HC Deb 11 May 1977 vol 931 cc1473-501

10.18 p.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop)

I beg to move, That this House takes note of Commission Documents Nos. R/2021/76, R/2614/76 and R/2109/76 on financial matters under the EAGGF and tariff quotas for frozen beef and veal, and the Ministry of Agriculture, Fisheries and Food's explanatory memorandum dated 9th May on Commission Document No. R/2614/76. The House has just had—[Interruption.]

Mr. Speaker

Order. Would hon. Members who feel that they have to leave the Chamber do so quickly and quietly, please?

Mr. Bishop

The House has just had a very full discussion on agriculture, and I welcome this opportunity to continue by considering some EEC documents which the Scrutiny Committee has recommended for debate.

I should like first to turn to the two financial items, R/2021/76 and R/2614/76 which, as the Scrutiny Committee has indicated, go very much together. I am particularly pleased that the Scrutiny Committee has suggested these two items for discussion.

The Cheysson Report, R/2021/76, reflects the importance which we have attached to the need for budgetary and financial control in the EEC, a theme that we have pursued constantly in Brussels and elsewhere. I need only recall the initiative of my right hon. Friend the Member for Huyton (Sir H. Wilson) when, as Prime Minister, he spoke of his desire to see applied in the EEC methods of financial control com- parable to those developed over the years in the United Kingdom.

The Cheysson Committee, named after Monsieur Cheysson, who was Commissioner for Budgets and Financial Control in 1973, when the work was put in hand, has already produced reports on the olive oil and oilseed and milk and milk products sectors. The committee, which reports directly to the Commission, is made up of senior officials from member States who have special knowledge and experience of auditing and financial control. Their work is not only done by the study of legal texts, of papers submitted to them by the Commission services, and of answers to questionnaires sent to member States, but also by visits for on-the-spot inspections including one made eighteen months ago to the United Kingdom in connection with this report on beef and veal.

The report contains a number of proposals. In general terms, there is the simplification and standardisation of Community rules and the avoidance of measures which could give rise to opportunities for speculative operations such as the carousel trade. The report also recommends improvements in co-operation between member States, better understanding of each other's systems, and standardisation of procedures to some extent. In addition, there are many detailed technical and operational recommendations relating specifically to beef and veal.

We have already expressed our appreciation in Brussels of the Committee's work. Many of the report's recommendations are already in effect in this country. There is close contact between officials of the various departments responsible for administering measures under the CAP and similar co-operation between those officials here and in other countries.

On the other hand, we do have doubts about some of these recommendations. The proposal that in the short term the concept of abuse of law should be used to enable member States to refuse payment to traders runs counter to United Kingdom legal concepts and practice, and more thought will be needed before we can decide how best to deal with this recommendation.

The EAGGF Financial Report, R/2614/76, on the other hand, is an essentially factual document covering the operation of the farm fund during 1975 and, as the title indicates, it is the fifth of its kind. As such, it is a welcome addition to the available information on the operation of the CAP. The supplementary memorandum which the Ministry has just submitted sets out the content of the report in some detail, and I would merely draw the House's attention to the fact that the report is presented in four parts. There are chapters on guarantee and guidance, which cover the financing of these sectors; there is a chapter in which inspections and irregularities are analysed, which records the development of audit methods by the Commission's services in this field, and summarises reports of irregularities made by member States under Regulation 283/72; and the remaining part of the report deals with the financing of Community food aid.

It might be helpful to the House if I explain at this stage exactly what is meant by irregularities. These are not, of course, necessarily frauds. An irregularity occurs when there is a breach of Community rules. For instance, in the guidance section, a farmer may agree to farm in a certain way for five years and be prevented by death or ill health from doing so. This was a feature of a recent debate in this House. Community rules are not complied with and an irregularity occurs and is reported, but in that case it may not be called fraud.

As for the scale of irregularities, in 1975 irregularities in the guarantee section totaling£1 million were reported out of total expenditure in that section of over£2,000 million. I give these figures in order that the House can get a sense of perspective of the situation. The report shows us that, from previous experience, more than half the money is likely to be recovered within five years.

About 20 per cent. of the Communities' guarantee section expenditure in 1975, or about£400 million, was on beef and veal, About 11 per cent. of guarantee sector irregularities, or about£80,000, fell in the beef and veal sector.

Reports such as these before us help us to evaluate the progress being made by the Community and by member States in the operation and control of Community funds, and to this extent both are welcome documents.

Finally, I will say a few words about the other document before us, namely R/2109/76, dealing with arrangements for the allocation of a Community quota for the import of frozen beef, free of the variable levy which is otherwise applied to imports.

This is a subject that has already been thoroughly aired in the House—when we adopted the Agriculture Levy Reliefs (Frozen Beef and Veal) Order 1977 on 8th March. Consequently, although I shall of course be pleased to deal in my winding-up speech with any points hon. Members may wish to raise tonight, I will merely remind the House of two points at this stage. The first is that the instrument to which the Council agreed in December provides an increased share of the quota for the United Kingdom compared with the original proposal submitted by the Commission. The second is that our share of 12,750 tonnes in 1977—of a Community proposal of 38,500 tonnes—provides a useful source of supplies of the kind of beef that cannot be produced in the Community, and makes an important contribution even allowing for the generally more flexible import arrangements that came into force in this sector at the beginning of April.

Mr. J. Enoch Powell (Down, South)

Will the hon. Gentleman make one matter clear about the instrument? It is before us as a draft instrument. He said that it was approved by the Council last December. Are we to understand that since then it has been in force and in operation? If so, are we considering a draft instrument which has already been effective in this country for the last five months?

