HC Deb 26 January 1978 vol 942 cc1613-22
The Minister of Agriculture, Fisheries and Food (Mr. John Silkin)

I beg leave to make a statement about the meeting of the Council of Ministers in Brussels on 23rd-24th January on agriculture at which I represented the United Kingdom.

The main issue before the Council was the Commission's proposals for common prices in 1978–79. I reiterated my view that common price increases should be kept to a minimum and that for products in structural surplus there was no case for any price increase at all.

Following the vote of this House on 23rd January, I requested the Council to agree to amend the Commission's proposal to devalue the green pound so as to increase the amount of the devaluation from 5 per cent. to 7½ per cent. The Council agreed, subject to a qualification that I shall mention later, to this revised proposal, and also to the proposal to devalue the Italian green lira by 6 per cent. The new green rates are to apply from 1st February for milk and milk products, pigmeat, beef and veal and, in the case of Italy only, for sugar. For other products the new green rates will come into effect at the beginning of the marketing year for each product. This means that the resulting increase in United Kingdom intervention prices for sugar will not take place until 1st July, and for cereals not until 1st August.

The Council's agreement is not, however, definitive at this stage. The German, Dutch and Belgian delegations said that, because of the short time they had had to consider this proposal they could agree to it only ad referendum; in other words, by reserving the right of their Governments to withdraw their consent. They proposed that the ad referendum period should run to 1st February.

There is no precedent for a member State being denied a request to change its green rate at a Council meeting, and a delay of the length suggested would have had two disadvantages. It would have prevented the regulation being published in time for the devaluations to take effect on 1st February, and it could have prejudiced the discussion of other issues in the interim. The first difficulty was met by bringing forward the end of the ad referendum period to 29th January. On the second point, I made it clear that, until the devaluation of the green pound was finally approved, I should not feel able to take part in the discussion of other issues.

Mr. Peyton

Does the right hon. Gentleman think there is any likelihood of these objections proving to be anything more than merely formal? To the extent to which he shares our anxiety—that the longer these subsidised imports go on, the more established becomes the place in our market of these goods—does he agree that in future there is a danger that he might meet increasing resistance from his colleagues in the Council to similar proposals to that which he has now made?

I note that the right hon. Gentleman intends to take no further part in the discussions. However, is he satisfied that that will involve no risk of unpalatable decisions being taken in his absence?

Mr. Silkin

The first and third matters raised by the right hon. Gentleman come together. A German Minister, Herr von Dohnanyi, this morning spoke to my hon. Friend the Minister of State at the Foreign and Commonwealth Office and assured him that the German delegation did not intend to make any link between the devaluation of the green pound and the common fisheries policy. My hon. Friend assured him that the United Kingdom would consider the Commission's proposals for 1978–79 farm prices on their merits. I understand that the German Government will not be in a position to lift their reserve on the devaluation of the green pound until 29th January. For my part, I intend to attend the fisheries Council on 30th January.

The right hon. Gentleman referred to what he called "subsidised imports". Perhaps it is better to say that they are FEOGA financed export subsidies to another country. It is always a question of balance. As the right hon. Gentleman knows, the Government's view is that the trouble with a devaluation of the green pound it that it can be brutal to the British consumer. I think the stand which the Opposition took in the wind-up speech, in which their policy was outlined for the next two years, makes that clear. As regards parity, which is what he suggested for the next two years, it will mean an increase of 6½p in the pound on food prices. There are arguments—and they are good arguments—which show that we ought to preserve and, indeed, increase our self-sufficiency. I absolutely agree. However, we cannot do that at the expense of the consumer. We must do it as one nation.

Mr. Peyton

The right hon. Gentleman has answered a question that I did not put to him. He has not answered the question that I did put. Since he is dealing with the effect on food prices, may I ask whether he agrees that only one-sixth of one penny on his food index separates our proposals from his?

Mr. Silkin

I read that the right hon. Lady the Leader of the Opposition made that point at what I understand was an agreeable dinner the other night. However, I should inform her that she was badly briefed at the time. The hon. Member for Westmorland (Mr. Jopling), in the wind-up speech, said that all commodities should be devalued at the same time immediately. That makes a great deal of difference. I agree that the Commission's final proposal, on the basis of a 5 per cent. devaluation, does not make too much difference. However, that is very different from the Conservative Party's proposal of 7½ per cent. When that is taken together with what the hon. Member for Westmorland said about it being Conservative Party policy that the whole gap should be wiped in two years, my figures stand.

Mr. Geraint Howells

I am grateful to the Minister for his full resumé of what transpired at the Council of Ministers meeting in Brussels. Does he agree that if the Government had devalued the green pound by 5 per cent. last December with a further commitment for 1978, life would have been made much easier for the right hon. Gentleman to conclude negotiations in Brussels with a satisfactory price review that would have been of benefit to farmers and consumers in this country?

