§ The Minister of Agriculture, Fisheries and Food (Mr. Joseph Godber)
With permission, Mr. Speaker, I should like to make a statement. I apologise to the Opposition, but it has been impossible to let them have a copy of the statement until now, since I have only just arrived in the country.
At its meeting which ended in Luxembourg this morning, the Council of Agricultural Ministers agreed on the prices under the CAP for 1973–74. This agreement, in my view, represents a reasonable compromise and safeguards British interests.
991 The Commission's original proposals envisaged an increase in prices of 2.76 per cent. virtually across the board, with substantial additional increases for some products. As a result of lengthy negotiations, we secured, first, that, under the provisions of Article 52 of the Treaty of Accession, we could reduce by 10 per cent. for each commodity, except beef, the increase in price which would otherwise have resulted from our undertakings to the Community.
On individual commodities, the Council agreed that the increases in the price of cereals and sugar should be limited to a modest 1 per cent., with a similar further increase when all member States have adhered to the joint float. This element of delay in adding the additional 1 per cent. is a useful gain.
The Council's decisions on milk are complicated and have to be looked at as a whole. The target price of milk is to be increased by 5½ per cent., but only by 4 per cent. in Germany and Benelux. The intervention prices of butter will be reduced by 5.4 per cent. and the price of skimmed milk powder raised to offset this and also, of course, to absorb the effect of the higher target price.
We were also able to secure agreement that member countries should be able to pay a subsidy on butter consumption amounting to about £47 a ton. This represents over 2p per pound and half the cost will be met from Community funds. The cut in the common butter price, together with the butter subsidy, are positive steps in dealing with the butter surplus problem.
As a result of these measures and of the 10 per cent. abatement under Article 52 which I have already mentioned, the average price of butter in the shops in this country should show no increase this year over present levels.
For beef, there is to be an increase of 10.5 per cent. in the guide price. There will be no 10 per cent. reduction under Article 52 in the price alignment in the United Kingdom. This is not necessary for beef, because the increased guide price is still well below present market prices.
These increases will not raise retail prices. On the other hand, producers 992 will have the assurance that their returns will not fall to unduly low levels, and this should help to maintain the expansion of home production. At the same time, consumers will still be able to benefit from any moderate falls in the world price of beef. They will also benefit from the continued suspension of all import charges which was agreed to operate until 15th September. This is a very important move, which will help to encourage imports and to keep down prices.
In addition, the Community has agreed to introduce grants to encourage milk producers to switch to beef production. This is a valuable move, designed to reduce excess butter production.
For pigmeat, an increase of 4 per cent. was agreed, with provision for a further 1 per cent. when all member States are in the joint float. This should not affect consumer prices.
There will be a general increase in the basic and buying-in prices of fruit and vegetables covered by the CAP of 7.5 per cent., except for pears, for which it will be 5 per cent., and cauliflowers, for which it will be 9 per cent. As these prices are well below market price levels, the increases are unlikely to have a significant effect on the level of market prices.
The Council also agreed on a resolution on farming in poorer areas. The Council will adopt, by 1st October, a directive which will provide for a special aid system, including compensatory payments, designed to encourage farming and to improve farmers' incomes in the poorer areas of the Community. Such a directive should prove an important step in the development of the CAP.
Finally, the Council agreed that there should be a thorough-going review of the general system of the CAP in the autumn. This may well prove, in the long run, to be one of the Council's most important decisions.
§ Mr. Shore
First, we appreciate the speed with which the Minister has come to the House to report on his lengthy negotiations in Brussels. However, although we appreciate that, it might have been somewhat better for the House as 993 a whole, on a statement of such importance and complexity if he had given himself and the House an extra 24 hours. [HON. MEMBERS: "Oh."] Among the reasons for making that suggestion is the observed fact that sleeplessness gives a certain euphoria to public statements and the reflection that the Minister's self-congratulatory statement on the one o'clock news may look very different when we have digested it tomorrow.