Mr. Bishop

I understand that that is the position. The matter was agreed by the Council in December. The House debated this on a motion to annul the order moved on 8th March, and the motion was withdrawn. We are now debating this matter because, before that, I understand that the Scrutiny Committee recommended that it should be a matter for debate. But this has already been debated in the House. The other two documents—the FEOGA Fifth Annual Report and the Cheysson Report and recommendations—are still matters for consideration in Brussels.

I have not gone into very much detail on the three documents before us today. The last item has already, in effect, been discussed and approved by the House. The other two documents are factual and informative rather than legislative.

Mr. Neil Marten (Banbury)

The hon. Gentleman used the word "approved". Was it approved?

Mr. Powell

The motion was withdrawn.

Mr. Bishop

The instrument came before the House and, on 8th March, there was a motion for its annulment. After a debate, that motion was withdrawn. So the matter has been debated by the House.

Mr. Marten

But not approved.

Mr. Bishop

The two other documents are matters still for consideration in Brussels. The debate will give the House an opportunity tonight of expressing a view on these documents and that can be taken into account subsequently.

Mr. Douglas Jay (Battersea, North)

Was my hon. Friend strictly accurate in saying that the order had been approved by the House? As I understand it, there was a motion to annul the order, and that motion was withdrawn.

Mr. Bishop

The Scrutiny Committee recommended the item for debate but said that that should not hold up the agreement.

10.31 p.m.

Mr. Michael Joplin (Westmorland)

I suppose that I should begin by congratulating the Minister—although I regret having to do so—on having saved his shirt by such a narrow margin in the Division a few moments ago. We would all personally have felt some sorrow for him if he had had to reduce his standard of living as a result of the vote. I am sorry that in the event there were not enough Members of other parties to support our motion. With their support we could have sounded a signal success against the Government.

Of the three documents, the first, R/2021/76, deals with irregularities in the beef and veal sector. All systems of agricultural support create opportunities for abuse and dishonesty. In our own system of grants and deficiency payments the same situation applied. Wherever government intervenes to provide cash and support such irregularities are bound to occur.

Publicity has been given to incidents in the Common Market. I am glad that a paper has been produced dealing particularly with this matter because we are naturally happier to know that something is being done about it. When huge payments such as those involved in mcas on agricultural produce are passing between member States it is inevitable, with green pound discrepancies, that temptations to cheat should arise. That makes it all the more important for the Community to be vigilant.

Mr. Hamish Watt (Banff)

Does the hon. Gentleman not agree that inter-Community trade is so lucrative for many people who are shipping meat across borders that there is no need for them to be dishonest? They can make a fortune legitimately.

Mr. Jopling

Perhaps the hon. Gentleman knows more about that than I, but I agree that over the years stories of various practices have arisen. I hope that the hon. Gentleman agrees with me that the numbers involved in questionable activities are small. I should be surprised if it were more than a very tiny minority of those engaged in the trade.

I turn to Document R/2614/76. On page 71 there is a list of new fraudulent practices which were notified during 1975. It covers a wide range. The last item refers to seeds, but the others refer to the beef and veal sector. It is alarming that all these new practices have been discovered. I suspect that this arises from the large monetary compensatory amounts that are paid as a result of the green pound discrepancies.

Returning to what the hon. Member for Banff (Mr. Watt) said, many of us have heard such rumours and I have heard the practice called "roundabout beef". There is a considerable amount of such trade across the border between Northern Ireland and the Republic, and I hope that the Minister can tell us what steps are being taken to stop this abuse. One hears about the wholesale smuggling of cattle across the border.

Mr. Peter Mills (Devon, West)

I have actually seen the smuggling. When I was a Minister in the Northern Ireland Office, I sent out Army helicopters to take photographs of cattle being moved across the border.

Mr. Jopling

I know that my hon. Friend used to sell cattle and I am glad to hear that he has seen the smuggling in his capacity as a Minister rather than as a dealer in cattle. No doubt the right hon. Member for Down, South (Mr. Powell) will wish to say something about this practice later.

Can the Minister tell us how many cases of fraud have been discovered? I think he said that 11 per cent. of fraud cases were in the beef and veal sector. It may be distasteful to the Minister, but it is important that the House should know which countries were involved. I am sure that we all wish to see such irregularities stamped out.

Document R/2109/76 deals with boneless frozen beef. It is proposed to import 38,500 tonnes of this meat from third countries this year. I know of the demand from meat manufacturers for this sort of beef, but I have never understood why they cannot find it in the domestic market. They say that they like cow beef that has been bred on the pampas and do not like beef that has fat within the lean parts, and I suspect that the imports under this document are to help that part of the manufactured meat trade. I cannot see why some manufacturers cannot make contracts to buy thin, unfattened cows on the home market. Although the price may look low, it would be a more profitable venture than fattening up cows for many of our farmers.

I apologise for forgetting to declare my interest in the last debate, and I do so now.

I hope that the greatest care will be taken not to depress further the beef market in this country. The Government have probably realised from our last debate that there is serious disquiet about the position of beef producers and that this would not be a good time to depress the market further by introducing greater imports of beef from any source.

Finally, I come to Document No. R/2614/76, and, before asking any questions, I must express a certain irritation. The expanded explanatory memorandum came to the Vote Office only last night. It was not there yesterday morning, and I hope that the Minister of State will tell us why. I can think of no reason for our having to wait until about 24 hours before the debate before we have the expanded memorandum on the matter.

The document itself was dated 5th November 1976, and it was deposited with Parliament on 11th November 1976. The memorandum tells us that the document is a factual report which has no policy implications". It refers to matters as far back as 1975. In fact, there is nothing recent in it. It is 140 pages long. Having looked through the expanded memorandum which the Government have deposited in the Vote Office, I cannot see anything written there which could not have been written a good many months ago.

