COMMON AGRICULTURAL POLICY

HC Deb 07 April 1978 vol 947 cc842-933

11.7 a.m.

Mr. Thomas Torney (Bradford, South)

I beg to move, That, in view of the disastrous effect of the European Economic Community Common Agricultural Policy to both producer, consumer and the United Kingdom economy, immediate action should be taken to secure basic changes in the policy, including the abolition of support prices, levies and taxes upon third country food imports, and intervention; that member countries be permitted to support producers at their own cost and to protect consumers from higher food prices; that marketing boards be established at the discretion of member countries; and that surplus food production be disposed of anywhere in the world, including the European Economic Community, financial losses to be borne by the producing country. Despite the fact that there have been numerous debates on agriculture and food in recent months, I make no apology for again coming forward with an issue that is so dear to the hearts of all of us who are concerned in food production and in the consumer's interest. Whilst we have had numerous debates dealing with the general situation in agriculture and food, I do not think we have had a debate dealing specifically with the common agricultural policy. I think that no one, whether pro-Market or anti-Market, would deny that the CAP presents a great number of problems to all of us working in agriculture and food or with an interest in them. It is the specifics of these problems that I hope that the House will debate today.

I do not wish to prolong the pro-Market and anti-Market argument. I think that everyone knows that in the past, both in the House and outside it, I have argued against the Common Market. But my arguments are based upon sincerely held views and on doing the best for Britain and for the British people. It is not my intention today to contribute to a political hurly-burly or to an anti-Market or pro-Market cut-and-thrust debate, like many of the debates that take place on various subjects in this Chamber. Rather, it is my wish that this debate be an examination in some depth of the operation of the CAP, and why it does not appear, at least, as most of us will perhaps agree, to be working for Britain—and I would say that it does not work for Britain.

It is hoped that in this debate we can examine the steps which we can take to change the situation. I know that there are many of my hon. Friends who, if they were present, would cry "Come out of the Market". I confess that possibly I myself have at times been guilty of making such cries. I make no apology for that.

However, I am sufficiently realistic to appreciate that, despite my wishes and the wishes of many hon. Members on both sides of the House, we are now in the Market. What we can do is to try to change the parts that are not functioning in the best interests of our country and our people.

My motion is designed to contribute, not to the hurly-burly of politics or to the Market argument, but something basic that we hope that the Government will be able to use in future deliberations to make the common agricultural policy work better for Britain and, in the ultimate, better for all the member States of the Common Market.

Possibly the main purpose of choosing this subject for debate today is that we can express the hope that the Government will more than take note of what is said and will act positively on the constructive arguments that I shall develop and upon the constructive arguments that, I hope, hon. Members on both sides will develop.

I am convinced that there is considerable feeling on both sides of the House—whatever the political views of hon. Members may be—and in the country, in industries affected by the common agricultural policy and among the general consuming public, that something should be done to make the CAP operate better and more in the interests, not only of the consuming public in general, but of those who produce our food, whether by growing it on the farm, processing it in the dairy, or manufacturing it in some way.

I have no wish to belittle the tremendous job that my right hon. Friend the Minister of Agriculture, Fisheries and Food has in trying to get the best possible results out of the straitjacket of rules that the common agricultural policy is. As I understand it, these rules were never meant to operate for a country such as ours whose farming and food production and food consumption is so different from that on the Continent. My right hon. Friend the Minister has the unenviable task of trying to get some satisfaction for all those involved in feeding our nation—whether it be the farmer with his cows and pigs, whether it be the dairy processor, whether it be those in the shops who sell the food, or, indeed, whether it be the consumer.

I will go through my proposals shortly and explain what they mean and what they are designed to achieve. I want to see an end to the bargaining that takes place at present. My right hon. Friend the Minister and his colleagues go to Brussels and, because of the way the rules are constructed and operate, when they want to secure something for our consumers, our farmers, or our dairy processors, they are reduced to horse trading. I can put it in no other way.

When right hon. Friend and his colleagues go to the Commission in Brussels, it is a case of their having to find representatives of another country who want something different from us and whom we can support if they, in turn, will support us in trying to secure the concession we want to wrench from the Market.

"Horse trading" is a very apt description. Is that any way in which to go about the proper feeding of our nation? It is an important task in that we must ensure, not only that the farmer can make a living and that milk will still be delivered on the doorsteps, but that the food is there when people go into the shops to buy it and, above all, that it is there at the sort of price that people can afford to pay.

I repeat that horse trading is no way of dealing with such an important aspect of our economy as food. I can describe what goes on as the process of—"You scratch my back and I shall scratch yours"—in an effort to secure, perhaps, a small devaluation of the green pound or a change in the monetary compensation amounts.

The reasons why we want to see an end to this horse trading and a determined effort made—not just by the Ministry of Agriculture, Fisheries and Food, but by the entire Government—to secure basic changes in the CAP can be summed up very easily by stressing the very structure and nature of our island and the simple, oft-repeated fact—this is not a political point; I think that it is acknowledge on both sides—that from within its own boundaries Britain produced only about one half of the food needed to feed its people.

What I have just said is not just meant to be an attack on or a criticism of our farming industry. I suggest that our farming industry is probably the most efficient farming industry in Europe. It is certainly very efficient. Our small island contains a large number of people. With all the good will in the world we could not raise our production of food much beyond the present level. Even with the tremendous effort that was made during the war years it was not possible to raise our production of food by much more than 1 per cent. or 2 per cent., not sufficient to make any major contribution.

Mr. Peter Mills (Devon, West)

May I ask the hon. Gentleman a very simple question? Has he read the White Paper "Food From Our Own Resources"? It would be interesting to compare that document with what the hon. Gentleman is saying.

Mr. Torney

Of course. I read that document a long time ago when it was first published, before the present Minister became Minister of Agriculture, Fisheries and Food. I do not say that we could not produce more than the 50 per cent. that we are producing at present. I said, and I stand by it, that with all the effort that "Food From Our Own Resources" would provide it is doubtful whether we could appreciably increase our food production to the extent that we were producing all or almost all the food we needed. This is because of the very structure of our small island. We have to house our people and provide space for our factories to produce much needed goods. We are producing efficiently, whereas many of our Common Market partners are producing inefficiently.

The point that I am making is that, because we produce only about half the food that we require, we need to secure the other half elsewhere. We need to go outside our own economy in order to buy our food in the markets of the world. Before we entered the Common Market, of course, we used to purchase our food in the best markets of the world. There were vast resources for the production of the food that we needed, and food could be offered to us at the most competitive prices.

That stopped when we entered the Common Market, and now we are faced with taxes and levies upon much of the third country food that we may wish to import. As for the food that we buy within the Common Market, we find that in the main the prices are much higher than those that we would have to pay on the world markets.

It is easy to see the reason that many of our Common Market partners have for protection. Most of them are self-supporting in the production of their food. If they are not self-supporting, they are very close to being self-supporting. They are certainly much closer to self-support than we are in Britain. It is for that reason, therefore, that they want to protect their food-producing industries from outside competition. But they want to do more than that. They want to make it difficult for all the Common Market partners, Britain included, to go outside the Common Market to buy their food. We can buy the food outside, but we now have to pay even more for it, in many cases because of the taxes and levies, than we would pay within the Common Market.

That is why I believe that we should abolish levies and taxes upon third country imports. I shall deal later with what would replace the sort of support that would go if we did this. I believe that these taxes and levies should be abolished forthwith, and that proposal is embodied in the motion.

The bacon and pig industry has been debated in this House at great length over recent times. I do not want to go basically or deeply into those many debates or to repeat what was said but simply to use the bacon and pig industry as a very clear example of why we should abolish the CAP support prices and intervention. Any system which can cause the collapse of a food-producing industry in our country must be radically wrong, and we as a nation—and this House as a House of Parliament—must seek to do something about it. That is precisely what I am trying to do in my motion.

It is widely known—certainly in this House—that because of the Common Market support or subsidy given to the Danish pig industry and the Danish bacon industry, through the system of monetary compensation amounts, the competition with the British pig farmer and with the British bacon producer is most unfair. We are working with a load upon our shoulders. We have seen how terribly difficult it is to do something about it by means of the horse trading to which I have already referred.

We tried recently to devalue the green pound. We remember what a tremendous difficulty we had over that. It was only after a great deal of battling and heart-searching that we were able to make a very modest devaluation. I know that my right hon. Friend the Minister of Agriculture has been trying hard to secure some change in the monetary compensation amounts. There have been all kinds of promises but so far there has been no result which would help the British pig farmer and the British bacon industry.

I wonder at times whether Denmark thinks that she is capable of supplying the whole world with bacon, or at least the whole of Europe. I hope that Denmark does not think this. If, indeed, she imagines that she can, we shall have a very serious position in the future, because the policy of support prices is killing the British pig industry and the British bacon industry. We could easily reach a point in the future at which the Danes would be unable to supply Europe with its needs in this respect. What would happen then? The demand would be there, the supply would be short, and therefore prices would rocket.

This is another reason for my wishing to abolish CAP support prices and, indeed, the system of intervention. I lump together support prices and intervention in my motion. We know how the system works. I have always believed—and I have heard my right hon. Friend the Minister say on many occasions that he has always believed—that food was meant to eat. Of course it was meant to eat. It was never meant to be put in storehouses and perhaps allowed to go rotten. As we know, if the storehouses are full and the food has not gone rotten, we sell it to third countries at give-away prices.

Mr. Peter Mills

Does the hon. Gentleman believe that in life it is not a good thing sometimes to have something in the larder? Is he saying that we should produce food and eat it from hand to mouth, and not consider storage and putting food away in good years? That is what intervention is about.

Mr. Torney

I cannot agree with the hon. Gentleman that intervention is about that. It is not about stockpiling for the bad years.

Mr. Nigel Spearing (Newham, South)

That is right.

Mr. Torney

I know the hon. Member for Devon, West (Mr. Mills) well. I know of his farming interest and I have a great deal of respect for his views and his competence on this subject, but he surely must know that this is a question of over-production by the French farmers and of the encouragement that intervention gives to the French farmers to over-produce.

There is, of course, a political aspect here. I refer to the political pressures that the French farming industry can place upon the French Government. The French Government are afraid to take any action that would perhaps stop the over-production because of the impact that the farming vote would have at some future election. Of course, the French farmer is a much bigger political entity than the British farmer. I think the figures are about 2 per cent. or 3 per cent. here and about 19 per cent. or 20 per cent. in France. I am talking off the top of my head, but I think that those percentages are about right. That makes a difference. To me it is ample proof that intervention, rather than stockpiling for a rainy day is really putting the stuff away in order to keep the prices high for the French farmer. Who pays the piper? We do.

Mr. John Lee (Birmingham, Handsworth)

Is it not a fact that some of the stockpiled resources have been deliberately contaminated and down-graded so that they are not fit for human consumption? Does not that kill once and for all any apologia that may be made that this is intended as some kind of strategic stockpiling?

Mr. Torney

I am grateful to my hon. Friend for making that point. I have read about this sort of thing happening. That brings me to the point I was about to make, which is that there can be no sense whatever in stockpiling these goods. When one's stores are full to overflowing one must then either get rid of it in the way that my hon. Friend has suggested or one must sell it to third countries who are prepared to take it if the price is low enough.

Who pays? We do. When I say "We" I mean the British people. They pay in high prices in the shops caused by the very policy of intervention buying in order to keep prices up to the French farmer. They pay again when it it sold cheaply to third countries because through EEC taxation we have to make our contribution to the CAP and we have to pay our share of the amount of loss that has been incurred upon the foodstuffs that have been sold to third countries. There can be no doubt that this is an idiotic system and the quicker we can get rid of it the better it will be for all of us in Britain and ultimately for the whole of the Common Market.

Other issues are involved. I am not only talking about mountains of food. There are lakes of milk and wine and all the rest. I have dealt with the question of how we are affected in this way. I want to see these taxes and levies got rid of. I also want to see intervention abolished. That will make the CAP a more sensible policy which will be better for us.

There is another aspect of taxes and levies which is not widely known and not widely used in discussions and debates in this House. A section of the food producing industry in Britain is known as meat manufacturers. I refer to those people who make pies. When one goes into a pub or a small cafe one buys a pie. Those pies are mass produced in large factories and distributed to cafes, shops and pubs. The meat manufacturers are experiencing a very bad time with regard to taxes and levies. They do not require the best quality prime beef which in the main British farmers produce. They require lower quality stuff.

It had been the practice of the meat manufacturers for a long time to buy meat from countries outside Europe. They bought it much more cheaply and put it into their pies. Of course, that was re flected in the price charged for the pies in shops or cafes. But from what the meat meanufacturers tell me, I know that they cannot get this unless the taxes and levies are paid. That is another reason why these taxes and levies should be removed—so that our food manufacturers are able to operate outside the straitjacket imposed upon them.

I turn to the Milk Marketing Board. There is tremendously wide agreement on this subject. All sides of the House want to see the MMB continue as do all sides of the industry—the Milk Marketing Board itself, the Dairy Federation and the trade unions concerned with workers in the industry. All of us want to see the MMB continue because we know that since its formation many years ago it has transformed the dairy industry, which was a higgledy-piggledy mess, into a well-organised industry where a farmer knew the kind of price that he would get for his milk. No longer did the farmer have to tout around and try to sell it—as he used to do before the inception of the MMB—he was guaranteed a price and a market for it. The MMB also organised surpluses to be made into other foodstuffs.

We know that there have been great dangers to our Milk Marketing Board. Furthermore, we know there have been great dangers to our daily delivery of milk. We hope that those dangers are passing, but I am not at all sure. Here I must declare an interest. I do not own a dairy or anything like that, but I am sponsored in this House by USDAW, the Union of Shop, Distributive and Allied Workers, which organises a great number of people in the dairy industry—the dairy roundsman, the processors and so on. I have an interest in seeing those men kept at work. I also have an interest in seeing the housewives' pinta on the doorstep the next morning. I make no apology for wanting to keep those people at work because all too often we hear about factories closing. If we can keep a few thousand dairy workers in employment, that will be a good thing.

Mr. Ernest G. Perry (Battersea, South)

Surely the issue is not only about keeping those people at work. The point is that the dairy roundsmen provide a very efficient service in many places which are inaccessible for people to get shopping. The milkman who calls at the door is today an essential factor in the distribution of goods. Any interference by the European Community in trying to stop it has got to be met head on.

Mr. Torney

I thank my hon. Friend for those remarks and I agree with him. That is why I have called in my motion for the right of member States to establish marketing boards at their discretion. I think that is reasonable. It am not telling France that she has got to do it. I am saying that she can do it if she wants, just as we would be allowed to do it if we wished. In fact, it might do the French dairy industry a lot of good if, rather than talking about forcing us to abolish our Milk Marketing Board, it came and looked at it, saw how efficiently it runs, and then went back and tried to copy it. That would probably do the French dairy industry a power of good.

I have said before that food is for eating and not for storing. I want to ensure that if we have some surpluses, we try to sell them everywhere and anywhere. I do not want to prevent countries from allowing over-production, inefficient production or production for political considerations. I do not want to be as selfish with them as they are being with us about milk production and delivery. If they want to go on in archaic ways, if they want to permit French farmers to have their usual influence at the next election, let them do so. But I do not want to pay for it and I do not want the British taxpayer to pay for it. They must pay for it from their own resources.

This is why my motion uses the words surplus food producers be disposed of anywhere in the world, including the EEC". We should be able therefore to purchase some of the surplus ourselves at reduced prices. But the financial loss should be borne by the producing country.

Of course, this works both ways. If we ever had over-production, we should have to do the same. We should have to support our farmers as we did in the past and pass on the surplus to the consumer at reduced prices. But we cannot support our farmers at the moment. When the Minister subsidised the pig farmers about a year ago, he was almost dragged to the European Court for breaking Community rules.

I want to turn that attitude overboard, so that a country with difficulties can support its own industries at its own discretion and meet the cost itself. As compensation, there would be lower prices and we should not have to pay into a Common Agricultural Fund which subsidises one country's production so as to put our producers out of business.

There appears to be wide agreement on the need for basic changes in this policy—not just horse trading. At an annual luncheon recently, the Parliamentary Secretary said: Now that the principle of continued British membership of the Community has been fully accepted, the time has come for everyone to take a more objective and balanced view of the Common Agricultural Policy. The CAP desperately needs constructive reform. Its food surpluses represent a costly and wasteful misuse of Community resources. Contrary to public opinion, the CAP has had a relatively small effect on the overall level of United Kingdom consumer food prices. I agree with most, although not all, of what my hon. Friend said, and its supports what I want to do. I have tried to take my speech out of the pro- and anti-Market political context and offer something positively constructive for the Government to act upon.

The Food Manufacturers Federation, an important organisation covering the food industry, listed these possibilities of CAP reform: …mechanisms to ensure that food supplies reach consumers at prices which reasonably reflect the supply and demand situation; reducing unmarketable farm surpluses and preventing their recurrence; the facilitation of supplies from outside the EEC of commodities which Community farmers are unable to produce in sufficient quantities to meet consumer demands; the acquisition of a fair standard of living for all employed in the production, processing and distribution of food, and the best possible value for money to the consumer by the rational development of agricultural production. The Food and Drink Industry Council, covering an even wider ambit, has said: There should be no further devaluation of the Green Pound, without changes in the way food price levels in the Community are decided, dairy prices should be cut and there should be a freeze on the farm price of cereals, beef and sugar; the European Commission's attempt to tax margarine should be rejected; proposals to introduce 'exclusive use' regulations (to compel producers to use surplus products like skimmed milk powder rather than cheaper alternatives for some manufactured foods) should be condemned; trade barriers between the EEC and third country suppliers —we keep coming back to this— of a number of foodstuffs should be eased; the CAP should be reformed. There is wide agreement, perhaps not on the ABC of my proposals but on the need for basic change. There is wide agreement outside the House, in the food industry. I think that even the farmers are not so happy with the CAP as they were when they supported our entry.

I hope that the Parliamentary Secretary can offer me something hopeful, but above all that he will take back the message that we do not want the Minister to remain in the straitjacket of these rules or continue horse-trading over the CAP as we have done since we have been a member of the Common Market. We want basic changes so that we can get a better deal for Britain and the British people.

11.50 a.m.

