HC Deb 25 March 1974 vol 871 cc38-48

3.51 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

With permission Mr. Speaker, I should like to make a statement about the outcome of the meeting of the Council of Ministers (Agriculture) in Brussels on 21st to 23rd March at which agreement was reached on prices and other arrangements for 1974–75 under the common agricultural policy. These include certain special measures being taken to fulfil the Government's aim of ensuring that the price increases decided by the Council should not result in increases in the prices of basic foodstuffs to the British housewife. The main changes agreed for the full Community prices and the special arrangements for the United Kingdom are as follows.

In the cereals sector, the Community intervention price for soft wheat is to be increased by 4 per cent. and for barley by 5 per cent. The increased prices are, however, below present world market prices, and these changes will not have any effect on market prices in the United Kingdom this year.

For beef, the Community's guide price is to be increased by 12 per cent. The guide price in the United Kingdom is, however, being increased by only 6.3 per cent. This keeps it well below the present market price and increases the subsidies paid by the Community on exports from other member countries to Britain. It has further been agreed that we should have the option in any event of not taking beef into intervention.

The combined effect of these measures will prevent increases in the price of beef in the shops. In accordance with Treaty procedures the Government have informed the Commission of their intention, subject to Parliamentary approval of the necessary order, to safeguard the position of beef producers in Great Britain by an increase of £10 per calf in the calf subsidy.

Special arrangements are also to be made for Northern Ireland to safeguard the interests of consumers there while preventing the distortion of trade with the Irish Republic. The estimated cost of the additional support for beef producers will be £38 million in a full year.

For milk, the Community's target price is to be increased by 8 per cent. The Community intervention price for butter will be held unchanged, however, and the increase in the target price will be reflected in a higher intervention price for skimmed milk powder. For the United Kingdom, the Community Regulations are being changed to make it possible to increase the general butter subsidy by the same amount as the intervention price in the United Kingdom. This will make it possible to nullify the effect of the transitional increase in the intervention price so that there need be no increases in the price of butter in the shops due to these changes.

For pigs, the Community base price is being increased by 8 per cent. It will still, however, be well below current market prices. In the United Kingdom, special arrangements are being made to safeguard the future supply of bacon and pork to the consumer. The Commission has been informed under Treaty procedure of our intention to introduce a special subsidy to producers with effect from today, although payments will not, of course, reach producers for a week or two. The subsidy will be paid on pigs certified under the fatstock guarantee scheme, and the rates will be 50 pence per score deadweight until the end of May, 35 pence in June, and 15 pence in July. The estimated cost is £15 million. Payments will be made under the authority of the Appropriation Act. A Supplementary Estimate will be presented in due course, with recourse meanwhile to the contingencies fund.

Finally, the Community's intervention price for sugar is to be increased by 7 per cent. The intervention price in the United Kingdom will not be increased till July and will remain below the price which we are now effectively paying for sugar from Commonwealth suppliers. Moreover, the arrangements for the refining margin for our cane sugar refiners have been substantially improved. From July, the new arrangements will enable them to secure an adequate refining margin without recourse to the present Exchequer subsidy and without increasing their selling prices in relation to the United Kingdom intervention price.

I regard the outcome of this Council session as satisfactory. There has been no disruption of the essential day-to-day business of the Community. The interests of the British consumer have been fully safeguarded; and we are arranging help for British farmers with their particular problems on beef and pigs. I believe that this is a reasonable settlement.

I pay tribute to my staff in Brussels from the Permanent Secretary down to the most humble typist. They were a fine team and they helped me considerably.

Mr. Pym

I thank the right hon. Gentleman for his prompt statement, which we shall naturally want to study in detail. The Opposition are glad that he believes that he has achieved his objective. In particular, I am glad for what he has done for the pig producers, who have suffered the worst aspects of the market in recent months, and for what he has done for sugar.

The House will note that the whole of these negotiations on which the right hon. Gentleman is reporting are within the terms of the Treaty of Accession and that, of course, many of the price increases agreed in Brussels are below world prices and therefore are at present of no significance.