This is an intolerable way to treat the House and I hope that we shall have an explanation and at least an undertaking that that sort of thing will not happen again. This is a case in which an explanatory memorandum can help the House, but unless it arrives in good time it is too late and does not help us at all.

Document No. R/2614, which, as I say, is 140 pages long, is interesting and extremely helpful. It sets out a good many of the facts and figures about the Community. Having looked quickly through the expanded memorandum on a day when we had a major debate, I have not been able to go into the document in the depth I should have wished because the Government deposited their paper far too late in the day. I shall study it later and, if any matters occur to me on which I wish to ask questions, I shall write to the Minister of State. But I must protest at this very bad way of treating the House, and I hope that it will not occur again.

10.42 p.m.

Mr. Douglas Jay (Battersea, North)

I wish to ask some questions arising out of Document No. R/2109/76, which refers to the levy-free quota for beef imports into the Community in 1977. As I understand the explanatory memorandum, the Community is to admit 38,000 tonnes of beef of this type from outside the Community to be imported into the Community as a whole in 1977, and of that about 12,000 tonnes will come to the United Kingdom.

These are derisory figures for beet imports compared with either United Kingdom consumption or, much more relevantly, the quantities of beef which this country imported from producing countries such as Australia, Brazil and Argentina before we entered the Market. I put this question to my hon. Friend the Minister of State. Taking a year such as 1970, or perhaps 1971, before we entered the Market, what were the imports of beef into the United Kingdom from, say, Australia, Argentina and Brazil? I imagine that they were much nearer 100,000 tons than 12,000 tons.

It is, of course, the exclusion of beef from these efficient low-cost producing countries—which now have considerable quantities of surplus beef available at much lower prices than those within the EEC—that has kept the price of beef in the United Kingdom at a level that the consumer would have considered prohibitive until quite recently.

I was surprised to hear the speech by the hon. Member for Westmorland (Mr. Jopling). We are told that the Conservatives are opposed to import controls. In the case of beef we have a system of import controls, amounting to very nearly total exclusion, imposed by the Community. It is surprising that this should be accepted and welcomed by the Opposition. Perhaps the hon. Member for Westmorland should consult his Leader and his Shadow Cabinet on whether he has the right party line.

I remind the Minister that the recent Summit declaration, which we all cheered, pronounced firmly against protectionism of all kinds. If we exclude prime food stuffs from the most efficient producer countries, surely this is protectionism to an indefensible degree.

If I am wrong in my figures I should like to hear it from the Minister. I urge him to tell us the figures for actual imports in the year preceding our entry into the EEC as compared with the 12,000 tonnes we are committed to import from outside the EEC.

10.47 p.m.

Mr. J. Enoch Powell (Down, South)

I rise principally to put on the record an emphatic protest against the form of the motion before the House tonight. I believe that it is a breach of the spirit, if not precisely of the terms, of the agreement between all sides of the House on the handling of EEC documents which are recommended for the attention of the House by the Scrutiny Committee. The general principle is that in the case of such documents, before a final decision is taken, unless the Scrutiny Committee specifically recommends otherwise, the House should have the opportunity to see that its opinion on the matter is expressed, either by a debate or, alternatively, by coming to a conclusion on it.

If two or more such documents dealing with substantially separate matters are to be combined in one motion and disposed of in one and a half hours under the Standing Order, that fundamental agreement on the handling of EEC legislation is, in effect, nullified. Even if the agreement is only that these documents should be debated, it is absurd to suggest that, with ministerial explanations in opening, it is possible for two or three separate subjects to be debated in any natural sense of the term in the space of one and a half hours.

This linking of documents in a single motion frustrates even the minimal sense of the understanding on which these proceedings are based. It also brings another matter of frustration. It has been the custom, sanctified by Mr. Speaker from time to time, that where the House wishes to come to a conclusion on such a document, the Chair will call an amendment to the motion to take note. But it will be perfectly obvious that if such a procedure is desired in respect of one of a number of documents before the House combined in a single motion, it is making a nonsense of our procedure to attempt to debate an amendment to the "take note" motion—which would take the full one and a half hours—in respect of one of several matters comprised in the motion.

The matter is worse than I originally suggested. It not merely frustrates debate; it frustrates decision—even if the House is anxious to come to a decision, if necessary, by way of vote. This is a precedent of extreme danger, not only in the context of EEC legislation but in wider matters even than that. For if there is no Standing Order of the House which prevents this kind of motion—I take it that there is not, Mr. Deputy Speaker, as otherwise it would not be standing on the Order Paper—there is no reason why the Government should not link together in a single motion the approval of two or more draft Orders in Council.

I will not dwell at length on this matter, Mr. Deputy Speaker, but I am sure that you are aware that the part of the Kingdom in which I represent a constituency is legislated for at present to some extent by Order in Council, and consequently the ability to debate the draft Orders in Council is a precious vestige of our representational rights. If this precedent is to be followed in future, no doubt we shall have motions which invite the House to approve "the following orders" which are set out in the terms of the motion.

Mr. Jay

Does the right hon. Gentleman think perhaps that if we are to start down this road, before long we shall have a motion to approve the Second Readings of three or four Bills in one motion?

Mr. Powell

The right hon. Gentleman is wise to observe, if I may say so, that once we allow a procedure to override what is the clear understanding and intention of the House in dealing with its business, no man can set limits to the extent to which that precedent will be followed. The well-known appetite of Governments for time, combined with the well-known propensity of the Whips' Office to minimise time, acting as the upper and the nether millstones, can very soon grind to powder the opportunities of the House for doing its duty. Therefore, I hope that I shall not be alone in placing radical dissatisfaction with this motion upon the record of tonight's debate.

