HC Deb 19 June 1974 vol 875 cc478-88
The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

With permission, Mr. Speaker, I should like to make a statement about the Council of Ministers (Agriculture) meeting in Luxembourg on 17th and 18th June. There were two main items of business—a statement on behalf of the United Kingdom on the renegotiation of the terms of British accession to the Community in the agricultural sector; and the current market situation for pigs and beef.

On the former, I made a full statement elaborating our aims as they had been set out by my right hon. Friend the Foreign and Commonwealth Secretary on 4th June. I have deposited copies of my statement in the Library. In it, I covered three basic areas. First, I outlined the ways in which the operation and mechanisms of the common agricultural policy must be reformed. I emphasised the need not only to adopt clear criteria for future price determinations, but to implement them in relation to the requirements of modern efficient farms and to the supply/demand situation for individual commodities.

I also asked that it should be accepted in principle that prices could, by agreement, be fixed for particular parts of the Community at levels lower than those applying generally. I proposed that the mechanisms of intervention should be modified so as to reduce automatically the incentive to produce more than the market required, and that if surpluses accumulated they should be made available as a matter of priority to Community consumers.

Secondly, I pointed to the need for improvements in the régimes for particular commodities. I laid particular stress on the need for a new regime for beef—one which should replace permanent intervention by variable subsidies and production grants, to the benefit of producer and consumer alike. I recognised that such a new régime could not be introduced before next April and warned my colleagues that the difficult market situation might call for further Community action on an interim basis during the coming weeks.

Thirdly, I dealt with the need for a general liberalisation and improvement of access for food imports from Commonwealth and other countries. For New Zealand, I propose that the review of the existing arrangements should start this year rather than next; that prices should be reviewed annually; and that provision should be made for continuing imports of New Zealand butter after 1977 at broadly the levels envisaged then. We were also considering possible methods of dealing with cheese.

For sugar, I emphasised the need to offer continuing access for 1.4 million tonnes of sugar from the developing countries, and said that arrangements were also needed for further supplies from Australia—[Interruption.] Why not? I am defending Australia. Finally, I pointed to broad areas in which access for third countries to Community markets should be improved; and I gave examples where both levies and tariffs could be reduced to the benefit of consumers.

I was able to point out that all the issues I had raised could be dealt with as important and urgent business of the Council.

No member country dissented from this proposal and the Chairman of the Council declared that the various elements contained in my statement would be dealt with in the framework of the work which the Council had set itself to carry out in the course of the coming months—and I shall be present. This has been written into the record. So I shall look to the Council to approach seriously and expeditiously the questions which I put before it; and I shall report to this House on progress as it is made.

The second main item was the current market situation for pigs and beef. After full discussion in the Council, the Commission announced its intention of adopting two further measures which I had sought in the interests of United Kingdom producers. On pigs, provision has been made for the continuation of the current special subsidy of 50p per score deadweight until 1st September. Thereafter it will be paid at the rate of 35p per score until 29th September and at 15p until 3rd November. This amounts to total supplementary aid to pig producers of £30 million since March of this year.

On beef, the increase in the United Kingdom guide price scheduled for 31st January will be brought forward to 1st July. This should not raise prices to the consumer, for there are plentiful supplies available in this country. It is intended to sustain the market in a difficult situation. In consequence, the special subsidy in Northern Ireland will end on the same date, and, subject to parliamentary approval, Northern Ireland producers will become eligible for the full rate of calf subsidy payable in Great Britain.

In this meeting of the Council, I have thus taken three measures to sustain confidence in the meat sector—[Laughter.] I am surprised to hear hon. Members laughing—

Mr. MacArthur

"Sustain"?

Mr. Peart

First, I have secured the arrangements on pigs and beef which I have just described. Secondly, I have warned the Council of the possible need to take interim action to meet the beef market situation in the coming weeks. Thirdly, I have outlined the kind of Communuity régime for beef which should be introduced next year.