Mr. Peter Mills (Devon, West)

I am grateful for the opportunity to speak on this matter and to the hon. Member for Bradford, South (Mr. Torney) for raising it in the House. It is as well to air the views of hon. Members on such matters. I listened with great care and interest to the hon. Member's speech. I reckon that he brought in every possible animal, even horses, when he mentioned horse trading. I do not think that horses come into any of the regimes in the Community organisation as yet.

The most important thing that we must bear in mind in discussing these matters is the attitude of hon. Members to the Community. This is fundamental. If hon. Members want changes in the common agricultural policy they must change their attitude to the Community. One cannot expect changes in the working of the CAP if one is opposed to the whole concept of the Community itself. I am the first to admit that there are problems within the Community and not only about the CAP. Basically, I believe in the Community with all its warts and difficulties. I look for peace in Europe, not just for myself but for my children and grandchildren.

If the hon. Member for Bradford, South is fair he will realise that it would be better for him to come clean with the House, and say that it is no good trying to tinker with the CAP. Many hon. Members and even some of my hon. Friends including my hon. Friend the Member for Holland with Boston (Mr. Body) will say that we should come out of the EEC. Fair enough; I accept that argument and view. I do not agree with it, but it is a fair view. However, it is no good tinkering with the CAP if one is fundamentally opposed to the whole conception of the CAP and the EEC. It would be much better to say so right at the start.

The hon. Member for Bradford, South is opposed to the EEC, and there is no doubt that Ministers who handle agricultural matters for this country are also opposed to the concept of the Community. How can we possibly get any changes in the CAP when our Ministers have this fundamental attitude of opposition? If they want changes, they must be interested in the Community and keen on its concept.

In a sense the EEC is a club. It is a group of people with a common aim and a common view even though there are difficulties within. If one is a member of that club, and wants to promote its objectives, one cannot go in wanting to change the rules and be a reluctant member or want to get out.

I have a strong feeling that at the next election the Socialist Party may very well make noises about holding a referendum on coming out of the EEC. If some hon. Members below the Gangway get their way, this will become a reality. However, if hon. Members want changes they must adopt a different attitude. How can the Minister of Agriculture go to Brussels and discuss with other Agriculture Ministers changes that should be made in the CAP when everyone of them knows his fundamental attitude? How can we persuade the other EEC countries that we are sincere in wanting changes in these circumstances?

The argument that has been presented to us this morning and many times before is that there are alternative sources of food supplies. There may have been other suppliers in times past but I doubt whether there are now—

Mr. Spearing

There are.

Mr. Mills

Before the hon. Member for Newham, South (Mr. Spearing) starts talking from a sitting position he should get his facts right. I have heard a strong rumour—and I shall ask the Minister to confirm or deny it—that New Zealand's supplies of butter and cheese are so low that it has no surplus at all and cannot even fulfil its present commitments—

Mr. Bryan Gould (Southampton, Test)

rose—

Mr. Mills

I shall give way to the hon. Member in a minute. I know that he comes from New Zealand. I am not absolutely certain about this rumour and I want to get my facts right. That is why I ask the Minister to tell us the facts.

If we cannot get supplies from overseas, we must concentrate even more on the CAP and food from our own resources. When the Minister replies and tells us whether New Zealand has a surplus of butter and cheese, will he also tell us why a Japanese dairy trade delegation is in this country at present?

Also, what about stories and views expressed about New Zealand finding alternative markets for its output? I am all for New Zealand finding alternative markets. I disliked the way in which the Community has clobbered New Zealand when it has sought to find alternative markets. I dislike the way in dairy products. The important question here, however, is why there is a Japanese dairy trade delegation visiting this country. It is not here for its health, or to get Red Rum. It is here to get supplies of butter and cheese for the Japanese market.

I am sorry that I forgot to declare my interest but I think all hon. Members know me as Farmer Mills or, more rudely, Fertiliser Mills. I declare an interest in agriculture, meat plants and so on. I believe that it is fundamental for this country not to rely on overseas supplies for its food. It is far better for the consumer, the producer, the country as a whole and our balance of payments to rely more on food from our own resources.

Mr. Gould

In dealing with this point about New Zealand's ability to supply us, the hon. Member presented no arguments to back up his case. He simply repeated a rumour. If he wishes to be taken seriously he will have to supply us with some evidence to run counter to the clear statements made by successive members of the New Zealand Government who visited this country and expressed concern about this matter.

Mr. Mills

I could not agree more. That is why I am asking the Minister to confirm or deny the rumour. I want to back up what I have heard, and to be quite clear in my own mind whether it is true. I know that it is true about the Japanese dairy trade mission. I hope that these points will be cleared up by the Minister in a few moments.

Everybody knows that changes are needed in the CAP. In fact, substantial changes are needed now that the Community has been working the CAP for some time. My hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) and I wrote a paper on the subject. I shall not bore the House by quoting from it but I shall repeat several fundamentals which it raised. The first is that one needs to look at what can be done in both the short and the long term. Certain actions can be taken in the short term—on the green pound, for instance, and by basing prices not on the least efficient farmers but on the most efficient farmers. I am sure that hon. Members will agree with me on that. That would help.

With respect to the hon. Member for Bradford, South, he is utterly confused about surpluses and intervention. In the short term one must distinguish between structural and natural surpluses. It is good housekeeping to have surpluses which can be stored and brought out of the larder for use when there are shortages. One must, of course, deal with structural surpluses and this can be done by basing prices not on the least efficient farmers but on the most efficient.

In the long term one must also deal with other fundamental matters. In this respect I move a little towards what the hon. Member for Bradford, South has said. If national Governments want to keep sections of their agriculture community in business for social reasons, that is their responsibility and the community as a whole should not have to pay for this. The guidance fund and aid and help for alternative work for farmers who are producing structural surpluses should be encouraged to deal with the problem. I could go into great detail about the many changes that are needed, but I do not want to delay the House.

One must try to get the European politicians off the hook in these matters because the CAP is fundamental to the philosophy of the Germans and French. I believe that that change will come about when we have an enlarged Community. The excuse and opportunity for fundamental changes will arise when Spain, Portugal and Greece come into the Community. Now is the time for us all to begin thinking seriously about the fundamental changes that will be needed in the enlarged Community.

With the right attitude and, I hope, a change in Government and in the Minister of Agriculture, we can bring these changes about. We should work towards that end. In the short term we should try to do the things that we can do, such as make an adjustment in the green pound, change the composition of the MCAs and base prices on the more efficient rather than the least efficient farmers. We could do these things in the short term if we had a different attitude and a real change in the policies of the present Minister. In the long term we must make fundamental changes.

I am still concerned about the attitude towards buying on the world market. We need a healthy agriculture. By that I mean prosperity in the countryside for the farm workers, for processors and workers in the food plants. In the long term I am convinced—although some people will say that I am biased—that a healthy agriculture will benefit the consumer, those who work on the land and the whole rural scene.

I hope that hon. Members will be careful before they make fundamental changes in what the CAP is trying to do. If they make changes which destroy the prosperity of the farm worker we shall be be in real trouble, not only here but in the other countries of the Community.

12.5 p.m.

Mr. William Hamilton (Fife, Central)

I have been a member of the European Parliament for the last two and a half years and I am convinced of the importance of agriculture to our European colleagues, not only as a way of life but as a measure of the willingness of the Europeans to come together on common policies of one kind or another. The common agricultural policy is the only policy which so far has brought Europeans together. But I have detected in the European Parliament a growing feeling that the CAP is not working as it was thought it would work.

There is a general feeling among committed Europeans such as I that there are great reservations about the efficiency of this policy. I have always expressed this view in the House and, to a lesser extent, I confess, in the European Parliament. But, conversely, unqualified condemnation of the policy is equally silly. To my hon. Friends, some of whom are sitting in the Chamber, this has been regarded as a favourite whipping boy in their expressions of anti-European sentiment. That is as silly and as untrue as seeking to blame the CAP for all, or even a major part of, food price increases in this country in the last few years. The Parliamentary Secretary made a speech in London on 25th October in which he said: Contrary to popular opinion"— I hope that my anti-European colleagues are listening carefully to this— the CAP has had a relatively small effect on the overall level of United Kingdom consumer food prices. That is undeniably true. He went on to list other causes for food price increases—the fall in the value of the pound, the increased costs of production, distribution and manufacturing, the reduction in food subsidies, changes in world supplies and the fact that commodities such as coffee, tea and potatoes are outside the CAP altogether. These prices, for a variety of reasons, have rocketed and gone down in a wild and unpredictable way.

Reference has been made to the latest study of the CAP by the Cambridge economic policy group. This estimated that United Kingdom food prices today would be 12p less in the pound if we had not been in the EEC. Even the Minister of Agriculture, who is a well-known anti-European—I fear that that is part of the trouble—rejected that in the debate on 21st March as being too high. Even if we accepted the figure of a 12 per cent. increase in food prices as a direct result of our membership of the Common Market, that is much less than the estimates made in the Labour Government's White Paper of February 1970 and the revised estimate by the succeeding Tory Government in July 1971. We have come out of it rather better than was expected by a Labour Government and a Tory Government.

I want to concentrate on the real worries and criticisms concerning the CAP. The primary criticism, though not the only one, concerns the structural surpluses. It is the height of criminal folly to spend taxpayers' money to over-produce butter, milk, wine and cereals and to put them into the deep freeze. That is an absurdity which no rational person can defend. One could give all the figures and refer to the emotive language that is used about butter mountains, wine lakes and so on and the enormous cost of storing surpluses and eventually selling them at heavily subsidised prices to, for example, the Soviet Union, which it was rumoured, sold them again at higher prices to third countries. The profit motive is prevalent in the Soviet Union. All this is the height of absurdity and we must end it.

In his London speech the Minister said that over-production of milk and dairy products will cost the Community about £2,000 million this year. It is the height of craziness to allow this situation to continue. But how do we deal with these surpluses? Do we stop them being produced or do we encourage production and seek to sell the produce to underdeveloped countries? Whatever else we do, we should not grow and produce food simply to store it in vast quantities and at great expense only to sell it later to countries outside the Community, such as the Soviet Union, so that they can resell it at enormous profit to themselves.

Milk surpluses are increasing almost daily. I was very impressed by a speech made by my hon. Friend the Member for Durham (Mr. Hughes) in the European Parliament two or three weeks ago. The House should be grateful for his efforts to try to persuade the Community of the absurdity of the situation in which the CAP puts Europe. My hon. Friend is one of the most knowledgeable experts on agriculture in the European Parliament and in this House. He said that the number of cows in Europe has been reduced substantially, but that their productivity has increased enormously. In deed, if the productivity of our car wor-workers were as impressive as the productivity of Europe's cows, we should be in a much better economic position.

But, while the cows are doing their stuff, other factors are working in the opposite direction. The decline in the birth rate in this country and others has meant that the number of children is declining and, because they consume a great proportion of milk in liquid and other forms, consumption in that category has reduced substantially. One way of tackling the problem of milk supplies is by adopting an extremely stringent pricing policy so that we may help producers, as kindly as possible, to get out of milk production. However, this is not as easy as we sometimes pretend.

I spent a few days of my holiday last summer with a farmer in the depths of agricultural France and hon. Members cannot visualise the deep commitment of such small farmers to agriculture as a way of life. I told him that it seemed to me that he was very inefficient and I asked what monetary compensation he would accept to get out of agriculture. He said that nothing could compensate him, that he intended to stay in agriculture for the rest of his life, and that when he passed away the farm should be handed on to his family. We cannot browbeat men like that and pay them a price to get out of agriculture.

Mr. Spearing

I am one of the hon. Members whom my hon. Friend regards as being anti-Europe, but I am not anti-Europe; I am anti-EEC. I agree with what my hon. Friend said about the small farmer, but can he tell us why the CAP will not encourage an organisation such as our Milk Marketing Board to be established in France in order to provide his farmer friend with much-needed income, to give more French children milk, and to provide, possibly, daily milk supplies in France? Would not those be good things for the CAP to do? Why is it not doing them?

Mr. Hamilton

My hon. Friend is right, and I shall be dealing with the Milk Marketing Board and the problems associated with it.

I criticised the Minister of Agriculture earlier, but he is doing all he can to try to persuade our European partners to adopt a policy of marketing boards. But it must be done by persuasion. We cannot put a pistol in their back and tell them to do it. We must try to persuade them that the best way of dealing with milk and dairy product surpluses is to increase consumption and that one of the finest ways of doing that is to establish the principles underlying our Milk Marketing Board.

The problem of dairy product surpluses can be solved best by a stringent pricing policy which is fair to the producer but not so generous that it encourages surpluses, and by encouraging increased consumption of milk and milk products—through subsidies, price stability, education and good and effective marketing such as that carried out by the Milk Marketing Board.

The Commission is not inactive in these matters and I pay tribute to Commissioner Gundelach, who is very much on the consumers' side. He and Commissioner Burke have the interests of the consumer at heart, and there is no doubt that the emphasis in the CAP is switching from the interests of the producer to the interests of the consumer.

The hon. Member for Holland with Boston (Mr. Body) saw in one of my speeches an effort to drive a wedge between consumers and producers, but I believe that their interests can be common interests. The producer must have prices that enable him to have a decent standard of living—no one wants to batter the farmer—but he must be told that he needs to produce efficiently in order to give the consumer a fair deal. The Treaty of Rome specifically seeks to strike this balance, but up to now it has seemed that all the advantages have been with the producer and that there has been little regard for the consumer.

Can the Minister tell us something about the prospects of our getting a special butter subsidy from the EEC this year? Every housewife knows that the retail price of butter in this country went up from about 25p a pound in early 1973 to 50p a pound in mid 1977 and that it is likely to continue going up in the next few months. The present EEC subsidy of 8½p a pound is due to disappear. However, that and the devaluation of the green pound could increase the price substantially by the end of the year. Will we have success in retaining the subsidy? That is important from the point of view of the Government's fight against inflation, and no one knows that better than my hon. Friend the Parliamentary Secretary.

I was intending to say a few words about the surplus beef and the 3 million tonnes of surplus sugar that is in store at enormous cost. However, I skip that. Instead I shall direct my remarks to the policy of the Socialist group. It is a group that has had little publicity in the House and still less in the country. I shall talk about the work of the group to which I belong in the European Parliament that is concerned with agriculture. I emphasise that it is the only group in the European Parliament that is representative of all the nine countries. There are good Socialists in the group, but every member of it is concerned about the future of agriculture. We have to understand their fears and their determination to protect their consumers and producers.

The Socialist group produced a unanimous report, which was no mean achievement. The report states: Pricing policy must reflect the market demand for products. It must not encourage structural surpluses. We were concerned about structural surpluses at least two years ago. The report continues: Producers in such sectors must be encouraged and helped to move into other areas of agricultural production, or out of agricultural production altogether. That seemed to be a reasonable proposition.

I shall make one further quotation from the report. I apologise for the length of the quotation but it is important. It states: While recognising certain advantages of the CAP, notably the reasonable guarantee of adequate supplies of food at a time when all the signs point to increasing world shortages and widespread malnutrition in many parts of the globe, as international Socialists we believe the EEC agricultural policies must be more outward looking, more efficient, fairer to the consumer and defensible in both international political and economic terms. In the Socialist view, the CAP as at present operating is inefficient, wasteful, inward looking, unduly costly, of too little benefit to the consumer and often, too, to the small producers. That is an adequate summary of the policy.

One of the heartening things about the past 12 months in Europe is that consumer organisations are now much more active in their responses to the effects of the CAP on shop prices. It is well known that rising food prices hit the poorest the hardest. The poorest families spend a greater proportion of their income on food. That is a common observation. If the CAP leads to unnecessary price increases, it hits the poorest the hardest.

The Treaty of Rome specifically provides as one of its aims that food for consumers shall be available at reasonable prices. The CAP has failed to do that, and it has also failed to help the poorer farmers against the richer farmers. As my hon. Friend the Member for Durham said, discrepancies in Europe within agriculture, not only generally economically, in respect of incomes and standards as between poorer farmers and better-off farmers have widened. That is partly as a result of the CAP, and that alone condemns it.

The European consumer organisations have argued justifiably that where there are current structural surpluses in milk, sugar, wine and cereals, and where there is more than is required as a safety margin, there should be no increase in the prices for those commodities for the producers. In other words, they argue that prices should be frozen for those commodities at the level of the 1978–79 price review, which is currently under discussion. That is supported by Commissioner Gundelach.

The consumer organisations also argue that the common agricultural policy should be changed in nomenclature and emphasis to a common food policy. It is argued that the emphasis should be on the interests of consumers rather than, as hitherto, on the interests of farmers and producers. The aim would be not to clobber farmers but to get a fair balance between producers and consumers while at the same time—this is equally important—safeguarding adequate supplies by allowing a greater proportion of imported food where it is cheaper so long as overall demands are not jeopardised strategically. For example, it would be foolish to rely on supplies from the Soviet Union or the Eastern bloc.

However, it would be completely sensible and wise international politics to allow food to be imported from the Commonwealth and the underdeveloped world when there is clear evidence that on cli matic and other grounds it is better to do so than to try to build a wall around ourselves and produce it ourselves in Europe.

Mr. Lee

My hon. Friend is now saying a great deal with which many of us would agree. However, let us suppose that the proposals that he has outlined are put forward. Let us suppose that Mr. Gundelach is on the side of the angels. Let us further suppose that, in spite of that, these proposals are overridden. Does my hon. Friend take the view that I hold, that in those circumstances we should exercise our power of veto? It has not been exercised so far, not even by our present Minister of Agriculture, Fisheries and Food.

Mr. Hamilton

No, I think not. As has been said, we have to accept that we are in the Community and that we must work within it. There are different points of view. I am expressing my point of view but no doubt European politicians would express different points of view. The only way in which we can deal with these matters is by trying to reach a compromise. I shall not get all of my way and the other chap will not get all of his way. The essence of politics is to try to reach a compromise.

Some of my hon. Friends refer disparagingly to wheeler dealing, but that is what politics is about all the time. Wheeler dealing is of the very essence of politics. We are in this place because we are professional wheeler dealers. We make all sorts of pacts and deals. The term "usual channels" is merely another name for a wheeler dealer organisation. Let us not disparage our profession. Wheeler dealing is what we are here for.