There are only two or three other minimal matters—relatively to that—to which I should like to allude. First, we have a complete nonsense in dealing with R/2109 in the way in which we are doing tonight. The Minister says that this draft instrument was implemented by an order, that we debated that order implementing this draft instrument upon a Prayer to annul it and that now it arrives as one of three topics for joint debate in this one-and-a-half-hour debate, presumably because the word "beef" happens to be mentioned in this draft instrument as well as in one or two of the other draft instruments linked with it.

I should have thought that the natural procedure, and one which would have satisfied the requirements of the Scrutiny Committee, was that when the Prayer against the implementing order was taken it should have been taken, as is often the case, in connection with the draft instrument R/2109. That would have satisfactorily disposed of that matter in one debate.

Then, coming to R/2021, I was challenged by the hon. Member for Westmorland (Mr. Jopling) to refer to the well-known and lucrative but not always legal traffic across the frontier between the United Kingdom and the Irish Republic. Of course there is always smuggling across the frontier between nations which have different fiscal regimes; that is in human nature and will last as long as human nature is unchanged.

But what is special is that the Common Market and its provisions, including particularly the provisions for the mcas and the green pound, might have been specially devised to create the ideal conditions in which the propensity of human nature to smuggling was absolutely maximised. Therefore, on that order, I have to say that although smuggling was indeed endemic, it is one of the facts that illustrate the nonsensicality of the artificial regime of the CAP that we in this country have to pay out millions of pounds per quarter in order to neutralise the nonsense effect across the frontier between the Irish Republic and the United Kingdom which is created by the working of the CAP.

I want to draw attention to paragraph 9 of the explanatory memorandum to that same instrument where it says: A recommendation that will require particularly careful examination is that for harmonisation of penalties, as the administrative penalties used in some Member States are in the United Kingdom employed only to a very limited extent We indeed welcome the confirmation that administrative penalties are employed in this country to "a very limited extent". It will be the determination of most of us that they should always be used in this country to "a very limited extent."

We would, I am therefore sure, be glad to hear from the Minister a little more of what lies behind that rather ominous sentence and to have assurances that there will be a new and full opportunity for consideration if there is any question of a harmonisation of penalties, which alters the form of penalties which are thought appropriate in the United Kingdom.

10.56 p.m.

Mr. Nigel Spearing (Newham, South)

The aspect of the documents before us tonight which I shall draw to the attention of the House relates to storage and the consequent investigation into irregularities. These are contained in Document R/2021/76 which we are told is for the purpose of examining the possibilities of fraud and irregularities in the management of Community funds. This document deals only with the beef and veal sector. I wish to deal with the matter as a whole because it is also dealt with in the 1975 report. It is not easy to find out how much money is spent on storage. I am talking not of intervention buying or selling out of intervention at a subsidy but of keeping the goods in store.

Volume IV of the 1977 Budget, pages 144 to 168, sets out the appropriations made in 1976 for this purpose. I wish to put on record how much was spent in millions of units of account for each of the major items. About 61 million units of account were spent on cereal storage and 469 million on milk powder storage and special sales. Unfortunately, the two are not separated so it is impossible to compute from that information what relates to storage and what to sales.

About 151 million units of account were spent on the storage of butter; 11 million on cheese; 1.5 million on olive oil, colza and sunflower oil; 131 million on sugar; 393 million on beef; and 50 million on wine. Incidentally, an extra 134 million was spent on distilling wine.

About 8 million units of account were spent on tobacco storage, although the total expenditure on tobacco was 228 million units of account. One million units of account were spent on fish. That totals about 1,281 million units of account.

Perhaps in my somewhat amateur researches I have made an error in the figures. If I have, I hope that my hon. Friend will let me know in correspondence at a later date. I guarantee to ask him a Question so that he can correct me if I have made a mistake.

The expenditure amounts to about£500 million or more, according to how one calculates the rates of exchange. That sum represents 15 per cent. of expenditure on agriculture.

Mr. Jay

My hon. Friend has done a very valuable piece of research in unearthing these figures for the cost of storage. Is he absolutely certain that he has the noughts right? If he is not, perhaps the Minister could confirm it. If it is true that on top of everything else some such sum as£500 million is being spent this year on storage, in addition to intervention and sales and so on, that in itself seems to me a condemnation of the CAP without any further evidence.

Mr. Spearing

I am very willing to be corrected on this matter if correction is necessary. However, it is only fair to myself to add that it is not always easy, as anyone knows in relation to almost anything relating to the Common Market, to dig out very important figures because they are spread and scattered in all sorts of directions.

Mr. Jay

Deliberately.

Mr. Spearing

That may well be. Therefore, I am putting forward these figures tentatively, and for later correction if necessary. If I am wrong, I can only claim that these matters are not set out in EEC documents with the relative clarity of papers relating to Her Majesty's Government. Perhaps we can leave the matter at that.

However, what I can say quite clearly is that in the budget statement for 1976, which we debated on 19th July last, there appears in the EEC report this very important qualification of the accounts of the EAGGF. I quoted it in that debate and I quote it again tonight, because it is a quotation that has not had the attention that it deserves. This is a report of the Audit Board of the Community, Document R/118/76. It says, only very limited examination by the Audit Board of the operations of the Guarantee Section of the EAGGF has been possible. As in previous years, the Board has not been in a position to form its own judgment of the manner in which the operations have been conducted or to give an opinion on the reliability of the financial management of this sector of expenditure. I have said previously and I say again: if that qualification appeared on the accounts of even the smallest firm in the City, the Board of Trade would be down on it almost immediately. That is the background to the document before us, which is attempting to get rid of some of these irregularities.

I draw attention to page 31 of Document R/2021/76, where it talks about control problems. It says, Because of lack of staff the intervention agencies are not always able to carry out under satisfactory conditions the many checks which should be made at time various stages of the private storage operation, namely —and it goes on to mention one or two things. In other words, there is an admission in this document that the proper inspections cannot be carried out. Towards the end of the document, on page 107—it is no small document—it refers to the use of false or forged T1 and T3 documents. In other words, it is not only a question of people not, perhaps, inspecting the storage places, but it is also, apparently, a matter of the deliberate forging of documents. That, too, should be put on the record.

