EUROPEAN COMMUNITY (AGRICULTURE AND MILK)

HC Deb 21 March 1978 vol 946 cc1344-456

[Commission documents also relevant: Nos. R/3295/77, R13296177, R/1969/77, RI863177, R/2291/77, R/2292/77, R/2648/77 and R/389/78.]

Mr. David Stoddart (Swindon)

On a point of order, Mr. Speaker. I refer to the Government motion, which, as you know, was put down only yesterday. My point is that the fact that we are having the debate today means that we have been given very little time in which to put down amendments. Furthermore, no opportunity has been given to hon. Members on both sides of the House who might wish to do so to add their names to the amendment.

I think that it also makes difficulties for you, Mr. Speaker, when a Government motion is put down so late, in deciding whether you should call an amendment for debate. Indeed, those who put down an amendment have little or no opportunity to make representations to you. I appreciate the Government's difficulties in this matter, but it would be helpful to have your comments.

Mr. Speaker

I am obliged to the hon. Member. The motion is strictly procedurally correct, but that is all I can say in favour of it. This procedure has often been adopted, but it does not give hon. Members much of a chance to put down an amendment. By way of comfort to the hon. Member, may I say that I am selecting the amendment for discussion today, and perhaps those who are responsible for what has happened will try to bear in mind that the House likes to have proper notice to be able to table amendments.

Mr. Robin Corbett (Hemel Hempstead)

On a point of order, Mr. Speaker. I am sorry to detain the House, but, as you will appreciate, we are trying in this short debate to deal with about 15 documents, and that makes great difficulty for all those who wish to take part in the debate, in view of the guidance you were kind enough to offer the House last week. You suggested then that a speech lasting eight minutes was good but that anything exceeding that time was not so good and that the names of those who made longer speeches would end up on a little list kept somewhere in this building.

Is it within your responsibility, Mr. Speaker, to draw to the attention of those responsible for arranging the business of the House the immense problems of Back Benchers when we are moving from wine through to olives, milk prices, the future of the Milk Marketing Boards and whether our children receive free school milk?

Mr. Speaker

I preferred the hon. Gentleman's reference to milk to his reference to wine and olives. He must pursue the matter with the Leader of the House, who is responsible for Government business in the House in a way that I am not.

4.20 p.m

The Minister of Agriculture, Fisheries and Food (Mr. John Silkin)

I beg to move, That this House takes note of Commission documents R/3200/77, R/3200/77 Addendum 1 and R/545/78 on agricultural prices, and document R/27/78 on the Milk Marketing Boards; supports the Government's intention to negotiate a settlement which, taking into account the interests of consumers as well as producers, helps to secure a better balance of the market, particularly in those sectors with a structural surplus; welcomes the Commission's proposals to safeguard the essential functions of the Milk Marketing Boards; and supports the Government's intention to seek the changes necessary to ensure the continued stability of arrangements for marketing milk in the United Kingdom. As my hon. Friend the Member for Hemel Hempstead (Mr. Corbett) has just said, we have a long list of documents to consider today, all related to the negotiations on CAP prices for the coming year which will begin in earnest immediately after the Easter break. Some of these documents deal with detailed and background issues—R/3296/77, for example, which is the Commission's report on agricultural markets in 1977. Both R/ 1969/77, which deals with starch production refunds during the past year, and R/863/77, the document which was put forward by the Commission at last year's price fixing and which deals with isoglucose and the United Kingdom butter subsidy, are in this category; likewise R/2648/77 which contains a proposal by the Commission for the use of the funds derived from the milk co-responsibility levy.

I shall ask my hon. Friend the Parliamentary Secretary to deal with these matters when he winds up the debate, as well as with some of the other important points—whether they cover wine, olives, milk or anything else—that I do not have time to answer.

Documents R/2291/77 and R/2292/77 deal with the highly important question of the market support arrangements for beef and veal. The question posed is whether there should be a more widespread use of the dual system of intervention and premiums which we operate in the United Kingdom. I do not expect the Council of Ministers to decide this question at the price negotiations. It may not even be discussed before the summer. As I have explained before, I very much favour the dual support system in our own country.

Document R/339/78 is the Commission report on distortions caused by the MCA system. Its importance lies in its reference to the question of recalculating the pigmeat MCAs. The House knows that this is a matter on which I pressed the Council alone for many months, although latterly the French and Italian delegations have supported me. I have to say that I find the report very disappointing. It evades the central issue, which is that an intervention price for pigmeat is purely theoretical. Pigmeat levies are based on cereals, and—as with poultry—pigmeat MCAs should also be based on cereals. So far, the Commission's only proposal is to increase the basic price of pigmeat by 3 per cent.—an increase which would have no direct impact on producers' returns but would increase MCAs. I have had no hesitation in saying, therefore, that I will not accept an increase in the basic price unless we get a change in the level of MCAs paid on our imports.

As for the main body of the report, suffice it to say that its conclusion that MCAs should be phased out over seven years sidesteps the real problem, which is that the so-called common prices are based on the values of the joint float currencies—in effect, on the German mark. The real level of common prices therefore varies with every fluctuation in the value of the mark. The report does not consider how the system could be adjusted to meet this problem or how common prices could be fixed in more realistic terms.

Document R/27/78 is the Commission's proposal for a legal framework for the continuation of the United Kingdom Milk Marketing Boards. The boards have provided the United Kingdom with a valuable instrument which has allowed us to preserve the system of doorstep deliveries, which is desirable both on economic and social grounds. While other countries in the Nine have witnessed a calamitous drop in the consumption of liquid milk over the last 12 years—Germany by 36 per cent., the Netherlands by almost 50 per cent., and Denmark by 40 per cent. for example—our orderly and vigorous milk market has continued. The fall in United Kingdom consumption over the same period was only 2 per cent.

The loss of the daily delivery round would, as all Continental experience shows, lead inevitably to a marked drop in consumption and, therefore, to increased sales into intervention of butter and skimmed milk powder. I know that the right hon. Member for Yeovil (Mr. Peyton) has made light of this surplus, but the fact remains that the dumping of excess butter at give-away prices to Russia is an affront to most people in our country.

I have therefore been at great pains to get these points across to the Commission, and I was glad to be able, broadly, to welcome its proposals when they were published before Christmas. Nevertheless, there are difficulties in the proposals for us. The requirement that 50 per cent. of production be consumed in liquid form is restrictive; we need to protect Northern Ireland, which has its own problems; too many producer-retailers would be allowed to opt out of the scheme and the five-year polls of producers militate against long-term planning. But at least the proposals offer an opportunity for a secure basis for the boards within the framework of Community legislation.

Unfortunately, some of my colleagues in the Council seem to see difficulties in the Commission's proposals. I do not for one moment underrate the difficulties ahead, but I believe that I have the backing of the whole House when I say that one important objective must be to see the future of the boards made secure.

Mr. Peter Mills (Devon, West)

I wholeheartedly agree with what the right hon. Gentleman is saying about the Milk Marketing Boards. Has he suggested to the Community that it might be very wise to take a lesson from our boards and seek to expand that system in the Community?

Mr. Silkin

Yes, Sir. This is very much in my mind. I do not want to go too much into the objections now, because I have noticed that objections in the Council of Ministers of recent weeks seemed to be wider than the purely narrow point that one was debating.

Documents R/3200/77, R/3200/77 addendum 1 and R/534/78 between them explain the Commission's approach to the price proposals and give the detailed changes which the Council will be discussing, and R/3295/77 gives the Commission's assessment of their financial implications.

It is, of course, prices that lie at the centre of the common agricultural policy and form the main subject of the prolonged and difficult negotiations we face every year at this time. For very good reasons, which I have frequently explained to the House, we have found ourselves in previous years negotiating against great odds to secure a fair and sensible outcome. To too many of our European partners increasing the level of farm prices has seemed a desirable end in itself, for reasons of internal policy. Our remit, on the other hand, has been to prevent excessive price levels, which, we believe, damage the whole Community. But in present circumstances they damage United Kingdom interests more than those of other countries. It is natural, therefore, that we fight the hardest every year to hold down price increases.

CAP prices affect our economy in three important ways. They govern the price of most of the food which the United Kingdom consumer buys and thus influence our counter-inflation policies and our living standards; they affect the general cost of running the CAP, to which we pay a major share through our budgetary contribution; and they affect the cost of many of our imports, which in turn affects the balance of payments and our trading relations with other countries. All these effects taken together can make a substantial difference to our economic performance.

We have had a timely reminder of this with the publication last week of a summary of the latest study by the Cambridge Economic Policy Group. The study draws a number of conclusions, but there are three in particular that I would emphasise. First, the direct cost of the CAP to the United Kingdom balance of payments is estimated to be currently about £1,000 million per annum and will probably rise to £1,200 million at 1978 prices by 1980. Secondly, food prices here are higher than they would have been if we were not applying the CAP.

Mrs. Elaine Kellet-Bowman (Lancaster)

Are Messrs Wynne Godley and company still assuming, as they frequently do, that we are concerned with pre-inflation prices?

Do they not know that we did not buy the bulk of our sugar and butter at world prices before joining the EEC but at Commonwealth Sugar Agreement prices and at special prices from New Zealand, and that New Zealand is no longer prepared to accept those low prices?

Mr. Silkin

I wish that I had not given way. The hon. Lady can perfectly well read the study for herself.

Mrs. Kellett-Bowman

She has read the only report available.

Mr. Silkin

In that event the question seems to be totally immaterial and irrelevant. Let me give an example. The hon. Lady mentioned New Zealand butter. The Wynne Godley team seemed to me to be seriously overstating the figure for butter, not understating it. That figure did not take into account that, without the CAP, butter coming from Europe to the United Kingdom would be cheaper, not more expensive.

I should like to finish the line of argument that I was dealing with. I shall then try to reassure the hon. Lady, if it is possible—which I begin to doubt—of what is the Government's view on the matter. I said that there were three points that I wanted to emphasise, and I have dealt with two. The third point is this. To the extent that our economic expansion, says the Wynne Godley team, is constrained by the balance of payments, the real cost to our national income and output could certainly be larger than the direct cost.