May I invite the Minister to make it clear that the increase in the cost of living arising from these negotiations of some ¼ per cent., as he puts it, in this coming year, is an increase on top of the increases which we have already known since the beginning of the freeze—an increase in food prices of about 8 per cent. since last November—and is quite apart from the increases in food prices which will take place this year under the terms of the Treaty of Accession and the application to Britain of the first phase of adaptation in the first year of our membership? These are entirely different and additional increases on top of the already unacceptable high levels that we have experienced and will experience still more in the year ahead.
Will the Minister confirm that the proposals that he has brought back compare with the proposals originally put forward by the Commission in certain respects? First, we are to have increases of 1 per cent. now and a 1 per cent. later—a 2 per cent. general increase—in food prices compared with the Commission's proposal put forward only a month or so ago for a 2.76 per cent. increase.
Secondly, will the Minister confirm that there will be a reduction in the intervention price of butter of 5 per cent. compared with the Commission's proposal of11 per cent.? Will he agree that the increase in the price of beef will be exactly the same as that proposed by the Commission? Will he tell the House why the proposals put forward by the Commission, which only a month ago seemed to him to be so unacceptable, now give him such satisfaction?
On hill farming, will the Minister make it clear whether the criteria for the areas which are to receive additional aid, and the kind and quality of that aid, are different from those which at present apply under hill farming subsidies paid by the 994 British Government? Will he assure us that the new levels of aid are not lower than existing levels? Will he say whether any agreement was reached about the unit of account and the measurement of our payment to the common agricultural policy? Shall we continue to have our obligations to Europe measured in pre-devaluation pound of 2.40 dollars or is it now to be paid at the devalued rate of 2.164 dollars, the result of which would be a corresponding and heavy increase in the obligations of this country?
§ Mr. Godber
I am grateful to the right hon. Gentleman for his concern for my health, but I assure him that I am only too happy to come to the House to make statements as quickly as I can. On his first question about the increase of less than 0.25 per cent. in the food cost index, this is a rough estimate. I think that the increase is substantially less. This is separate from the increase which will accrue each year, which has always been referred to in this House and which has been estimated regularly at about 2 per cent., but which, as a result of the negotiations and other factors, I believe will be only 1½ per cent, this year. The factor that we have been able to eliminate—the increase in the butter price —is an important part of this.
On his second question, I found it difficult to follow his point about 1 per cent. now and 1 per cent. later on food prices. He must have completely misunderstood the point. There is no question of 1 per cent. now and 1 per cent. later. These increases apply to specific items of cereals and sugar and these will not produce increases in food prices directly to the housewife. They are limited increases which at some time and at some stage will have some impact but which at the moment have no impact because the market price is substantially higher.
As for the right hon. Gentleman's point about the Commission's original proposals, I remind him that, while the Commission made certain proposals, other countries wanted far more. We have been able to contain and to prevent these additional increases taking place and have gained something back on the Commission's proposals as well.
On hill farming, all along we have been seeking a Community commitment 995 which will take the place of some part at least of our hill farming commitment so that FEOGA funds will be made available for help in these areas, thus relieving the British Exchequer. We shall see that nothing is done to harm the position of our hill farmers, and anything introduced by this proposal will be introduced before anything else is removed from the assistance to our hill farming areas.
§ Sir Robin Turton
Is my right hon. Friend aware that the country will be grateful for the promptness with which he has come to report to the House on his difficult negotiations? He will be generally congratulated on the valiant way in which he has stood up for the interests of the British housewife. Will he quantify the amount of extra money that the French farmer will get as a result of his announcement on what will be paid on milk and will he say how far that will affect the British contribution in later years?
§ Mr. Godber
I am most grateful to my right hon. Friend for his kind words. The French farmer will be getting the benefit of a 5.5 per cent. increase as regards butter and milk. But, for the reasons I have given, and as a result of the various proposals we have agreed, there will be a reduction in the price of butter and therefore less attraction to produce butter. There will, however, be an incentive to consume more. That is important, but the proposals we have agreed to encourage a transfer from milk production to beef production will have a strong effect on France and will avoid some of the surpluses which have worried us all.