In the annual report of the EAGGF for 1975—R/2614/76, which is the big annual report—there is reference to the question of inspection. Section 6.2 on page 61 deals with visits in connection with the 1971 and 1972 accounts. It says, Visits undertaken between April and July 1974 in connection with the clearance of accounts for the 1971 and 1972 financial years were supplemented by a further 42 days work in 1975 It appears that auditing of the accounts for the 1971 and 1972 financial years was still being carried on in 1975. That is not an unknown occurrence in firms, but it seems rather strange. It goes on to say—as though it is a good thing— 42 days work in 1975, bringing to 165 days the number of days of work done in the six Member States by the Commission staff. On its own, that is meaningless. Is it 165 man-days or woman-days or is it one person for 165 days? There is a boast that everything is under control, with that massive number of days, but no real indication of the amount of work done. It is not a reassuring statement. The quality of the statement itself needs auditing, apparently.

The Community is spending a large sum—£500 million, it appears, but still a large sum even if it is half that; and it may be£750 million—purely on the storage of surplus foods. It appears from the documents before us, and the Audit Board report which I quoted previously, that there is no proper system of checking the documentation and payment for goods that may or may not be there, goods that may have come in and been taken away on the round-about routes.

In the past the House, through its powers over the Executive, required proper accounts of public moneys. It seems that we do not have that direct control over what happens in the Community. I have asked the Treasury and Ministers to examine this matter. My right hon. Friends bear responsibility in the Council of Ministers, and I hope that they will now begin to take steps to see not only that the Audit Board produces more reports but that the reports are more satisfactory, giving the House some indication that there is a minimal amount of fraud and deception involved in these very large sums which the papers before us do not and cannot show.

11.7 p.m.

Mr. Peter Mills (Devon, West)

I have the privilege of being on the Select Committee on European Legislation, and I think that these are documents which should have been brought before the House. I wish that more hon. Members were present to discuss them, because they are very important.

I should like to say a few words about the guarantee section. The more one looks at the sums of money that are spent in guaranteeing certain sections of the Community's agricultural production, the more one must come to the opinion that something should be done about production, particularly of milk, simply for the intervention prices. There seems to me to be little responsibility in marketing. The whole business of co-responsibility, with all that it means, should be very much to the fore in the Community's thinking.

The dairy farmers in this country have acted responsibly over many years, through the Milk Marketing Board, bearing the costs of the sale and distribution of milk, of advertising and so on, but within the Community there are people who simply produce milk for intervention, with no thought for marketing and no responsibility for it. The Minister should press that point very strongly in Brussels.

Much more should be done to have lower intervention levels for certain products, particularly skim milk powder, and there should be variable intervention levels in different countries. This is what is needed, and it would go a long way to reduce the butter and milk powder mountains. The disciplines involved in lowering intervention levels would get back to the farmers who produce without any thoughts about marketing but simply for intervention purposes. A much stricter policy should be brought in by lowering the intervention level for skim milk powder. This must be done in the coming months, and it would help to reduce the sums of money in the guarantee section. No responsible farmer would object to that policy.

I am somewhat confused by Annex GIII. I may even have lost three noughts. I hope that the Minister will clarify the situation. Not only am I getting old and dim, but I cannot even read the figures. They appear to be far from clear. They refer to units of account, but they do not say whether those units are to be taken in thousands. I hope that the Minister will clarify the situation. If one looks at milk production and the total expended in guaranteed prices, one sees exactly who will obtain the money. It can be seen that Great Britain has 70,107 units of account. It may even be 70,107,000 units of account, but it does not seem to matter whether those three noughts are added. It appears to show the United Kingdom as representing 70,000 units of account, the Netherlands as 215,000 units of account, France 296,000 units of account, and Germany 275,000 units of account.

Those figures appear to back up my argument. In other words, we in this country appear to be using out of the guarantee funds only 70,000 units of account, when other countries appear to be using three or four times as many. It illustrates the irresponsibility in those countries to marketing, discipline and co-responsibility. Perhaps the Minister when replying will say whether I have missed out the three noughts, but the trend is there and shows the picture.

Mr. Marten

We are subsidising them.

Mr. Mills

We shall listen with great interest to what the Minister has to say on that score.

We then come to the guidance section. There is no doubt that there is something radically wrong in that respect. We are obviously not taking advantage of all we should be doing in restructuring agriculture. We see from the figures that we in the United Kingdom have obtained from the Community only 5,644,000 units of account. When Germany has obtained 42,000,000 and France 33,000,000, it seems a pity that British agriculture and the various companies which process our food here are not taking advantage of these grants. I believe in getting all we can out of the Community. If we put a lot in, we should take out as much as possible.

Mr. Spearing rose—

Mr. Mills

Of course, it is not for me to answer for the Government. Any questions must be directed to the Government. It is for the Government to say why they are not taking greater advantage. I should like to see much greater use made of that which is available.

Mr. Spearing

A possible reason for the lack of applications is that British agriculture, for reasons that the hon. Gentleman will understand, does not stand in the same need of the restructuring as is constantly referred to in Germany, France and Belgium.

Mr. Mills

The hon. Gentleman will find that most of the money is being used to build storage plants and for the modernising of processing plants, for example. I remember fighting hard to obtain better facilities in Northern Ireland so as to take advantage of the grants when I had the privilege to be a Northern Ireland Minister. We are in the Community and I believe that we want to take advantage of that which is available. I hope that there will be far more effort on the part of the Ministry to encourage our food industry and agriculture to take advantage of the grants.