Of course, the precise level of the figures is open to argument. That I agree. They depend critically on the levels of commodity prices outside the EEC. I have no doubt that there can be much argument about the extent to which a balance of payments saving could generate further growth within the British economy. I believe that the calculation of a 12 per cent. increase in retail food prices as a result of the CAP may be somewhat on the high side. But, given present real Community and world price levels, when I consider the cost of the CAP I must tell the House that I think that Mr. Wynne Godley and his team have got it pretty well right. The figures involved may seem to the House to be large, but there is in fact nothing new in this assessment. Indeed, as the study says—this is why I asked the hon. Lady to read it—after making allowance for inflation the overall cost quoted is very close to what was forecast in the 1970 White Paper on the United Kingdom and the European Communities.

It seems to me that there are a number of important lessons to draw from this confirmation of the size of the economic burden which the CAP represents. The study shows how right we have been as a Government to make our central aim for the reform of the CAP the reduction of Community agriculture prices in real terms. It shows that two-thirds of the cost to the United Kingdom arises from the money that we pay to the Community budget. If we can get the cost of the CAP under control—and this means basically eliminating the structural surpluses—we can make a big reduction in our own net payment. We cannot, therefore, afford to relax our determination to prevent unjustified increases, and this year, as last year and previously, my intention is to use our full negotiating strength within the Council of Ministers towards this end.

Mr. Corbett

Will my right hon. Friend confirm that the £1 billion which the Cambridge economic survey says is the real cost of the CAP to people of this country is in addition to what the right hon. Member for Yeovil (Mr. Peyton) and his party want to do by doing away with the discrepancy of the green pound which, if my memory serves me aright, comes out at exactly an extra £1 billion, or £50 per year per family for everyone in this country?

Mr. Silkin

Mr. Wynne Godley was dealing with that situation.

Mr. Jerry Wiggin (Weston-super-Mare)

rose—

Mr. Silkin

If the hon. Member for for Weston-super-Mare (Mr. Wiggin) wants to intervene upon an intervention, I shall sit down to allow him to do so. But apparently he prefers to remain seated.

Mr. Wiggin

Will the Minister confirm that not only the present Government but all their predecessors, including previous Labour Governments, have always thought it right to support British agriculture? In doing so, there has to be a cost of some sort over and above the value at which food can be bought at world prices. Is not the Minister making yet again the old point that if we support British agriculture it is costly to the British taxpayer or consumer? Would it not be better for him to divert his efforts towards making it more efficient instead of complaining about it?

Mr. Silkin

That is a fair point to take in relation to the point made by my hon. Friend. It seemed quite apposite. I am sure that the hon. Gentleman is quite right. Mr. Wynne Godley was dealing with the present position, not the never-never land that Conservative Members, if they were unfortunate enough ever to be in charge of our destinies, would deal with in the next two or three years or whenever it is. So he is perfectly right on that.

But Mr. Wynne Godley and his team were talking about the direct costs. They were talking additionally about an indirect cost. The argument of the hon. Member for Weston-super-Mare is the argument of those who believe that it is right to increase farmers' prices regardless of what they can sell. Basically, at the root of the common agricultural policy is a system which puts hundreds of thousands of tons of foodstuffs into store rather than into the mouths of human beings. That is precisely what would happen if the hon. Gentleman's policy were followed. I am glad that it has not been followed.

That demonstrates another point I wish to make. Up to now, we have maintained our fight in the face of opposition from the Conservative Party. I had hoped that this year we might have some support from the Opposition, particularly after the vote last week in the European Assembly. A conversion, even at this late hour, will enable me in the Council to speak on behalf of a united nation against those who demand higher prices regardless of the real interest of the ordinary people of our country. I am sorry that that has not been the effect of this debate, but at least we know where we are. The hon. Gentleman put to me very clearly that at least a significant part of the Conservative Party—that was what I thought the hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) was saying, too—wants higher prices.

All this shows that we have been right, too, in our policy towards the green pound and towards the special butter subsidy. The Opposition have chosen to argue in the past that we are humiliating ourselves by insisting on Community-financed MCA subsidies on our food imports. The right hon. Member for Yeovil recently described it in these terms I now turn to the European taxpayer, who deserves some mention as he has been paying quite a substantial contribution to our food costs … averaging more than £1 million a day".—[Official Report, 23rd January 1978; Vol. 942, c. 974–5.] He then went on to attack what he called my "mendicant" attitude. The truth is that, so far from being a net receiver of benefits, the United Kingdom is, as the study shows, transferring resources on a large scale to the other member States of the EEC.

I must tell the House that in these circumstances I feel no inhibitions whatever about our benefiting from MCA subsidies on our food imports. I feel no regrets about having negotiated the special butter subsidy last year. And I am in no doubt that the policy I have been following on the green pound is the right one in the national interest.

Certainly, Her Majesty's Government intend to bring the philosophy of that policy fully into the price negotiations. We shall fight for a settlement which attacks the structural surpluses at their roots and we shall fight to preserve those national institutions, such as the Milk Marketing Boards, which are suited to our national needs and have proved themselves over the years.

Accordingly, I find no difficulty in accepting the amendment in the name of my right hon. Friend the Member for Battersea, North (Mr. Jay) and the names of other right hon. and hon. Members. I am sorry that, owing to an indisposition, my right hon. Friend cannot be present today. The wording of his amendment, it is true, is stronger than that of the Government motion, but the spirit behind both motion and amendment is the same—an awareness of what reqires to be done to amend the CAP and a resolve that it shall be done.

4.42 p.m.

Mr. Michael Jopling (Westmorland)

I begin by declaring my interests in these matters as a farmer.

The Minister has initiated the debate in a way which, I fear, did not find as thoughtful and as full of information as we might have expected from him on this occasion. But he has initiated the debate on a highly diverse package, which, as the hon. Member for Hemel Hempstead (Mr. Corbett) said before we began, is an extremely difficult package on which to make a co-ordinated speech, in view of the breadth of what we are talking about and the relative shortage of time that we have.

I should like to begin by doing what I am sure the Minister would have wished to do, and I do so not in platitudinous way. That is to say "Thank you" to the Agriculture Sub-Committee of which my hon. Friend the Member for Devon, West (Mr. Mills) is Chairman. It does an extremely helpful job in drawing these matters to our attention. The danger is that in such a short time and with such a wide breadth of subjects, it is so easy to leave things out. I am sure that I shall do that, although I shall do my best to avoid it.

Undoubtedly, of the documents that we are discussing, that which has the widest immediate importance is document R /3200/77 on the Commissions price proposals for the next year. Basically, these consist of proposals amounting overall to an increase in institutional prices of 1.9 per cent. The Minister said that he was sorry that the Opposition were not supporting him in trying to maintain that level of increases in prices, but he may recall that during the debate that we had on the green pound devaluation, we made it perfectly clear that we supported that. Indeed, we consider that a rise in prices of this sort—1.9 per cent. is quite adequate in the circumstances.

We believe that for commodities which are in structural surplus the market forces must operate in resisting further expansion and attaining in certain circumstances an actual cut-back in production. That is the basic truth. The Minister said, quite rightly, that it is wrong to have a policy that allows, willy-nilly, production to increase regardless of the consequences. We believe very strongly that it is a basic truth, and one with which few farmers would disagree, that farmers do not have a God-given right to produce more and more food which can be neither consumed at home nor sold abroad at sensible prices.

Therefore, for commodities which are in surplus we see little case for a rise. The principal document refers to these commodities—milk, wine, sugar, beef, olive oil and cereals. It also contains an acknowledgement that high prices under the CAP have tended to over-stimulate production and have had a negative effect on consumption. As the Minister rightly said, in many cases high prices damage us more than other countries in the Community.

Of course, we are all aware that the Commission's method of calculating what the rise should be—what it describes as the objective method—came out with the need for an increase in prices of 4.2 per cent. We believe that that would be wrong. Indeed, we believe that in many circumstances there is a good case for a nil increase in certain commodities. However, the fact is that even with these very heavy increases in prices it will mean, to many producers throughout the Community, a negative increase in prices in view of the way that costs of production have increased during the last year.

Therefore, the Opposition's message is that we support the vote of the European Parliament. My hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) played a very prominent part in that vote and will seek to catch your eye, Mr. Deputy Speaker, towards the end of the debate. The European Parliament certainly did a good job on that occasion.

We understand that it is a good deal easier for us in the United Kingdom to ask for very small increases in prices, because we have already agreed in this House that it would be right for us to have a 7½ per cent. green pound devaluation, and this, added to the increased prices as a result of the phasing out of transition on 31st December, will give reasonable increases to the United Kingdom farming industry. But this means, as we said during the debate on the green pound earlier in the year, that the Government have the ability unilaterally to help United Kingdom agriculture regardless of what might be decided at Community level.

Mr. Peter Mills

Does my hon. Friend also agree that, besides the very important point that he is making, it is also a step in the right direction as regards parity, and the fact that, British agriculture being in the Common Market, we should be moving towards levelling up prices?

Mr. Jopling

I am most grateful to my hon. Friend. I shall be dealing with that precise point when I come to other commodities, such as beef, in a few moments' time.

What farmers in this country cannot expect is to get price increases both from green pound devaluations and from substantial institutional price increases. But the benefits that will go to farmers as a result of green pound devaluations are only belated moves to bring the industry to that position of fairness and parity with the rest of the Community that it was led to expect when this country joined the Community.

Therefore, we believe that we must be prepared to move towards the end of very large levels of MCAs and, therefore, green pound discrepancies. As the House knows, we said at the turn of the year that it would be our policy to eliminate the green pound discrepancies that existed then over a period of between two and three years. We are still convinced that this is in the best interests of consumers in the long run, by ensuring that more food comes from our own resources and that the phrase "food from our own resources" does not become a hollow platitude, into which the Government have turned it during the last year or two.

Mr. John Watkinson (Gloucestershire, West)

On the question of parity, does the hon. Gentleman accept that the unit of account, as my right hon. Friend the Minister has pointed out, is based fundamentally on the German mark, and that if we move to parity, what we shall be having in this country, effectively, is German prices for foodstuffs without the German standard of living?

Mr. Jopling

I shall come to that point later. One of the disadvantages of the debate is that we have no opportunity to discuss the proposals to form a European unit of account. I think that when we are able to debate that subject I shall have a better opportunity to deal with the hon. Gentleman's point of view.

