HC Deb 30 March 1977 vol 929 cc411-20
The Minister of Agriculture, Fisheries and Food (Mr. John Silkin)

With permission, Mr. Speaker, I wish to make a statement about the Council of Agriculture Ministers which met in Brussels from 25th to 29th March. My hon. Friend the Parliamentary Secretary represented the United Kingdom.

The Council did not reach agreement on Community agricultural support prices for 1977–78, and discussion will be resumed at the next meeting in Luxembourg on 25th and 26th April. The consequence is that the EEC common support prices and the United Kingdom's guaranteed price for milk and the target price for beef under the beef premium scheme remain unchanged for the present. At the request of France, Ireland and Italy the Council accepted changes in the green currencies of those countries.

Eight member States would have been able to agree on a final package of changes from the Commission's original proposals, including slightly bigger price increases. In a long and hard session, my hon. Friend maintained that we should be prepared to accept the changes in common prices and a small devaluation of the green pound only if there were adequate compensating action of food prices in the United Kingdom. In this connection the United Kingdom put forward proposals for a butter subsidy which would have achieved this and also helped to dispose of part of the Community's expensive butter surplus. Unfortunately the final package did not offer sufficient advantages to the United Kingdom and we were, therefore, not prepared to accept it.

The Council also considered measures for the establishment of catch quotas for fish and other control measures in certain areas of the waters of member States. As my hon. Friend the Minister of State explained to the House on Monday evening, the United Kingdom could not agree to these measures, which would have adversely affected our rights in United Kingdom waters.

Mr. Peyton

Is the right hon. Gentleman aware that I made clear in the House on Monday that we regard the fish proposals as unacceptable? However, will he tell us what he would be prepared to accept? It is hard for us to see who has gained anything from this rather prolonged and obviously bitter argument. What is the cash amount separating what the right hon. Gentleman has been offered on the butter subsidy by the Council of Ministers and what he has been asking for on behalf of the Government?

Does the Minister realise that his statement will be particularly distressing for the producers of pigmeat, whose problems are still in the air despite the almost calamitous reverses they have suffered in recent months, and for the producers of beef, who will face some serious consequences as a result of the further devaluation of the Irish green pound? Does he realise that, although he may have a difficult task in his negotiations, the producers feel that he has consistently let them down?

Mr. Silkin

It is difficult to say exactly what one would accept in a package when it contains about 40 different regulations. As the right hon. Gentleman and those of his colleagues who have negotiated in Brussels know, the package must be accepted in its entirety. Once one starts disentangling it and saying that one is prepared to accept this or that, no one accepts anything. The package as a whole was unacceptable for the simple reason that what was being offered to the United Kingdom, which alone among the Nine had an interest in preserving prices at the most reasonable level for producers and consumers, was totally out of proportion to the price that would have been paid.

The right hon. Gentleman asked about only one part of the package. The final offer on butter was that there would be a subsidy, averaged over the year, of 7p a pound to the United Kingdom for a price that was at least 50 per cent. higher than that. I did not regard that as a very good deal for us.

I understand the difficulties of producers. I have checked the records, and if an agreement had been reached in Brussels it would have been the quickest agreement ever reached by the Council of Ministers. The Commission brought forward its proposals two or three months later than usual, and we had to go to the European Assembly for its view only a day before the five-day marathon in which we were engaged. It was always going to be difficult, but I was not without hope that we might have been able to come to an agreement. However, we could not do so.

We were at least able to end one fairy story that I hope will never be repeated—namely, that all we had to do was offer a devaluation of the green pound and the pigmeat mcas would be recalculated. The Danes made clear that, whatever we did on the green pound, they regarded a recalculation of the pigmeat mcas as intolerable.

Mr. Peyton

On that last point, did not the Minister miss an opportunity last autumn of securing a renegotiation of pigmeat mcas? Will he answer my question about the cash amounts separating what was offered on the butter subsidy and what he was asking for? Am I right in thinking that it amounts to about ¼p? Is that not a rather small amount compared with the effect of some of the Budget proposals on fuel oil and petrol?