I return to the guidance section. I feel that much of the money is not being directed to the right methods of dealing with the problems within the Community. I want to see funds diverted to improve the regional structure of many of the countries concerned. Money must be diverted so that very small farmers may find other employment opportunities. The Community as a whole must turn its attention to dealing with the regional structure more than the structural problems of agriculture. Far more money should be diverted within the Community to deal with these problems.

Mr. Marten

Would my hon. Friend have that done by agricultural financing or regional financing?

Mr. Mills

My own view is that there should be less money in the agricultural fund and that more money should be diverted to the structural funding of the regions. In the long term that is the only way to deal with surpluses within the Community. Alternative work must be found for many of the small farmers. Considerable emphasis should be placed on dealing with the problem of surpluses within the Community. I want to see money diverted so that there is a proper regional programme.

I welcome increased activity in dealing with irregularities. It is only human nature that we shall find dealers and farmers seeking to take advantage. There must be far greater activity in ensuring that many of the irregularities do not continue.

Reference is made to the difficulties that are experienced in carrying out checks. I have never heard weaker arguments in my life. It is said that there are difficulties in carrying out physical checks owing to the way in which goods are presented—for example, meat being placed in refrigerated containers and the possible risk of deterioration of goods when the doors are opened.

What nonsense that is! There is nothing to stop a person taking out a piece of meat. I have done it at meat plants in this country when making a check. There is nothing to stop anyone taking out a piece of meat. A piece of meat can be cut off in no time with a power saw, even though the meat is frozen solid. Of course samples can be taken and checks made. I sometimes wonder whether those who produce these documents have ever been to a meat plant and whether they have any experience in these matters. It is sad that they make such excuses. We need some practical people. These excuses merely give ammunition to the critics who are all around us, those who are anti-Common Market.

11.20 p.m.

Mr. Hamish Watt (Banff)

There is a great deal in these documents that requires comment, but I shall confine myself to three aspects. The first is the tremendous amount of swindling—I use the word advisedly—that goes on in the movement of meat across the borders. The hon. Member for Newham, South (Mr. Spearing) mentioned the tremendous sums being wasted by provision for the storage of meat in the Community. That amount is minuscule compared with the money being milked off by certain sections of the meat trade as the meat crosses the borders.

It is not good enough for the Commission to say that it cannot afford to police this trade. I quote an example of the sort of thing that happens, although this case is not to do with meat. Could the Minister explain why shiploads of barley from Peterhead to Bristol go via Hamburg? It is because restitution payments can be obtained by going that way round. Is there any sense in the Commission putting£6 or£7 a ton on such cereals? Yet the mishandling of the cereal trade is minuscule compared with the mishandling of the meat trade. I am referring to the trade not across the Irish border but between European countries.

Secondly, I am desperately disappointed to see that the Minister has acceded to the import of meat from Argentina once again. In 1973, this country was no less than 84 per cent. self-sufficient in the production of beef and veal—a very short step from 100 per cent. self-sufficiency. Had there been any encouragement to the beef industry, we could by now have been totally self-sufficient. It is too bad that, for the sake of 12,000 tons of meat from Argentina, the Minister should put our entire livestock industry at risk.

In 1970, we had in Cheshire the last outbreak of foot and mouth disease. The source was tracked back to meat from Argentina. It is too bad, in our wonderful island, where we could virtually have the status of a quarantine station, that the Minister should put all the animals in the country at risk by allowing the importation of even the small amount of 12,000 tons of beef from Argentina, where foot and mouth disease is endemic and often reaches epidemic proportions. It is too had that we cannot deliberately, through the health regulations, keep that meat out. It is virtually criminal to put our breeding livestock at risk in this irresponsible way.

Thirdly, there is the question of the export of live lambs from Britain to Europe. There has been for many years a legitimate, lucrative and reasonable export trade of lamb carcases from England and Scotland to France. We find now, however, that large quantities of live lambs are being exported to Belgium and Germany, where they are slaughtered—which, incidentally, deprives our own slaughtermen of work. The moment these lambs are slaughtered in Belgium and Germany they become Belgian or German lamb and they get into the French market by the back door, where they pay no levy.

It is little wonder that the French Government are getting particularly annoyed at what amounts to tax evasion by this means. The French Government impose a levy on lamb that comes from Britain but do not do so in respect of lamb that supposedly has its origins in Belgium or Germany. I fear for the legitimate side of the trade because unless this anomaly is cleared up quickly the French Government may close the door on all trade in lamb, both live and dead.

I would ask the Minister and his colleagues in the Commission to pay a great deal more attention to what the men in the meat trade are saying. I have never known them to be as frustrated as they are just now. Like many other people, these men are coming firmly to the conclusion that the CAP is one unholy bundle and that it can never work efficiently. It is obvious that the cost of running the CAP is going up year by year. We heard earlier that the Commission has not yet managed to square the books for 1972–73. Many fiddles are obviously taking place that will never be detected. I doubt whether we shall ever manage to get the books squared, but we shall no doubt be expected to fork out more and more cash as the years go by in order to pay for the many anomalies that exist.

It is not good enough for the Minister and his colleagues in the Commission to say that this matter is difficult to police. If it is impossible to police, he should tell the House so that hon. Members can come to a decision about allowing the CAP to continue. There is a strong case for this country remaining in Europe, but there is little or no case for the continuation of the monstrous CAP.

11.27 p.m.

Mr. Nicholas Winterton (Macclesfield)

I shall be brief. I was interested in the comments of the hon. Member for Banff (Mr. Watt) about fiddles and swindles taking place in the transportation of beasts and meat across borders. If I understand SNP policy correctly, the hon. Gentleman is trying to establish yet another border over which perhaps these fiddles and swindles would occur. I hope that he is not successful in his objectives.