Mr. Corbett

Will the hon. Gentleman say how he squares his support for very modest increases in prices across the board with his commitment, repeated today, to widen out the green pound discrepancy, which would add £50 a year to the shopping costs of every family in the land? How do the two things live together?

Mr. Jopling

We are not in a position of surplus in this country. We believe that it is absolutely tragic for us to witness the decline in food production in Britain which has taken place, in the last two years in particular, under the present Government. We believe that these trends should be reversed. We believe that the farmers and agriculture can contribute to a much greater extent to the health and to the economy of this country.

The Minister made much of the report which Mr. Wynne Godley and others produced last week. The only point that I want to make about it is that Mr. Wynne Godley and his associates are keen supporters of the old system of support through guaranteed prices and deficiency payments.

Mr. Corbett

There is nothing the matter with that.

Mr. Jopling

I shall tell the hon. Gentleman what is the matter with that system of support. I made this point in winding up in the debate that we had a few weeks ago on the green pound. The latest estimate that I have is that to move back to that system of agricultural support would mean extra demands upon the Treasury of not far short of £1,000 million a year. That is the point that Mr. Wynne Godley and others miss on these occasions.

Mr. Geraint Howells (Cardigan)

The hon. Gentleman referred to a guaranteed price deficiency payment. We are fortunate that sheep farmers have a guaranteed price deficiency payment for lamb. The present system has cost our Treasury very little in the last 12 months, so why abolish it?

Mr. Jopling

I ask the hon. Gentleman to consider how much it would cost in certain commodities—

Mr. Howells

Very little.

Mr. Jopling

—where we find that the world price is so much lower than the domestic price. For example, I ask the hon. Gentleman to consider the position of cereals in that context.

I now turn to the individual commodities, and first to milk, which I regard as the most important of them. Here we have a classic example of a commodity which is in surplus, and where restraint on a European-wide basis must be applied. We are still sitting on a surplus of 845,000 tons of skim milk powder in intervention, and even that is reducing in quality as time goes on. We must take more effective steps to eliminate surpluses, and, in relation to the matters of which I have already been speaking, we have also to try to avoid further surpluses being created.

Various methods and schemes arise in these documents in regard to the encouragement of consumption of milk, butter and other commodities. I agreed very much with the Minister when he said that exports of these surpluses to the Soviet Union are an affront. I can understand that the Commission takes a view that that is the cheapest way of dealing with the surpluses, but I agree entirely with the Minister that they are not practical in political terms. They infuriate our constituents, as we all know.

One of the problems is that these schemes are very often too slow to come into operation, and they do not work as effectively as they might. For instance, I very much welcome the mention in document R545/78 of making better use of liquid skim milk. It has always seemed to me to be a major mistake not to save drying costs of liquid skim milk by entering into long-term contracts with pig farmers for them to receive such milk at favourable prices.

This makes a great deal of sense, and I cannot understand why the Commission has been so slow in introducing schemes of this sort. Certainly we would support the steps proposed to make it more difficult to sell skim milk powder into intervention. In many cases it is too easy to sell to intervention. In some States within the Community this is the whole basis of the milk economy, largely because of too high prices, where production is carried on purely for the purpose of selling into intervention.

We also support that part of document R545/78 on aiding those who want to get out of milk production. On the other hand, we are very much opposed to the proposal in document 3200/77, in the last paper of the addendum, for a ban on investment aid for the dairy sector. This seems to be a backward step, and I hope very much that the Government will do their best to resist that proposal.

As to the future of the Milk Marketing Boards, the Conservative Party has consistently expressed its support for all our marketing boards, but we recognise that certain parts of the milk boards' activities might have to be altered. However, we believe that it is absolutely vital—we fully support the Government in their efforts—to preserve the basic functions of the milk boards and of the structure of milk marketing in this country. We think, above all, that it is right that the milk boards should preserve their powers to be the sole first buyers of milk and to have the right to pool prices.

To put in another way what the Minister said, it is no coincidence that the United Kingdom is almost the only country in Europe to have such a statutory organisation, while at the same time it is the only one to have such a large market for liquid milk sold on the doorstep. The Minister's figures, showing the extent to which liquid milk consumption in this country has dropped—far less than in the other countries he mentioned—illustrate this point very clearly.

We are glad to see, in document R27/78, that there are firm proposals to maintain the status of the Milk Marketing Boards, but we have reservations over a number of matters which appear in that document. We believe, for instance, that to have a poll every five years would put an unnecessary strain of uncertainty upon the boards. We are not happy about the insistence that sales of liquid milk should stay over 50 per cent. I am sure that they will, but nobody can be sure of what will happen, perhaps on a temporary basis, in the future. Therefore, we hope that that matter can be negotiated out of the terms.

Most particularly of all, we are concerned about the proposals to allow certain producer retailers to operate outside the milk marketing scheme. We believe that this could drive a coach and horses through our present excellent system of milk marketing. We regard it as a most dangerous proposal, especially in view of the very high figure of 150 cows as the cut-off point. The Government, therefore, must persevere. It is essential to present the Community with a case showing that the milk boards strike a fair balance between the interests of all those concerned—producers, retailers, manufacturers and consumers. We shall continue to support the Minister in his efforts in this regard.

We have heard reports recently that the Council of Ministers is professing to be extremely unhappy about even the inadequate proposals that the Commission has made. To what extent this is caused by genuine opposition, or is another example of the instinctive reaction to the way in which our Minister seems to put his case, I do not know. However, I cannot think of any other issue on which the whole House would be unanimous in opposition but that of failing to get a satisfactory solution to the position of our milk boards.

I hope that the Parliamentary Secretary will give us the details of the way in which the Government intend to reply to the letter from Commissioner Gundelach on 22nd December. There are a number of other points to which I have not referred, which I hope will be raised in the debate.

The beef sector has been extremely badly hit in the last few years. The latest figures show that the number of cattle under six months old is down 8 per cent. on the previous year. The beef breeding herd is down 6 per cent. on 1976 and 15 per cent. on 1974. Great ravages have been caused to the beef industry by Irish imports, and this reflects the Government's failure to act on the green pound issue.

We welcome the proposal in document R/545/78 to continue slaughter premiums for beef. This must be right and we support changes in the intervention system, if these are designed to reduce the volume of beef that is produced for intervention in certain countries.

On the question of pigmeat, we have the familiar point about the way in which the MCAs are calculated. We are still convinced that the Minister missed the boat in 1976. However, I think that we shall probably argue about that for ever. It is still an urgent matter.

Mr. John Silkin

Would the hon. Member kindly tell the House which boats the French and Italians have also missed?

Mr. Jopling

I do not think that at that time the position was so acute for the French and Italians as it is now. The only evidence that we have from the Minister about this is the letter from the Danish ambassador saying that he does not want us to make this change. I hope that since the French and Italians have, in the last few months, become so strongly in favour of a recalculation of pigmeat MCAs, the Minister will take this new opportunity, with his colleagues who are taking a much stronger line, to force these changes on the Community.

Mr. Silkin

I do not think that it is a case of taking a stronger line. The line has been strong all along. I cannot have the hon. Member doing his Stalinist trick of rewriting history. The French and Italians have been pressing this for more than six months and the reply by the Danes to them was the same as it was to me. Therefore, I ask him again which boats he thinks that they have missed.

Mr. Jopling

I said that we believed that the right hon. Gentleman missed the boat in 1976, and that was a good deal more than six months ago. We believe that the Minister now has the opportunity of a new chance.

The National Farmers Union told us that it did not believe that we should agree to the 3 per cent. increase proposed in pigmeat until the recalculation had been agreed. I gather that the Minister intends to take that line. If so, we support him in making a stand with the French and the Italians on this matter.

I hope that the Parliamentary Secretary will tell us how the Government intend to recalculate the pigmeat MCAs. Do they intend to do a total recalculation moving along the lines of feeding-stuff prices, or do they intend that the MCAs should be paid on a lower percentage of the basic price?

The main point about cereals is the support system for bread-making wheat. There is still a very unsatisfactory specification for it. Evidence has shown that the machinability test for wheats that are capable of making bread is not satisfactory. Now I understand that we shall have two reference prices for bread wheat. If one system was unsatisfactory, it is very doubtful whether we can manage with two. I hope that that will be resisted.

The problems of isoglucose and starch are interlinked. We are extremely unhappy about the Commission's proposals. There seems to be an excessive and undue interference by the Commission with the industries involved in producing isoglucose and starch.

In the case of isoglucose, this involved new investment in a new technology a few years ago. Firms took a risk, with risk capital, and set up in business. Then the Commission clobbered them. Of course we understand the thinking behind that, when there is a sugar surplus of 3 million tons, but we have our doubts whether it is right for the Community to be so Luddite in this situation. We doubt whether it is right for firms which had already committed themselves and taken these decisions before the policy of the Commission was announced.

I suggest that the Minister may consider that this is unfair, and suggest to the Commission that where firms can show that they had already set up in business to produce isoglucose, their individual plants should be allowed a levy-free tonnage in order to enable them to justify the original investment. It is quite a different matter for those firms which went into business and put capital in after the policy of the Commission was announced. They were taking a commercial risk with their eyes open. However, there is great difficulty, and problems of integrity for firms that went in before they knew the Commission's policy.

A similar argument could be made for starch. There is great concern at the proposals to terminate refunds on imported maize. Terminating these funds will cause great difficulties if the policy is carried through. The Commission is concerned about the cost of the refunds. When one looks at the history of the imposition of levies on maize and the way in which refunds have been paid on the finished product, one sees that the Commission has organised this whole affair extremely badly.

When grain prices were high between 1973 and 1975, it implied a low import levy on the maize purchased. At the same time, the Commission paid very high refunds. However, since grain prices have subsequently fallen and the Commission has not had to pay high import levies, these firms have been getting very low refunds. To put it into figures, between 1972 and 1975, when we had high grain prices, the net outflow from the Commission was 231 million units of account. Yet during the last few years, including the estimate for 1978, there is to be a net inflow to the economy of 238 MUAs. This seems a very temperamental way for the Commission to handle this important industry.