I wish that some of my hon. Friends would understand that, although I have a point of view about agriculture and how it should be dealt with, so have our European colleagues. They have been brought up in a different environment and they are talking in a different context.

Mr. A. P. Costain (Folkestone and Hythe)

Does the hon. Gentleman agree that it is wheeler dealing when we win and horse trading when we lose?

Mr. Hamilton

Yes, I agree whatever expression is used. However, as responsible individuals, politicians or otherwise, we resolve problems by talking about them, even with those with whom we disagree. For example, I shall be talking later about the Civil List. I shall disagree with many on that score. However, I have my point of view and others have theirs. I had to get that in somehow, but I leave it at that.

I repeat that in the last few weeks, the European Parliament, the Commission and the United Kingdom Government have united—it is a strange and salutary combination, but a very strong one—in a determination to resist any price increases for commodities in structural surplus. There is much opposition to that within the Council of Ministers.

I come back to the intervention made by my hon. Friend the Member for Birmingham, Handsworth (Mr. Lee). My right hon. Friend, the Minister will have a battle on his hands to get his way. It may be that he will have to make some compromises, which would be disagreeable to my hon. Friend, to get, for example, acceptance of the retention of the Milk Marketing Board. He might have to pay a price for that. Then he might be accused in the House by dedicated anti-Europeans of selling the pass to get a bit of what he wants.

I talked to our ambassador in Brussels not long ago. He said that now that we are in this or in any international organisation it is important for us to understand that, in order to get what we regard as important, we must recognise the necessity to compromise and yield on matters which we regard as of less importance. That is of the essence of international politics: how to know when and what to concede in order to get the better—

Mrs. Audrey Wise (Coventry, South-West)

Will my hon. Friend give way?

Mr. Hamilton

I am sorry. I have gone on long enough. I know that I shall not convert some of my hon. Friends and they will certainly not convert me. They are international Socialists as long as international Socialism stops at Dover.

I want to conclude fairly quickly by putting one or two questions to my hon. Friend the Parliamentary Secretary. First, there is the question of school milk. I want the Government to tell us exactly what the position is. We want to increase our consumption of milk. This is an area in which we could do a lot to get rid of the surplus. I hope that the Government will give an indication—if not in this debate, at least very soon—that they will consider restoring the school milk taken away by the Leader of the Opposition when she was Secretary of State for Education and Science—the milk snatcher of those days—and extending the scheme of free school milk to all children up to 11 years of age. That would make great inroads into the surplus.

The Commission has proposed an increased subsidy for this purpose. I gather—I am subject to correction—that the Commission has proposed an increase in the subsidy from 3p to 4½p a pint. If the Government extended the scheme to children up to 11 years of age, it would cost £3 million or £4 million, but it would be a very good investment in our future. That is what investment in our children is.

I have already mentioned the Milk Marketing Board and I shall pass from that. The point has been made successively by hon. Members. We should take the battle into Europe and try to persuade our partners that it is such a good organisation for dealing with structural surpluses that they ought to consider introducing a similar kind of distribution mechanism in their own countries.

Lastly, I refer to the mutton and lamb problem—what in Europe is called horribly the sheepmeat regime. We do not understand that particular language. We prefer to call it mutton and lamb. This underlines the point that I made earlier. Incidentally, it is important for Scottish hill farmers that we get the right answer here. The Parliamentary Secretary, who represents a Scottish constituency, knows what the problem is there.

I gather that there is to be some regulation this year. I do not know what the time schedule is. However, the Government must tell us that they will seek assurances that the British housewife will have continued access to adequate supplies of mutton and lamb at reasonable prices, and certainly from New Zealand. I know that my hon. Friend the Member for Southampton, Test (Mr. Gould) is very concerned about this matter. I am wholly on his side.

If we want to change this regime, we must stay within the organisation which is currently operating it. That seems to be the essence of the argument. We are equal partners. We must persuade our European partners that we have a good argument. The signs are that our influence is already working to our advantage within Europe. There is an increasing feeling of frustration about the way that the CAP is operating. If we play our cards right, I think that we can bring about the changes that we want.

12.35 p.m.

Mr. Geraint Howells (Cardigan)

I am very pleased to be called so early in this important debate. I am convinced that many of us now believe that perhaps we should debate agriculture matters on Fridays since today's debate so far has been one of the most constructive to which I have listened during the last few months. I congratulate hon. Members on both sides who have spoken on being constructive in their approach to a matter of great importance to producers and consumers in this country.

It is impossible to reform the common agricultural policy this morning, but we can make suggestions. Then people in other places may consider and debate our suggestions and constructive proposals can be brought back to this Chamber.

We have our differences on the common agricultural policy. I believe that, to look after the interests of the agriculture industry and consumers, it is again necessary to set up the Select Committee on Agriculture. We had such a Committee a few years ago and it did excellent work. Having listened to the views of hon. Members on both sides, I suggest that, if we had such a Committee now, it would do a power of good in uniting both consumers and producers, because food is the most important commodity produced in Europe.

I should declare my interest as a farmer living in Wales. Also, as reference is made to marketing boards, I should declare that I am one of the vice chairmen of a marketing board.

Before we joined the Common Market, we had one of the best marketing and support systems within Europe. I am proud of our record before we joined the Common Market. It is a great pity in many way that agriculture policies have been changed.

The duty of the Minister of Agriculture, whether Conservative or Socialist, is to look after the interests of British producers and consumers. But every Minister of Agriculture representing Britain now or in future will find it difficult to negotiate, because he is one of nine. Who knows, he may be one of 11 or 13. With the best will in the world, going from here to Brussels or to any other capital in Europe, he will find it very difficult to persuade not only all the other Ministers but even half of them to agree with him. We may disagree in the Chamber today, and rightly so, but it makes the work of the Minister much more difficult under the present regime.

It is worth considering the principles of the Common Market. When the original six members first came together they formulated principles governing the CAP but laid down no rigid rules, only guidelines to be followed. Their aims were straightforward and laudable and were set out in the Treaty of Rome in 1957. It was their wish to see an increase in agricultural productivity, a reasonable standard of living for those who farmed, stable markets and fair prices for consumers. The details were then left to be developed over the intervening years. Community policies have been altered and tailored to fit certain circumstances since then.

Let us consider the first objective of increasing agricultural production. Here I disagree with the hon. Member for Bradford, South (Mr. Torney). I agree with him to the extent that we produce only 50 per cent. of our own requirements. As a hill farmer, I am convinced that production in this country could be increased by 50 per cent. or 100 per cent. on marginal or hill land, and that it could also be increased on the low land. Many people might interpret that to mean that if a man keeps 1,000 ewes he should increase the number by 200. That is not the answer. The answer lies not in numbers but in quality. If that farmer was given the right incentive he would increase production by 25 per cent. without keeping an extra ewe. If only he developed his land he could increase the weight of lambs by 5 lb, and that would be an extra 5 lb of lamb on the market.

The farmers' main worry revolves around the two systems. We still operate both guaranteed price deficiency payments and the intervention system. As a farmer, I am worried about consumption in this country. Irrespective of our views, if the consumer does not eat what we produce we are doomed to failure. We must therefore work as a team. Very few hon. Members agree with me when I say, as I have said many times, that we should revert to the guaranteed price deficiency payment system for every commodity we produce.

Mr. Torney

We agree with the hon. Gentleman.

Mr. Colin Shepherd (Hereford)

Does not the hon. Member agree that the deficiency payments system is an open-ended commitment, but that the advantage at the moment is that the contribution to the budget is finite and negotiated in advance so that the farmer knows at all stages where he stands?

Mr. Howells

We could argue about this for hours, but I believe that the farmers of this country prefer the guaranteed price system because it enables them to plan ahead. The hon. Member may say that it is expensive, but so is intervention. It is open-ended, too. If we were to put all our surplus produce into intervention that would amount to an open-ended commitment.

The taxpayer has to pay for whatever system we devise. To safeguard the interest of both the consumer and the producer requires the system of guaranteed price deficiency payments which has worked so well. The majority of farmers in this country—I meet quite a few of them in other parts of the country as well as in my constituency—say that whatever we do we should make sure we retain that system, even for lamb at this very late stage. Many farmers are worried about consumption, and the intervention price system should be considered against that background by a Select Committee on agriculture—if we could persuade the Minister to set one up.

Many of us are worried, too, at the colossal cost of importing food. The taxpayer has to pay out millions of pounds a year in this direction, when British farmers, given the right incentives, could produce much more. It was a great shame that the farmer on marginal land should have been penalised by European policies with the loss of his subsidy on beef cows and other subsidies. He is just the type of farmer who could produce more.

When the Treaty of Rome was signed, currencies were fixed and the plans were made for the benefit of stable economies within the Community. In that context it was possible to envisage a more or less uniform framework of support for all the member States. Of course, we can all see now what an over-optimistic view that was. The past few years have seen a tremendous fluctuation in currencies, and it soon became obvious how impossible it would be to apply common price levels. The green currencies were brought into play, setting the official support prices for farmers.

That in its turn has led to distortions and what, over recent months, can only be described as chaos—producing great distortions in the market. It has resulted in some countries, such as Germany, taking advantage of the MCAs, while Britain has suffered very badly. We do not have to persuade the Minister at this stage—he knows as well as I do—that we must change the way we calculate the European MCA system.

Members today have made a strong plea on behalf of our pig producers. Unless there is a change in the near future, many of our pig producers will be doomed to failure. We cannot blame our Minister for that. It is the fault of the Danes and others within the Community. I do not blame the Danes, because they stand up for their own producers.

Mr. Shepherd

Does our Minister stand up for our producers?

Mr. Torney

Not half.

Mr. Howells

I am sure that the hon. Member for Hereford (Mr. Shepherd) will be called to take part in the debate. He will then be able to make his own points and say what he wishes about the Minister.

I must repeat what I have said before, that we owe a great deal to the Minister. Whether we agree with the Government's policy or with the right hon. Gentleman, we must congratulate him on his stand to safeguard the interests of the milk producers in this country by retaining the Milk Marketing Board. We can argue for a penny on every commodity if we wish, but the structure of the marketing system long term is more important than having a penny this year. I do not want to make this a political matter, but I am very indebted to the Minister, as I am sure many farmers are, for his stand in Europe.

We have accepted too many orders and directives from Europe during the past three years. It was time for someone to stand up to the Minister's counterparts in Europe. I believe that the dairy industry and the dairy producers will be delighted to hear the outcome, that the Milk Marketing Board is here to stay to look after their interests in the future.

Mr. Spearing

Is that a hope or an expression of hard fact?

Mr. Howells

I believe from what I have heard and gathered from others that the board is secured.

The hon. Gentleman and many producers will agree with me that it is a great pity that under the Treaty of Accession the Milk Marketing Board had to give up its system of a guaranteed price to the producers. We have given in too often to our counterparts in Europe. Our system is the best. I believe that at this late stage we should persuade them to come and see our industry for themselves, to meet farmers and organisations in this country, to talk to them and to debate our system of marketing, which has served this country well. Many changes are needed within the framework of the common agricultural policy.

I have not touched on the green pound. It would be wrong of us today to try to argue about whether we should devalue it further in the near future. The matter is causing a great deal of concern to many farmers and to the Ministers. Perhaps over a period, whether five or 10 years, we shall be able to abolish the green pound. When the time is opportune, let us get rid of it. That is very important.

I return to the sheepmeat regulations, which were mentioned by the hon. Member for Fife, Central (Mr. Hamilton). I have seen the draft proposals. Many sheep farmers are worried that the Minister will give in to his counterparts in Europe and that the guaranteed price deficiency payment will be done away with. I know that for the next year or two the present system will remain with us.

Many of our sheep farmers believe that our future is in Paris and in France. That may be true. I do not know, but I believe that if we want a stable agricultural economy we should retain our deficiency price system. I believe that the market for the sheep produced in this country is in this country, and that if we can look after the interests of our sheep farmers and ensure that they get a guaranteed price under this system it will be much better than gambling away in many parts of the world.

Our farmers need parity. Many of them believed that when they became members of the European Community they would be on a par with their counterparts in Europe, but that was not to be. There is today a great deal of disparity between the farmers of Britain and the farmers of the EEC. In my view, the levies that are being paid between member States are too high.

I merely give two examples. I believe that many hon. Members will agree with me that the levies are too high. If an exporter wants to export cow beef from this country to France and other European countries today, it is costing the British wholesaler 17.4p per pound, which is ridiculous. If the French importer wants to import lambs from this country into Paris he will have to pay 37p duty on every pound that goes over. So there is a great deal of disparity, and something must be done.

The British farmer's income is lower than that of any other farmer within the Community. I am not saying that the British farmer is not doing well, but the factual evidence is that his income is less than that of his counterparts in Europe. I believe that the incomes should be on a par.

The consumers of this country would be safeguarded if we had a deficiency payment system and not an intervention system. The sooner we get rid of an intervention system in Europe, the better. It is a sheer waste of the taxpayer's money to put the best beef, the best lamb and whatever else we produce in this country into intervention for six months and bring it out as manufacturing beef, denying our consumers the right to have cheap best cuts when they are available. It is ridiculous. I am convinced that the majority of farmers would agree.

In an imperfect world, it would not be possible at any time to meet in full all the demands from those whom the CAP affects—the claims of, for example, British and French farmers; those with small farms and owners of large farms; free traders and protectionists; those whose main preoccupation is the prosperity of the Community and those who worry over the problems of the Third world.

But we can aim for a better balance between these interests. Unless we do that, the future of the CAP and the Community is doomed. At present, this balance is difficult to achieve, because the price policy has to try to equate too many conflicting interests.

What is clear to me is that in a world where there is always uncertainty over our food supplies a workable CAP is necessary. It needs to get its prices right and at the same time operate more flexible polices so that it can come closer to the ideal that we would wish to see within Europe.

I am grateful to the hon. Member for Bradford, South for moving the motion so that we may discuss constructively what must be done to reform the CAP within the next few years, to make sure that we safeguard the interests of producers and consumers alike.

12.59 p.m.

Mr. Nigel Spearing (Newham, South)

The hon. Member for Cardigan (Mr. Howells) has just expressed our thanks to my hon. Friend the Member for Bradford, South (Mr. Torney) and said that we must act constructively. But the House can no longer act on matters of agricultural policy. There is no British agricultural policy. It is a common policy decided in Brussels.

No speaker so far has referred to the talks that took place earlier this week, from which my hon. Friend the Parliamentary Secretary has just returned. We look forward with interest to hearing what he has to say, because we have not yet had a statement. This is just symptomatic of the degree to which the power to decide our own domestic affairs, on matters such as food policy and agricultural policy, has left this House and Whitehall and has flown overseas to another legislative executive body.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang)

It might be helpful if I point out to my hon. Friend that my right hon. Friend answered a Written Question from one of his hon. Friends when he gave a report of the proceedings of this week's meeting in the Council of Agricultural Ministers. But I shall certainly respond to my hon. Friend's suggestion that we ought to amplify the Government's attitude to this week's discussions.

Mr. Spearing

I am grateful to my hon. Friend. There are difficulties with Written Answers at present, as we all understand.

I wish to refer to the hon. Member for Devon, West (Mr. Mills)—unfortunately, he is not in the Chamber now—and to my hon. Friend the Member for Fife, Central (Mr. Hamilton). I am an unrepentant anti-EEC man. I believe that the hon. Member for Devon, West has been misled into support for the Community from its own publicity. He talked about grandchildren, peace in our time, and all the rest of it—we all want that—and then he thought that the CAP and the EEC itself were a means of achieving that. I think that he has been misled into supporting the EEC in general and the CAP in particular, because I do not think that either does what it pretends to do. If it tries, it has the wrong mechanism.

That is truest of all in respect of the CAP. It sets out to be very progressive and very helpful, but in fact, it does not help agriculture. First of all, it is bad for world trade. It does not help world trade or world trade in agricultural goods. It does not help consumers. We all know about that. It sets up the consumer against the producer. It encourages the sectional interest. It even sets up one set of farmers against another set of farmers. The hon. Member for Cardigan mentioned that.

The CAP is not even good for the national communities of member countries, because their own agricultural resources are in imbalance, and they produce the wrong balance of production from the wrong balance of agriculture, even inside their own countries. It is bad for the Community in the narrow sense because it gives a very bad reputation to the EEC—which I believe it thoroughly deserves, but which those who support it have to defend constantly, as they have done in this debate. The CAP has no friends, and deservedly it has no friends.

The first thing that the CAP does to Britain is to impose food taxes, and taxes such as we have not had since the Corn Laws. It does that by restricting world trade. How does it do that? First, it grows food which can well be imported from elsewhere. Sugar has been mentioned. This year there is expected to be a surplus of 3 million tonnes of beet-grown sugar, when we all know that the Third World, which has, in some cases, not much else to produce, could well export that to Europe and we could dispense with some of our own production.

A country such as Malaysia is virtually stopped from sending us canned fruit. It has to pay up to 24 per cent. levy on the value of canned fruit that it exports to this country, particularly if it contains sugar.

Australia and New Zealand have been mentioned. Australia has virtually ceased to export beef to this country. The public may not realise that, but that is so. It is all very well for the hon. Member for Devon, West to ask where the surpluses are. I agree that they may be difficult to demonstrate, because, of course, what happens is that the beef is not produced and the milk is not produced. Farmers go out of farming. Land goes out of production. If there is no assured market, if there is no demand and if there are tariffs in Europe, the food is not produced at all—cheaply though it can be produced.

In The Times of today there is an article headed: Why Australian and New Zealand agriculture must stay on the European trail. It points out that Britain is also the major outlet for New Zealand's dairy produce, which still accounts for some 14 per cent. of total exports. Cheese exports to Britain were cut back from 75,000 tonnes in 1971 to 15,000 tonnes last year, and have now ceased altogether. Butter exports to Britain, though steadily declining, are at least guaranteed access up to the end of 1980; their continuation after 1980 is not assured. Despite what my hon. Friend the Member for Fife. Central said about what he wants to see, unless there is a new agreement there will be no New Zealand butter here after 1980. Despite what my right hon. Friend the Member for Huyton (Sir H. Wilson), when Prime Minister, said in Dublin, it just has not happened. We were had on that occasion, and we do not want to be had again.