Mr. Silkin

One must look at the package as a whole. It contained many other things, including no change in the calculation of pigmeat mcas. While we might be willing to accept some parts of the package, we were not able to accept it all. The cash difference at the end of the day remained very considerable.

On the right hon. Gentleman's point about a green pound devaluation affecting pigmeat mcas last autumn, it is not customary to reveal the details of conversations with other Ministers, but I think that the right hon. Gentleman has got it wrong.

Mr. Jay

Is my right hon. Friend aware that he will both deserve and receive the overwhelming support of the British public if he continues to resist uncompromisingly the crazy proposals of this ridiculous organisation?

Mr. Geraint Howells

May I express my admiration and congratulations to the Minister for his stand on the butter issue? The price of butter has increased by 55 per cent. in the last 12 months, and it cannot go on. Does the right hon. Gentleman agree that six months is too long to finalise prices in the annual renegotiations, and does he think that confidence will ever be restored if we carry on with this practice? What proposals has he to help beef producers who will lose up to £30 if they sell their cattle in April?

Mr. Silkin

I freely admit that it is difficult for the beef producers. I am afraid that there is nothing that I can say about that situation. It is the inevitable result of the price negotiations not having been completed. The precedents show that they are seldom completed in March, but I know that is not much consolation. We shall have to see what we can do.

Regarding the time element, I think that the hon. Gentleman was referring to the transitional steps on butter. These are laid down in the Treaty of Accession which, after all, is the basis on which we entered the Common Market. They are totally and utterly immutable.

Mr. Welsh

Given that the right hon. Gentleman is outnumbered eight to one in Europe, is it not really a case of "We're a' oot o' step but oor Jock Silkin"? What real chance is there of agreement next month or the month after, since our farmers have to deal with last year's prices to meet this year's costs? Will the right hon. Gentleman give a firm assurance that devaluation of the Irish green pound will not continue to have a harmful effect on the Scottish market? What steps can he take to protect Scottish beef farmers?

Mr. Silkin

On the last question, I do not know; we shall have to wait and see. The effect of the devaluation of the Irish green pound, which was quite a large devaluation, will mean that Irish beef will tend to find its way into markets in Europe other than our own. Therefore, that part of the competition will not take place. However, we shall have to wait and see. This is the possibility. If the hon. Gentleman cares to wait and see and be a little patient, we shall have more evidence of what happens. I take it that even the hon. Gentleman would not have devalued the United Kingdom green pound to the same extent as the Irish green pound has been devalued. If he would, that would be one of the many reasons for which I should thank God for a Labour Government.

Mr. Buchan

I hope that my right hon. Friend will accept the congratulations of most hon. Members in this House and of people in the country as a whole who regard his conduct and that of the Parliamentary Secretary as in marked contrast to the supine nature of the conduct of negotiations between 1970 and 1972 and, for that matter, the renegotiation in 1974. Does he agree that behind that lies the whole question of tine end price obsession of the common agricultural policy and the consequent creation or surpluses which flow from it, with which the Opposition are also obsessed, rather than the proper expansion of British agriculture?

Mr. Silkin

It is a question of the end prices. That is why we have a butter mountain of 200,000 tonnes and why, unless steps are taken now, it will grow and grow until nobody knows what on earth to do with it and we see the end of this policy.

Mr. Peter Mills

Will the right hon. Gentleman bear in mind that delay in coming to an agreement is a serious matter in terms of confidence in the production of food and of halting the drop in production in British agriculture? Will he also bear in mind that he has sacrificed home production and the British farmer for the consumer? As it would mean a less than 1 per cent. increase in the cost of food in the long term, what he has done is very serious indeed.

Mr. Silkin

I am afraid that the hon. Gentleman's figure on food prices is wrong. The figure is actually 3p in the pound. I am using the Commission's figure on food prices. To those who are paying the bills, particularly those on low incomes, it is a very great figure. I agree that any delay is difficult for British producers. I can only say that they, like the rest of the community, would prefer a fair rather than a bad package.