§ Mr. Hooson
Will the Minister clarify two points? First, will the funds used to encourage the switch from milk to beef production come from Community sources or national sources, what form will they take and when will they come into operation? On the directive on help for poorer areas, does it mean that support for the poorer areas in this country, being the hill and marginal areas, will come from Community funds as opposed to national funds and that there will be no difference in the present status of the hill farmers?
§ Mr. Godber
On the first point, the arrangements for this will be introduced 996 as soon as they can conveniently be made. The matter has to be ironed out and specific arrangements detailed and spelt out. I cannot give the hon. and learned Member a precise date. The funds will come partially from FEOGA and partially from national sources. On the changeover in the hill farming areas, again it will be partially FEOGA and partially national funds, and I give the hon. and learned Gentleman a firm undertaking that there will be no diminution in or derogation from the position of hill farmers in this country.
§ Mr. Charles Morrison
My right hon. Friend's statement will mean that the housewife and all consumers will be safeguarded in the short term as a result of what he said and in the long term by encouraging the production of those commodities which are in short supply. No doubt during the course of the review of the CAP every attention will be paid to encouraging the production of commodities which are in short supply. Will my right hon. Friend say whether it is intended that the review of the CAP should be completed in time for the farm review which will be undertaken this time next year?
§ Mr. Godber
Yes, that is certainly the intention. I attach tremendous importance to this and I want to get it developed in a period when we are not under such stress as we have had in recent weeks during actual negotiations. I have discussed the matter with M. Lardinois, the Commissioner, and he plans to make a start on his discussions within the Commission in June and to bring the matter to the Council in October, so that we should have ample time to deal with the matter before next year. As for the housewife, I agree that the stimulus for increased beef production is one of the surest ways of getting down meat prices in this country
§ Mr. English
Does the Secretary of State's statement mean that the Government are now in favour of a butter subsidy? Will the right hon. Gentleman correct the Lord President's misinterpretation to the Lobby of the meaning of the butter subsidy and the people to whom it could be applied in view of what has happened, with the Commission's approval, in the Republic of Ireland?
§ Mr. Godber
Perhaps I could correct the hon. Gentleman's misinterpretation. It might be better if I were to do that. [HON. MEMBERS: "Why?"] Because he is under a misapprehension—and I will spell it out. What I imagine the hon. Gentleman is referring to is the subsidy for social reasons. What I am dealing with is a general subsidy across the board for all consumers. That is the point. When there is a Community arrangement which will cover all the consumers that is an entirely different point. The social provision is something which the Government felt it right to delay until we had reached a determination on the more general position. We shall be making known our position on that, I hope, before the end of this week.
§ Sir D. Renton
Is it not a fact that my right hon. Friend, while persistently standing up for British interests, has saved the common agricultural policy from a crisis of its own? Does not his recent effort in diplomacy at Brussels augur well for our co-operation with Europe?
§ Mr. Godber
I am grateful to my right hon. and learned Friend. I am not sure that I deserve all that credit. One of my objectives throughout these discussions has been to see that we get a sensible outcome now and a sensible plan for the future. I am absolutely certain that the common agricultural policy can be made into an effective system to serve us and the rest of Europe. It is my intention to try to help to do just that.
§ Mr. Strang
Does the right hon. Gentleman agree that the extent to which Britain will benefit from the directive on hill farming will depend more than anything else on the number of farms in the United Kingdom covered by the directive? Is he satisfied, as a result of these meetings, that all areas at present in receipt of the hill cow subsidy and also a fair proportion of our marginal areas will qualify for assistance under the directive?
§ Mr. Godber
This is an important point and I am glad that the hon. Gentleman raised it. It has been a matter of great concern to me. Some of the Ministers wished to limit this to restricted areas, which would not have been of help 998 to us. We were finally able to agree words which would embrace these areas. Only this morning—at a very early hour I may say—I was able to read into the record—and obtain approval of it by the other Ministers—the kind of interpretation that I believed would suit us and which was acknowledged as being one of the bases for the directive.
Will the grant designed to persuade milk producers to switch to beef production be available to existing beef producers to enable them to increase their production? Has any forecast been made about whether a meat mountain is likely?