On 7th March, the Financial Times contained a very important article written by John Cherrington and Christopher Parkes, entitled The wolf draws nearer New Zealand's door". Perhaps the hon. Member for Devon, West ought to read it. It made it quite clear that the Irish and the French, for example, consider the issues to be closed. It said: In 1977, New Zealand was allowed to send 15,000 tonnes of cheddar to Britain. The article also said that the Irish and French do not want imports of New Zealand produce into this country to continue. They regard it as contrary to what they think is the CAP.

I do not believe that these matters are known sufficiently in the country. If they were, I think that people would be even more against the EEC than they probably are at present.

Why is this country alone, perhaps, in this attitude to the CAP? There is one very simple answer to that, in that, generally, we are the only member, perhaps with the exception of Eire, which has operated a traditional low-food-cost policy. The populations of the other countries have always had a different structure of agricultural prices and taxed imports from the outside world. Therefore, the British public are at a disadvantage in that, generally, they are the only public within the EEC who are greatly concerned with this matter and can try to use political muscle—but of course, they are outvoted and outnumbered by the interests of the rest of the EEC.

The Minister of Agriculture kindly answered a Question of mine on 11th January about the current level of levies. The current level of levies, even on common wheat, is extraordinary. The levy on common wheat is £67 per tonne. Because of the monetary compensatory amounts, we only have to pay £41 a tonne on wheat coming into this country, and we have to import hard wheat from Canada for our bread in order to make the sort of bread to which we are accustomed. That is the extent of the levy at the beginning of this year.

On cheddar cheese—other than that brought in from New Zealand under the special arrangements, which have already gone—the levy is £959 a tonne, which works out at 43p per pound. People will say that that is ridiculous because it is nearly the price of the cheese itself. Exactly. That is why it does not come in.

These levies are tariff walls that are built up so high they increase the level of prices within the wall to a degree that is very difficult to measure. That is why there are arguments about the exact increases that we have had to suffer.

But there is also something very strange about these levies. They are variable. They are not like a tax that is fixed, a fixed amount, or an ad valorem duty. They go up and down relative to the assumed outside prices. But I believe that these levies—we have to face some of them—are far too high, even based on realistic prices.

I have asked my right hon. Friend the basis upon which they are calculated, and it appears that it is secret. We know that the EEC is secret, but it even keeps from us the basis upon which it forms its food levies. My right hon. Friend replied to me on Monday 3rd April as follows: EEC common levies are calculated by the Commission on the basis of information gathered from a wide variety of sources in the Community. The method by which the levy is derived differs between commodities. The Commission does not make public the information from which it derives the levy."—[Official Report, 3rd April 1978; Vol. 947, c. 77.] Therefore, it is very likely that these levies are not only bad in themselves—we know that—but are far too highly based on the idea of keeping out imported goods. That is one of the things about which the Community cannot face the world, because it is being secretive and possibly misleading in this respect.

Moreover, the majority of the Tory Party is in favour of even higher levies. I have quoted the extraordinary level of £959 per tonne on cheese. That is without the green pound. They want to get rid of the green pound. It would be up as high as £1,312 per tonne if the green pound were entirely devalued.

So the Tories are not only in favour of high prices and food taxes at present—so are the Liberals, despite their brave past a century ago—but they want to increase those levies from outside the EEC even more. This is a matter of which the electorate should take great account in the forthcoming weeks and months as we come to a time of decision.

Therefore, the second point I illustrate is that this is to the disadvantage of the consumer and to the disadvantage of world trade. I believe also that the CAP is to the disadvantage of farmers. Some of my hon. Friends will ask "Why is that? Prices have risen. How can the CAP be to the disadvantage of farmers?"

Indeed, prices of food have risen, but so have prices of land. I think that superficially at least the interests of farmers can be measured by the market value of land. When we joined the EEC land prices rocketed. I have the official figures from my hon. Friend—this is Hansard for 3rd April, column 76—showing that the average price of land in 1972 was £544 per hectare. My hon. Friend has gone metric; he cannot give it in acres. It was in 1972 that we decided to go into the Market. Surprise, surprise, but in 1973 the average price was up to £1,092 per hectare. The price had virtually doubled within the course of a year. The latest price, for 1977, is £1,649 per hectare. The estimate for January-February 1978 is £2,000 per hectare—in other words, an increase of nearly four times since 1971–72.

So people will say that it is jolly good for the farmer, that if land prices have risen that much, they must be doing that well. I am not saying that it has happened all over the country—some may be doing well—or that this is an average price, but it is probably the average price for arable agricultural land in eastern England. It is largely estates which have been bought up either by City institutions or even by farmers from abroad.

Although land prices are high, it might be bad for farmers. The fact that land prices are high does not necessarily mean that it is good for farming or for the agricultural community as this country has known it over the years. I have a very profound respect for the agricultural community and wish to see it continue, but I do not think that it would claim that increased land prices was necessarily a good indicator of that.

Mr. Richard Body (Holland with Boston)

Does not the hon. Gentleman accept that it has become not merely difficult but impossible for a young farmer either to buy a farm or to rent a farm at present prices?

Mr. Spearing

I am grateful to the hon. Gentleman, who knows that for the very best of reasons. It will set perhaps the new set of managers and farmers—the new landed elite from the cities and their agents—against the traditional ones. It might even have an effect upon the traditional farming community in farming areas.

One can go and see the disintegrating effect of the CAP even on rural life as we know it. Although ostensibly meant to improve and maintain it, the CAP may even disrupt it. It may indeed have social effects which disrupt it. I thank the hon. Gentleman for making that point.

The CAP also sets highland farmer against lowland farmer. On the one hand, the highland farmer is encouraged to leave the land or to consolidate his holding, as my hon. Friend the Member for Fife, Central told us. On the other hand, the farmer in the arable sugar beet-growing areas, particularly of northern France and eastern Britain, is getting a greater return than he deserves.

That is the essence of the pricing policy operated by the CAP. One cannot, on the one hand, provide prices sufficiently high to give a reasonable return for the farmer in disadvantageous conditions—of soil, of climate, or of distance from market—and not provide, on the other hand, over-high prices for the farmers on good land in good climates and well placed for transport. Yet the CAP year after year obstinately tries to do just that—not because the Treaty of Rome says so, not because the broad objectives of the policy, written large, say so, but because the details as the policy has been worked out in practice make it so.

That is the great argument that many of us have against the CAP—not that there might not be a reasonable CAP, but that we are against this one, not because of its broad objectives, but because of the way it has been fixed in its evolution for particular interests and particular processing agricultural industries. That is what is at the heart of this policy. That is why it is so difficult to change, because the entrenched political and vested interests in certain European countries have formed it to suit them. They have not formed it to suit agriculture. They have formed it to suit their interests, and they are politically well placed to see that it is difficult to change it.

The majority of the members of the Conservative Party and the Liberal Party walked into the trap set and laid for them by the hon. Member for Sidcup (Mr. Heath). They signed the Treaty. The Liberals did not even see that they could ensure that the marketing boards were preserved. We have had to do that since the treaty was signed—[Interruption.] I am not blaming all the Liberals. The hon. Member for Cardigan is a very liberal Liberal. He understands exactly what I am talking about. I have no doubt that he tried his best at the right time to change that policy. Nevertheless, that is what happened.

We now have the question of the Milk Marketing Board, which illustrates—I was going to say the evil nature of the present EEC policy. The MMB, which was set up in the 1930s, with no party political difference across the Floor of the House, helped consumers and farmers—highland farmers and lowland farmers. It was a first-rate example of the way in which political intervention can act to everyone's advantage. It worked so well that many people did not know that it was there.

The EEC now says that it does not like the MMB. It wants to get rid of it, because it says that its operations work against the EEC policy of competition in that it is a legal and statutory monopoly. It may be that that is so in the fine legal analysis of the board's nature. However, the board does exactly what the EEC wants from its agricultural policy.

In the debate on 21st March details were given of the costs of milk distribution and processing as supplied by the Dairy Federation. In West Germany milk costs 62p per gallon, in Italy 65p per gallon, in Belgium 52p per gallon and in the United Kingdom 37p per gallon. That is just one of the benefits of the MMB. It switches our liquid daily pinta consumption to butter and cheese when there is a milk surplus. That is what the European dairy producers do not like because they think that that dairy surplus should be theirs. They think that there is some sort of subsidy from liquid milk to butter and cheese. Because they want that market, they are not prepared to allow the MMB to continue in its present form.

We know that the Commission is more sympathetic. But even the proposals it produced at the beginning of the year would not permit the Milk Marketing Board to continue as we know it, certainly not without opting-out clauses which could torpedo it, certainly not without the polls every so often which might undermine the confidence in its future.

Mr. Geraint Howells

Does not the hon. Gentleman agree with me that the Europeans are very envious of our Milk Marketing Board? One of the main reasons for that is that in this country 90 per cent. of the milk produced by British farmers is sold on the liquid market, whereas only 10 per cent. of the milk produced by our German and French counterparts is sold on the liquid market. Does the hon. Gentleman further agree with me that our system of delivering milk is unique, in that British consumers get their milk delivered on their doorsteps day in and day out seven days of the week? These are the two main reasons why our counterparts in Europe are envious of our system.

Mr. Spearing

I would entirely agree with the hon. Gentleman. When he speaks of our counterparts, he speaks as a farmer and I speak as a consumer. The housewives of this country would agree with him. If they knew this morning that there was any doubt that this magnificent operation, which we take for granted in this country, was under threat, they would be very surprised indeed, but that is the fact. The point that the hon. Gentleman forgets is that his counterparts in Europe may be in favour but apparently the Governments or their representatives on the Council of Ministers are not. That is the big difference that we have now to investigate and exploit.

I hope that that proves my point that the CAP is not an agricultural policy at all. It is a policy which was ostensibly for the benefit of agriculture, but the switching points in the mechanism have been used by particular groups in pursuance of their interests. I suggest that they are a very small minority of landed and processing industries throughout the EEC.

In the words of the booklet entitled "The Common Agricultural Policy", published by the EEC Commission, the basic principles of the policy were to be to increase agricultural productivity, to ensure a fair standard of living for those in farming, to stabilise markets, to ensure reasonable consumer prices. I do not believe that the CAP does many of these things. The Milk Marketing Board does.

Mr. Body

Hear, Hear.

Mr. Spearing

But those very interests that say that this is their policy want to break the Milk Marketing Board. This shows that there is something behind the CAP other than a desire for agricultural prosperity in the sense in which we have had it in this country and which we wish to continue.

I do not believe that it is possible to provide a structure of agricultural support which produces the maximum stability for agriculture, the maximum stability for rural communities, and a good deal for both consumer and producer, over an area which is very widely spaced geographically. Surely, if we are to have a satisfactory support structure, it must be linked to the natural and historic and community conditions of the area to which it applies.

We have seen that in this country. The hon. Member for Cardigan mentioned the hill subsidy, of which all of us were in favour. My hon. Friend the Member for Fife, Central mentioned the farmers in the Highlands of Scotland. Our policy matched most of the conditions in the British Isles, but on fundamental agricultural grounds it would be almost impossible to formulate a policy which operated with equal quality from Sicily to the Shetlands, and from the eastern borders of Germany to Britanny. How can we do that in basic agricultural terms and still provide the deal that we want for the rural areas in the whole of the European mainland?

I want to see a prosperous rural countryside, just as we want it here, but I do not believe that it can be done by imposing a single structure of support to try to meet the great variety of soil, climatic, social and historic conditions over such a wide area. If there is to be a common policy, it must be broader in outline, leaving the details to be filled in possibly by national Governments within certain limits. This is what we want. We are all united about that in this House. If anyone says that that is not the answer, let him say so. I shall not go into some of the ways in which that can be done. My hon. Friend's motion points the way.

I think that there is a wide degree of agreement in the House on the difficulties of the present policy and on what we want to see. I have tried to analyse the present CAP as I see it. I have tried to suggest why it is that we cannot make much progress. We shall not do so unless the nub of the matter is dealt with.

Time and time again in agriculture debates people say that this or that ought to be done, and that we should try to progress along certain lines. We have never been able to do it and I do not believe that we shall be able to do it until this country takes one step, and that is to make sure that the power to decide returns to the Floor of this House of Commons at least in regard to Britain's agriculture. That is the only way in which it can happen. I am referring not necessarily to an actual decision but to the threat to make the decision.

In his famous letter to the Labour Party national executive last October the Prime Minister made it quite clear to the Labour Party that he was in favour of protecting the rights of national Governments and Parliaments. He did not mention the people. The right hon. Member for Sidcup also forgot the people. Prime Ministers seem to have a habit of putting in the three estates rather than the two. We should remember the rights of the British people in regard to agriculture and consumption, just as much as the rights of Governments and Parliaments. The British people have lost these rights because this House has lost them.

The Labour Party, at its conference last October, said that the time had come to amend those parts of the European Communities Act so that if necessary this House could decide which Brussels regulations should or should not apply to this country. I believe that the only way which we can persuade our colleagues in the EEC that we mean business on this matter is to say "We shall take that power back" All it needs is two or three amendments to the European Communities Act 1972.

The Labour Party, at its conference two years running and certainly at Brighton last year, with an overwhelming majority, said that that time has now come. It is time for us to place before the British public at the next General Election that that is what we should do. It is not yet in the manifesto. It is only the view of the party.

I say to the Prime Minister that if his letter to the national executive committee at Brighton means anything at all, that part of the national executive committee's conference statement should go into the party's election manifesto. Unless it does, the Prime Minister's letter will be seen as just as passing and just as inconsequential as the so-called renegotiation which was conducted just prior to the referendum in 1975. I believe that if that pledge goes into the party manifesto for a General Election in 1978 or 1979, whenever it comes, the British public will respond.

1.27 p.m.

Mr. Richard Body (Holland with Boston)

I add my congratulations to those of other hon. Members who have already congratulated the hon. Member for Bradford, South (Mr. Torney) on putting down the motion and initiating a very constructive and interesting debate on a subject that is of paramount importance to us all.

Not for the first time I find myself in almost total agreement with the hon. Member for Newham, South (Mr. Spearing). I think that he was gloomier than he need have been about the Milk Marketing Board. I should like to refer him to a newspaper extract from Holland which was duly translated for me. It was about the Milk Marketing Board. The article stated quite categorically that the Milk Marketing Board would continue. It said that it would continue because of the bully boy from Whitehall. It then went on to speak of someone whom we know as the right hon. Gentleman the Minister of Agriculture, Fisheries and Food as the bully boy from Whitehall who always gets his own way. According to the article, it is because the Minister always gets his own way and is such a bully boy that the writer was quite convinced that the Milk Marketing Board would continue.

I am glad that the hon. Member for Newham, South alluded to many of the faults of the common agricultural policy. I am glad also that he dealt robustly with the assertion that in the world now we are cut off from supplies of food. That argument was put, not for the first time, by my hon. Friend the Member for Devon, West (Mr. Mills). I have a very warm regard for my hon. Friend, but I cannot quite understand the reasoning of that argument. As a farmer, he must know that one does not begin the process and all the risks of growing food—and particularly anything to do with livestock—unless one is reasonably sure that one will find an outlet and that there will be a demand for what one is proposing to supply. Demand is not just a need for that food—a willingness to buy it—but a willingness to pay a reasonable price. For generations we in this country have been willing to buy from New Zealand, Australia, the Argentine, the United States, Canada, and a host of other countries, the food that they have been able to produce at a reasonable price. We have been able to afford that price. We cannot afford to pay the price now because the import levies and duties exclude so much of that food from our households.

The situation has now become very serious. The consumers of this country are not buying anything like the amount of food which they used to buy. I am glad that my hon. Friend—if I can call him my hon. Friend with regard to agriculture—the Member for Cardigan (Mr. Howells) referred to the fall in consumption. We know how seriously food consumption fell from 1972 to 1976. It has continued to fall. I extracted the recent figures from the Library yesterday. They show that last year again consumption fell. In one year only beef consumption fell by 11.1 per cent., milk by 4 per cent., bacon by 3.7 per cent., sugar by 10.1 per cent., butter by 7.7 per cent. and fish by 17.7 per cent.

The question of consumption per head in larger families is very serious. When I last intervened on this subject I said that there must be about 3 million people in this country who by the standards of the FAO and the World Health Organisation are suffering from malnutrition. That is very serious. It was never so before 1972. We were among the best fed nations in the world, irrespective of the size of families.

In families with four dependent children or more, the figures show that with regard to beef the average consumption was only 3 oz per head compared with 9 oz for ordinary families or families with no children at all. That is one-third consumption. It is appalling that there should be this great disparity between larger families and smaller families. The comparison for bacon is 2 oz compared with 5.8 oz—that is nearly one-third. We know that fresh vegetables are important for children. Consumption for larger families—presumably these are the poorer families—is 8½ oz a week compared with 24 oz for families with no dependent children or very small families. That is an enormous difference. With regard to cheese it is 1.8 oz compared with 4.8 oz—again three times the difference. Larger families consume 2.6 oz of butter compared with 6 oz in other families.

Consumption is falling, and has been in the last 12 months, yet the amount of money being spent on food by average families is increasing sharply. In 1976 the average household spent £4.49 per week per head, and the figure rose last year to £5.05. That is a very big increase when one relates it to the fall in consumption. It is a startling and serious fall for the larger and poorer families of this country who, according to the standards of the FAO and the World Health Organisation, are now suffering from malnutrition.

One of the other mischiefs of the CAP is that it drives an increasing wedge between the producer and the consumer. As someone who tries to represent, no doubt very inadequately, the views of more food producers in this country than any other hon. Member—I am told that, according to the census, more people in my constituency are engaged in food production than anywhere else—I believe that it is indeed a very serious matter. There is now a growing disquiet among farmers about the future, so long as we are tied to the present system of the CAP.

The first fact—and this is essential knowledge for every farmer—is that all the items of food that we can grow best in this country are now in structural and chronic surplus in the Community. Those who have been in farming know that we have been able to maintain our livelihoods only by expanding year by year. When I started as a pupil on a dairy farm we had only 15 cows. That would he derisory now. That same farm now has about 75 cows. Incidentally, the livelihood of the farmer is about the same, but—and this goes for every farmer in the country—the fact is that he has been able to maintain his livelihood only by expanding production year after year. Only in that way has he been able to meet the ever increasing costs of machinery, feedingstuffs, fertilisers and all the rest.