May I make a suggestion which the Minister may consider proposing to the Commission? Why cannot the amount of refund be tied to the amount paid out in import levies? That would be a fair way of handling the matter when we remember that the industry should have some sort of refund, because the residues, the agricultural feeding stuffs, are intended to compete with imported animal feeding stuffs which come in levy-free. Therefore, there is no case for the residues to have a refund.

I believe that it would be fair to tie the refunds to the amount paid out in import levies in order to put the matter on a reasonable level. In that way firms could calculate ahead where they would be placed in terms of levies and refunds. The discrimination between industrial and food starches seems to be a nonsense, and I hope that the Government will oppose that attitude.

The background to the matter is that the starch industry has expanded. It has invested £90 million in recent years, and intends to increase its capacity from 900,000 tonnes, to a figure of 1.2 million tonnes. I was glad to see that the European Economic and Social Committee rejected the Commission's view that starch used for food and animal feeds shall no longer qualify for Community refunds. I hope that the Minister will re-examine the situation, because it is causing a great deal of concern.

Let me try to sum up my remarks, I do not advise my hon. Friends to vote against the motion. Indeed, we also support the amendment. We believe that our food-producing industry is in much better heart since the House of Commons took the basic initiative in the debate that we had on the green pound a short time ago. If that joint action had not been taken by all the Opposition parties, our farming industry would be in much worse heart than it is

Before that debate the Government's policy was relentlessly grinding down our capacity to produce our own food from our own resources. The decline in our breeding herds made that quite clear. It was right that the House moved in and elbowed the Minister aside so that a proper course of action could be embarked upon.

The recent policies of the Government have been aimed at serving the short-term interests of consumers. In the end, these policies would have been entirely against the interests of consumers, when imported foods became expensive and scarce and we found that our own supplies had run right down.

Thank God that the Opposition parties had the courage to reverse this down- ward trend. Heaven help us if the Labour Party ever again finds itself in a position in which it has an overall majority and cannot be brought to book by the Opposition parties.

5.12 p.m.

Mr. Robin Corbett (Hemel Hempstead)

I beg to move, to leave out from first "Boards" to the end of the Question and to add instead thereof: 'calls upon the Government to insist upon the maximum restraint on all common agricultural policy prices and especially on the prices for milk products, cereals, sugar and other products in structural surplus as a result of the operation of the common agricultural policy and to press for an agreement which fully safeguards the Milk Marketing Boards and the discharge of their essential functions'. As hon. Members will have noticed, the amendment appears in the name of my right hon. Friend the Member for Battersea, North (Mr. Jay).

It was interesting that the hon. Member for Westmorland (Mr. Jopling) found it easy to agree broadly with the Government's view on the myriad of documents that are now before the House. I was happy to hear the hon. Gentleman say that he also accepts the amendment. But it is surprising that the hon. Gentleman says that there should be no increases in commodities that are in surplus, but still overlooks the fact that it is the operation of the CAP that encourages the production of surpluses. That has been demonstrated since this policy was put into operation, and we were welded on to the side of this policy without the British people having been asked about the matter.

The hon. Gentleman appeared to be saying that these matters were no longer to be dealt with through the mechanism of the CAP, but that there should be more scope for national intervention and for us to pursue national policies and needs under the umbrella of the CAP. Perhaps his hon. Friend in his reply will ponder that point, because that is the inference that I draw.

The hon. Gentleman employed some interesting arithmetic in assessing what it would cost to go back to the old system. His figure of £1,000 million was interesting. According to the Cambridge economic policy review, that happens to be the precise annual cost of our adherence to the CAP at the present time. We are not arguing about the money involved, but there is a difference in the results that accrue, especially to the consumer.

At the moment the £1,000 million goes to jack up prices of food to pay for the storing of high-cost food produced by inefficient farmers in the Community. That £1,000 million could have been used to produce cheaper foods in our shops and to help our consumers. If a referendum were to be held among consumers on the question where that £1,000 million should go, I think that they would vote in favour of our returning to the traditional method, which experience has shown is better able to deliver food at a more level cost than does the abortion known as CAP.

Mr. Stoddart

Does not the Cambridge economic policy review show that the figure is £1,000 million across the exchanges, and does that not mean, in internal terms, the generation of new investment at £3,000 million? That is the benefit to this country as a whole, and in that case would not the £1,000 million support generate the actual amount required to pay for farm support from internal sources?

Mr. Corbett

My hon. Friend is right about those figures, and is right to say that the full effect on real national income would be as much as £3,000 million a year. He is right to say that those assets, if we were not tied to CAP, could be more wisely spent in other directions.

I never cease to marvel at the ability of the hon. Member for Westmorland and his hon. Friends to do the splits on this subject. At one moment they support the proposals and then make passing and fleeting references to the most expensive piece of policy ever devised, namely, the pledge, commitment, wish or hope, call it what one will, of the Opposition to wipe out the discrepancy in the green pound value in two or three years' time. The consequences of undertaking that course by the Opposition is that it would put £1,000 million on to the price of food, on top of the other increases that we have come to accept as natural.

It is no use the consumer being misled by being told that this will add only 0.4 per cent., or whatever may be the figure, to the retail price index. What we know very clearly is that because of the workings of the CAP the effect on the consumer is devastating. If this continues, any hope of voluntary effort to control inflation will go out of the window.

Mr. Jopling

Will the hon. Gentleman elaborate his argument? Will he try to put into perspective the contrast between what we have proposed, which means an increase in the cost of living index of about two-fifths of one penny in the pound in each of the three years, and the way in which the index has increased over the past four years since the Government came to power by no less than 85p in the pound? I hope that he will not fudge the issue.

Mr. Corbett

It is all very well for the hon. Gentleman to talk about two-fifths of one penny, but consumers at supermarket check-outs pay bills not in two-fifths of one penny or in percentages but in pound notes. Their best interests are served by the continuing success of the policies of my right hon. Friend in keeping farm price increases to a minimum, and the continuing and increasing success of the Government's policies in keeping inflation under control. It is no good the hon. Gentleman and his hon. Friends trying to juggle around with figures. It is the value of the pounds that housewives and others hand over at the check-out that matter. I do not understand why the official Opposition deliberately go for a policy of dear food.

This week saw the publication of the latest chapter in the national food survey. I hope that right hon. and hon. Members have seen it. It shows, for example, that average liquid milk consumption is the lowest recorded in any post-rationing era. That comes after a period of the fastest-ever price rises in the same era. There may be those in the industry, whether producers or distributors, who see some connection between those factors. Milk consumption is falling. As the survey states, it is now at the lowest level of any period in the post-rationing era.

According to the survey, butter consumption is 2 per cent. down, despite my right hon. Friend's success in achieving a subsidy that meant that in the previous quarter butter was 8 per cent. cheaper, in real terms. Despite that reduction, consumption decreased. The consumption of lamb is static. It is no good anyone involved or concerned with the industry believing that we can continue, whether we are for more price increases or against them, to ignore such statistics. The situation that they represent will have a great and vital effect on the future of the industry.

We are seeing the warning signals. At a time of falling consumption of some major commodities damage will be done both to the producer and the industry if those who advocate price increases go screaming for wild increases across the board on every commodity. In the long term that will have only a damaging effect.

We have had some cross-chat about price levels inside and outside the European Economic Community. I hope to demonstrate that prices within the Community over many commodities have been consistently at much higher levels than world prices. The latest figures produced, which relate to 1976–77, are in one of the documents now before us. If we take the world price as 100, it is to be seen that the Community price for common wheat was 204. In other words, the Community price for that commodity was more than double the world price. That, incidentally, is at a time of almost record wheat production. With a world price of 100, the Community price for maize in 1976–77 was 163. Again, taking a world price of 100, the Community price for sugar was 176. The Community price for butter was 401, against a world price of 100. Within the Community prices for butter were four times those obtaining on the world market.

It is quite wrong for the House to be told again that it is a myth and a legend that there are regular food supplies available from outside the Community and that prices are lower than those within the Community. The figures that I have put to the House demonstrate that the reverse is the case. If right hon. and hon. Members want to adduce arguments to support what they see as the stability of the industry within the Community, that is another matter. However, it is wrong and misleading to pretend that cheaper food supplies are not available on the world market.

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

The hon. Gentleman says that there are cheaper food supplies on the world market. Does he agree that they are available because there is a lack of demand? Would not the balance be upset if we started buying on the world market?

Mr. Corbett

I am not quite sure that I follow the hon. Gentleman, although I acknowledge that he makes a fair point. I do not believe that the answer lies totally in one direction or in another. I am saying that there is a judgment to be made. At present we are enabled only with great difficulty to take advantage of cheaper food supplies on the world market. When surpluses arise within the Community, the stocks are bought in at intervention prices and placed in storehouses. I am arguing that there is a balance and a judgment to be exercised.

Many hon. Members have been sent by the Consumers Association a report of European consumers on the CAP. It is a most helpful document. I point out to the hon. Member for Westmorland that it suggests that instead of across-the-board increases in commodity prices it would be better for direct payments to be made out of taxes. It is argued that that would be a fairer and more efficient method of charging what amounts to a tax on food. That is probably a reference to direct national payments out of national Exchequer funds instead of trying to use the CAP for social aims that are not properly a part of its operation.

I am sure that hon. Members on both sides of the House have been pleased to receive a document from the Royal Association of British Dairy Farmers, which contains what can only be described as a glowing testimony to the value of the Milk Marketing Boards in the United Kingdom. The Royal Association speaks for all sectors of the milk industry. It has been in the business for more than 100 years. The document states: Not only have they —the boards— been able to develop order, confidence and justice in the marketing of farmers' produce but, through highly efficient management and relationship with the processing and distributive trades, they have ensured that the health and welfare of consumers have also benefited. In a nice size of nutshell, that makes the case for the continuation of the boards.

I am happy to be able to agree with the National Farmers Union in its concern over the Commission's proposals for the future of the boards and the quinquennial polls on which it seems to be set. I agree that they would have an unnecessary and disturbing effect on the industry. There is no great argument or debate in any section of the industry, despite differences over other matters, that our boards perform a vital job in the buying of milk and its handling to the farm gate.

We have surely demonstrated that the achievements of the Milk Marketing Boards, with other interests, have given a lead to other members of the EEC. I am happy to see that the co-responsibility levy recognises that there is a great untapped market of fresh milk products and liquid milk. This must be tackled.