The housewife will be glad about the limiting of price increases, but may we know more about the implications? Have the Government set any limit to the subsidies bill to be met by the taxpayer? I think that within the last week about £100 million or more additional subsidy has been announced. How far do the Government intend to go? Is it not the case that the taxpayer will contribute extra money to the Common Market farm fund as well as extra money to producers and consumers? We are entitled to know how far the Government intend that the taxpayer should meet this kind of bill.

Will the right hon. Gentleman confirm that this is the first time since the war that there has been no minimum price for beef? There is now no bottom in the market for beef. Does that mean that the right hon. Gentleman does not intend to intervene? If he does intend to intervene, at what price level will that be? I am sure that he will agree that this is a most important matter for the confidence of the beef sector. If the prices are held down here, what is to stop supplies of beef going abroad where prices are better? Is it the right hon. Gentleman's intention to bring in again a guarantee system such as operated before?

Was there any discussion of the Comission's proposals on fruit and vegetables, and did the right hon. Gentleman raise, in particular, the plight of the glasshouse sector which was raised in the debate ten days ago?

Is the right hon. Gentleman satisfied that the deal will lead to an increase in production? It is not only a question of continued supply but of expansion. The consumer is every bit as interested in this as the producer because without adequate supplies, prices would be adversely affected. Therefore, whatever the right hon. Gentleman may feel about the reasonableness of the settlement, the crucial question is whether it will lead to continued expansion in the agricultural industry.

Mr. Pearl

Of course the Exchequer is involved here. Indeed, there are producers' subsidies totalling £53 million. There are also consumers' subsidies in relation to butter, for example. I accept this. It was the right approach.

The Opposition have often been involved in Exchequer support in relation to production grants. Only recently in their award—which I thought was essential to give confidence to the dairy industry—the Opposition did precisely this. They were responsible for the subsidy, and I recognise this, but there is the consumers' point of view. If we can use Exchequer support in this way and it keeps down prices, we shall be able to fight inflation.

The right hon. Gentleman asked about the time limit involved. The agreement is equivalent to our own Annual Farm Price Review and will be for the appropriate period.

The right hon. Gentleman also asked about beef. He must recognise that the Community system in relation to support is different from the old deficiency payments system which was enshrined in our legislation, which was approved by both parties. It is an intervention system. I do not like it. I believe that when there is a need for beef, it is wrong for it to be put into storage. Therefore I asked for an option, which I shall use sensibly.

Regarding other matters, including those affecting fruit and vegetables, there is a specific problem relating to glasshouses, involving fuel. I hope to have immediate discussions with the industry on this. On matters relating to fruit, I have kept in touch with the industry, and its representatives within COPA who were out there in Brussels.

I am satisfied that this award and the proposals which I have put forward will give confidence in parts of the industry where there was some neglect. I have in mind the pig industry, which should have been dealt with previously but had not been dealt with. I have now given a direct injection to that industry, and this will give confidence to pig producers here as well as in Northern Ireland. For that reason I believe that I have struck the right balance, and I hope that the right hon. Gentleman and his party will support me.

Dr. Mabon

I congratulate my right hon. Friend on his success in these discussions. With regard to sugar, who pays the increased refining margin of £19? Is there an increase in the subsidy which the right hon. Member for Grantham (Mr. Godber) introduced last July, or is it now part of the EEC system? What obstacles now remain before my right hon. Friend can proceed with the Cyrriax report on the reorganisation of the sugar refining industry in this country, which is causing much concern among cane sugar refiners in Britain?

Mr. Pearl

The cane sugar refiners' margin was only £12, so an Exchequer subsidy of £5 had to be provided to bring it up to £17. Now, under the new EEC arrangements, there will be a margin of £19 without Exchequer subsidy.

The future of the sugar industry was not a matter for my discussions in Brussels, but on my coming into office we had discussions immediately with different sections of the industry. This is an urgent matter.

Mr. Hooson

I congratulate the Secretary of State on obtaining this concession in Brussels and I congratulate the other Common Market Ministers on acknowledging and sympathising with our present problems in this country.

Did not the right hon. Gentleman's negotiations lead him to the conclusion that the cheapest food which we could get at the moment is that which is grown in this country? There has been slaughter of breeding animals in the last few months in this country. Should not there now be a long-term review of our agricultural situation?