I was tempted to make a brief contribution because of the interesting speech of my hon. Friend the Member for Devon, West (Mr. Mills). It is always a pleasure to listen to my hon. Friend's contributions, not only in agricultural debates but also his observations on the numerous EEC documents that are brought before the House late at night. It is a pity that more hon. Members on both sides do not participate because the contents of many of these documents are very important indeed. They will have long-term effects upon the way that this country is run.

The document we are discussing tonight is a particularly heavyweight document, which I have only briefly glanced through, relating to guidance verification, irregularities, food aid and so on in the guarantee scheme, which is of particular importance. There is one point I should like the Minister to comment upon when he winds up. He and I will be sharing a platform in his constituency on Saturday and, with his permission, I look forward to a visit to his most delightful constituency.

My hon. Friend the Member for Devon, West highlighted the huge differentials in the sums of money being taken from the appropriate EEC accounts or funds by the various member countries of the EEC. From the facts that my hon. Friend presented to the House there was no doubt whatever that the meat processing industry, and the agricultural industry as a whole, in this country were taking far less than any other major country within the EEC. My hon. Friend mentioned France and Germany in particular.

Will the Minister say whether this is because we have a very damaging system of taxation in this country, combined with the Price Code and price restraints imposed by successive Governments, but increasingly by the present Government? Because of the situation of high taxation and low profit margins, are companies, farmers and producers in this country not in a position to take advantage of the grants that my hon. Friend the Member for Devon, West rightly drew to the attention of the House?

If that is the case, all that I can say is that the Government have the Finance Bill in Committee at the moment and I hope that they will have second thoughts about some of their proposals or add new clauses to enable food producers, manufacturers and farmers to take advantage of the very generous grants which exist within the EEC. It is ridiculous that we should be making the massive contributions that we are making, and how right my hon. Friend the Member for Banbury (Mr. Marten), the right hon. Member for Battersea, North (Mr. Jay) and the hon. Member for Newham, South (Mr. Spearing) are to draw attention to them again and again.

I am not anti-Market, although I see a great deal wrong with it, and certainly the CAP is not a common agricultural policy at all. When dairy producers in Italy can draw 80p a gallon for milk and our own farmers are to get only 48½p in a week or so until the end of the year, there is nothing common about it.

Our farmers are suffering. Are the Government aware of the situation? Have they analysed why we are not drawing the necessary funds from the EEC, along with the other major agricultural countries? I hope that the Minister will give some attention to this and provide some explanations.

11.32 p.m.

Mr. Bishop

In the brief time available to me, I shall try to deal with some of the matters raised in the debate.

The hon. Members for Macclesfield (Mr. Winterton) and Devon, West (Mr. Mills) asked about the contribution to the Community and what we get from it. My information is that, in 1975, the United Kingdom's net benefit from guarantee section expenditure by the EAGGF was about£70 million. But, in 1976, the United Kingdom made a net contribution of about£200,000 to CAP expenditure. In 1975, we gained greatly from large receipts from mcas on United Kingdom imports paid in the United Kingdom. In 1976, arrangements for paying mcas were changed and, since then, most of these payments have been made in other member States. This reduced United Kingdom receipts from the EEC budget without diminishing the benefits which the United Kingdom derived from mcas and should not increase consumer prices. This change, plus increases in the share of the Communities' budget resulting from the Treaty of Accession, largely accounts for the difference between 1975 and 1976.

The hon. Member for Macclesfield is right that we make a very substantial contribution to Community funds. Speaking from memory, our contribution to the overall budget is about 19.2 per cent. which, out of nine member States, is not an insignificant contribution. Surely this justifies the stand which my right hon. Friend and my hon. Friend the Under-Secretary, who wound up the previous debate so well to get that two-vote majority, are taking in Brussels to ensure that we get not the kind of charity to which the Opposition so often refer in the green pound but some return for our contribution.

The hon. Member for Banff (Mr. Watt) made allegations about fraudulent shipments from Peterhead to Bristol via Hamburg. If he will write to me about it, I shall be pleased to look into it.

The hon. Member for Devon, West asked about Table GIII on page 95 of the fifth EAGGF Report. The figures in the table are in millions of units of account and the United Kingdom figure is 70.107 million units of account.

The beef carousel trade applies not only to Europe but to Northern Ireland. It is almost inevitable that any system of trading arrangements will provide some scope for profits to be made out of irregular or artificial but not necessarily illegal trading activities. There have been one or two examples in the beef sector, and the so-called carousel trade between the United Kingdom and the Continent has attracted special attention.

I assure the House that a special watch is being kept for new irregularities, and when they are detected the attention of the verifiers and the auditors is directed towards establishing whether there are distortions of trade. Good co-operation has been developed among the customs authorities and it is a feature of the EEC system that regulations can generally be rapidly changed to close loopholes. The United Kingdom is taking every opportunity to ensure that Community legislation is drafted so as to reduce the scope for irregular trading to a minimum.

Hon. Members have referred to the United Kingdom's share of the beef and veal sector. In 1975 the United Kingdom received just under a fifth, or 18 per cent., of the total EEC expenditure on the beef and veal sector. I regret to say that later figures are not yet available.

There have been references to the Cheysson Committee and the intervention system. Some criticisms of that committee apply to the whole range of support measures currently in operation. On page 98 of its report the Cheysson Committee recommends: As far as possible no regulations should be adopted which make for excessive administrative work or complicated inspection procedures…This recommendation effectively applies to all forms of support in the sector of beef and veal. I merely pass on that information, and hon. Members will note it.