I hope that the Minister has seen the Early-Day Motion in the names of myself and a number of my hon. Friends and I hope that he will be able to persuade the Government that, on the back of the levy, we should return to a system of free school milk for all pupils in full-time education up to the age of 16. They should be given fresh milk, its equivalent in semi-skimmed milk, such as flavoured milk, or yoghurts, through the school meals service. The money is there and the industry can produce the necessary amount of milk. Serving milk through the school meals service might overcome some of the objections of teachers' organisations.

When the money is available—the annual cost in England and Wales is no more than £14 million—we should restore this service. It would be welcomed by all sectors of the dairy industry. In addition, if the Government's commitment to phase out the £362 million a year subsidy on school meals leads to a succession of price rises, it would be wholly admirable if yoghurts or milk products were supplied in schools so that children could benefit.

We welcome the decision of the Council of Ministers to ask the Commission to think again about the ending of refunds on starch. The withdrawal of the refund from the starch from maize would have a particularly severe effect in this country because we use that starch in our food industry. The immediate impact would be a rise of about 10 per cent. in product prices, though the impact on food price increases would be less. Continuing the subsidy on industrial starch and withdrawing it from maize starch appears to offend what I understand to be one of the underlying rules of the EEC, namely, that it is wrong to distort competition.

The proposition is no more than an attempt to discriminate against other kinds of starch and their end uses in the food sector in favour of potato starch and its Continental outlets. The proposals are contrary to the United Kingdom's interests, which are principally in the food sector and are unjustifiable in Community and United Kingdom terms and in terms of simple fairness. The Minister may recognise those words, as he used similar expressions in a letter to my right hon. Friend the Member for Battersea, North earlier this year.

I am please to confirm what the hon. Member for Westmorland told us. We even have the support of the EEC Economic and Social Committee, which said: the Committee rejects the Commission's view that starch used for food and animal feed should no longer qualify for Community refunds. Underlying our debate—I am sorry that it has to be held in this form, with such a mass of documents to be considered—is the fact that alongside our proper concern about doing what we can to ensure a sensible and growing level of food from our own resources, we have to keep consantly in mind the interests of consumers. Unless they go together and are seen to go together, and unless there is a better understanding between these groups, the industry will get into trouble and consumers will get a bad deal.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Oscar Murton)

Order. Before calling the next hon. Member, I remind the House of Mr. Speaker's decision not to register speeches of nine minutes or less.

5.36 p.m.

Mr. Geraint Howells (Cardigan)

I am grateful to you for calling me so early, Mr. Deputy Speaker. It would be wrong for any hon. Member to try to speak to all the directives before us, and I shall confine my remarks to the state of agriculture in Britain and go on to the MCAs, the common agricultural price review and the future of Milk Marketing Boards and other boards.

As usual, I declare my interest. I am a farmer and vice-chairman of one of the producer boards, and I have interests in the meat trade.

I am grateful to the Minister for his excellent speech. We are taking stock of the industry and the Minister is right to stand up to his counterparts in Europe. As I have said many times, we have accepted too many directives and orders from the Europeans in the past three or four years. I am sure that every hon. Member will back the right hon. Gentleman in his determination to safeguard the interests of milk producers by retaining the marketing boards. Later this year, the right hon. Gentleman will have the opportunity to defend the interests of sheep producers when the sheepmeat proposals are brought before us.

I am sure that the Minister will agree that before we accept any proposals from the Europeans, we should ensure that we may look again at the policy of a guaranteed price system in this country. Whatever the views of hon. Members about the scheme, the majority of sheep farmers will not be satisfied if we give in to the Europeans by doing away with a guaranteed price deficiency scheme that has operated well in the last 20 or 25 years.

I return to consider the state of agriculture in this country. It has been necessary from time to time to emphasise how the production of British agriculture has a bearing on our economy.

Efficient agriculture, producing to full capacity and expanding and improving, is now recognised as being to the benefit of consumers and producers alike. As a producer I have always believed that unless we can satisfy the consumer we, as farmers, are doomed to failure. We should therefore work in harmony to ensure that the interests of consumers and producers are catered for under the CAP. The Government have acknowledged this fact. Targets were set in the 1975 White Paper which gave the industry reason to believe that its problems were being taken seriously. However, it seems that many of these targets have not been met, and it is important to examine why.

I do not blame the Government. I blame their counterparts in Europe. I hope that this evening we shall not go into the argument whether we should be a member of the Community, but instead will look at what should be done to reform the CAP from within. During the intervening period since those targets were established, one section of the industry or another has suffered from recession. Many farmers have been forced to give up altogether and others have suffered a decline in their standards of living.

The White Paper "Food from Our Own Resources" stated that The basic conclusion that a continuing increase in the output of our own agriculture over the next five years will be economically worthwhile is drawn from an assessment of the price and availability of imported food and feed and in the view of the Government would remain economically valid, whether or not the United Kingdom decided to stay within the European Community. The logic behind that has been greatly reinforced by the subsequent fall in the value of sterling, even though that value has recently steadied. The arguments for expansion were powerful before, but now that the cost of imported food has increased so markedly they have even greater significance.

The White Paper considered what were desirable levels of expansion from 1974–75 to 1980 and concluded that milk production should have gone up by 21 per cent., beef by 9 per cent., pigs by 11 per cent. and sheep by 19 per cent. We are half way through the term and we could therefore assume that the levels of expansion should have reached approximately 50 per cent. of those figures. However, the figures show a shortfall. In June 1975 the figure for cows and heifers was 308,000, and in June 1977 the figure was 314,000, a shortfall of 8.3 per cent. The total of cattle and calves is down by 16.5 per cent., pigs by 17.6 per cent. and lambs and sheep by 4.9 per cent.

It seems that this country will produce less in the next few years, and for that I blame the monetary compensatory arrangements operating in Europe and the green pound. I hope, however, that we shall not continue the argument that was conducted in our last debate on the subject.

Mr. Ralph Howell (Norfolk, North)

How does the hon. Member explain that catalogue of disasters, given that he has just congratulated the Minister on all that he has done for agriculture?

Mr. Geraint Howells

I congratulate the Minister on his stand. He must stand up to his counterparts in Europe. I am sure that the hon. Member will agree that we have received too many directives and orders from the EEC, especially those affecting small hill farmers.

Does the hon. Member recall that we on the Liberal Bench and many Labour Members fought hard to retain the hill compensatory allowance for sheep farmers in this country? The small man has as much right to farm agricultural land as the large man who farms, perhaps, 1,000 acres. Perhaps I can put the hon. Member's mind at ease by reminding him that on the occasion of that debate the Conservatives voted against small hill farmers with between five and seven hectares keeping 16 or 17 sheep qualifying for the hill compensatory allowance. That was one Common Market provision that we accepted that we ought not to have done.

Part of the cause of our troubles lies in the way in which the CAP in its present form has tended to work against the interests of British farming. Fluctuations in exchange rates have meant that the MCAs have distorted trade within the Community, and Britain, because of its dependence on imports, has come off very badly. Other States, however, have taken advantage of the system and reaped the benefit. Small wonder, therefore, that there is growing discontent among our farmers and a suspicion that we are being taken for a ride.

It seems entirely wrong that, although we are now full members of the Community, we do not have parity with other member States and have to endure a great deal of unfair competition. It is our duty, therefore, to support the Minister in calling for the MCAs to be reduced immediately and eventually to be eliminated.

Mr. W. Benyon (Buckingham)

The right hon. Gentleman does not want that.

Mr. Howells

I am sure that the Minister will take heed of the views of all hon. Members. I have spoken to him personally and feel sure that he will do everything in his power to persuade the Danes, for example, to change the MCAs on pigmeat.

The Danish pig producer last September was receiving 68p a kg for every pig produced while the British producer was getting approximately 33p. That constitutes unfair competition. The Danes were receiving a compensatory allowance of approximately £200 for exporting bacon to this country. That, too, is unfair competition, and until we have parity with the rest of the Community, our industry is doomed to failure.

We should give every encouragement to the Minister to persuade his European counterparts not to increase prices for Continental farmers at the annual review this year. I believe that they have been well treated in the past and if we are to achieve parity we shall have to change the MCAs, retain the guaranteed price system for some of our commodities and try to persuade the Europeans to accept our method of marketing. When considering reform of the CAP it is essential that we underline the value of our Milk Marketing Boards.

I believe that at last the Commission is being persuaded about the importance of our system of marketing and has recognised the potential of similar sys-terms elsewhere in the EEC. I have always thought that it is a great pity that European farmers, especially dairy producers, are unable to visit this country to see for themselves how we operate our marketing scheme, which has been run so sensibly for the last 20 or 30 years. The tendency in Europe is to oppose marketing boards of any kind, but I believe that these boards have served British farmers well.

I sometimes wonder whether the consumers of Britain recognise how extraordinarily fortunate they are in having a constant supply of liquid milk delivered to their doorstep throughout the year. That does not happen in other European countries. The only reason has been the organisation of the marketing boards, which buy the milk from the registered producers and sell it on their behalf.

We would not have a surplus of skimmed milk, or a butter mountain, in Europe if only we could change the CAP to do away with the intervention system of which I am not in favour. According to the statistics, 90 per cent. of the milk that we produce in this country is sold on the liquid market. In France and Germany only 10 per cent is sold through the liquid market. If only we could persuade the 250 million Europeans to drink more milk—to drink an extra pint of milk a day—we could do away with the butter and skimmed milk mountains that exist.

It will take many years to persuade and influence consumers on the Continent to accept our method of marketing, which has done well in the past, has got the balance right between all parts of the industry, and has looked after the interests of both consumers and producers. It is, therefore, vital to retain the Milk Marketing Board while at the same time trying to persuade our European counterparts to recognise the value of such boards.

Many United Kingdom producers would agree that it was a great pity that the Milk Marketing Board, under the Treaty of Accession, had to abandon the guaranteed price for the end product. I believe that many farmers are worried because within the next year or two they may be forced to reduce the amount of milk which they produce. Without a guaranteed price system for milk, I believe that they could be in trouble. I hope not. Our marketing systems are not perfect, but over the years they have provided stability to the industry. We must urge other members of the Community to accept the principle of marketing boards as well as a guaranteed deficiency payments scheme.