These three measures are further evidence of the Government's determination to ensure that our livestock industry can continue to provide the nation with the supplies it needs in the years ahead.

Mr. Pym

The House is grateful to the right hon. Gentleman for that statement, which is good in parts and a total disappointment in others. We are glad that the whole tone and context of it is Europe. That is something of a U-turn for the right hon. Gentleman. He now recognises and accepts the objective of improving the operation of the CAP.

Is the right hon. Gentleman aware that we think it right that his suggestions for adjustments and other proposals which will be made should be considered within the framework of normal Community procedures?

The specific changes which the right hon. Gentleman indicated yesterday are short-term and inadequate. He is in fact tinkering with the problem. He has acknowledged at last that the beef sector is under severe strain. Is he aware that, after his statement today, it will still be under strain? He did a U-turn with his agreement of 23rd March, so that is a double U-turn so far. But is he aware that damage has been done, that confidence has been knocked, and that it will take more than a straight reversal to stop the decline, let alone to expand? He has allowed matters to drift and is acting too late. The consumer will suffer.

When will the right hon. Gentleman bring back a floor in the beef market? Is he aware of what has happened in beef markets this week? I ask him to expand on his statement. What in practice does he mean by, It is intended to sustain the market in a difficult situation"? He talks about "the possible need"—I think it is a real need now— to take interim action to meet the beef market situation… Will the right hon. Gentleman confirm that the new intervention price is £17.90, and will he intervene at that level? If not, when and at what level will he intervene?

In the pig sector, the continuation of the 50p subsidy is obviously better than was settled in March. Is that likely to be any more effective in stopping mass slaughtering than during the past two and a half months? What happens after the subsidy ends? Is the right hon. Gentleman aware that he has now been shown to have failed in his stated aim of safeguarding the future supply of bacon and pork to the consumer?

The right hon. Gentleman's arrangements in Northern Ireland represent a third U-turn and will be a great disappointment.

May I ask the Minister to tell us more about sugar supplies in 1975? What are the prospects for obtaining 1.4 million tonnes? What are the prospects for getting more supplies from Australia? What are the prospects for getting larger acreages at home? These are all crucial questions which should be answered.

Finally, is the Minister aware that, whilst we support the most careful consideration of long-term adjustments to the CAP in the European Community—of course we do—there is deep uncertainty still in the livestock sector which his statement does not dispel? Unless he puts the matter right at once, the consumer will suffer through inadequate supplies and higher prices later.

Mr. Peart

I am rather surprised at what I think is a pathetic statement by the spokesman for the Opposition. After all, I did not create this situation. I inherited it from right hon. Gentlemen opposite.

I have not altered my policy towards Europe. I believe that there should be fundamental changes in the CAP, as we stated at the election. I believe that I am doing something that right hon. Gentlemen opposite should have supported when they were in Government. They failed to do anything about our domestic agriculture. They failed to submit proposals to the Council of Ministers. The right hon. Gentleman knows that. We have done it. We believe that if we achieve what we set out to do, we shall help our producers and consumers.

The right hon. Gentleman asked what I had done regarding pigs. We have given £30 million, which represents a large amount of money, to the industry. I did not create the pig situation. It was there when right hon. Gentlemen opposite had responsibility. Moreover, they know very well that the situation facing livestock producers, and the trend of inflation in feed costs, occurred under their régime. I make no apologies. I believe that what I am doing is right for Britain.

Mr. Pym rose—

Several Hon. Members rose—

Mr. Speaker

Order. I think that there is a procedural matter that the House of Commons should consider. Statements are being made and then questions asked upon them which lead to something in the nature of a debate. That is wrong. Other opportunities must be obtained for debating these matters. This is an opportunity for questioning the Minister on his statement, not for debate.