The hon. Member for Westmorland (Mr. Jopling) and the hon. Member for Devon, West spoke about the number of frauds in each country. The Commission does not report irregularities divided by country. It will be appreciated that many instances arise in trade between countries and it would be invidious to attribute them to the country that discovered them and reported them. [HON. MEMBERS: "Why?"] It is a matter not of apportioning blame but of finding out what has gone wrong and putting it right as soon as possible.

I was asked about the number of instances of irregularities. In 1975 it was reported that there were six instances with beef and 18 involving mcas, of which 14 related to the beef and veal sector. We must keep this matter in perspective. In 1975 the irregularities reported in the guarantee sector totalled£1 million out of a total expenditure of£2,000 million. That is a small percentage, but it is serious and certainly gives no justification for us to let up on the necessary safeguards.

The hon. Member for Devon, West referred to discipline. The Cheysson Committee is looking into this matter. The committee was disturbed by the variation in the rules of administration and even the types of support schemes among member States. For instance, in the United Kingdom we pay a premium on the slaughter of fat cattle, whereas in Italy a premium is paid on the retention of calves. In our view, some variation in methods of support must be tolerated, and the committee has overlooked that there is less than complete uniformity in the ways in which the intervention system is operated. We accept that if variations are allowed it is most important to have effective co-operation and an exchange of information between the enforcement agencies, and I can assure the House that we have played a full part in this matter.

I come to points raised about the beef and veal sector. This matter was referred by the Scrutiny Committee to the House. The Committee suggested in its report, which was ordered to be printed last October, that in its opinion the instrument raised questions of political importance and recommended that it be further considered by the House during any future debate concerning beef and veal", but it did not consider that further consideration need delay its adoption by the Council.

This was the subject of an order introduced under the negative resolution procedure. There was a debate on an annulment motion, which was withdrawn, on 8th March.

I have been asked about the date of the explanatory memorandum. It is usual practice for self-explanatory reports of this kind to be deposited with a short formal covering note. However, in view of the size of the report I thought it would be helpful to hon. Members if they had an explanatory memorandum of the kind used in Bills, summarising the contents of the report. The matter has been before the House and so the House was well aware of the situation.

The hon. Member for Westmorland raised one or two questions about the debate on 8th March and about the kind of beef used. He asked why manufacturers needed to use imported beef. They require lean, tough beef for many of their processes. That type of beef is produced in the dry grasslands of the Southern hemisphere. In the EEC, where cattle are fed predominantly on richer grazing, this type of beef is not produced. Frozen beef from intervention stores is not always suitable for manufacturing purposes and could not replace this import requirement.

My right hon. Friend the Member for Battersea, North (Mr. Jay) asked what third country imports there were in the year before entry into the EEC. I can tell him that the Community, including the United Kingdom, is nearer to self-sufficiency now than it was in the 1960s. We must continue to offer home producers adequate protection in order to ensure a stable supply to consumers. That is in line with the policy spelled out in our White Paper "Food from Our Own Resources".

Mr. Jay

Will my hon. Friend answer the question? What were those imports before entry?

Mr. Bishop

That is a matter upon which I must write to my right hon. Friend.

The other question about the import of beef referred to the quota. I reiterate the point that I made in the debate on 8th March that the overall size of the quota is hardly significant in relation to the total production, either here or in the Community as a whole. I hope that hon. Members will be reassured on this point. The figure of 38,500 tonnes compares with annual production in the EEC of 6 million to 6.5 million tonnes. Our own production is about 1 million tonnes. Our quota share is 1.3 per cent. of that. Because of the Community's GATT obligations, imports under the quota have been allowed to continue uninterrupted over the past three years, even though there have been some general restrictions on the import of beef in the period.

The hon. Member for Banff asked about imports. I am sure that he will appreciate that there is good reason for some liberalisation of trade with third countries. This need not in any way create unfair competition for home-produced food.

I think that I have covered the main points raised in the debate.

Mr. Nicholas Winterton

I asked the Minister to explain why there was a huge difference in the sums granted from Euro- pean sources to meat manufacturing and agricultural interests in this country compared with the sums granted to Germany and France, for example. It seems that we are not in a position to take advantage of the funds that are available. Why is this?

Mr. Bishop

I should like notice of that question.

The right hon. Member for Down, South (Mr. Powell) mentioned administrative penalties and I was pleased that in his comments on policy implications he accepted that there is a recommendation, that will require careful examination, for the harmonisation of penalties, since administrative penalties in some member States apply to only a limited extent in the United Kingdom.

There is a reference in the report to the possibility of introducing administrative sanctions in regulations governing the CAP. We envisage this as the provision of controls by the Commission of the sort that already exist in the sphere of competition and it may include such things as the withdrawal or refusal of licences and the withholding of benefits.

There have already been discussions between the Ministers of Justice of the member States with a view to establishing procedural rules to be applied to administrative sanctions, particularly with a view to securing, as far as possible, that the rules reflect existing rules for the protection of the individual in EEC States.

Mr. Spearing

I understand that my hon. Friend cannot confirm now the figures that I gave, but will he undertake to write to me confirming my figures or, if they are not correct, giving me the right figures?

Mr. Bishop

I should prefer to be accurate rather than hopeful so I shall write to my hon. Friend about the allegations that he has made.

The debate has been useful. One of the three documents before us has been debated and approved by the House. The other two are still being considered by the Commission. It has been helpful to have as the basis of our discussion not only the fifth annual report of FEOGA but the recommendations of the Cheysson Committee that are detailed so well in the reports. I can assure the House that the views of hon. Members will be borne in mind in the further consideration in Brussels.

Question put and agreed to.

Resolved, That this House takes note of Commission documents Nos. R/2021/76, R/2614/76 and R/2109/76 on financial matters under the EAGGF and tariff quotas for frozen beef and veal, and the Ministry of Agriculture, Fisheries and Food's explanatory memorandum dated 9th May on Commission Document No. R/2614/76.