When aiming for efficiency I do not believe that the value of the part-time farmer in Europe should be derided or overlooked. In a rural community he plays a vital part in the social pattern. It is a great mistake to discourage such farmers on the grounds of economic viability, without taking into consideration their value to the community. I believe that we can expect another directive from the EEC in the near future to do away with many of our small farmers. But, living in rural Wales, I know that part-time farmers play an important part in social activities. It would be wrong of us to do away with them.

As I said earlier, it was a step in the wrong direction when we took away the hill compensatory allowance from the small hill farmers. We must reintroduce it at all costs, especially when one compares our small farms with the small farms of Europe.

We have been talking about production and consumption in this country. I am sorry that consumption of many of our commodities has declined. I hope that in his wisdom the Minister will look once again at the Social Fund within the EEC. We are continually hearing that the EEC's funds are underused, especially the Social Fund. Why not direct some of the available money towards subsidising those consumers—such as pensioners and people on small fixed incomes—who are particularly hard hit by the increased cost of food?

I disagree with the Bureau Européen des Unions de Consommateurs, which at its conference on 8th December 1977 passed a resolution stating that The Common Agricultural Policy must develop into a food policy of which agricultural policy is a part, and in which consumers have as much say as producers. A food policy would take full account of consumer needs for reasonable prices, quality and security of supply. I hold the view that our Minister has the dual role of looking after the interests of producers and consumers alike. At this moment, I believe that it should be left entirely to the discretion of the Minister to make sure that the interests of both are looked after.

Many reforms of the CAP are needed. One could go on at length to debate those reforms. I hope that over a period—it may take five or even 10 years—we shall be able to influence our counterparts in Europe and revert to the guaranteed price deficiency payment system within Europe, which has worked so well in the past in Britain. As a practical farmer, I would be willing to revert to the original system, which has served us well. I am sure that is the view of the majority of British producers.

I hope that we shall be able to change the intervention system. We can improve it a great deal. As I have said on many occasions, it is a sheer waste of taxpayers' money to throw best beef, best quality lamb, pig meat and milk into intervention. It costs millions of pounds to put these commodities into cold storage. Let us be sensible. Let us work together this time to ensure that the interests of the industry, as well as those of the consumers, are looked after in the future.

5.57 p.m.

Mr. Colin Shepherd (Hereford)

I echo the sentiments of my hon. Friend the Member for Westmorland (Mr. Jopling), when he congratulated the Select Committee on the amount of work that it has done on our behalf and on making the business before us that much more digestible. At the same time, I believe that it is too much to expect hon. Members to tackle this heap of bumph in one debate. It is rather like considering the whole of the steel industry, from the darning needle through to the automobile, in one debate. I wonder whether it would not be better to have a Standing Committee meeting all the time and considering nothing else but European legislation, because tackling it all at once means that it cannot be properly covered.

The price review is at the heart of these documents. It must be looked at in the light of the difficult and delicate balance between the needs and means of producers and consumers. I do not think that anyone will deny that during this extremely unpleasant bout of inflation the consumer is being squeezed painfully between the increasing costs of the weekly shopping basket and the not so rapidly increasing level of the housekeeping income. It is most important, therefore, that the 1978–79 price review makes "people sense".

Similarly, the producers in our country are being squeezed between fixed returns and alarmingly increased costs of production. No one will deny that a depressed agriculture will hurt our country immeasurably.

Nowhere is the conflict of requirements so marked as in the milk sector. Getting things right in the milk sector is all the more important, because of the implications and effects on so many of the other sectors of our agriculture. I am particularly concerned with the decline in liquid milk and butter sales in the United Kingdom and I shall direct my remarks in that direction.

In his opening speech, the Minister pointed out the drastic decline in liquid milk sales in various countries in the Community, but the decline in this country bears looking at as well. In the second half of 1977 there was a drop in consumption of about 5 per cent. In January 1978, when the price of milk went up to 12p, there was a drop of 2 per cent, in the January-on-January figures. In February it was marginally less than 2 per cent. The decline may be moderating, but it is a decline.

Butter consumption is expected to be down by approximately 25,000 tonnes, if matters stay as they are, to about 380,000 tonnes next year. It is apparent that at the prices pertaining in the shops, sales of butter and liquid milk are sensitive to fluctuation.

No good will be achieved if the price review has the effect of further depressing these sales. I think that the whole House would be agreed on that matter. Nevertheless, we must recognise that milk producers have incurred increased costs, although no doubt many have already been looking for ways and means of increasing efficiency.

We must look at the returns to United Kingdom milk producers and see how they will be affected in the coming year. The NFU has drawn attention to four ways, and I shall take them as the base. It refers, first, to the level of the target price in the Community, which will affect the intervention price for butter. The second factor is the rate of the green pound. The third factor is the level to be determined by the United Kingdom Government of the Milk Marketing Board's maximum first-hand selling price for liquid milk. The fourth factor is the market situation for dairy products.

I have looked at the last factor first. It is apparent that the market for dairy products is running up against its price ceiling and there will be no easy returns for producers from increased prices on that side. However, there is considered to be growth for production of cheese cream and possibly marginal growth for liquid milk.

On the third factor, producers will have to be wary in assessing what they are pressing for, since an ill-considered move might be counter-productive. That there will have to be some move in the retail price of liquid milk during the year is indubitable, as producers are facing increased costs all the time. The rate of inflation might be dropping, but it has still not disappeared. It could be that a small increase at more frequent intervals may provide the return with the leas) hiccup effect on the industry. The Government's thinking on the matter would be of great interest. Will the Minister give the matter some consideration in his summing up? What, for the sake of argument, would be his reaction to a ½p increase in June or July this year?

Turning to the first factor, milk and milk products are in surplus across the EEC as a whole. Price increases would be contrary to the Commission's other proposals to take producers out of production. It would not be reasonable for producers in this country or anywhere in Europe to expect increased support prices for the coming marketing year.

That leaves us with the second factor only—the green pound. If the retail price of liquid milk is fixed, as it is, the only way for United Kingdom producers to recover their increased costs is through an increase in the price for manufacturing purposes. That can be achieved only by further devaluation of the green pound. It is to be hoped that the 7½ per cent. devaluation will help producers' returns, but it will be the end of 1978 before butter prices come up to intervention levels, and there is that time factor.

One difficulty about the green pound devaluation is the resultant increase in the retail price of butter, which could lead to a further decline in sales. But one advantage is that the attractiveness of United Kingdom markets to liquid milk imported from the Continent declines as the differential declines. The importation of liquid milk in a form which complies with our health requirements is a potential hazard, which should not be ignored. The hazard is reduced each time the green pound differential is reduced.

It is apparent that the situation for the dairy industry is finely balanced. The proposals put forward by the Commission go a long way towards attempting to solve the many riddles involved. But we have requirements which conflict with the general European requirements. I look at the whole debate today from the viewpoint of being European. The European context is much wider than the common agricultural policy. We must not forget that.

The Government's White Paper "Food from Our Own Resources"—we have not yet had the updated version of it—states that it wants to see our milk industry expand. I think that same wish is reflected throughout the whole of agriculture in this country. Nevertheless, means already exist for providing for the increase in sales of milk from Continental sources without having to expand our industry. Will the Minister, in his summing up, give us some line on the Government's thoughts on this matter? It is fundamental to confidence in the milk-producing sector in this country.

What is the solution? A common policy must work towards creating conditions, first, where structural surpluses—that is above normal reserves for good housekeeping—do not occur and, secondly, for the disposal of surpluses which, through good weather conditions and other factors, do occur. But, as a precursor to that, the disposal of any surpluses must be tackled in ways which make sense to people both inside and outside the Community.

Mention has already been made by my hon. Friend the Member for Westmorland, and by the Minister in his opening remarks, of the disposal of butter surpluses to Russia. I am glad that the Community institutions have now recognised that that was silly, and I heartily concur. Nevertheless, from an economic viewpoint, it was a logical solution to the exercise. But economics do not necessarily make sense to people. It hurt even more when people found that the butter was being sold on to Third world countries at a profit, with the added benefit to the Russians of providing hard currency into the bargain.

At a recent gathering of New Zealanders in London, one common request was "Please do not offload your surplus dairy products on to Third world countries at subsidised prices." It does no good to us or to the New Zealanders to cut the ground from under the New Zealanders. It is an expensive way of getting no real return or benefit from our surpluses.

Both ways of external disposal of surpluses involve a substantial outflow of funds from the EEC. Therefore, it is important to remove the cause of the surpluses.

Turning to the disposal of surpluses, I find myself in total agreement with Resolution No. 4 of the BEUC conference on European consumers and the common agricultural policy. My French pronunciation is so revolting that I shall not attempt to pronounce the proper words. Resolution No. 4 in that report, which was circulated to all Members, states that: Surpluses should be disposed of in a way that benefits EEC consumers and helps Third World countries and not by subsidising exports. Taxation of competing products or schemes which force the use of surpluses should never be used as a method of disposal. It is clear by now that every time they have been adopted they have set up stresses far and away above that which they set out to cure.

With regard to the matter of avoiding surpluses arising, the concept of the co-responsibility levy makes a great deal of sense—that is, properly used. But it seems as though matters are not progressing as they should. Amongst other things, producers initially insisted that levy funds were to be used to expand and develop markets. It appears that progress towards agreement on the use of these funds has been disappointing 13 slow. I understand that no funds have yet been received in this country, although between £2¾ million and £3 million should be due to the Milk Marketing Board to supplement its advertising and sales expansion effort. Will the Minister tell the House exactly what the position is and what he is doing to expedite matters? I am sure that he will agree that it is a matter of considerable urgency that we should get on with expanding sales in this country at the earliest possible moment.

The promulgation of milk non-marketing schemes is most important. I think that the extension of the duration of the schemes and the improvement of terms will help to swell the take-up of the schemes. The restructuring of the European dairy herd is often alleged by some—the hon. Member for Cardigan (Mr. Howells) referred to this matter—to be sacrificing the small in the interests of the large. A few moments' reflection on these matters will show that it is not so and need not necessarily be so if the schemes are operated correctly.