If we are to be so optimistic as to believe that from now on we shall have no more inflation, and that all those costs which the farmer has had to bear—and must bear from now on—will remain the same, then we can perhaps sit back and say that we need not worry about expansion and that we can go on having existing herd sizes, yields from our fields and so forth. I do not think that anyone can seriously assert that inflation will stand still from now on. We must expect a rate of inflation of perhaps 10 per cent., 15 per cent. or more for several years to come. This means that the costs which farmers must bear will in a few years be perhaps 20, 30 or 40 times greater. That is quite a realistic figure when one compares how prices have increased in the last five or six years.

We therefore have to ask ourselves how we shall be able to pay these higher costs which must include increased wages. Wages on some of our farms are still a disgrace. On some of the arable farms in my constituency farm workers are eating less and less, and their families are the very ones to which I referred.

Therefore, farm wages must go up very substantially in order to keep pace with inflation. This can be done only either by increasing our farm gate prices within the CAP or by expanding our production as we have done in the past. I find it very difficult to believe that the latter course will be possible so long as we have the present excess production of the very items that we are most efficient at producing. The difficulty is made much worse by the great potential that exists in Western Europe. It is easy to knock Continental agriculture. We have a mixture of the most efficient and most inefficient agriculture. I think the hon. Member for Fife, Central (Mr. Hamilton) and others have seen that for themselves. There are some of the most efficient farmers in the world in the Paris basin. The hon. Gentleman referred to some very profitable holdings. But the Paris basin was not such wonderful farming land in days gone by. It has been made good by amalgamation, and productivity has been increased by the use of the kind of machinery that we have in East Anglia and considerable use of fertilisers.

Great areas of Western Europe can do what has been done by the Paris basin, the Po valley and other areas. Flying over Germany, for example, one sees many fields down to permanent pasture, building up a great bank of fertility. Once those little holdings are amalgamated, with assistance from the guidance fund such as we have had, the tractors and combines can go in where now only horses are used.

I do not see how we can possibly say to Western Europe "We have expanded in the last 30 years but you must stand still. Your farmers must not employ our methods. You will not have the combines, the fertilisers and the large dairy herds that we now have." That is not a realistic view to take.

We must now look for a major expansion of food production in Europe. This matter was touched upon by Mr. Roy Jenkins in a speech to the Food Manufacturers Federation in London on 27th September 1977. He said: European agriculture has tremendous productive potential. If average yields of crops and livestock were brought up to the level of the most efficient, the increases in output would be enormous. But if nobody wants to consume the additional output, if there is to be no market for it, we shall have wasted our resources. Those last words are an understatement. Thus, I am convinced that we must take more and more account of future demand for food and for different types of food in Europe. But consumption of food on the Continent is now static—indeed, declining a little, as it is in this country.

There is no evidence that our food consumption will increase. So we face the prospect of an enormous expansion in production of the kinds of food that we can grow best in this country, coupled with a static consumption by those who live in the EEC. I see great difficulty in solving this delimma which will face our farmers if they wish to expand.

It is not a sensible proposition to export those surpluses. It will cost a great deal. The hon. Member for Fife, Central referred to the colossal figure of £2,000 million which is already to be spent this year on subsidising exports of dairy products. That is not the whole of it, of course, since we shall dump on the world market a great deal of wheat, which will cause awful trouble to the major wheat producers.

It seems that the United States may once again embark on a policy of setting aside acres, and of coercing its farmers by saying "Although you can grow wheat more cheaply and efficiently than anyone else, we shall pass a law to restrain you from growing as much as you would like." We remember how Australia, the Argentine and Canada embarked on similar policies of coercing their farmers, the most efficient in the world, to grow less food. That is the main reason why a year or two later there was a great wheat shortage—because it coincided with the EEC stopping the dumping of wheat, not releasing it on the world market. As a result, many millions went more hungry than they should have done.

Dumping is not the answer. It will invite retaliation. Already the United States is threatening various retaliatory steps if the EEC pursues that policy. It will be an unfair burden upon the taxpayer. We on this side often argue in our weekend speeches that the British people are over-taxed. That is true, and I do not see how we can tell our constituents that it is fair that each average taxpayer should continue to pay £15 a year towards export subsidies so that this food can be dumped on the world market.

If we are talking about cuts in taxation, as I hope my party will continue to do, I hope that this will be right at the top of our priorities. It is the kind of expenditure that we can do without. It is not only harsh on the taxpayer: it causes appalling problems to world food producers and puts many a good farmer out of business.

One third of the dairy farmers of Australia—that is only one country—have gone out of business because of the way in which the export subsidies are working and because they have lost their markets in this country. That perhaps is one of the answers to my hon. Friend the Member for Devon, West: of course we shall not get the alternative supplies immediately; of course they are not there at the moment if we have already driven them out of business.

A third of Austria's dairy farmers is a large number. They are rightly very bitter about some of us on this side of the House, as well as some Labour Members, who have failed to argue the case for the Australians and others. They have now gone out of business because of our attitude and the way in which we have completely overlooked their interests. If my hon. Friend the Member for Devon, West met some of these farmers, who were just as efficient as he is or as I am, he would understand why they are so bitter about our neglect and why they do not understand what is being said by him about the lack of suppliers in the world.

As I said in my hon. Friend's absence, the supplies would be there if we demanded them. Demanded means a willingness to buy at a price which affords the producer a reasonable return. The supplies would be forthcoming—not immediately, of course; one cannot recreate a dairy herd in 12 months—if we wished it to happen. So the proposal to export this food is not a practical one or one that we should countenance.

The third possibility is to devalue the green pound. We have been through that argument well enough and I do not want to rehearse it again. Obviously, however, that will cause some reduction in consumption and an increase in production in respect of the very items of which we now have a structural surplus. Although it might be desirable for our farmers to have that, one cannot see it being remotely likely that that decision will be made.

That would require legislation—and legislation passed not by this House but by the supreme law-making assembly to which we are subordinate, the European Council of Ministers. So long as we are in a minority of one, it is most unlikely to say the least, that we shall get a unanimous decision in favour of a devaluation of the green pound, which would be adverse to them and prevent them from expanding as they are entitled to do to catch up with us in the Common Market.

The fourth possibility is the one canvassed by the European Consumers' Union and broadly supported by the Socialist group in the European Parliament. I agree with its ideas. I believe that it wishes to remove the wedge that is being forced between the consumer and the producer.

The proposal is that we should work towards the alignment of green currencies and simultaneously have a reduction in common prices of 10 per cent. That is a very large reduction and without doubt it would be opposed by the producers in Germany, France and Italy. I do not see how we can expect that solution, sensible as we may think it is. It would create a genuine common market for agriculture and give us advantages which the CAP could give in such circumstances.

If the decision is to be made by the Council of Ministers, it must look over its shoulder and recognise that 15 per cent. to 20 per cent. of the electors are steeped in agriculture. It must have regard for the kind of feelings and instincts portrayed so vividly by the hon. Member for Fife, Central when he spoke about his visit to a French family. I do not see how he can expect a unanimous decision from the Council to enable such a policy to be pursued.

If those are the four possibilities, I am driven to the view that not one is feasible for four, five or even six years or more, by which time the CAP will be in such a chaotic mess that it will destroy itself. Personally I look forward to that day. The sooner the chaos comes in that sense, the better. I see no chance, given the diversity of interests among the Nine, for us to reform the CAP in a way that would best serve the interests of farmers in this country, and still less of consumers.

1.53 p.m.

Mr. John Lee (Birmingham, Hands-worth)

Not for the first time I am in agreement with a great deal of what the hon. Member for Holland with Boston (Mr. Body) said in his interesting and detailed analysis of the CAP's deficiencies.

I join with other hon. Members in thanking my hon. Friend the Member for Bradford, South (Mr. Torney) for choosing this subject for debate. I also thank him for almost everything that he said. If I have any criticism at all it is one small but not unimportant one. He said when he opened that he was not attacking the fundamentals of Common Market membership. He said that his position was well known—that is true—and that he was seeking to promote the reform of the system, implicitly within the structure of our membership.

In my view, with the best will in the world, that is not possible. The wonderful efforts of our Minister for Agriculture—for whom we all have a great deal of admiration on this side of the House—show that whatever he tries to do not only is he abused and called a bully boy but he finds that the amount of success meeting his efforts is very limited.

I draw attention to an aspect of the law which is fundamental to this and supports my contention, namely, that we cannot hope to reform the CAP from within. In The Times weekly European law report for the week ending 10th March this year there is a case involving the Italian tax and revenue administration and S.A. Simmenthal (Monza). The Italian court decision had been subjected to review by the court of the Community. The matter involved was the import into Italy of a quantity of beef which had been subjected upon entry to a health tax. The importer claimed that this was not in keeping with the conditions of the EEC Treaty abolishing quantity restrictions and the tax of equivalent effect. The report says: The health tax had been levied by virtue of Italian legislation. The importer had brought an action against the Italian Tax and Revenue Administration before the Pretore at Susa, who had referred the case to the European Court. The subject matter of the dispute is not important. What is important, and what the Government should bear in mind especially now that the Euro-elections Bill is making its way through another place, is that the judgment of this court makes it clear that any legislation, whether more in anticipation of a decision of the court of the Community, or in anticipation of any Common Market legislation or made subsequently in order to reverse that decision, is fundamentally contrary to the provisions of the Treaty, and for that reason cannot be sustained.

Therefore, those hon. Members, including a number who are genuinely critical but not anxious to part company with the EEC, who take comfort from any measures incorporated in the European Assembly Elections Bill and other legislation in the hope of correcting or guarding against mischief forthcoming from European legislation must bear in mind that fact.

As I have said on a number of occasions, we shall soon no longer be able to avert our gaze from the fact that where there is a fundamental clash between what is decided in the Common Market and what is decided in this Parliament, in theoretical law at least the decisions of the Common Market, however damaging to this country, however absurd and contrary to our interests, will prevail. Therefore, if we are as honourable as we should be, we must be prepared to break out of the system and face up to defying the authority of the EEC.

Mr. Gould

Just to reaffirm my hon. Friend's argument, I must point out that in an earlier decision of the European Court of Justice it was held that even the basic human rights provisions of the German written constitution cannot prevail against the Commission regulations.

Mr. Lee

That puts my point in an even more dramatic light. Those of us who are fundamentally opposed to this organisation have always feared such things.

Mr. Shepherd

Is not the hon. Member overlooking the fact that each Council of Ministers includes one of our own Ministers and unanimity is required for its decision?

Mr. Lee

That may apply in some instances, but it does not apply to the Commission—that strange hybrid body which is the focal point of power and which is non-responsible and as secure as the Civil Service while arrogating to itself the powers of Ministers. That is the heart of the matter. I do not think that the hon. Member should overlook that.

Several hon. Members have already said that we are one voice among nine. Soon we could be one voice among 11 or 12. In varying degrees all the applicant countries are undeveloped. This is the problem that we face in trying to square the circle and reach an accommodation or compromise, which my hon. Friend the Member for Fife, Central (Mr. Hamilton) suggested was the answer to the problem. We have a modern, basically efficient agriculture system brought about under the stimulus of war and regularised by the 1947 Act.

I make due allowance and give due credit to those countries in which improvements have occurred. The hon. Member for Holland with Boston correctly referred to this, but most of the countries in the Common Market are high-cost producers and we are low-cost producers. There is no way of producing a system which gives equity to both within the present arrangements. That is one reason why we must face up to breaking away.

The Minister of Agriculture has fought hard. If I criticise him at all it is in the context that he is incomparably better than any Agriculture Minister that we have seen since Tom Williams just after the war. Anything that I say will therefore be minor criticism.

I believe that the Minister was wrong to discontinue the pig subsidy. He made a mistake when he undertook to obey the decision of the court of the Community directing us not to assist our own pig producers. He must realise that he should defy the Community. The sooner he does that the better. The Minister was also wrong to attempt to devalue the green pound. I think that I am the only Member on this side of the House who abstained from voting on that proposition. We had no business whatsoever to devalue the green pound and so add gratuitously, even to a quite small extent, to our own consumer costs.

Although the Minister was wrong about that, it does not detract from the fact that he has set about the task of trying to rescue an absurd situation with a will and the right intention. Surely it is better to send to negotiate with the other side someone who is prepared to be tough, even if he may be forced to give way in the end, than to send someone who is a softy and who is known by the other side to be a softy and a pushover.

Does the hon. Member for Devon, West (Mr. Mills) suggest that we should send a Minister who is known to be hostile because the Common Market will be that much more difficult and will react merely out of pique?

Mr. Peter Mills

I do not say that. I say that the Minister should be extremely tough in his negotiations. That would give him a better chance of getting what he wants. If one is a member of the European club, it is better if the Minister shows that he is pro-European and wishes to see the Community succeed.

Mr. Lee

The hon. Member confirms my suspicions. His answer is that the Minister should be a softy, that he should be accommodating and, to use an example from rather distant history, he must be an appeaser. The hon. Member believes that if he is these things he will get away with it. The hon. Member for Devon, West is becoming sensitive about this matter, but that is what he is asking us to do.

These strictures that I make regrettably apply to the present Minister's predecessor who, thankfully, has been put out to grass.

Mr. Michael Jopling (Westmorland)

Cheap.

Mr. Lee

Whether it is cheap or not, it is true. It was also expensive in one sense because we had that Minister while the renegotiations were taking place and they did not amount to much.

What are the fundamental deficiencies of the system? First, almost every major food import commodity has been obtain for most of the time in the world market at a substantially lower price than in the Common Market. But it could be said that one cannot tell exactly what the position would be if there were a free market.

Mr. John Wells (Maidstone)

rose—

Mr. Lee

I have given way enough. The hon. Member came into the Chamber late. He should contain his patience and talk about horticulture later if he wishes.

The stockpiles which have developed have the disadvantage of producing enhanced prices without providing a strategic stockpile. I have heard hon. Members trying to defend them as if this were a preparation for a war and as if we were having to deal with U-boats rather than with the European Commission. That attitude is silly and it is made worse by the obscene policy of downgrading and polluting certain foodstuffs, rendering them unfit for human consumption and turning them into pig food.

It is also silly and almost as obscene to release on to certain selective markets at sub-economic prices foods which are needed elsewhere. Some such foodstuffs have been sent to the Soviet Union at sub-economic prices instead of being sent to parts of the Commonwealth which are poverty stricken and for which we still have a residual moral responsibility. Indeed, this is compounded by, for example, the release of sugar on to the market which jeopardised the exports of Barbados.

In the under-developed world revenue from exports is not only important for the balance of payments. Many of them are near mono-culture countries. When their exports are damaged, they are damaged disproportionately. Such action causes damage to countries which do not have much economic cushioning.

Mr. Jopling

The hon. Member was talking about a situation which he described as obscene. He talked about putting colouring matter into certain foodstuffs so that they are used as animal food. If he thinks that it is obscene, why did he not speak up before we joined the Community when his Government did exactly the same thing—and still does—with potatoes which, when they are support-bought by the Potato Marketing Board, are treated in the same way? They are taken from the human market and used for livestock feed. Why did he not complain about that?

Mr. Lee

The hon. Member suffers from amnesia. I have attacked this policy, inside and outside the House, ever since I first came to the House in 1966 and as a parliamentary candidate before that. I suggest that the hon. Member looks at the references in the Library.

One of the other failings in the system is that there is no arrangement, as there was under the 1947 Act, for the dispossession of the inefficient farmer. We dispensed with this provision before we entered the Common Market. Between 1947 and 1962 there was a provision which was part of the quid pro quo for a guaranteed market payment system whereby in certain exceptional circumstances farmers who were grossly inefficient and were proven in the courts to be so could be dispossessed. Not many cases were brought successfully and maybe that was an indication of the efficiency of the farming industry, but the deterrent was there. It is interesting that, when we began to consider the possibility that we would be threatened with entry into the Common Market during the Macmillan days, certain members of the NFU deplored the fact that this provision was to be ended and suggested that it should be retained as a deterrent against bad farming, even though it had not been used very often and was not likely to be used often.

A number of meetings are due to take place this month in connection with the annual review. We are faced not only with the phasing in of a system of levies, which make our food prices unnecessarily more expensive, but with the Common Market annual review, which takes place in just the same way as we used to conduct our own national review.

Does the Minister intend to resist further rises in prices across the board? My hon. Friend the Member for Fife, Central, claims to be what he presumptuously calls a European—he means a Marketeer—and I asked him what would happen if, despite all the Minister's efforts, attempts to prevent unnecessary increases were unsuccessful. What will Ministers do? If we are not prepared to defy the Community, it will know that, however much the Minister fights, if it persists it will get its way and we shall suffer accordingly.

One of the many unfortunate side winds of the CAP is the rise in farm prices and the value of farm land. It has always been difficult for people to enter the farming industry in this country. Getting capital has not always been easy and high interest rates have made it that much more difficult. Despite the mitigating effects of various credit arrangements, it has not been easy except for millionaires who, as we used to say, were "ploughing in Schedule A" and wanted to use farming as a plaything. I am not suggesting that the activities of business men who have taken up farming as a sort of tax hobby have not produced good farming. No doubt they have. But we should be concerned with trying to promote a policy to encourage people to enter farming.

Mr. Wells

Tell us about the Prime Minister's pigs.

Mr. Lee

The hon. Gentleman can talk about that later. He has ants in his pants, but if he will sit down and relax, I shall finish. Otherwise, I shall go on much longer, so he had better keep quiet.

Do the Government have a policy in regard to promoting new entrants into farming, and how can that be squared with a policy that results in unnecessary increases in land values?

The European elections are intended to give a spurious legitimacy to the Common Market, which is concerned more with agriculture than anything else, since 70 per cent. of the Common Market's revenue is devoted to agriculture in one form or another.

The European Assembly Elections Bill is of the greatest importance. Whatever I may be doing politically after this Parliament comes to an end, I shall campaign against any member of my party who stands for election and I shall encourage anyone to sabitage the elections whenever they take place. I do not mind where that is known or how it is received. I agree with the right hon. Member for Down, South (Mr. Powell), who said that we should treat as our personal enemy anyone who supports elections to the European Assembly. I identify entirely with that sentiment.

2.16 p.m.

