HC Deb 16 February 1978 vol 944 cc650-3
14. Mr. William Hamilton

asked the Minister of Agriculture, Fisheries and Food what would be the estimated effect on the retail price index of a complete devaluation of the green pound, assuming the devaluation were spread over two years.

Mr. John Silkin

I estimate that if the change were made now there would be an increase in retail prices of the order of 1 per cent. to 1½ per cent. or 4 per cent. to 5 per cent. on the food price index, over and above the effects of the recent green pound settlement.

Mr. Hamilton

My right hon. Friend no doubt agrees that that is a convenient stick with which to beat the Opposition, but how far does he agree that a gradual devaluation over a period of time is probably both politically and economically inevitable? May I ask whether, in the figures that he quoted, he has taken account of the likely effect of such devaluation on our own increased home production in line with our White Paper policy?

Mr. Silkin

Very much so. Indeed, a moment ago my hon. Friend may have heard me quote from the speech of the Editor of the British Farmer and Stockbreeder, in which he said that it would hurt agriculture if he were to devalue very speedily.

The fact remains—I give this to my hon. Friend—that it may well be that, with common prices the way they are, the only way in which one can ensure a proper basis of remuneration for the producer and look after the consumer is by using the green pound as a method of fine control. I accept that. I have always accepted that, and I have said that I would devalue as and when the national interest demanded, and not on any other occasion.

Mr. Ian Lloyd

Does the right hon. Gentleman agree that although she may have little understanding of the green pound, and be in good company in so doing, that most pragmatic of all our constituents, the British housewife, has legitimate cause for concern when she reads in the newspapers this morning that interventionist pricing is producing beef, butter and barley mountains in this country? Has the right hon. Gentleman any explanation to offer?

Mr. Silkin

I agree with the hon. Gentleman. May I say "Welcome to the club"? A number of us have for years been attacking the intervention system. Having said that—perhaps it is a reasonable comment on the way in which the CAP is being operated at the moment—the fact remains that the butter hill in the United Kingdom represents 4 per cent. of the Community's butter storage, while that in the Federal Republic of Germany, with its prices so much higher than ours, represents 60 per cent. The hon. Gentleman can draw the moral.

Mr. Jay

Has my right hon. Friend also noticed the statement in the Commission's agricultural report for 1977 that EEC prices of wheat, barley and maize are now more than double the world prices which we would have to pay if we were not members of the EEC?

Mr. Silkin

That is an argument that we have had in the past, and no doubt it will go on for some time. The fact remains—I agree with the implications of what my right hon. Friend is saying—that the right way to attack the structural surplus is at the end price. That must be done, and that is what the Government are trying to do.

Mr. Peyton

Does the right hon. Gentleman agree that the present level of German butter imports into this country would never have been achieved without MCAs, and that they would not have been there if the green pound—real pound discrepancy had been ironed out?

Mr. Silkin

That is probably true, but we are a deficiency country in butter. We can manufacture a good deal more of our own, and that we must do. I agree with that, but I put it to the right hon. Gentleman, because I suspect that very soon he will be in a minority of one on this matter, that a mood is coming about, and has been seen clearly during the past few weeks, which has looked at the MCA discrepancy and found the right basis on which to proceed. It is to get a common price level which really reflects what the Community ought to be paying, and not the basis under which it operates at the moment, which is the basis of the "snake" currency.

Mr. Peyton

On the question of MCAs, will the right hon. Gentleman register the fact that we on the Opposition side of the House are profoundly disappointed with the puny efforts of the Commission in thinking out this problem?

Mr. Silkin

This is one of the rare occasions on which I find myself in total agreement with the right hon. Gentleman. He will no doubt remember that last September the Commission promised to look into the whole question. It has taken five months, which, as I pointed out to the Commissioner, has given us for the first time the actual gestation period for the mountain to produce a mouse.