§ Mr. Godber
The grant will be related specifically to those switching from milk to beef. We have had a large number of different proposals before us in recent months, some of which have aimed at the purpose to which my hon. Friend referred. We have not been able to reach agreement on them yet. I look on this issue as the most important one. Now that we have agreement, it may be possible to introduce others.
§ Mr. Deakins
The Minister has often told the House recently that any general consumer subsidy must involve rationing. When are we to have butter rationing as a result of this agreement in Brussels? Can he say how much the cost of joining the Common Market has been increased as a result of these across-the-board increases on virtually all common price commodities?
§ Mr. Godber:
The point about subsidies involving rationing has to do with subsidies when there is a shortage of supply. There is no shortage of butter, as the hon. Gentleman knows. Thus there is no question of rationing when a commodity is in ample supply. I have explained the precise effect of these matters and have pointed out that the total impact will be less than a quarter of 1 per cent, on the cost of food, which is very much less taken over the whole retail cost of living index.
§ Mr. Farr
May I congratulate my right hon. Friend on the exciting news he has brought back today, especially that in relation to the possible review of the common agricultural policy in the coming months? Is he aware that this is something to which we attach great 999 importance? What decision did he reach about the Community production of sugar in the next year bearing in mind that the Community as a whole is an over-producer of sugar and that we shall shortly have to make room for Commonwealth sugar entering the country?
§ Mr. Godber
Sugar was one of those commodities I mentioned which has a 1 per cent. increase in price now and a further 1 per cent. at the time when we join the float. This is substantially less than the increase in the cost of production over the year. It is the maximum disincentive that could have been involved. I agree about the need to safeguard the position of our Commonwealth friends. My hon. Friend will recall that I recently held a conference at Lancaster House for our Commonwealth sugar-producing friends to discuss the implications of the position.
§ Mr. Godber
Herr Ertl was speaking under some stress during a period when we had all been up for many hours. We have all had some difficulty in recent days. If any agricultural Minister has said some strong things during the last few days, I do not think he can be blamed. What I say about the common agricultural policy is that it should be improved. In the small hours of this morning I said some fairly strong things about the measures which have been adopted. I have said that I want to see some improvement in the system so that we can do this in a more reasonable way.
§ Mr. Biffen
Does not the agreement about milk, which permits a different price for France as opposed to Germany and the Benelux countries, establish a valuable principle of price differentiation along national bases? Will it be my right hon. Friend's objective to pursue that valuable precedent in future negotiations designed to replace the present ramshackle structure of the common agricultural policy?
§ Mr. Godber
The answer is, "No, Sir." I do not look at it in this way. This was a special arrangement as a result of great pressure from different countries and it is 1000 working against the long-term interests of the common agricultural policy. I have said so. I criticised it on this score during our discussions because I believe that we have to try to get back to some common structure as soon as we can.
§ Mr. Baxter
Will the right hon. Gentleman explain how a 5½ per cent. increase to milk producers will reduce the amount of milk available for the manufacture of butter? How shall we get rid of the resulting surplus? What is his estimate of the amount which the British taxpayer will have to pay next year to subsidise the sale of the surplus butter? Will he give us an explanation about how this agreement will affect New Zealand butter producers?
§ Mr. Godber
The 5.5 per cent. increase was the least that could be secured, although some Ministers were pressing for 8.5 per cent. I said 5.5 per cent. and 4 per cent. in certain other areas. That is only one aspect. The other element in this is that the price of butter to the consumer is being reduced. It is being compensated for by increasing the price of skimmed milk powder. There is also the direct subsidy. Both of these will help to increase consumption considerably during the period. Another factor is the stimulus to switch from milk to beef production. We have to look at these matters as a whole. I am as concerned as the hon. Member to prevent surpluses. This is one of the reasons why it has taken us so long to reach an agreement, because I was determined to obtain factors of this kind which would help to offset the dangers. I believe that we have succeeded in that respect.
§ Mr. McBride
Does not this statement, shorn of all its verbiage, mean simply that prices to the housewife in this country will increase? Does not the Minister agree that no British housewife will believe him when he says otherwise?
Lastly, could I put it to him that with this and other indications of the expensive nature of our joining the Common Market in relation to a common agricultural policy, it is quite clearly beyond peradventure that the cost of living will increase by much more than the 2½ per cent. estimated by the Government in the declaration contained in the White Paper.