Mr. John Cockcroft (Nantwich)

We are discussing a blockbuster of a motion which includes almost everything except, perhaps, original sin—unless one regards the common agricultural policy as being defined in that way. I must also point out that the motion is ungrammatical in referring to both producer, consumer and the United Kingdom economy". As I said in our last debate on the CAP, many hon. Members on this side of the House who have been pro-Europe for a long time would like to see major revisions of the policy, but the motion is tantamount to saying that we should do away with it and start again—or not start again, if that is the feeling of the whole of Europe.

There are many disadvantages in the CAP, but the fact that it accounts for more than four-fifths of the Community's revenue is a reason for those who believe in Europe to maintain that it should be retained. It is an intrinsic part of the Europeon edifice, however much it should be, and will be, revised in coming months and years.

There is much talk in our debates, sometimes late at night, about harmonisation. This is of the essence in the European ideal. In the context of agriculture, I suggest that perhaps we need a harmonisation of Ministers. The other Ministers who go to the Council are only Ministers of Agriculture. In this country, uniquely, our Minister, whoever he is, has to deal with quite contradictory interests in the context of a policy that was evolved at Messina in 1962 and afterwards and was not geared to a country only 3 or 4 per cent. of whose population work on the land. I should like to see a standardisation of the role of the so-called agriculture Ministers within the context of the Council of Ministers. As Lincoln said—and this refers to any Minister of Agriculture: A house divided against itself cannot stand. However, I commend the Minister's stand on the Milk Marketing Boards. For many reasons, the boards are well suited to the interests of the producer and the consumer in this country. This has been well rehearsed in this and in many other debates on agriculture.

Reverting to the conflict of interests faced by the Minister, it is difficult to reconcile conflicting views even in the case of producers of milk and dairy products. Should prices be higher or lower—it depends whether one drinks milk or produces it—should produce be more widely available or less available? There are inherent contradictions of interests in this context. Who decides and how?

In other countries, there are usually two Ministers, one protecting one interest and another protecting the other interest. I do not want to commend an increase in the size of the payroll vote, which is already much larger than I would wish, or to suggest that any more senior Ministers should be appointed at high salaries. However, there are exceptions to every rule. Although the proposition might increase the size of the Cabinet by one, or decrease it by one, depending on whether the two Ministers were within or without the Cabinet, there is quite a strong case for saying that the present impossible job should be separated into two.

2.20 p.m.

Mr. Bryan Gould (Southampton, Test)

We have spent a good deal of time on the CAP in recent months, but my hon. Friend the Member for Bradford, South (Mr. Torney) is entirely justified in raising this important matter yet again.

The CAP is overwhelmingly the most important feature of the Common Market. About three-quarters of the Community's budget is spent on it. Its impact on the United Kingdom, especially as we are the only major net consumer of food, is peculiarly dramatic. So much is that true, that I confess that sometimes I am puzzled by those who say that they are still staunchly pro-Market although they accept that the CAP needs fundamental reform. It may truly be said that the Common Market is nothing more than the CAP dressed up with a few trimmings.

The CAP has prompted a peculiar debate within Britain and in this House that takes place nowhere else. The debate is centred around the question whether the CAP is about high food prices. If we were to ask someone on the continent of Europe, whether he were a farmer, consumer or economist, for example, if that were the case, he would reply "Of course it is. That is the whole point of it. That is why we need it." If he thought that we were particularly dim about these matters, he might go on to explain that it is because European food prices are so much higher than food prices elsewhere that we need the whole ramshackle structure of the CAP, including intervention prices, import levies, custom duties and surpluses. He would explain that all these things are necessary because European food prices are roughly twice as high as world food prices.

That is self-evident to even the most blinkered onlooker in respect of some major food imports such as dairy produce and meat. It is also true for major cereal imports. I read, for example, in the Commission's own report of December 1977, that by the beginning of 1977–78 the import levies for all the major cereals were greater than the world price for the cereal itself. That means that world market prices were less than half the Community's threshold price.

I hope that the ridiculous debate about whether the CAP means high food prices will come to an end. No one needs to rely on my authority as the Commission itself provides all that is necessary. That is true now and in the foreseeable future. Climatic and geographical factors make it possible for the North Americans and Australasians to produce food so much more efficiently than we can. That will continue. That price disparity will remain year in and year out.

That means that the housewife is paying much more than she need for the food in her shopping basket. Of course, we must bear in mind that so far she has been protected against the full impact of higher prices by the green pound. However, that will now come under increasing pressure for devaluation. The housewife is paying higher food prices, and higher prices are having an important effect on the whole structure of industrial costs in this country.

As the cost of living rises so does the pressure for increased wages. In that way our industrial costs rise and we become less competitive as a manufacturing nation. We also have to pay substantially more across the exchanges. In balance of payments terms it is costing us hundreds of millions of pounds to belong to the CAP. The policy is bad for consumers and for British industry.

Is the policy really in the interests of farmers? That is a question to which other speakers have turned. I think that farmers were persuaded that the CAP would provide for them a substantial bonanza. That was always a naive view. If farmers ever thought that the CAP would survive without green currencies when, for good reasons, they had been introduced long before we became a member of the Community, they were taking a naive view. It seems clear that the CAP would not have survived if currencies had been kept at their original parities.

It is also clear that farmers must now begin to perceive, if only dimly, that if we were ever to achieve a truly common market in agricultural produce, the overwhelmingly important factor would be that for all the produce that we grow as an agricultural nation there is already a surplus in the Common Market as a whole, with the possible exception of sheepmeat. In other words, there is no pressure for expansion, to which the British agricultural industry looks, but pressure for reducing production. The whole pressure and thrust of a truly common agricultural policy would be to try to reduce surpluses. We are already seeing that pressure in operation in dairy production.

The hon. Member for Holland with Boston (Mr. Body) has already explained that as other areas of Western Europe become more efficient, the likelihood is that the concentration of production will find itself situated in other parts of the Common Market rather than in Britain. The only area of our agricultural industry that we can regard with any confidence or equanimity in terms of a truly common market is grain production in East Anglia. The prospects for the rest of our farming industry are grim indeed if we should ever achieve a common market.

The one argument usually advanced by supporters of the CAP, who may accept all the disadvantages that I have described, is that it is worth paying higher prices to maintain security of supply. Time and again we hear the parrot cry that there is no longer cheap food available. No one is arguing that food prices will ever again revert to the levels that existed 10 years or 15 years ago. All prices have risen substantially. However, when those on the side of the argument that I am advancing talk about cheap food, all they mean is food at substantially lower prices—only half of the prices—than those prevailing in the European Community.

The hon. Member for Devon, West (Mr. Mills) introduced into the debate a rumour that New Zealand is unable to meet its production commitments. It would require strong evidence if that rumour were to be sustained in the face of clear and repeated statements by New Zealand Ministers about the importance that they attach to continued access to this market. However, even if such rumours had some foundation, that could be only as a result of a most cruel and unfortunate Catch 22 situation into which the New Zealanders have been forced by the CAP.

Let us look at the problem from the point of view of the New Zealanders. They are being told that they must diversify production and their markets. They are told that their access is to be reduced and that their quotas are to be reduced and eventually eliminated. They are told that if they want a decent price they must reduce the volume of supply. In all these circumstances if they try their best and narrowly fail to judge correctly the market and the demand, are they to be told that they do not need the market or that they are unable to produce? That seems to be a cruel and completely unfair argument.

If we are considering security of supply, we must bear in mind the Common Market surpluses. If we were not a member of the Common Market, the surpluses would not disappear. They would continue to exist and they would grow even more rapidly. I believe that the only reason that we were allowed into the Community was to soak up the surpluses that could not be dealt with in any way. If we were not members of the Common Market, there is every chance that we could benefit in the same way as the Russians by obtaining our share of the surpluses at knock-down prices.

I challenge anyone in the Chamber who has serious doubts about the continued availability of much cheaper food supplies than we are currently drawing upon to drop a line tomorrow or today to the New Zealand High Commission. I invite him to ask "Are you interested in supplying to the British market on a long-term and guaranteed basis some of the basic and necessary imports of foodstuffs, notably dairy produce and meat? Can you do that at a price substantially lower than a price that is foreseeably available in Europe?" I guarantee that by return he will get the brief answer "Yes, please", because that is what the New Zealanders, the Australians, the Argentinians, the Canadians and all our other traditional suppliers want. They want continued access to this market.

A further consequence of the CAP, which is related to the point that I have just made, is that we are progressively being forced to break off our trading links with our traditional suppliers. That means a distortion in what has always been a natural and most advantageous trading pattern for this country. In past times—indeed, for a century or more—we bought the cheapest and most efficiently produced food and raw materials around the world. In return we obtained preferential markets for our manufactured goods. As a result of Common Market membership, we are now having to buy more expensive food from the self-same people who are ripping the heart out of our manufacturing industry. That is the explanation for our swollen trade deficit with the Common Market.

I believe that the common agricultural policy is bad not only for the British consumer and farmer but, as I am sure Opposition Members will concede, for Europe itself. How can those who with high hopes embraced the European ideal, as I understand they did, now argue seriously that the Arc of the Covenant of all their hopes is a common agricultural policy which is so irrational, wasteful and expensive? I believe that it is in the interests of Europe as well as of this country that the common agricultural policy should undergo a fundamental reform.

What is to be done? I believe that my right hon. Friend the Minister of Agriculture must pursue his sterling efforts in the two directions in which he is trying to move. He is trying to bring about lower real prices and to preserve and extend our national freedom to pursue our own agriculture policies. That means that he must be supported, and deserves support, by the House in his efforts to resist price increases in the farm price review and to protect devices such as the deficiency payments system.

But I believe that he must go further than simply trying to resist the difficult aspects of the policy. If the policy is to be reformed, it will be effected only as a result of a comprehensive and well-thought-out programme for reform. I believe that there are several aspects to that programme which bear consideration.

The first—here I agree with the policy which I believe has been adopted by the Socialist group—is that intervention prices should be fixed in line with the needs of the efficient producer. If that leaves the inefficient producer with an inadequate income, that is a problem for social policy and must be dealt with by national Governments. There seems no reason whatsoever why the British consumer and taxpayer should subsidise the French Industrial Revolution.

Secondly, I believe that intervention prices should be fixed at the same time as quotas and that beyond those quotas the intervention prices should no longer be available. That, indeed, would be a major guarantee against excessive production of over-expensive food which no one can afford to consume.

Thirdly, I believe that there is some merit in the suggestion that the CAP could busy itself with fixing prices for food which internationally traded, but that, within that framework, national Governments should have freedom to allow domestic prices to find their own levels or to fix them in the interests of the domestic economy.

I believe that unless the common agricultural policy is tackled in a fundamental way and unless the various aspects are recognised as reflecting an unacceptable underlying principle, we shall continue to suffer unacceptable damage, I am not particularly sanguine—here I agree with the hon. Member for Holland with Boston—that the effort at reform will eventually succeed, but the effort must be made. If that effort does not succeed, the common agricultural policy will have condemned itself by its own irrationality.

2.35 p.m.

Mr. Colin Shepherd (Hereford)

I should like to add my congratulations to the hon. Member for Bradford, South (Mr. Torney) on raising this subject today. It is a monumental subject to try to tackle on a Friday, but we do not often get the chance of being able to tackle it free of some specific issue, such as the fixing of prices. Therefore, I welcome it. However, I am critical of the wording of the motion. I think that it sets out to do too much and to tackle matters in too great a detail and that it repeats itself.

My attitude to the debate must be from within the context of being a European believer. I take the view that the common agricultural policy must be seen as part only of the European concept. Admittedly, it accounts for 65 per cent. of the budget, but the remainder of the policies have yet to be and must be developed with the maximum expedition and diligence so that the relative proportion of effort consumed by the CAP begins to take its proper share.

The CAP and the EEC are not syonymous, but we must pay tribute to the way that the CAP has succeeded in a number of its objectives over the last 20 years. It is easy to go ahead and to forget what it has achieved.

The hon. Member for Cardigan (Mr. Howells) drew attention to various aspects of the objectives of the CAP set out in the framework defined by Article 39 of the Treaty of Rome.

The first objective is to increase agricultural productivity by promoting technical progress and by ensuring the rational development of agriultural production and the optimum utilisation of the factors of production, in particular labour". We have only to look over the 20 years of the operation of the CAP to see that the numbers directly involved in agriculture have dropped by 50 per cent. Therefore, we have only half the work force involved in agriculture compared with what we had before. I think that is something to shout about.

The size of an average holding in the European Community has increased to about 42 acres. I am not good on hectares, so I shall stick to acres. The United Kingdom holding is now an average of 153 acres. That is a tremendous improvement in developing the structure of European agriculture. That falls into line with the first objective.

The second objective is thus to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture". If we have a fixed market for foodstuffs—for the sake of argument at this point, let us not worry whether it is declining or increasing slightly—we can improve individual returns to people operating inside that market only if we reduce the numbers in it. To that extent, the CAP, having reduced the numbers of people in agriculture, has been able to improve the wages of those involved in it. However, it still has a long way to go, as was pointed out by my hon. Friend the Member for Holland with Boston (Mr. Body).

The third objective "to stabilise markets" is coupled with assuring "the availability of supplies" and ensuring that supplies reach consumers at reasonable prices. It is easily forgotten by those who wish to detract from the performance of the CAP that, during the years 1973 to 1976, world prices outside the Common Market were substantially higher. We were protected by our membership of the Common Market.

When we discussed the matter during the referendum campaign in 1975, that was apparent. If we came into or confirmed our membership of the Common Market because world prices happened to be higher at the time, we cannot try to have our cake and eat it by wanting to opt out as soon as prices get lower on the other side. We must have a certain commitment and honesty about the matter.

The question of the conservation or continuity of supplies is important. We forget easily the traumas that we went through at the latter end of 1973 and the beginning of 1974 when, as a result of trying to get away with paying less than the market price for sugar, we found ourselves in a spot of bother. The stocks of sugar held within the EEC in 1972 at 3.9 million tonnes represented 20 weeks' supply in the Community. But by late 1974, in order to bail us out of our wish to get something for nothing, we were able to draw on these stocks. By the end of 1974, even having used them with good husbandry, we were facing the prospect of shortage. Continuity of supply was achieved, therefore, within the European framework, although we were only just in time to take advantage of it. Similarly, wheat stocks in the EEC helped to stabilise food prices when they went soaring up in 1972.

There have been achievements, therefore, in securing the necessary continuity of supply and stability of prices. The hon. Member for Fife, Central (Mr. Hamilton) pointed out that since we had been in the Common Market the increase in prices attributable to the Common Market was not quite 12p in the pound. We must put that into context, since in the same period the prices of food very nearly doubled as a result of internal Government policies. The percentage increase attributable to Common Market membership is therefore nothing like the percentage attributable to other sources.

The successes of the common agricultural policy exist therefore, but that is not to say that the policy is right. It is an organic structure and it must be developed organically as we progress. We are all involved in the issue and we are only humans with human needs and ideals. These must be taken into account as we meet changing world circumstances. There are weaknesses. Areas of failure have been due to the conflict of national political requirements with the needs of the European concept.

On the weaknesses, there is the ability and very often the penchant for the Governments of member States to misuse the instruments of the policies either for political or for social purposes. Over the last two years we have seen a classic example of that with the green currencies. It is intolerable that any Government should have sought to duck out of their responsibilities for allowing a currency to drop as much as it did, due to their own policies, leading to a 42 per cent. differential in the green pound rate.

It is all very well to scream that the method of calculation of pigmeat MCAs is unfair, but the stresses that have arisen because of that have largely resulted from Government policies. If the Government were to take a more honest line and face the consequences of their policies, the price of food would be related more to those consequences. The green pound differential and the monetary compensation amounts would not be so high, and we would not have destroyed the bacon and pig industry, or put it under attack, as we have. How the hon. Member for Cardigan can congratulate the Minister on protecting the producers I do not know.

Mr. Geraint Howells

I congratulated the Minister on his stand in Europe against his counterparts and on defending the Milk Marketing Boards. We have accepted too many orders and directives from the European Parliament in the last few years.

Mr. Shepherd

That was only part of what the hon. Member said. He congratulated the Minister on protecting producers and on maintaining the high differential in the green pound—

Mr. Geraint Howells

No. Read Hansard.

Mr. Shepherd

I shall.

Mr. Spearing

Is it not a fact that in seeking to protect producers the Minister was taken to the European court?

Mr. Shepherd

The circumstances which led him to have to give a temporary subsidy to the pig producers were created by his Government's reluctance to come to terms with the financial consequences of their industrial and other policies which resulted in the slide in the value of the pound. They cannot get away from that.

Member States have sometimes been reluctant to come to terms with the practicalities of the solutions required. In this respect I refer to the need to develop the spread of milk marketing boards throughout the Community. This was referred to by the hon. Member for Cardigan, and to this extent I very much agree with him. But he said that he thought that the position of the Milk Marketing Boards had been secured. That is certainly not my view. Perhaps I may quote from a Press release from the Federation of Agricultural Co-operatives, which alas is undated, referring to the BBC Radio 4 programme "Farming Today". I do not know which day it was. It appeared to be at odds with the European co-operative organisation in Brussels, the COGECA. It says As a result of pressure from the U.K. the position of COGECA was changed significantly despite strong opposition. In place of an outright rejection of the Commission's proposals, a compromise was agreed under which other EEC Member States, while recognising that there was a U.K. problem which must be solved by the Community as a whole, would not themselves be compelled to accept the concept of Marketing Boards. It goes on It must be understood that the COGECA view is not in conflict with the retention of Marketing Boards in the U.K. but it is opposed to the extension of the concept of marketing boards throughout Europe. The practicalities of this for marketing boards mean that the Governments should themselves promote the concept of marketing boards throughout Europe. Until there is an organisation which can develop the marketing expertise of the Milk Marketing Boards, sales of liquid milk will not be increased on the Continent to the levels achieved here. Only when that level of sales has been achieved shall we be able to begin to tackle the essential question of overall surpluses.

There is an added dimension in the weaknesses of the CAP, and that is the use of the CAP to tackle social problems. The sooner the Community deals with the inter-relationship of agriculture problems and social problems, the sooner will matters begin to resolve themselves into their proper perspective. We tackle the problems of the hill farmer, using the less favoured areas directive to bring aid to this area. An adequate case has been made out for helping the marginal lands. My constituency on the borders of Wales has substantial areas of marginal land which suffer from all the problems of rural depopulation and deprivation.