We have been told that we should willy-nilly have accepted the Commission's first package. Had we done so, that would have created an unparalleled rise in prices. Had we done so, we should have been the only country to accept the Commission's proposal. Perhaps the Opposition will tell us here and now whether they would have agreed to accept the Commission's last proposal, which would have been a tremendous increase over its first proposal.

Mr. Torney

I congratulate my right hon. Friend on the stand that he has taken against the oppressiveness of the common agricultural policy and the Prime Minister on having supported him in this matter. Is my right hon. Friend aware that, by their agreement when in Government to enter the Common Market, the Conservative Opposition are responsible for the very problems that they are mentioning today? Does he agree that the real problem is the uselessness of the CAP to Britain? Will he and the Prime Minister take steps radically to change or abolish the common agricultural policy as that is the real cause of what Britain is suffering from today?

Mr. Silkin

I have never disguised from the House my own view of the common agricultural policy. However, at Brussels during the last five days and nights my aim was to stop an oppressive price rise, which the Opposition supported, at the expense of the British housewife.

Mr. Buchanan-Smith

What message has the right hon. Gentleman for pigmeat producers, who are currently producing every pig at a financial loss? What message does he have for beef producers, who will have to face an additional export subsidy from Ireland? I acknowledge that he is standing up for the interests of the British housewife, but what estimate has he made of the consequences of this uncertainty to the security of future food supplies from home sources?

Mr. Silkin

One of the results that must be obtained is the continuance of the variable beef premium. On that remained absolutely firm. I have already mentioned beef prices, and I do not particularly want to go into that subject.

It is only a matter of two months ago that I informed the House, in answer to a question from an Opposition Member, that I was introducing a subsidy because of the unwillingness of our partners or of the Commission to move to a recalculation of pigmeat mcas. That subsidy remains. I know that the position is difficult—it is bad—but if we had not been willing and prepared to provide that subsidy at that time, the position would have been desperate.

Mr. Peyton rose—

Mr. Speaker

Order. I shall call those hon. Members who have already risen, if they will be brief.

Mr. Peyton

Is the right hon. Gentleman aware that in his brief statement he has given the House no detailed information on the points that separate him and his colleagues in the Council of Ministers? We shall take an early opportunity of returning to this matter in order to give him a chance of repairing his lamentable failure to do so.

Mr. Silkin

I should be grateful if the Hat hon. Gentleman would make that a firm promise. I begin to understand how it was that when in Government and negotiating on the various foolish attempts that they made in the past the Opposition failed to arrive at anything sensible. [HON. MEMBERS: "Answer."] I shall answer the question. There were a number of different items, because this was a package. If the right hon. Member for Yeovil (Mr. Peyton) expects me to answer that in detail, all I can say is that my opinion of him as a negotiator is even lower than it was earlier.

Mrs. Dunwoody

Is my right hon. Friend aware that his degree of realism is the first that we have seen of any sensible negotiations in the Council of Ministers? Should he not point out, not only to the consumer but to the producer in this country, that unless he gets a radical revaluation, particularly of the dairy aspects of the common agricultural policy, we shall be in a worse situation in 12 months than we are at the moment, and that the farming community will have to pay for it?

Mr. Silkin

My hon. Friend is correct. If prices of farm commodities go up, consumption goes down. Time and again it has been proved that it is the farmers who lose.

Mr. Farr

Does the Minister agree that the last time the Irish changed the value of their green pound the British beef producers were hit because Irish exports undercut the market? In view of the failure of the Government to renegotiate the MCA for pigmeat and in view of the increased costs of production and the fall in the value of the market in pigmeat, will the Minister consider increasing the 50p subsidy, which has been a great help so far?

Mr. Silkin

I have already dealt with mcas. In January other circumstances contributed. We shall have to wait and see how pigmeat works out. We must be serious about it. I am being taken to court on this matter. I can hardly increase a subsidy on which I am about to be taken to court.