§ Mr. Godber
The answer to the first question is precisely the opposite. This 1001 statement means that as a result of this agreement the increases that would have taken place and would have affected the British housewife this year will not now take place. I have said that such increases as there will be are absolutely minimal during this present year. That is a very important achievement to have made.
The hon. Member spoke about a 2½ per cent. increase—I told him that my revised estimate for this year is about 1½ per cent.—as being due to CAP. I hope he knows—I have told the House many times—that the big increases we have had during the last six or nine months have been due solely to world conditions and not to CAP.
§ Mr. Godber
I do not think it means a change in the fundamental principles. That is not likely to happen. But by changing emphasis in many ways we can get it into a healthy condition, and it is my objective to achieve just that.
Mr. Mark Hughes
May I ask the Secretary of State whether he will undertake to publish, at the earliest opportunity, a White Paper on assistance to special areas, and whether this would include such matters as assistance to tourism, climatic problems and so forth, so that such a White Paper could be debated?
§ Mr. Godber
I am happy to consider the point about a White Paper, but we shall not get the final directive about assistance to these areas until 1st October this year. The resolution to which I referred committed the Commission to produce the directive before 1st October. But today I especially begged that, although the commitment is for 1st October only, the date should be brought forward. As soon as it is available, we shall see what can be done in regard to publicising it. The main point is that it will be taking the place of existing national arrangements, and so it will not be extended. I agree it is very important 1002 that people should know, and I will gladly consider whether it will be right when the time comes to publish a White Paper.
§ Mr. Godber
I am most grateful to my hon. Friend, but sometimes gratitude from the other side of the House can be embarrassing.
§ Mr. David Clark
We do not express gratitude because we do not feel that there is anything to be grateful about.
Can the Minister tell us what the Intervention Board price of butter in the United Kingdom will be as from today, and what the price is in Europe? Could he confirm that under the procedures we have at the moment our butter prices will have to be increased to approximately £800 a ton from approximately £400 a ton? Can he also tell us what effect the new arrangement will have on the 150,000 tons of butter which we have in store in Britain at the moment?
§ Mr. Godber
The price will go up, not from today—because we had to make arrangements and the decision was reached only today—but from 13th May. That is the date when the rise will take place. The application of the full percentage reduction and the special 10 per cent. abatement means that the price will go up by £55 instead of £84, but most of this will be offset by the butter subsidy of £47 and the rest will be offset by the fact that the market price is already above the intervention price. The answer is that there will be practically no increase at all.
The EEC level is around £800. It will be lowered by the arrangement we have made this time, by the reduction we have brought about, but I could not give the hon. Gentleman the exact figure.
§ Several Hon. Members rose—
§ Dr. Dickson Mabon
On a point of order. We have been discussing this 1003 matter for 35 minutes, of which 18 minutes have been spent by the Minister answering questions from backbenchers. There are still some backbenchers left who have important matters to raise and whose constituents expect them to raise them. I am in that position and I expect my constituents to telephone me on one matter. I am sure that there are other hon. Members who are in the same position.
§ Mr. Speaker
Order. The hon. Member knows quite well that that is not a point of order. This is purely a matter of discretion for the Chair. I allowed 35 minutes, during which time we heard I think three Scottish Members. Mr. Carr.
§ Mr. Speaker
Order. The hon. Member may not pursue the same point if I rule that it is not a point of order. If the hon. Member has another point of order—
§ Dr. Dickson Mabon
I will change it to another point of order. Would it be possible for you, Mr. Speaker, on a point of order, to ask the Select Committee to bear this point in mind—
§ Mr. Molloy
Mr. Speaker, I wonder whether you would consider examining this situation. There seems to be a very unhappy state of affairs on this side of the House. There are those of us who do not enjoy the privilege of being a Privy Councillor, who have a remarkable facility for catching your eye. It seems there is a new situation developing in which some hon. Members for part of Question Time sit on the back benches and catch your eye, and then revert to the Front Bench and catch your eye again. Many of us who sit right through Question Time fail to catch your eye.