Mr. Silkin

I wish that I could take so sanguine a view of matters. The position was this. There was resistance even to 5 per cent. That had taken place the day before whilst the House was debating the matter. The arguments against a 5 per cent. devaluation were from those European colleagues of ours whom I am always accused of irritating and who are always supposed to be pressing me for a green pound devaluation. I had to remind one of my European colleagues that on his visit to this country in June, when he addressed our pigmeat producers, he said "Mr. Silkin only has to ask for a green pound devaluation of any amount and it will be given to him instantly".

Mr. Corbett

I congratulate my right hon. Friend on his determination to try to see that there is no increase in Common Market prices for those commodities which are in surplus. How does he regard the attitude of the West Germans, the Dutch and the Belgians? Does he regard it as an outrage to the will of this House as expressed on Monday night, or does he welcome them to the sensible minority here who do not want needlessly to force up consumer prices right across the board?

Mr. Silkin

The view that it would be wrong to force up prices right across the board was the view taken by the Commission. The Commissioner's view was that a 5 per cent. devalution of the green pound was justified. But he had strong reservations about a 7½ per cent. devaluation. The objections made by our European partners were not on that basis.

What I felt was that this was the first time, as I think I told the House, in the history of the many changes to green currencies, whether sterling or any other currency, that any European member State had at a Council meeting tried to prevent another member State from devaluing or revaluing. I regarded that, in the case of the United Kingdom and following the expressed determination of the British House of Commons, as being quite unacceptable.

Mr. Welsh

Will the Minister ensure that there will be no EEC concessions or trade-offs between United Kingdom agriculture and fisheries and that he will take an equally firm stand for both during these negotiations?

Mr. Silkin

That is my view.

Sir David Renton

The Minister has not made quite clear when the MCAs of the Dutch, the Danes and others will start to operate in relation to pigs with the 7½ per cent. devaluation. Will he clarify that?

Mr. Silkin

Assuming that the reserves are lifted—and the date in question is supposed to be 29th January—it will operate for pigmeat on 1st February. As regards the cereals which feed the pigs in question, it will not start to operate until 1st August.

Mr. Jay

In view of what my right hon. Friend said about the German Government, what is the validity of this reserve put on his request, and does he expect it to be wholly withdrawn by 29th January?

Mr. Silkin

The way in which it was put was that all the member States, with the exception of one which abstained and therefore did not count, expressed their approval, subject to a reservation. But the reservation enables the Government to say "No. We will not accept it." I hope that what I said at the Council and following the Council and what I have said to the House of Commons today will help everyone to make up his mind in a sensible and conciliatory manner.

Mr. Emery

May I ask the right hon. Gentleman two questions? He has expressed concern about the delay, which has not existed before. Will he undertake to institute some inquiries to see that this sort of procedure is not allowed to arise in the future and that some steps are taken to alter the regulations in order to ensure that it does not?

Secondly, will the right hon. Gentleman clear up what appears to be a doubt? Apparently he is attending the meeting on Friday concerned with fisheries. At the same time, it was suggested that he would not take a major part in them. Those engaged in mackerel fishing in the South-West, small in number though they may be, are so concerned that they are considering breaking the regulations because they see themselves losing their livelihood. Will the right hon. Gentleman take that into consideration in the negotiations?

Mr. Silkin

I will take all matters into consideration in the negotiations, including what I have always believed to be the wholly justifiable position of the United Kingdom—one with which I think the whole House agrees.

With regard to the dates of the meetings on fisheries, the next Fisheries Council is on Monday. However, I understand that there were hopes of having unofficial meetings in the course of this week. It is these meetings which I felt on the whole I might not have time to attend if I had to explain to this House very fully why, for the first time, reserves of this kind were put upon a proposition of this sort.

As for writing something into the regulations, I do not think that that is quite the way to do it. There are a number of Council rules which are perhaps better not written down. I think that this is one of them. At the same time, I take the hon. Gentleman's point. We have to see that it does not happen again.

Mr. Raphael Tuck

In view of recent events in the EEC, can my right hon. Friend give any indication of what his prognosis is about the subsequent effect on the green pound—a 7½ per cent. devaluation, a 5 per cent. devaluation or, as I fervently hope, to protect the consumer, no devaluation at all?

Mr. Silkin

In the light of the increase to 7½ per cent. and in the light of the Commission's view of matters, too, I cannot foresee an increase in the devaluation of the green pound for a very long time to come.

Mr. Giles Shaw

Without commenting on the Minister's insistence on keeping food prices as low as possible, may I remind him that it was his Government who introduced a tax on food? Is he aware that it is now costing the consumer about £160 million a year? Would not its removal reduce the food price index by nearly 1 per cent? May we expect the right hon. Gentleman to work to that end?

Mr. Silkin

That is a matter for my right hon. Friend the Chancellor of the Exchequer, and I know that various representations have been made at various times to my right hon. Friend.