The proper application of the EEC's social policy to this type of area is the correct approach and is preferable to trying to shape a rather blunt instrument out of the CAP or trying to define where marginal lands begin and end.

I have described some of the weaknesses, and I wish now to outline areas where there is room for improvement. The first of these must be financial. I want to see as soon as possible the adoption of the European unit of account because that will reduce the impact of the fluctuations of currencies and to a large extent defuse some of the green pound and MCA issues. Will the Minister tell us the current position in Europe on the adoption of the unit of account? That issue is fundamental to our approach in the immediate term. I should like to see a proper recognition of the distortion of the green currencies in terms of resource allocation because of the damage which can be done to individual countries by short-sighted national policies. If we correct the use of the green pound that will stabilise our food industries This is very important. It will reduce the contribution to the agricultural budget of the country and will bring the commitments of the guarantee section and the guidance section of FEOGA, the guidance funds and the guarantee funds, into balance. At present they are heavily loaded in favour of the guarantee section, and this is not within the original concept of this funding.

The question of surpluses has been dealt with a good deal today. My hon. Friend the Member for Devon, West (Mr. Mills) specifically pointed out the desirability of maintaining good housekeeping reserves. There is no doubt that we have surpluses. Let us tackle structural surpluses in the way that the Community is going now. Let them not be incentives to produce commodities that are in surplus. That makes common sense and is good housekeeping. If we have a surplus to dispose of, let us dispose of it within the Community. It might not be the cheapest way, but it makes more public sense and more understandable sense, and it does not upset our friends in other parts of the world, such as the New Zealanders.

I am sorry that the hon. Member for Southampton, Test (Mr. Gould) is not present, because he pleaded the cause of the New Zealanders very hard. Perhaps he will read Hansard, and then we can discuss the matter later. I should like to put to him the difference of standards that sometimes comes about.

The New Zealanders are very much endeared to me, but as a manufacturer some years ago I used to export manufactured goods to New Zealand during the days when there was Commonwealth preference and my output to New Zealand was cut off arbitrarily because someone in New Zealand decided to set up in business manufacturing waste disposal units. That market was denied to me, and it has been denied to me ever since. The tariff barrier was such that I could not begin to sell in New Zealand. Therefore, if I appear slightly jaundiced about New Zealand, there is a background. My company was by no means alone in this experience. If one embarks upon a course of protectionism, one cannot complain if it is adopted against oneself.

Mr. Ronald Bell (Beaconsfield)

Was that after 1960, which was when New Zealand was being asked by the Government of this country to begin to readjust its economy in anticipation of Britain's deserting it?

Mr. Shepherd

It was in 1961, but at no stage has the position changed since then. I still cannot export there.

Mr. Torney

How can the hon. Gentleman expect to do that after the way in which we have treated New Zealand?

Mr. Shepherd

I do not expect it.

With regard to incidental surpluses, let us make certain that we retain a good housekeeping level before we start to sell off or dispose of the remainder. This is very important. The precedent that I described earlier is undeniable.

The improvement that can be made is in the public relations and common sense approach, always making certain that the Community and its instruments stand back, look at themselves and see how they are seen by the people in the member States. This is of fundamental importance to any group activity. At no stage must one become so involved that one cannot see how one appears.

There is a fourth point, a decompartmentalisation of the European structure so as to engage in closer co-operation between the various policy-forming groups. I am talking about industrial, social, overseas and even in due course, as the Community progresses, possibly foreign and agricultural, because they are all interwoven. I do not think that at present there is sufficient contact between the various sections of Europe. Many of the problems that we have are due to rigidity. If that can be broken down, the common agricultural policy will develop that much faster.

Fifthly, we should carefully examine whether there is scope for development of the concept of national measures within the remit of the CAP. But this can only be in line with Article 38 of the Treaty of Rome, which covers the freedom of movement of agricultural goods. Any such measures should not bestow a relative competitive advantage on member countries or industries within a country.

If those points can be overcome, possibly national measures could be taken. It may well be that the expansion of the concept of communication within Europe will cover that matter.

I want finally to share my concern for the future with those who have already covered the point to which I referred—the hon. Member for Fife, Central and my hon. Friend the Member for Holland with Boston. I am very concerned about what happens when all of Europe is producing agriculturally as effectively as the United Kingdom is, because we shall have a monumental problem to cope with. The time to tackle it is now.

I want to see a major debate developing involving all sections of the country. There are those who say that the only way to solve the problem is to opt out, to remove ourselves from the European concept. That is one point of view. My own is that the European concept is far larger than the CAP. We must try to tackle the matter inside the total European context of mutual security, of harmony for the future, of being able to hand down to future generations something that is stable and secure.

Many people have a part to play in this debate—national farmers' unions, COPA, the co-operative arrangements, the universities and the think-tanks as well as all political groupings and parties. We cannot buck this issue, because it is fundamental.

I do not pretend today to put forward any answers to this major problem. I say only that it exists and that we must face it, as it is the key challenge facing Europe today.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

In about one hour and three minutes four hon. Members would like to contribute to the debate, in addition to the two contributions from the Front Benches.

2.56 p.m.

Mrs. Audrey Wise (Coventry, South-East)

Whilst I appreciate what you have said, Mr. Deputy Speaker, I would point out that I have been here all day and that there are certain things that I shall say that will not and cannot be said by anyone else.

Some of us were lectured earlier in the debate about the need to be honest and put our cards on the table. We were told in a chiding way that we were anti-Market. That apparently gives us less right to make statements about how the common agricultural policy should be altered. In my view, far from giving us less right, it gives us more right, because we were right in what we said about the Common Market and we remain right.

All that I regret is that I underestimated the warnings I gave. I said that the Common Market would have a disastrous effect on our food policies, and it has. We are repeatedly told by Conservative Members what a disastrous effect it has. They speak of pigmeat problems and so on.

I told those who listened to me during the campaigns on the Common Market that it would lead to interference in our day-to-day lives. I did not scare young mothers with the notion that they could be deprived of their daily milk deliveries, but I wish that I had. I am the only person taking part in the debate who knows from personal experience the effort needed when one has to feed, wash, dress and cart around babies and toddlers before one can move a step outside the front door. I know from personal experience the effort involved in shopping. Like many others in this country, I had to do it on my own two feet, because we had no car. It was my own two feet or on the bus.

But that was some time ago, when my children were little. If the daily milk delivery were abandoned now because of the interference with our Milk Marketing Board arrangements, people would find that they were in a worse situation, because there are fewer buses and fewer corner shops. Retail distribution has changed a good deal in its nature, to accommodate those with cars. There are now more refrigerators—but not everyone has a refrigerator. Besides, there is a limit to how many bottles of milk one can carry around, especially if one has a baby and a toddler to cope with.

I am glad that the Minister of Agriculture has been defending our right to have our Milk Marketing Board, and I am grateful to him. But I resent having to be grateful to him. Those who lecture us on the need to compromise now that we are in the European club and say that we should learn how to be gentlemen and discuss these matters in a reasonable way seem to forget that every compromise we are asked to make is just about keeping what we already have. If we were not in this European club, we should not need to fight to keep the Milk Marketing Board. It was never an issue in British politics previously, and there were no debates about this aspect of milk before the Common Market was involved.

I am grateful to the Minister of Agriculture, but I should be even more grateful if we moved to a situation in which we did not have to make compromises to stay exactly where we were, or to expend the amount of energy that must be expended to defend our existing satisfactory arrangements.

We are also told that in making these gains—so-called—we shall also have to make concessions. Therefore, all that the art of compromise and gentlemanly behaviour in the Common Market amounts to is that the only question is how far, in which direction and to what extent we shall be able to save ourselves from losses and general attacks.

Far from feeling inhibited in this debate, I have grown increasingly anxious to take part and to remind hon. Members of some of the facts of life for ordinary people.

We are also told that the EEC is about competition. I have discovered that what that means is that we should be open to competition where it hurts us—for example, in manufacturing—but that where we actually do rather well, even in supplying our own population with basic foodstuffs, what we find coming is not competition but interference, intervention and all those things that the proponents of competition are supposed to abhor.

I am not against intervention, but I like it to be to our advantage. I am entirely against the sort of interference with imports which, for example, prevents us from getting at the cheapest possible prices the sort of food that we cannot grow here. It is quite crazy that we should have taxes on imported pineapple, for example, because no pineapple is grown here or, as far as I know, in the Common Market. Yet we have import duties on pineapple.

The hon. Member for Hereford (Mr. Shepherd) referred to the question of his waste disposal units. He was rather successfully challenged by one of his hon. Friends. There can be sense in a country trying to ensure that its own manufactures get some sort of priority within its own territory, but there is no sense whatsoever in imposing food taxes by means of import duty to keep out, or to make expensive, things which are not produced here.

Mr. Shepherd

Does the hon. Lady feel that if we adopt policies that protect our home manufacture, we should not scream if other countries adopt policies that hurt our exports?

Mrs. Wise

I gave way to the hon. Member simply because I had referred to him, but I shall not be led on to a general discussion on imports. The point is, however, that we do not protect our manufacturing industry, so the question of retaliation does not arise. We are not protecting our manufacturing industry, but we are interfering with the free importation of foodstuffs into Britain, even foodstuffs that are not grown here. We are making the cost of living higher in so doing. I believe—and I am confident that if most of my fellow citizens knew the truth, they would agree with me—that this is crazy and indefensible, and we should not continue doing it.

We have been told, especially by Tory Members, that we should be very grateful to the taxpayers in Europe who help us in our difficulties. For example, the right hon. Member for Yeovil (Mr. Peyton) has said: I now turn to the European taxpayer, who deserves some mention as he has been paying quite a considerable contribution to our food costs."—[Official Report, 23rd January 1978; Vol. 942, c. 974.] The moment it is realised that, far from being the case, the direct cost to the United Kingdom balance of payments of the CAP is currently about £1,000 million a year, we can all dry our tears and stop feeling sorry for the European taxpayer and discount the claim that he is paying out for our benefit. It is a myth. In fact, we incur a net direct cost as a result of our membership of the Common Market of £1,000 million a year and increasing, and there is probably an incalculable indirect cost in addition.

So we have every right to start introducing sweeping motions. I do not think that the motion moved by my hon. Friend the Member for Bradford, South (Mr. Torney) is too sweeping. The hon. Member for Cardigan (Mr. Howells) said that he thinks that farmers preferred the guaranteed prices and deficiency payments system. I am sure that consumers preferred it, too. Of course it cost money, but it cost money which was paid to keep food cheaper. We now pay out money to keep food dearer. Previously we also paid our money to keep our agricultural industry efficient and successful. We now pay our money and are constantly regaled with tales of gloom and doom, some of which are, unfortunately, justified.

In our last debate on an agricultural matter the hon. Member for Westmorland (Mr. Jopling) complained that the cost of returning to the guaranteed prices and deficiency system might amount to £1,000 million a year. He was challenged by the hon. Member for Cardigan, who pointed out that the guaranteed price deficiency payments for lamb which still exist had been costing very little.

Even if the official spokesman for the Conservative Opposition were accurate, I would rather pay £1,000 million for cheaper food and a successful agricultural industry than pay £1,000 million for dearer food and a mess-up, and I believe that that view will be widely shared.

Some novel suggestions have been made. There are those who favour a little trimming round the edges. The hon. Member for Nantwich (Mr. Cockcroft) made the peculiar suggestion that there is something wrong in our having one Minister to deal with the subjects of agriculture, fisheries and food. He suggested that there should be two Ministers, one to deal with food and one to deal with agriculture, because they are two contradictory interests. I shall draw those remarks of the hon. Member for Nantwich to the attention of the Warwick-shire National Farmers' Union which is constantly seeking to convince me that there is a parity of interest of consumers and producers. I agree with them. We gain immeasurably by recognising that fact in the ministerial set-up.

In conclusion, the worst aspect of this debate is that we have heard so much about there being food surpluses and about the increasing problems which will be posed for our agricultural industry as European agriculture in general becomes more efficient. I believe that it is an obscenity that this Parliament should be faced with the necessity of discussing food production in these terms. In my view, the only discussion which should be permissible is one concerning the need for increased production of food. There is no such thing as a food surplus in a world in which some people are starving.

It is a measure of the insanity of our present arrangements that we can spend hours debating problems which can be expressed as the problems of food surpluses. There are many people in this country—including my own constituency, where there is, I am glad to say, a high level of moral feeling on many things—who are trying to take a more moral view about their own food consumption because they are so concerned about the starving in the world.

I have to let them know that their efforts are apparently misplaced and that the position is much worse than they think. They think that the trouble is that we devote too much of our resources to the production of animal foodstuffs and not enough to the production of vegetable foodstuffs which are more economical of land, energy and effort.

Objectively speaking, they are right, but such is the crazy set-up in which we are involved that we cannot get to grips with the genuine problem of finding ways of ensuring that the world's population can be fed, because we are in a so-called club which is not about feeding people but about making money. It is not enough in this world to need food or to want food. The essential thing is to be able to pay for it. With these arrangements many people in the world—and increasingly in this country—will be unable to pay for it.

I am sorry that the hon. Member for Westmorland is getting impatient, because I know that he does not welcome my line of thought at all, but I am afraid that he will simply have to tolerate it. I shall be very surprised if he can produce answers either to the detailed points, such as the plight of young mothers faced with the loss of day-by-day milk delivery, or the overall moral problems and contradictions in our discussing food production in terms of surpluses in a starving world. I shall be very surprised to hear answers, and I shall be even more surprised if there are answers within the context of the Common Market. But my hon. Friend's motion will, I feel, at least be helpful in this matter.

3.13 p.m.

Mr. Michael Jopling (Westmorland)

As the hon. Member for Coventry, South-West (Mrs. Wise) has been so long-winded, she has left very little time for anyone to give the answers to which she referred.

I begin by declaring my interest and saying how sorry I am that some of my hon. Friends, particularly the hon. Member for Folkestone and Hythe (Mr. Costain) and the hon. and learned Member for Beaconsfield (Mr. Bell), were unable to get into the debate.

I congratulate the hon. Member for Bradford, South (Mr. Torney), to whom we listened with interest, on initiating the debate. I thought at the beginning of his speech that he would say something different from what he has said on the many other occasions when he has made that speech. Indeed, I always feel that, metaphorically speaking, I can see the moths scattering each time he puts his hand in his pocket and gets out those dog-eared notes and delivers that speech once again.

But we welcome the opportunity to be able to debate these matters. We had a similar debate just before Easter. In spite of that, this debate gives us an opportunity perhaps to think in rather deeper terms about our policy in this country and in the Community concerning the common agricultural policy.

As on so many previous occasions, we have had the familiar situation in which those hon. Members who are passionately opposed to the European ideal use the common agricultural policy as their whipping boy. The hon. Member for Fife, Central (Mr. Hamilton), in a notable speech earlier today, referred exactly to that point.

I think that we got the real truth in the speech from the hon. Member for Birmingham, Handsworth (Mr. Lee) a few minutes ago. He ended his speech by speaking of all those who are in favour of the European ideal as his enemies, and saying that it was his intention, as I understood it, to campaign against one of them after he leaves the House at the next General Election. I imagine that if he goes for big guns the Secretary of State for Education and Science might find that she has an unwelcome opponent at that time.

This debate has given us an opportunity of looking at our strategy for a food and farm policy. I put the words of that phrase deliberately in that order because our agriculture policy must be primarily a food policy rather than a farming policy. Several hon. Members have made that point, particularly my hon. Friend the Member for Devon, West (Mr. Mills). The main purpose of the CAP when it was set up was to provide for the housewives of the Community adequate supplies of food from relatively stable markets at as reasonable prices as could be obtained. I shall return to that point towards the end of what I have to say. However, it was the secondary objective, although very important, to increase agricultural productivity and to ensure a reasonable standard of living to the rural community.

In general—I think there will be agreement on this—no one would argue that productivity of agriculture through the Community has not improved over the years. Fewer people produce more food on more viable farms. In general, the prosperity of farming throughout the Community could not by the wildest stretch of the imagination be accused of having had a vast financial bonanza at the expense of the housewives. Farm incomes have increased over the years, but no one can say that they have increased extravagantly. Nor can anyone say that the farmers of the Community have feathered their nests over these years at the expense of the Community's consumers.

I return to the question of the CAP. I should like to examine the ways in which it supports the agriculture industry. But I hope that no one need justify the need to have a support policy at all for home food production, whether in this country or in the Community as a whole. I hope that the one thing on which we can all agree is that if we had no support system of any sort, then not only would the prosperity of the countryside collapse—the natural beauty of the countryside which is largely maintained by farmers would seriously deteriorate—but, most important of all, the housewives, both of this country and of the Community, would be at the mercy of shortages and high prices for food. I believe that both shortages and high prices would occur with a great deal more frequency than we have ever known before.

Accepting that we need a support policy for agriculture as a general principle, when one looks at the general techniques which the CAP adopts in order to carry out its functions one sees that it uses in general five separate techniques. Many of them have been mentioned in the debate. There is intervention buying, import levies, deficiency payments, quotas and grants.

As some hon. Members have said, before this country's entry into the Community we used principally to have a system based on deficiency payments backed up by a limited blend of intervention, quotas and grants. We Conservatives have believed for a very long time—as far as I know we still do—that that blend of support techniques was wrong. The experience of British agriculture in the middle and late 1960s showed that a system of this sort exposed home producers to dumping which reduced the capacity to produce, reduced confidence here and, above all, relied much too heavily on high taxation and a generous Chancellor to finance deficiency payments through taxation.

Looking back to the reception given to the last Labour Minister of Agriculture before 1970, the right hon. Member for Anglesey (Mr. Hughes), and recalling the great state of turbulence in which he found the industry, one realises the extent to which that system was grinding British agriculture and its capacity to produce food to a halt.

Although deficiency payments have a continuing, and even increasing, role within the Community, they must not again become the mainstay of our sup port system. We are convinced that much the best way to support home food production is to provide some protection based on variable levies on food imports. That technique gives the farmer a reasonable assurance of fair returns on his costs of production and therefore gives the housewife the stability and the reasonableness of price she seeks.

Of course there are some—we have heard from them today—who yearn for a return to the old system of deficiency payments. Both the hon. Member for Cardigan (Mr. Howells) and the hon. Member for Coventry, South-West have said this. What they do not explain is the implication of increased taxation—although I acknowledge that the hon. Lady was quite fair about that.