In terms of the expansion of the use of milk and milk products by public sector institutions, the use of more milk within schools is an interesting line. In the United Kingdom we already provide milk for children up to the age of 7, and it is to be hoped that all primary schools in the EEC will be brought up to this level by the use of co-responsibility levy funds. Bearing in mind the constraints on public sector spending under which we must operate, has the Minister any figures available to show what would be the cost to public funds of extending the milk provided in schools to children up to the age of 8—that is for each year on—allowing for the European support offered to us, amounting to almost 5p per pint?

My last point relates to expanding the consumption of butter. Recognising the price sensitivity of butter in United Kingdom markets, it will become imperative to develop a means of feeding in the money which would otherwise be spent on subsidising exports. As a method of supporting the consumer the Minister put before the House the special butter subsidies. I think that this line of thought wants developing further, because butter is very much the linchpin in reducing the fundamental surpluses, and I think that in terms of expediency any method of genuinely increasing its consumption can only be of benefit to agriculture.

I pay tribute to the work of the Milk Marketing Board. Those who run and take part in the board are the means for promoting the expansion of sales. I should like to see their work extended across Europe, because this is the right way to tackle it in taking together all parts of the industry. We operate in a managed industry, and good management, as our board has shown, can be made to make the industry work. Coupled with the use of the milk marketing boards, the intelligent use of funds, the recognition of people sense, and making arrangements that take into account always how they will be seen by the man in the street, or the man on the No. 9 omnibus from Clapham, will go a long way towards developing the confidence of people in the aims and objectives of the European Community. This is the overriding requirement.

Mr. Nicholas Winterton (Macclesfield)

Is my hon. Friend aware that the United Kingdom is perhaps the only country in Europe which operates a "pinta on the doorstep every day" practice? Our European colleagues do not have a doorstep delivery. Our Milk Marketing Board is successful because milk is delivered to the doorstep and it can be marketed easily. It is not easy to get people who have to go to a supermarket to buy cartons of milk to buy more.

Mr. Shepherd

My hon. Friend has put his finger on the point. What I want to see is a litre on the doorstep of every house and every dwelling across Europe, because that is the way to expand liquid milk sales. The formula provided by the Milk Marketing Board has shown that it can be done. Malk has to be taken to the people. It is a heavy thing to carry from a supermarket. Anybody who has done that, as I have regularly for many years, knows that to be so. I like my delivery of milk, and I am prepared to pay marginally over the odds to get it.

With these main ingredients, the real objectives of the CAP can be met. They are summed up in the report of the BEUC. They are fundamental. They are security of supply, reasonableness of prices, and quality.

6.14 p.m.

Mr. John Watkinson (Gloucestershire, West)

I sense a moderation and a realism in the contributions that are coming from the Opposition Benches. I should like to take up a number of points made., by the hon. Member for Westmorland (Mr. Jopling), but I should like first to endorse what was said by the hon. Member for Cardigan (Mr. Howells) when he referred to the stance which the Minister of Agriculture has taken in Europe. I, too, support that stance. It seems to me that my right hon. Friend has been involved in a painful process of education both here and abroad. I think that he has been right to stand up for our national interest.

The impression is sometimes given by Conservative Members that within the EEC there is a gentlemen's club to which the Labour Minister of Agriculture comes and acts, as it were, as a, bounder within the context of that club. I believe that to be a nonsensical approach to The EEC. If Conservative Members study the way in which Ministers of countries such as France or Germany conduct their affairs, they will find that those Ministers pursue the national interest of those countries every bit as fiercely as does my right hon. Friend for this country. The EEC is not a club but a jungle in which various countries have to fight for their national interest, and I believe it appro- priate that our Minister should have fought in the way that he has done.

I said that I wished to take up one or two points that had been made by the hon. Member for Westmorland. The first is a matter on which I intervened when he was speaking. It is the dangerous supposition that is being promulgated by Conservative Members that there can in some way be a return to parity and that this should be a goal that is attainable in the near future. As a result of the intervention policy, Conservative Members accepted that, given the operation of the CAP, which is based fundamentally in terms of its unit of account upon the German mark, if we were to return to parity the result would be that farmers in this country would receive German prices while consumers here would have to pay those German prices without the German standard of living. This is an important matter and one which the Opposition should be at pains to point out.

I should add, in fairness to the hon. Member for Westmorland, that he says that if we could turn to a unit of account based upon the basket currencies this might be a possibility. Here I should be prepared to meet him somewhere on the argument, but, as we know, the Germans are the last people to be prepared to do away with the present system, because they seek to protect their own inefficient farmers. This is one of the problems of Europe. That is an example of German intransigence. It is clearly the case that the unit of account should be based on the basket and not on the snake currencies, but we see no movement there.

The hon. Gentleman made a point about deficiency payments. I go along with the hon. Member for Cardigan. It is a system which I should be prepared to support and one which historically has served this country exceptionally well over the years. The hon. Gentleman said that if we were to revert to a deficiency payment system this would cost the Exchequer the best part of £1,000 million a year. That is true, but that is what it is costing us to be in Europe now. The one matter which the hon. Gentleman omitted was that if we had that system we should be receiving cheaper food because we should have access to world markets.

I take the point made by the hon. Member for Lancaster (Mrs. Kellett-Bowman) that if we were buying on the world market prices would go up, but I take issue with Conservative Members if they claim that price would rise to the current level of European prices. I do not believe that to be the case, because the discrepancy now is so enormous that the impact of British buying in the world market would not act in that way.

I think that this debate has centred, as indeed have the considerations in Europe, on the problem of structural surpluses, and I think it is now common knowledge and is accepted at large that the very system of the CAP encourages the production of surpluses. In any agricultural system where end prices are supported, there must immediately be a tendency to encourage the production of surpluses.

But there is one other factor, and it is that in farming there has always been in Europe a potential capacity to produce surpluses. This capacity has been markedly increased not only by the intervention of the British but by the massive improvements which have taken place in French agriculture. It is a myth that the CAP was produced to protect the inefficient French farmer. The French farmer is no longer inefficient but is massively efficient and has the capacity to produce vast quantities of foodstuffs. That can only add to the structural surpluses that are being produced in the Market.

An end price system also produces problems for consumption. I am glad that that has now been fully recognised by the Conservatives, and even by their Front Bench. It is now clearly accepted, and I assume it to be Tory Party policy, that the farmer cannot expect simply to produce and in a miraculous way have his produce consumed. I have made the point a number of times in agriculture debates that there are two sides to the scissors, supply and demand, and that demand is absolutely crucial if the foodstuff is to be lifted off the market.

As is now accepted, if the price goes beyond a certain level, the food will not be lifted off the market. My hon. Friend the Member for Hemel Hempstead (Mr. Corbett) said that food consumption here was down, and my right hon. Friend the Minister referred to the marked decline in milk consumption on the Continent. This is a matter of major concern. We now accept that one cannot go on putting up the p[...]e of food and expect it to be lifted off the market. It is not happening.

From this debate and the debates in the Common Market, it would appear that the method to try to deal with the problem of demand is to hold prices down, and not to increase prices in the areas in which there is endemic structural surplus. That is considered the appropriate way, the market way, to deal with it. Sooner or later, however, given the enormous capacity of Europe to produce food, we must have a planned approach to agriculture in Europe in order to deal with the vast surpluses and the potential surpluses. Europe may turn to a system of quotas, which may not be acceptable to the Opposition. [HON. MEMBERS: "Hear, hear."] I am grateful for that intervention.

If farmers have to rely on prices and are not sure from year to year what will happen in the price review, that will undermine the mystical thing called confidence, which I know to be absolutely vital to farmers. Anyone involved in a business which must take decisions relating to a time span of three years must have a certain degree of confidence in order to take those decisions. I am not sure that the system now being adopted in the EEC, of simply relying on prices from year to year, will provide the necessary confidence.

Mr. Nicholas Winterton

That is what deficiency payments did not do.

Mr. Watkinson

I support deficiency payments.

Mr. Winterton

They did not provide confidence and forward planning.

Mr. Watkinson

If the hon. Gentleman talks to the farmers in his constituency, he will find that the deficiency payments system was exactly the system which gave them confidence. Many farmers wish to return to that system.

I come briefly to the problem of the Milk Marketing Board. I think it is agreed on all sides that there is common support for its retention. In the context of what I have just been speaking about—the problem of surplus—I am mystified to know why the Common Market takes the view that it does about the board.

Here we have an organisation which has proved itself over many years capable of disposing of a great deal of milk. I should have thought that, instead of wanting to do away with it, the Common Market would have been grasping it and saying "Let us incorporate it into the EEC, because it might help us to deal with our surplus." It seems to me that the EEC is trying to sacrifice a significant and useful marketing mechanism on the high altar of dogma, that there must be free and perfect competition. That is nonsense in the face of the reality of the cataclysmic fall in the consumption of milk in the Common Market described by my right hon. Friend.

To emphasise my point about the board's efficiency, I wish to quote from the annual report and accounts of the Dairy Trade Federation: The distribution margin in pence per gallon in mid-1977, including both processing and distribution of milk, in the United Kingdom was 37p, Belgium 52p, West Germany 62p, Italy 65p. Does not that speak volumes for the competence and efficiency of the board? If such a system were adopted in Europe, the margins available to those concerned with the distribution of milk might be such as to make it profitable.

The delivery of milk is very important, but it is doubly important in remote rural areas such as mine. We produce the milk, but it is easier for someone living in a town to obtain milk than it is for a person in certain remote areas. Therefore, it is vital that the daily delivery be maintained. It is to the advantage of my constituents.

The debates this year in the Common Market and in this House have marked a change. Until now, the EEC and the Opposition have largely been more concerned with one side of the food business, the farming side. I now detect an increasing realisation here and in Europe of the necessity to combine the two great interests of farming and consumers.

There are hopeful signs that we are moving away from a common agricultural policy with certain limitations in terms of definition to what I would call a common food policy, where the interests of producers and consumers are equally concerned. I regard that as healthy.

6.30 p.m.

Mr. Gwynfor Evans (Carmarthen)

Although my remarks will be mainly concerned with the dairy industry, it is as well to remember that this industry is also involved with other aspects of the livestock industry. We should not forget that as much as 70 per cent. of our beef derives from dairy cattle. Therefore, we are very much concerned with the price of beef, as we are with the price of milk products.