Mr. Jay

Is my right hon. Friend aware that the responsibility for the present beef situation rests with the Opposition who, when in office, abolished deficiency payments? Is he also aware that as a result of that situation the EEC now has a stock of nearly 100,000 tonnes of beef which is unsaleable because the price is too high and that apparently the remedy proposed by the EEC now is to raise the price still higher?

Mr. Peart

I agree with my right hon. Friend. I believe that the system operating in the Community of permanent intervention is wrong. I came to the House previously to announce that I believed that there should be an option. I have suggested that the Community should think in terms of having a new premium support system. That is right. I believe that the system that has been operating there is wrong, but right hon. Gentlemen opposite strongly supported it. For this reason, I am seeking to change the system in the Council of Ministers. We stated this at the election. I have our manifesto here. I keep strongly to it. I believe that what I have done is right and proper in the interests not only of this country but of world trade.

Mr. Scott-Hopkins

Does the right hon. Gentleman accept that he is entirely responsible for the weakness in the livestock sector now? Does he also accept that what he said at the Dispatch Box today, other than bringing back the Australian quota, is nothing new or outside the terms that the Conservative Party was trying to negotiate and, indeed, had put forward during the last eight months at the various Community institutions? The right hon. Gentleman has put forward nothing new. Will he now do his best to achieve results?

Mr. Peart

I am amazed at the hon. Gentleman, who was a very effective and good Parliamentary Secretary, but he knows very well—

Mr. Scott-Hopkins

Read my speeches in the House.

Mr. Peart

The hon. Gentleman must listen; he is not at Strasbourg now. He should realise that what I have done in suggesting a new beef régime is something positive. What I have done about continuing access for New Zealand products is a change from what was decided by the previous Government.

Mr. Scott-Hopkins

Nonsense.

Mr. Peart

Of course it is. One has only to look at the Treaty of Accession. I have done something in relation to the Commonwealth and the lowering of tariffs on many products from third countries—problems about which right hon. Gentlemen opposite did nothing.

Mr. Scott-Hopkins

That is absolute nonsense.

Mr. Russell Kerr

Is my right hon. Friend aware that the House will dismiss the idle vapourisings of the right hon. Member for Cambridgeshire (Mr. Pym) and, indeed, will give a warm welcome to his reference to the Australian quota and especially to the fighting stance that he has revealed in defence of this country's interests, particularly in the light of the misrepresentation of his position recently set out in the Sunday Times?

Mr. Peart

I am grateful to my hon. Friend for those remarks. I saw something in the Sunday Times which was a distortion. It is not for me to comment on what journalists say. We have to accept the situation. This is inevitable in political life. However, I believe that what I am doing is in conformity with what we said we would do, and that has been my stance throughout.

Mr. Russell Johnston

Surely the Minister will agree that the object of the exercise, from the point of view of all parties, is to keep consumer prices as low as possible while maintaining stability for the farmer. Does he agree that the basis of his criticism of the CAP now is different from that in 1972? The basis then was that the CAP would cause alarming increases in consumer prices, whereas, were we not in the early stages of the transitional arrangements now, the CAP would be holding consumer prices down in view of the new world situation. How is it possible to have a referendum on the terms at one moment in an ever-shifting situation which might be negotiated very well now and change completely in two years?

I should like to put two further questions. Is the Minister proposing to introduce deficiency payments on beef? Secondly, is he in favour of unlimited improvement of access for Commonwealth countries' food irrespective of British producers' interests?

Mr. Peart

I believe that we should have a greater liberalisation of trade within the Community. The Community has been too rigid. That is why I have always argued that we must insist that some of our traditional suppliers, such as New Zealand and Australia, should be able to send their products to our market.

At the same time, I recognise always that there is our own domestic producers' point of view which must at all times be considered, but I see no reason for not having this liberalisation. This is why I am defending the 1.4 million tonnes target for sugar, and why we shall be having talks soon with the Caribbean countries on this matter. I want to honour this. We should do it. It is right.

With regard to high prices, I said in my statement that we should be in a position to lower prices if necessary.