I said in the debate before Easter to which the hon. Lady referred that if we were to return to deficiency payments it would probably cost the taxpayer not much less than £1,000 million a year.

Mr. Torney

This is a dog-eared argument.

Mr. Jopling

That figure was disputed at the time, but since then I have been able to get a number of figures. Nor are they dog-eared figures. They have been produced in the last few days.

The Home-Grown Cereals Authority has told me today that it calculates that it would cost about £280 million a year to support the cereal market through deficiency payments. The National Farmers Union has told me in the last 24 hours that it estimates that the cost of supporting sugar would be about £200 million for 1977–78. According to the EEC Commission in Brussels, again within the last day, to return to the deficiency payments system for cereals, beef and butter would cost us no less than £800 million a year. So I do not believe that my estimate of £1,000 million was far away.

The hon. Member for Coventry, South-West said that she would gladly face that extra taxation liability. I know her general political philosophy, so that does not surprise me at all. However, when everyone except the extreme Left wing is talking about reducing taxation, a new bill of £1,000 million, which in practice would mean an increase in both rates of VAT by about 3 per cent.—from 8 per cent. and 12½ per cent. to 11 per cent. and 15½ per cent.—would be totally unacceptable.

Mr. Geraint Howells

rose—

Mrs. Wise

rose—

Mr. Jopling

I will not give way to the hon. Lady. She talked for far too long. I shall give way to the hon. Member for Cardigan.

Mrs. Wise

On a point of order. Mr. Deputy Speaker. I would point out that only one Back Bencher spoke for longer than—

Mr. Deputy Speaker

Order. The hon. Lady knows full well that points of order are not for pointing out such things.

Mr. Geraint Howells

I am grateful to the hon. Gentleman for giving way. Can he say categorically on behalf of the Conservative Party that it is its belief that the majority of sheep farmers in his constituency and in the country as a whole are willing to do away with a guaranteed price deficiency system for lamb now that we are to have a sheepmeat regime?

Mr. Jopling

As we have not yet seen a sheepmeat regime, which is being discussed, we have no means of making up our minds about this. Therefore, we believe that the basic support techniques of the CAP are right. We think that the CAP uses all the techniques, most of which hon. Members opposite want to throw away.

The hon. Member for Bradford. South said that he wanted the levy system to be jettisoned. The effect of levies marginally increases food prices at certain times of the year when world prices outside the Community are below those inside. However, we do not hear from the critics, such as the hon. Member for Southampton, Test (Mr. Gould), when world prices are higher than Community prices, as they have been for grain, beef and sugar in recent years. This is all double talk.

We hear repeatedly from the anti-Europeans that there must be no import levies on food. Yet in the next breath they are calling for more vicious import levies on manufactured goods. We never hear from them about the removal of levies on manufactured goods such as motor cars. I found this quote from the hon. Member for Bradford, South in 1975: Will the Secretary of State for Industry make the strongest possible representations to the Prime Minister to persuade him to change his mind regarding import controls, because both the workers and the employers in the industry want such controls?"—[Official Report, 23rd July 1975; Vol. 896, c. 567.]

Mr. Torney

Why not? What is wrong with that?

Mr. Deputy Speaker

The hon. Member knows that sedentary observations are not in order.

Mr. Jopling

It is incredible cant for the hon. Member for Bradford, South to argue on the one hand for import controls for textiles and clothing and on the other to call for their abolition for food—

Hon. Members

It is absolute humbug.

Mr. Deputy Speaker

I have already reminded hon. Members about sedentary observations.

Mr. Jopling

The same applies to intervention buying and seasonal surplus buying. Hon. Members opposite reject intervention buying now, but it conflicts totally with the track record of the Labour Party. The powers of the Potato Marketing Board were brought in originally by the Labour Government. In 1964 the Labour Government introduced the Home-Grown Cereals Authority which had the right of intervention, and in 1970 they established the Eggs Authority with similar intervention powers. We supported all those powers. What a pity that the anti-Marketeers cannot find better ammunition with which to vent their spleen.

The way in which the CAP supports home food production is right. However, that does not mean that it does not suffer from serious imperfections. We pointed this out in the debate just before Easter. My hon. Friend the Member for Hereford (Mr. Shepherd) referred to misguided national policies which have led to the most serious decline in our breeding herds and flocks since the war. This is because the Government have failed to remove the imperfections in the CAP caused by the green pound.

All these arguments have been heard many times before. It is a fact that the green pound arrangements provide serious imperfections in the CAP. Most important, we believe that Community prices are too high in many instances and are encouraged too much by unwanted or unsaleable foodstuffs. Much more self-restraint is needed by the Community where surpluses are continuing to be produced.

My hon. Friend the Member for Devon, West and the hon. Member for Southampton, Test were perfectly right in saying that prices should be fixed on the basis of the costs of efficient producers rather than of those of inefficient ones. The public are rightly outraged to see the Community plunging deeper and deeper into structural surpluses in beef or butter. They are rightly more outraged when they see those surpluses being sold at give-away prices to Russia and other country behind the Iron Curtain.

Mr. Lee

The hon. Member talks about fixing the CAP prices by the level of the efficient producer. Does he really believe that that is politically feasible while there is a raucous Poujadiste lobby of militant farmers in Italy and France who erupt every time anything is done to bring down the prices?

Mr. Jopling

I am not trying to make a cheap point. I do not recall whether the hon. Member was in the House for the debate that we had just before Easter when there was agreement on both sides that it was right to damp down the institutional price rises to 1.9 per cent. I believe that that is practical. We should be doing our best on these lines. That is what we on this side have been trying to do in backing up the Government in damping down unnecessary price increases of this kind.

There are other aspects of the CAP that should be changed. We have debated most of them in the House many times before. Only time prevents me from talking about the marketing boards.

I should like to take up the argument of my hon. Friend the Member for Devon, West. Most of us believe that we should be able to alter some of the defects of the CAP if we had a different team of Ministers in Brussels. I swear that I am not making a party or a personal point on this matter. We believe that it is a grave mistake not to have negotiating Ministers who have an enthusiasm for, or at least sympathy with, the concept of the European ideal.

Both the Minister and the Parliamentary Secretary who do most of the negotiating—and I am not being snide or personal about this—are not without abilities within the Labour Party. It is tragic that their talents are not used elsewhere in the Government so that others, with an enthusiasm for the ideal, could take their place. I disagree profoundly with what the hon. Member for Hands-worth said on this issue. My case is proved by recalling how Lord Peart, when he was Minister, managed to get more for this country in his negotiations in Brussels than the present team of Ministers have been able to achieve.

Mr. Strang

The hon. Member knows, and the House appreciates, that this is a piece of cheap political tomfoolery. The Minister and his predecessor spoke for the British Government. His stance reflects the collective position of the Cabinet, which discusses all these issues. I supported membership of the Community. It enthusiasm for the ideal automatically leads to good results, it is funny that the right hon. Member for Sidcup (Mr. Heath) created so many of the problems with which we are trying to deal at present.

Mr. Jopling

I was trying hard not to become involved in what the Minister calls political tomfoolery. He has not been able to resist doing that himself. He is putting words into my mouth which I did not say. I believe that it is easier to make a deal in the Council of Ministers if all the Ministers believe in the general concept and ideal of bringing the countries of Europe together in this way.

I return to the question of the housewives' point of view. The CAP has not been a disaster. It uses the right techniques for pursuing a food policy. Housewives have suffered relatively infrequently from shortages and high prices. The CAP has been successful over the years in achieving a degree of stability for the housewife. It has done this by asking the housewife to pay a modest premium in prices so that relatively assured supplies of food at reasonable prices may be available from home farm resources.

The hon. Member for Bradford, South was honest enough to refer to the speech of the Parliamentary Secretary in London last year in which he pointed out that the increase in food prices was very much lower than is suggested by many opponents of the European ideal. This modest premium in prices gives the consumer an insurance policy that means by far her best bet is to rely on home sources of food rather than on the uncertainty of overseas supplies. In recent years, we have seen classic examples of the volatility of overseas supplies and prices of food.

The hon. Member for Test said that food was available around the world at lower prices, but I invite him to remember the escalation of beef prices in 1973 and the escalation of grain prices in 1974. In 1975, it was sugar, in 1976 it was potatoes and in 1977 it was tea and coffee. These show clearly how volatile food supplies and prices can be.

As world population and spending power increase, we would be made to incur the risks that would follow our increased exposure to such shortages and high prices. A policy designed to provide secure and stable supplies to consumers is unlikely always to be able to supply them at the lowest available price, but it is right to ask the housewife to pay a premium in exchange for the advantages of increased stability and security. We are convinced that our membership of the Common Market gives us greater security of food supplies than we would have if our membership ceased.

As Lord Peart has often reminded us, the days of being able to pick up cheap food at will around the world have gone. It is time that the critics of the CAP realised this.

We are naturally opposed to the motion, and I suspect that the Government also oppose it. I hope that the hon. Member for Bradford, South will withdraw it at the end of what has been an extremely useful debate.

3.38 p.m.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang)

I congratulate my hon. Friend the Member for Bradford, South (Mr. Torney) on initiating the debate. I agree with the hon. Member for Cardigan (Mr. Howells) that it has been more constructive and thoughtful than some of the agriculture debates that we had earlier this year.

My hon. Friend the Member for Bradford, South said that he did not want to continue the old pro- and anti-Market argument but wished to look in some depth at the working of the CAP. His speech achieved that aim and the criticism by the hon. Member for Westmorland (Mr. Jopling) was singularly ill-judged.

I start with a few words about this week's discussions in Brussels. Inevitably, a number of hon. Members have referred to the negotiations that are taking place on the prices package for 1978–79. The central objective of the Government in these negotiations is to hold down the level of common prices. The Commission has proposed an overall increase of about 2 per cent. This is relatively low and reflects the growing support in the Community for the stand taken by the Government on this issue.

The British Government are committed to the maximum restraint on common prices and are opposed to any price increases where there is a structural surplus. As my hon. Friend the Member for Fife, Central (Mr. Hamilton) said, what might have seemed a rather lone stance during the British presidency a year ago is now a policy that is supported not only by the Socialist group in the European Parliament but by the whole European Parliament, as judged by the last vote on the issue, and by the European Commission.

I turn to some of the specific issues of importance to agriculture in the current negotiations. I come straight away to the position of the Milk Marketing Boards. I am glad that my hon. Friend the Member for Coventry, South-West (Mrs. Wise) was able to intervene. My hon. Friend reminded us that while experts and those of us concerned with agriculture tend to look upon the importance of the issue as it affects the system of suporting our milk producers, it also has an important bearing on our consumer interests.

My hon. Friend was right to draw attention to the great value of our milk delivery system. It is our view that if we lost the Milk Marketing Boards the system would be threatened. Although my hon. Friend is the only person in the Chamber who has had direct experience of the advantages of having milk delivered to her door, I have a wife with a baby 18 months old and I am sure that she, too, appreciates that we have five bottles of milk delivered to the door each day, as do millions of housewives throughout the country. It is for that reason. and for the important agricultural reasons. that we are determined to retain the Milk Marketing Boards.

I should explain the position that we have reached in the negotiations. It is not the case that they have been concluded. The Milk Marketing Boards are threatened because it might be argued that they conflict with the Community approach to free competition. It is for that reason that we persuaded the Commission to table a special regulation that would enable the boards to continue. We are now discussing that regulation in the Council of Ministers. We are determined to obtain a satisfactory conclusion to the discussions so that we may settle once and for all the future of the boards in the European Community.

It is understandable that the pigmeat issue has been raised. We have continued ferociously to press the Council of Agricultural Ministers on the subject. We have stated that there is no way in which we shall agree to an increase of 3 per cent. in the basic price for pigmeat without something being done about the size of the monetary compensatory amounts. At the Council meeting this week the Commissioner undertook to table proposals in the Council before the conclusion of the price discussions for the reduction of monetary compensatory amounts on pigmeat and some other agricultural products.

The butter subsidy has been mentioned by a number of hon. Members, especially by my hon. Friend the Member for Fife, Central. At the previous price negotiations we secured a special butter subsidy for the United Kingdom. We are disappointed with the Commission's proposal, because the special subsidy has proved its worth by giving us a level of consumption in the United Kingdom about 16,000 tonnes higher in 1977 than it would have been otherwise. With the United Kingdom price likely to rise by about 40 per cent.—that is 24p in the pound during 1978—our total consumption could fall by as much as 60,000 tonnes in a full year. That is why we are looking for better terms than those proposed by the Commission.

There are, in effect, two butter subsidies in the European Community. There is the special United Kingdom subsidy, which is 100 per cent. financed by FEOGA. It is that subsidy which we want to continue, and which we want to continue to have paid out of FEOGA. The second subsidy is a general one throughout the Community. Member States can receive a FEOGA contribution to a nationally financed butter subsidy. We are determined to improve the proposals for a special FEOGA butter subsidy to protect British consumers from sharp increases in the price of butter.

Mr. Geraint Howells

Will the hon. Gentleman give way?

Mr. Strang

I shall desist from giving way, because I was late in starting my speech. I hope that the hon. Gentleman will understand.

I turn briefly to the sheepmeat regime. This matter was raised at the Council. I think that the hon. Member for Westmorland ought to have realised that the Commission has tabled its proposals for a sheepmeat regime. Indeed, they were extensively reported on in the Press. I refer, for example, to the article in the Financial Times on 23rd March. Indeed, at the Council this week Commissioner Gundelach took the opportunity to outline these proposals. I do not wish to speak at length on the sheepmeat proposals, but I take this opportunity to assure the House that New Zealand has a part to play in supplying the United Kingdom market, and that we intend to ensure.

Furthermore, we believe that a sheepmeat regime can be tailored to our positive advantage, for the reasons indicated by the hon. Member for Cardigan. We can expand our exports of lamb into the French market particularly. We have a high levy at present. With the common regime, that levy will be phased out. Therefore, we are endeavouring to secure a common regime which not only protects the position of New Zealand but at the same time provides for an expansion of the United Kingdom sheepmeat industry.

I turn now to the fundamental issue in the debate—the reform of the common agricultural policy. My hon. Friends the Members for Bradford, South and Fife, Central referred to my speech in 1977 to the Guild of Agricultural Journalists. What I said then still stands. Indeed, the hon. Member for Westmorland also referred to that matter.

The recent report from Wynne Godley and his Cambridge colleagues provides further support for that central attitude to the common agricultural policy. I do not want to get involved in an argument about how much higher consumer prices are at the moment as a consequence of Market membership. Wynne Godley and his colleagues estimated 12 per cent. My right hon. Friend pointed out that we reckoned that to be on the high side. In fact, it depends on world prices. There is no doubt that consumer food prices are significantly higher at the present time than they would be if we were not in the Community, and I think that is likely to remain the position for the foreseeable future. To that extent, I agree with my hon. Friend the Member for Southampton, Test (Mr. Gould).

The central issue is the enormous cost of the CAP—above all, the enormous budgetary cost. That is what imposes the burden on our balance of payments. It is not so much the higher prices that we pay for imported food as the colossal cost of the CAP itself, which represents 75 per cent. of the total Community budget.

I make no apology for returning to the milk surplus, because that is the surplus par excellence. That commodity—it is absolutely incredible—is budgeted for 34 per cent. of total FEOGA expenditure in 1977. That represents more than a quarter of the total Common Market budget. Is it not a staggering fact that, at a time when we have over 6 million unemployed in Europe, the Community should be spending more than a quarter of its total budget on the milk sector? We know what it has been spent on. It has been spent on disposing of and holding in intervention stores the enormous surpluses of butter and skimmed milk powder.

The intervention system plays funny tricks with the situation in the market place. I take, for example, the position in the United Kingdom at the present time. My wife complained to me the weekend before last that she could not find any British butter in the local co-op store. She could find Dutch, Danish, German and Irish butter, but no British butter. There is a very good reason for that. It reflects not the policy of the Edinburgh Co-operative at St. Cuthbert's but the fact that British butter is moving massively into intervention and we are eating imported butter. That is because traders imported the butter with the MCAs in anticipation of a reduction of those MCAs. It now pays them to sell that butter, and they are able to undercut British butter. That is an illustration of the sort of anomalies that arise with the CAP. They normally arise partly because of excessive dependence on permanent intervention but also because of the size of the MCAs and the fact that the reduction in an MCA could be anticipated.

The central weakness of the CAP is the high level of common prices and the structural surpluses they generate. That is why the overriding priority must be to hold prices down.

There are, however, other weaknesses. Generally the policy is too protective. It is not sufficiently internationalist in the way that it keeps out the products of other parts of the world, including the developing countries. It is true that under the Lomé agreement we have made a substantial advance in relation to some areas of the developing world. We are also determined to retain access for New Zealand products into the Community. One of the Government's prime aims is to reverse the protectionist state of affairs.

The mechanisms of support need modification. The variable premiums which we achieved in the renegotiation—which constitute the new system of support for beef in the United Kingdom, involving an element of support buying—were a step in the right direction towards deficiency payments. We want to see less dependence on permanent intervention, and Commissioner Gundelach's proposals for suspending intervention buying on skimmed milk powder will be a significant advance if they are agreed in the Council of Agriculture Ministers this time.

The Conservatives have sought to maintain that the stance adopted by British Ministers in the Agriculture Council does not reflect the real interests of the British people or that it is in some way misguided or less successful for all sorts of extraneous reasons. I do not believe that that argument stands up. After all, the policies that we are adopting have the support of the House of Commons—the policy of restraint in common prices and the policy of retaining the Milk Marketing Boards, which I believe are an example of pragmatic Socialism. These objectives are supported by the great mass of our people and they reflect the interests of our producers.

I therefore ask my hon. Friend the Member for Bradford, South to understand that we cannot accept the motion as it is worded but that we basically support him—and this is where we disagree with the Opposition Front Bench—in believing that there is something fundamentally wrong with the CAP. We are committed to changing it. On that basis, I hope that he will be prepared to withdraw the motion.

3.53 p.m.

Mr. Torney

In view of the assurance given to me by my hon. Friend the Minister, and given the fair degree of agreement that exists in the House, with the possible notable exception of the hon. Member for Westmorland (Mr. Jopling), I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.