Mr. Ioan Evans

I congratulate my right hon. Friend on the fight he has put up in Europe. It is peevish of the Opposition not to recognise what my right hon. Friend has done. I am sure that their attitude will be noted in the Stechford by-election. Will my right hon. Friend confirm that 1 lb of butter that cost 24p when we entered the EEC will cost £1.20 by the beginning of next year if the green pound protection is withdrawn? Is that not contrary to the Government's policy of keeping prices down? Does he agree that the common agricultural policy is highly inflationary and that we should abandon it?

Mr. Silkin

That is one of the aspects on which I spent five long days and nights.

Mr. Hastings

What, if any, discussion took place on the production of isoglucose? I understand that there is a proposal to increase the levy to £28. Does not the Minister agree that that is too high and that it will put at risk the technological development of this important commodity? Will he continue to resist it?

Mr. Torney

The Conservatives took us in.

Mr. Speaker

Order. An hon. Member below the Gangway has a loud voice. I hope that he will let us get on with the business.

Mr. Silkin

This was one of the issues on which the United Kingdom delegation made a strong plea indeed. It still remains to be settled, because, after all, the package or its successors remain to be negotiated. I agree that it was a bad offer.

Mr. Roy Hughes

In his statement my right hon. Friend said that the beef premium scheme would continue meanwhile. Will he amplify that and take the opportunity to emphasise that there is no division between producers and consumers, because if we have prices that are too high both will suffer?

Mr. Silkin

My hon. Friend is right on the latter part of his question. The variable beef premium remains part of the matters to be negotiated. We have every prospect now of continuing it. I asked the Commissioner about the Milk Marketing Boards. I received an assurance from him that he viewed them favourably and that he hoped to put the issue to the Commission in the near future.

Mr. Marten

Do not all the goings-on in the past three days illustrate the absurdity of trying to get a common agriculture policy for nine different countries at different stages of economic development and with different climates? Would it not be better to go back to a national agriculture policy and win for ourselves more imports from outside the EEC, as suggested when the Official Opposition agreed to the amendment of the motion the other night when we debated the EEC price review?

Mr. Silkin

It must be clearly understood—incidentally, it was five days and nights, not three—that the basis on which we entered was that there were different systems of agriculture with different requirements and that that at least required some careful handling. We must remember that the end package can never be to the advantage of all. A liberal importation of foodstuffs from outside the Community remains the policy of the Government. In the light of what we have been pressing for for years I am delighted to hear that Opposition Members are coming to agree with that policy.

Mr. Spearing

Does my right hon. Friend recall the right hon. Member for Sidcup (Mr. Heath) speaking on a radio programme on 4th July 1971? Does he recall the right hon. Gentleman, when advocating entry to the EEC, saying that the cost of food as a result would be a ½p in the pound for each of the six years that we were changing to the EEC system of food prices? Can my right hon. Friend tell the House what the cost has been and what the cost of the proposed package from the Commission will be for this year? If he cannot do that now, will he undertake to give an answer later?

Mr. Silkin

I missed that radio broadcast, but I received reports of it. It has proved to be inaccurate. If my hon. Friend cares to write to me, I shall give him a detailed account.

Mr. Temple-Morris

Does the Minister fully appreciate that our credibility in Europe is being damaged through the Government and their supporters constantly dragging their feet on European matters? Will the Minister address his mind to the difference between him and his eight European colleagues and tell us exactly what that difference is? Does he agree that the proposals amount to 1 per cent. overall on food prices, or ¼p on the cost-of-living index?

Mr. Silkin

No, the difference is much greater. It is a question of principle and of whether one is in favour of a high-priced food economy. Furthermore, I prefer our present position to total invisibility in Europe.

Mr. Watt

Although I appreciate that the right hon. Gentleman is desperately short of sleep, will he take time to tell the House whether one of the items in the package involves the sheepmeat régime? Is he aware of the present iniquitous position in which the French are increasing the levy on lamb and yet lamb is entering the original six countries free of levy by the back door via Britain and Germany?

Mr. Silkin

I take the hon. Member's point, but that was not discussed.