Mr. Peart

I am grateful to the hon. and learned Gentleman, who I understand leads the Liberal Party, or did lead the Liberal Party, on this matter. [Interruption.]—Indeed, I think he is the Liberal Party spokesman. I had thought that he had moved to another subject.

I should be frank with the House. I negotiated this agreement but I accept that many of my colleagues in the Council and in the Commission played their part. They were helpful and wished to co-operate. I in no way tried to get any major reorganisation of the CAP. What I was concerned with was a continuation of the price review negotiations, within the Treaty and the regulations. It was in that spirit that I approached my negotiations in order to protect British interests—those of the housewife and the consumer—and to balance these with the interests of the producer.

I agree with the hon. Gentleman that we should have a long-term plan on food production. I have already had discussions with the National Farmers' Union on this. It is my wish to have a long period in office in order to implement this plan.

Mr. Cledwyn Hughes

I congratulate my right hon. Friend on his substantial achievement in Brussels. Does he agree that one of the most significant features of the agreement is the acceptance in principle of deficiency payments? Does he see this developing as a permanent feature of Community reviews?

Mr. Peart

My right hon. Friend knows that the Community has previously used the deficiency payments systems on certain commodities. It is not for me to comment now on any long-term arrangements, if we are to seek renegotiation. The reality is that deficiency payments systems have been used.

Mr. Godber

I congratulate the right hon. Gentleman on an agreement which I recognise is a big step as he comes into office, and I also congratulate him on certain aspects of it, including the sugar refining margin, which will be useful.

However, does he agree that acceptance of the agreement will mean that the British taxpayers will have to pay for the national subsidies in full and will also have to contribute their full share to the much larger community figure, which will be involved, particularly in regard to beef and milk, where both of the figures he has announced for the Community are substantially in excess of what the Commission first proposed. The milk subsidy, in particular, could lead to another milk mountain. Is this not where the right hon. Gentleman had to give concessions in order to get agreement on his other points?

Mr. Peart

I thank the right hon. Gentleman for his remarks. I noted with interest his comments in the Daily Telegraph—which were both serious and amusing—regarding my position. However, I do not think that he is right on this. We have prevented through this method much higher prices, which would have harmed the consumer and which, in the end, would not have benefited the producer.

Mr. Milne

Is the right hon. Gentleman aware that his statement represents no substantial shift in Community policy? Can he outline policy on the question of Britain's contribution to the Community budget which still stands at 25 per cent. of the total?

What is the position regarding the 20 per cent. annual increase in foodstuff prices between now and the end of the transitional period? Will my right hon. Friend indicate the benefits to the Commonwealth from the sugar-refining arrangements?

Mr. Peart

I cannot agree, and I cannot comment on whether we have moved towards an acceptance of a different policy in relation to the CAP, which is what my hon. Friend is saying. I achieved in the discussions things which have never been achieved in the Community in an approach to our national problems—a special pig subsidy, a special subsidy on beef and options on intervention prices. Those are examples. In that sense I believe that they constitute an achievement. I cannot comment on other longer-term matters, which are subjects for discussion.

Mr. Morrison

Understandably, the right hon. Gentleman may think that it is wrong to put beef into storage, but the total implication of what he said is that he does not want an expansion of beef production at home. Will the calf subsidy help current producers of beef? How are producers to have renewed confidence in beef production in the future, when it is the end price that matters?

Mr. Peart

If the end price is too high, consumers do not consume beef. The hon. Gentleman should know the market conditions of the industry. That has been one of the great problems. Many of our people are not eating what was once a traditional part of our food supply. Conservative Members must bear that in mind. I believe that the industry needed confidence by the injection of a direct subsidy. I have done that with calf subsidy. I see no reason why there should not be expansion.

Rev. Ian Paisley

On behalf of the people of Northern Ireland, I congratulate the right hon. Gentleman on his statement, which has been long awaited. Will he still keep in mind that the pig industry in Northern Ireland represents 45 per cent. of total agriculture there, and that barley prices are higher in Northern Ireland than in the rest of the United Kingdom? In order that the pig industry may plan ahead, will the Minister give an assurance that when the arrangements are put into effect he will reconsider that matter in the interests of the pig industry in Northern Ireland? I should also like to know how the calf subsidy will work for the Northern Ireland farmer.

