to know—by what amount the price of sugar will go up to the consumer as from July 1, which is the date laid down in the Government Statement?

LORD SHINWELL

My Lords, may I ask the noble Earl, Lord Ferrers, whether he would not agree that although some prices have gone up irrespective of our entry into the Common Market, many prices are bound to go up because of our entry? How does the noble Earl expect the general public to accept that in the next six years prices will rise by only 2 per cent.? What justification, what foundation, has he for making a statement like that, or indulging in speculation of that kind? I wish to ask the noble Earl a further question. Does he not realise—this applies also to Members of your Lordships' House generally; and particularly to those noble Lords on the Government side—that a rise in prices as a result of the Common Agricultural Policy will wreck the Government's anti-inflation policy? Because although there are many Members of your Lordships' House and many well-to-do people outside who could afford to sustain life even if prices do rise substantially, the great mass of the working-class people cannot remain complacent and are bound to resent it. Therefore, the Government's anti-inflationary policy, in so far as it affects the reduction or curtailment of working-class incomes, is bound in the end to cause a great deal of trouble.

EARL FERRERS

My Lords, if I may come back to the noble Lord, Lord Hoy, he said that some years ago, when he was in the Ministry of Agriculture, the bacon stabiliser was considered very important. I concede that it was a very important part of the guarantee system under the system of protection that we had. But now we are moving into a different area of agricultural policy and it is to meet the changeover that some things have to be altered. Clearly this is one of them. The noble Lord, Lord Hoy, asked to what extent the price of sugar in the shops would go up as a result of the sugar subsidy being removed. At present our current subsidy is £15 a ton and it will be phased out between March 1 and July 1. This represents about 1½p on a 2lb. bag of sugar.

The noble Lord, Lord Shinwell, asked how I could say that the price of food would go up by only 2 per cent. per year in the next six years. I think it vitally important to make clear what I said. I did not say that the price of food would go up by 2 per cent. per year. I said that according to our calculations, if everything else were the same, the effect of joining the Common Agricultural Policy would be an increase of only 2 per cent. per year. Obviously, as the noble Lord, Lord Hoy, said earlier, we are in a period of very high food prices, but if Russia and China have disastrous wheat years and the price of world foodstuffs goes roaring up, we cannot insulate ourselves from that. My reference was only to the actual fact of joining the Common Market and not to any effects that world prices might have on food. It is true that rising food prices will affect an anti-inflation policy, but that is the reason why Her Majesty's Government are trying to pursue an anti-inflation policy.

SEVERAL NOBLE LORDS

Oh!

EARL FERRERS

Of course it is, my Lords, because they are fully aware that if the price of food goes up, inflation is likely to hit on those less able to afford it. But the Government cannot alter world prices, which have been a substantial cause of the increase in prices recently.

LORD MAYBRAY-KING

My Lords, I should like to ask the noble Earl a technical question. He will probably know that I have been appointed by your Lordships Chairman of a Committee which is examining ways in which we as a House of Lords can take some part in the decisions of Europe before they are made. I gather that these are decisions which have been arrived at. Did they come first in the form of proposals which if we had had the adequate machinery we could have examined?

EARL FERRERS

My Lords, these were negotiations that were being continued in the Commission in Brussels at which Great Britain was represented, and of course they will emerge as Community Regulations.

LORD MILVERTON

My Lords, my name was down on the paper to make a few remarks on a point which I thought to be of some importance, but unfortunately the noble Earl on the Front Bench rose with such speed that I was unable to speak in my proper place. The point I want to raise, which I think is worthy of consideration, is one which affects—

LORD SHEPHERD

My Lords is the noble Lord proposing to ask a question of the noble Earl, Lord Ferrers, or is he participating in the debate that we started earlier this afternoon?

LORD MILVERTON

My Lords, I am trying in vain to participate in this afternoon's debate.

LORD SHEPHERD

My Lords, in that case, there is one point that I should like to put to the noble Earl, Lord Ferrers. I wonder why this Statement was made to-day. If the noble Earl looks at the House of Commons Hansard for Wednesday night he will see there, in response to a Written Question, a full Statement by the Minister very much on the general lines of the Statement to-day. It seems to me extraordinary that here is a statement of policy arrived at some days ago, and the noble Earl—it may be no fault of his—was quite unable to answer the very pertinent points put not only by my noble friend Lord Hoy, but by the noble Lord who sits on the Liberal Benches, to whose questions I do not think the noble Earl had the courtesy to make one reply. I recognise that this is a difficult subject, and is something that the House will certainly have to look at, particularly the point made by the noble Lord, Lord Maybray-King. But can the noble Earl say why the Statement is being made to-day and was not made last week?

BARONESS GAITSKELL

My Lords, I should like to ask one more question on the Statement before the noble Earl replies. As one who does not understand the Statement at all, and as a housewife who does not understand words like "parity", "deferment" and "compensatory", may I ask the noble Earl one small practical question? As housewives who want to buy beef are always told to buy pork because it is cheaper—

LORD HOY

And poultry.

BARONESS GAITSKELL

—what protein are the Government suggesting instead of beef now that pork is going to be more expensive? Are housewives going to be told to get their proteins from "nuts in May"?

EARL FERRERS

My Lords, if I may first answer the noble Lord, Lord Shepherd, it is true that the Government did make a Statement last week on the day after the Council's decision, but it was then anticipated that we should be able to give further and more complex details now. This is what I have tried to do. If I have been unable to answer the noble Lord, Lord Hoy, to Lord Shepherd's satisfaction, I can only say that I am sorry. I tried to give the noble Lord answers which, even if he did not agree with them, would be satisfactory to him. I have tried to explain the point to the best of my ability. When the noble Lord, Lord Shepherd, says that I did not refer to the noble Lord, Lord Henley, or answer one of his questions. I can only say that I referred to the noble Lord in so far as I thanked him for his contribution and what he had to say upon the Statement. The noble Lord then went on to say that all the points he had in mind had already been referred to by the noble Lord, Lord Hoy, and therefore I thought the best thing to do was to refer to Lord Hoy's questions. The noble Baroness, Lady Gaitskell, asked: if the price of pork goes high—

LORD HOY

And poultry.

EARL FERRERS

And poultry—what are the Government going to suggest that the housewives should buy now? I do not believe your Lordships would wish on this Statement to have a debate on the rising price of poultry, pork or meat. I accept that these prices have risen, but I can assure the noble Baroness, as the Statement says, that these have not risen as a direct result or as a pre-result of our entry into the Common Market.

VISCOUNT AMORY

My Lords, this Statement covers a series of immensely complicated things, but the questions raised by the noble Lord, Lord Hoy, were all most relevant. Will my noble friend accept that I think—and I am sure many other noble Lords will think so, as well—that in the time at his disposal he went a great way in answering the most important of the questions.

THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (LORD ABERDARE)

My Lords, I think we have now had a fairly long debate on this Statement and we ought now to listen to my noble friend Lord Milverton.

SEVERAL NOBLE LORDS

Not Lord Milverton; Lord Hale.

LORD ABERDARE

My Lords, I apologise. I thought my noble friend Lord Milverton was next on the list.