The hon. Gentleman mentioned my position in relation to the CAP. I have repeated over and over again that, for beef in particular, intervention is a bad policy, because it reduces the quality of meat and in the end there is an accumulation. I believe that a policy resulting in a butter mountain is also bad. Whether we dispose of the butter to the Soviet Union or to any other country, the policy is wrong and does not help the consumer.

For those reasons, I want the changes which are proposed—and my party has said so.

Mr. Roy Hughes

Is my right hon. Friend apprehensive of representations about his alleged evasive attitude to renegotiation? While I appreciate that the Opposition are responsible for the present position because of the terms which they accepted for taking us into the Common Market, does not my right hon. Friend nevertheless agree that in order finally to restore reasonable prices to the British people it will be necessary completely to repudiate the CAP?

Mr. Peart

My hon. Friend should know that it was stated in our manifesto that we would seek major changes in the CAP. I note that a report in The Times today, following what I said in Luxembourg, says: Britain presents Community with radical proposals for changes in agriculture policy. I believe that when my hon. Friend studies carefully what I have said, he will see that I have acted as I have been instructed by my Government and by my party, and I believe that in the end this will benefit both the producer and the consumer. We can fight any election again on this point.

Mr. John Davies

Is the right hon. Gentleman aware that the remark he made on the subject of operating differential prices in the Community will sound like the death knell to our livestock industry because that industry knows the Government's record? Is he further aware, in referring to an early review of the New Zealand situation, that the principal objective of New Zealand is to get an allowance for inflation, thus increasing butter prices to this country?

Does the right hon. Gentleman believe that he will get an arrangement with Australia which will allow sugar to come from that country at prices which we can accommodate within our problems of inflation?

Mr. Peart

I believe that with the good will of the Australian Government—I am glad to say that it is still led by a Labour Prime Minister—we shall be able to conduct bilateral negotiations on that matter. We have indicated our position.

I believe also that the question of guide prices which I have mentioned will help the beef industry. I am certain that when the farmers and the farmers' unions meet me in connection with what I have proposed regarding the beef régime, they will fully accept it. It is time that the Opposition started to talk the market up instead of down.

Mr. D. E. Thomas

Is the right hon. Gentleman aware that whereas we certainly welcome his longer-term proposals for a premium in place of the present intervention system, this still does not satisfy the deep concern about the crisis facing the industry? Why is he at present so reticent in the EEC as not to demand the reintroduction of the fatstock guarantee system in this country?

Mr. Peart

If I feel it essential to take immediate and urgent action I shall have to make proposals to my colleagues. After all, it was not I who said that we should go into the Community, but, now we are in, I must get a new policy adopted. I know that this is a long-term aim, but if the situation gets worse I will act.

Mr. Ronald Atkins

Has my right hon. Friend made it clear that substantial acceptance of his proposals are one of the conditions of continued British membership of the Community and does he agree that, if this is the case, we need an early reaction to these proposals from the Ministers in Europe, in view of the fact that the British Labour Party want to make it an issue at an early election?

Mr. Peart

I understand my hon. Friend's point. I have told the Council of Ministers that they must regard this matter as a serious proposal and that we should discuss it urgently and expeditiously. I believe that that approach is right.

Mr. Pym

The right hon. Gentleman said that he intends to sustain the beef market. Will he tell the House how he intends to do that?

Mr. Peart

That is for me to decide.

Several Hon. Members rose—

Mr. Speaker

Order. I am afraid that we cannot debate this matter now. An important debate is to follow and there is also a Ten Minute Rule Bill to be considered.

Mr. Harry Ewing

On a point of order, Mr. Speaker. While not questioning in any way your choice of hon. Members to ask questions on this matter, I ask you with the greatest respect to bear in mind, when statements are made in future on the European Economic Community, that we in Scotland have some interest in the matter.

Mr. Speaker

I am well aware how many hon. Members have so many interests in so many subjects, and I try to do the best I can.