Mr. Ioan Evans

My right hon. Friend will realise that there is general appreciation of the strong stand that he has taken in the discussions in Europe. But does he not feel that his position was weakened by the decision of the House of Commons to try to force up prices further than the Government intended? Will my right hon. Friend bear in mind in future discussions the strong representations that he has received from the National Consumer Council, the Welsh Consumer Council and other consumer bodies, try to change the CAP completely, and revert to the policy that we had previously of guaranteed prices and deficiency payments?

Mr. Silkin

I must be fair. The decision of the House on this matter, although I disagreed with it and although the Government disagreed with it, did not affect our negotiating position in Europe. It is only right that I should make that quite clear. However, to my mind, it affected adversely the position of the consumer, and I am glad that the Commission, with ourselves, in putting its proposals managed to rescue the consumer from an immediate devaluation of 7½ per cent., which would have been disastrous.

Mr. Jopling

Does the Minister realise that in quoting what I said on Monday night he was not being entirely fair? I said that it was the Opposition's aim to do away with the existing green pound discrepancy over two to three years—not two years. I am sure that the right hon. Gentleman recognises that.

Secondly, did I hear the Minister say that what my right hon. Friend the Leader of the Opposition said in a speech on Tuesday night was wrong when she implied that the difference between a 5 per cent. and the 7½ per cent. devaluation which the House agreed on Monday amounted to a rise of no more than one- sixth of a penny in the pound on the retail price index?

Mr. Silkin

Let me explain to the hon. Gentleman. I was referring to Conservative Party policy and not to what the House decided. The House decided the 7½ per cent. devaluation in a rather ambiguous way, and I took that to mean, on reflection, that, provided I could persuade the Commission to do it, it did not matter whether it was a single devaluation or one done selectively, as we had proposed. It was Conservative Party policy, as the hon. Member for Westmorland (Mr. Jopling) himself said, that there should be a total devaluation, unselectively. That was the difference—between a selective devaluation of 5 per cent. and an unselective devaluation of 7½ per cent. I want to be fair to the hon. Member for Westmorland. Indeed, the fairer I am to him, the more the public ought to know what he is saying. I am delighted to know that it is over two to three years and not just over two years that the foodstuffs of this country would be going up by 6½p in the pound if the Conservatives got their way.

Mr. Torney

In the light of the flagrant disregard of this House by the Common Market in its decision not to allow the devaluation of the green pound, does not my right hon. Friend agree that the Cabinet should be informed of the feeling of the House and that some action should be taken by the Cabinet towards basically changing the rules of the Common Market, particularly the common agricultural policy, so as to ensure that this kind of thing cannot happen again?

Mr. Silkin

The policy of the Government remains the same. We have always said that the common agricultural policy needs radical change. But I do not think that we should over-dramatise what to my mind smacked much more of tomfoolery, as I said at the time, than perhaps of a wild but calculated position.

Several Hon. Members

rose—

Mr. Speaker

I will call three more hon. Members.

Mr. Nicholas Winterton

Will the right hon. Gentleman indicate whether he is entirely confident that our European partners will remove their objections to a devaluation of 7½ per cent. on or before 29th January? Would not the right hon. Gentleman concede that the decision of this House on Monday, involving, as it does, a very small increase in the price of food, is a price well worth paying if it results in the increased investment in agriculture that will guarantee a secure market and a secure production of food in this country in the long term?

Mr. Silkin

The very small devaluation that the hon. Gentleman refers to is a difference of 8.1 per cent. in support prices. That is quite a jump. I agree that some devaluation was necessary in order to preserve our own home industry from being overtaken by foreign competition—that was the Government's point. But it is still a question of how much and of being reasonable and realising that there are not, after all, 97 per cent. consumers and 3 per cent. farmers and farmworkers but 100 per cent. consumers in this country.

Mr. Buchanan-Smith

The right hon. Gentleman will, no doubt, have heard my request to the Leader of the House. Can he now tell me, in view of the concern expressed by the fishing industry, both to him and to hon. Members this week, whether we shall have a debate before a conclusion is reached?

Mr. Silkin

My right hon. Friend the Leader of the House and I could throw this at one another throughout the afternoon. He could say that I am about to make a statement, and I could say that it is a matter for him, and that is true. One could conceive of an occasion when a decision had to be made on a common fisheries policy without an immediate consultation with the House. I would regard that as a very sad thing, and I hope to avoid it as far as possible. But such a situation is conceivable, and it is only fair that I should put that on record. I have taken the precaution of keeping the Scrutiny Committee informed, and its acting Chairman is well aware that this difficulty could arise. I will do all in my power to see that it does not.

Mr. Marten

When the EEC subsidies have been phased out towards the end of the year, when the devaluation of the green pound and its effects have been brought in, what will be the price of a pound of butter on the British market? Is it true that it will about 70p a pound?

Mr. Silkin

I have to do a very quick calculation. Unless something is done and forgetting any common price increase that might occur, but taking into account the green pound change and loss of subsidy, the extent of the difference would be about 13p in the pound from the time when the subsidy was at its height.