Mr. Peart

I believe that the pig subsidy has been welcomed, and I am glad that the hon. Gentleman appreciates that. He and his colleagues lobbied me on the matter, and I know that they feel very strongly about it. I know Northern Ireland very well, and I know the importance of the pig industry. I believe that the calf subsidy will be satisfactory. We shall be making separate arrangements especially for Northern Ireland to prevent distortion of the market in relation to Southern Ireland. I shall keep in touch continually with Northern Ireland on the matter.

Mr. Lee

I congratulate my right hon. Friend on knocking some sense into that absurd organisation in Brussels. He has already said in answer to an earlier question that he does not like the intervention principle. May we take it that he made clear to his colleagues over there his dislike of that principle, and that he will make it clear again and again until we are emancipated from the Common Market agriculture policy?

Mr. Peart

I can only repeat what I said earlier. I had to work within the rules and regulations. The reorganisation of the CAP is a matter not only for me but for my right hon. Friend the Foreign and Commonwealth Secretary. In the discussions, my colleages in Europe—I use that term—[HON. MEMBERS: "Hear, hear".]—That is right [Interruption.] It is not a question of truth. I have disagreed over the CAP, but I have always believed in wider European co-operation. There is a difference. All I am saying now is that I believe that they recognised that I had a point about intervention, and it is for that reason that I achieved what in fact I achieved.

Mr. Mills

I welcome what the Minister has done for the pig industry, but does he not agree that the position regarding market stability in the beef sector is far worse, for without the underpinning of intervention or deficiency payments there can be no confidence for the fattener.

Mr. Peart

The hon. Gentleman chastises me on the question of confidence, but it was his Government who let confidence slip. It is precisely for that reason that I have injected a subsidy for pigs, which the hon. Gentleman appreciates. As a former Northern Ireland Minister, the hon. Gentleman knows full well that I am right on that matter. Secondly, I believe that the injection of aid in the form of the calf subsidy will give confidence in the beef sector.

Mr. Harry Ewing

While not wanting to detract from my right hon. Friend's magnificent victory over the weekend, may I ask whether during the negotiations he gained the impression that the previous Government, because of their blind obsession with Europe, had betrayed the British people by accepting conditions that they need not have accepted, and that that is the main reason why consumer prices in this country have been so high for the past year?

Mr. Peart

I note what my hon. Friend says. My object was to achieve what I thought was in the interests of my country, and I did that within the rules and regulations.

Mr. Biffen

Can the Minister confirm that the sliding scale of 50p down to 15p being paid per score deadweight on pigs is also available to pig producers from the Republic of Ireland, but that the Irish have managed to get it financed from the common agricultural fund, whilst the right hon. Gentleman is to tax the British taxpayer? What is the charm possessed by the Irish Minister for Agriculture that he can use Community funds, whereas the right hon. Gentleman cannot?

Mr. Peart

I cannot accept that. That comes again from the Irish point of view, which I agreed in relation to Northern Ireland. I was able to do something. There was a recognition in the end that the Southern Ireland Government had a difficulty which we do not have, and that therefore there would have been a distortion of the market. [Interruption.] I am stating their position. I believe that what I have achieved is a good thing.

Mr. Anthony Stodart

Is not the most important feature here the question of the guarantee on beef, or the lack of it? Whilst I accept the right hon. Gentleman's point about the injection of the calf subsidy, does not he recognise that a flood of cattle on to the fat market without either intervention or guarantee could cause the price to plunge? If the right hon. Gentleman dislikes intervention, as I am ready to accept that he does, is he returning to the system of guarantees and deficiency payments? There must be one or the other.

Mr. Peart

This involves a major attitude towards the CAP—how we reorganise it. My injection of money into the beef industry through the calf subsidy will, I believe, give confidence. After all, Conservative Ministers did nothing about it, either in the Annual Price Review or in Europe, when we had the unfinished business. I believe that this is essential. I have an option on intervention. I do not like it. But I believe that what I have done in the direct subsidy is right and proper.

Several Hon. Members

rose—

Mr. Speaker

Order. We must move on to the next debate, in which more than 40 right hon. and hon. Members wish to speak.