Before discussing the dairy industry, perhaps I may be allowed to refer to the strange way in which the EEC Agriculture Fund was distributed in 1977. Distributions were made in this way. Scotland received £2,020,744, Northern Ireland received £2,188,728, England £7,047,480 and Wales £141,702. I find it hard to believe that the needs of Wales are less—certainly not that much less—than the needs of the other parts of the United Kingdom.

It is a tribute to the efficiency of the dairy industry that the amount of milk produced in the United Kingdom has increased without there being any lowering in the quality. Unfortunately, the number of dairy farmers has decreased steeply. Over a decade in Wales, we have seen a 40 per cent. decrease in the number of dairy farmers. This is a serious social matters, because it means that we are faced with rural depopulation.

For us, agriculture is not just an economic matter; it is also a social matter. It is essential for us to keep a large and prosperous population in the countryside. Our thinking about the structure of agriculture should be directed to maintaining the family farm and the smallholding, to which the hon. Member for Cardigan (Mr. Howells) referred, which also help the income of people who work in other industries or occupations.

It will not be possible to maintain these family farms and smallholdings, which are comparatively small, unless the farmer gets an adequate return for his product. The EEC proposals for average farm prices for the coming year do not seem to be over-generous. I hope that 2 per cent. will prove to be sufficient, at least to maintain stability. It is unlikely to produce any development in the industry. I hope that the figure of 2 per cent. will prove enough to pay the costs.

The Government decide the level of the board's selling price for liquid milk. Although the British farmer receives less for his milk than other farmers in the EEC receive, I recognise the constraints upon raising the price. These constraints have been recognised by other hon. Members in the debate. We would come up against consumer resistance, although I doubt whether it is widely realised what a splendid bargain milk is at its present price. The nutritional value of a pint of milk, for instance, is far above that of a pint of beer. Most households enjoy the great advantage of the milk being brought to their doorstep. Yet a pint of beer, I am told, costs three times the price of a pint of milk. It is not so much the farmer who is subsidised here as the household.

I recognise that there must be some restraint on the amount of milk produced in present circumstances. If restraint is needed on this side of the Channel, it is certainly needed on the other side. The green pound rate is the most relevant factor in matters affecting the price of manufacturing milk. I welcomed the 7½ per cent. devaluation, although the delay in its implementation has had some unfortunate consequences, especially in manufacturing. I speak as one who opposed our entry into the Common Market. I spoke in the debate in the House in 1967 against our entry when the Prime Minister of the day was so enthusiastic about the Common Market.

In the referendum on the Common Market, I engaged myself actively in trying to get these countries of Britain out of the Market. Therefore, I can speak with some impartiality on the matter of the green pound. I do not believe that farmers are getting a fair deal. Their support for the EEC was, after all, based on the belief that there would be fair competition, common prices and free trade. The present green pound situation was not foreseen by anyone. It is the result of the depreciation of sterling over a long period of time. The current situation is now being used by the Government, and I do not blame them, to keep down food prices.

We should take a long-term view rather than a national or even Common Market view on these matters. The time is coming when we shall need all the food we can produce. In that situation, I doubt whether it would be a good thing for anyone if the present disparity between the rates continued indefinitely. It should be the Government's policy to ensure one more devaluation before the end of the year to help the farmer next year. This could be of greater value than all the increases that the Commission proposes. Certainly it would help to close the gap between liquid and manufacturing prices.

The processing of milk suffers severely from the price gap. In my constituency the creameries are our biggest industry, employing about 1,500 people, of whom 700 are employed in cheese-making. These people naturally look with apprehension at the huge imports of cheese from EEC countries. In 1977 these imports were worth £109,946,000. Because of the way the green pound and the MCAs work, it means that these cheese imports are in our view unfairly subsidised.

I wonder whether the unique position of the United Kingdom in relation to the other EEC countries and the consumption of liquid milk is fully realised. The figures speak for themselves. In 1976, the percentage consumption of liquid milk was as follows: Belgium 18 per cent., Germany 15 per cent., Ireland 14 per cent., Luxembourg 13 per cent., France 11 per cent., the Netherlands 9 per cent., Denmark 8 per cent., and the United Kingdom 57 per cent.

I should like to see far more effort made in the EEC countries to increase the consumption of liquid milk. It is here that the co-responsibility levy on milk should prove its worth. After all, a levy has twice been collected in these countries. The Milk Marketing Board collects a levy and uses it effectively to further milk sales. I do not think that all the EEC countries collect the levy, let alone use it. I hope that the Minister will use all his powers to urge these countries to collect the levy and to use it to promote the consumption of liquid milk.

Another use to which the levy could be put is in subsidising milk for schoolchildren. It is not possible for a child to have better food than milk. This has been proved time and again. The habit of drinking milk should be instilled into children at a very early age and continued throughout their schooling period. I remember how the Labour Party reacted in 1971 when free milk for most schoolchildren over 7 was abolished. Its reaction then was justified.

I remember, too, that the present Government early in 1976 allowed the local education authorities to supply free milk at their discretion to any child but did not make it mandatory. Then, later in the year, through the Chancellor, the Government withdrew even the discretion for local authorities to give free milk to any children over the age of 7.

Mr. Stanley Newens (Harlow)

Does the hon. Member recognise that some local authorities such as my own of Harlow still take advantage of the existence of what was the old penny rate to provide school milk for some children over the age of 7? This prevails in a number of local authorities up and down the country.

Mr. Evans

I am glad to hear that. I think the hon. Gentleman will find that the proportion of children throughout the country who receive this free milk over the age of 7 is very small.

What I am pleading for now is the expansion of free milk for all children over the age of 7 and to restore it to those who lost it in 1971. I think that it should be restored also to the older children who lost it before then at the hands of a Labour Government.

Mr. Nicholas Winterton

Will the hon. Gentleman tell the House who should pay for this?

Mr. Evans

The cost should come out of the Exchequer and the co-responsibility levy. It would be a very fine way of spending money. It would be in the interests of the health of our people. That has been proved time and again. I am not simply making a case for the dairy farmer but am making a case for the health of our people.

Finally, I must say, along with many other hon. Members, that much of the comparatively good health of the dairy industry is due to the Milk Marketing Boards. This is clearly also the view of the Minister. We should give him our strongest support in his efforts to withstand all attempts to weaken their powers and upset the balance between the consumer, the producer and the trade interests.

I speak for all the farmers in my constituency when I assure the Minister that the EEC's proposals for quinquennial elections are unacceptable. The proposal that at least 50 per cent. of the milk should be used as liquid milk is unacceptable, because we cannot guarantee that that figure will always obtain. Also, farmers deplore the possibility of the withdrawal of some producer-retailers from this great board.

Therefore, the present powers of the MMBs are in the best interests not only of the farmer but of the consumer, and for that reason they should be maintained.

6.44 p.m.

Miss Joan Maynard (Sheffield, Bright-side)

I begin by taking issue with the hon. Member for Westmorland (Mr. Jopling). We were old sparring partners before we came to this place, so there is nothing unusual in my disagreeing with him. I begin with his comments about the declining production or lack of expansion in industry and his attack on the Minister and the Government and blaming them for that. We are no longer in complete control, unfortunately, of our own industry. There are the other eight nations in the Common Market which have a say in this matter. That is where the hon. Member ought to be directing his criticism. If there is any danger to the expansion of our industry, it comes from the EEC and not from our Minister and our Government.

If Conservative Members had had their way on the level of devaluation of the green pound, prices would have been so drastically increased that consumption would have been reduced. That would not help the expansion of the industry either.

I am particularly amazed at the hon. Member's attitude to the cost of going back to the old system of support. As other hon. Members have pointed out, it would not cost any more than the present system is costing and it would have the added advantage of giving us cheaper food. But I emphasise that it would have another advantage, which nobody has yet mentioned—that of giving security and stability to our industry. That is something which it never had until the Agriculture Act 1947 and everything that flowed from that Act.

Mr. Jopling

On that point, I should like to ask the hon. Lady a straight question. If the cost of returning to a system of support based on guaranteed prices and efficiency payments is almost £1,000 million—that is the estimate that I have been given-is she happy that the level of taxation in this country in order to pay for that system would be almost £1,000 million a year more than it is now?

Miss Maynard

I have already pointed out that the present system is costing us that amount. I am being lenient when I say that it is costing as much as that. It is really costing us more.

Mr. Jopling

Where is it coming from?

Miss Maynard

Never mind where it is coming from. It is coming from the British people, and is particularly hitting the low-paid people because the percentage spent on food is much greater for low-paid people. There is no justice in that kind of a system.

I want to deal with the Milk Marketing Boards. I say at the outset that my union. the National Union of Agricultural and Allied Workers, supports the Milk Marketing Boards and would be very much opposed to anything that undermined the boards. The introduction of these boards was for farmers the beginning of moving out of the depression of the 1930s, which some of us, unfortunately, remember. The regular income that came with the monthly milk cheque was the first move away from depression in agriculture and towards a brighter future for the industry. It would be a body blow to the industry if the boards were to be undermined. It would be a body blow not only to the industry but to the consumers.

I agree with the hon. Member for Westmorland that a poll every five years would tend to create uncertainty in the industry. Having to guarantee liquid milk sales of over 50 per cent. makes for uncertainty. All of us are agreed about the importance of doorstep sales in order to make sure that we keep up our sales of milk, particularly for producers and consumers and also to keep down surpluses. I believe, with the Minister and the Government, that the production should be for consumption and not for putting supplies into surplus or into intervention.

I agree with the idea—I hope that the Government will look at this—of giving free school milk to all schoolchildren. This would be good for industry and very good for the children, who are the future of our country.

I want to say a word or two about what the hon. Member for Devon, West (Mr. Mills) said about parity. I emphasise that there are other parities in which some of us are also interested, such as parity of wages. The problem for the British people is that they have Common Market prices without Common Market wages—that is their problem—and without Common Market social benefits. In particular, of course, if we look at farm workers and the kind of wages they receive—

Mr. Ralph Howell

I am glad to hear of the support of the National Union of Agricultural and Allied Workers for the continuation of the Milk Marketing Board, but I cannot understand the hon. Lady's line of argument when she is completely at variance with the agricultural unions, because they have the sense to say that unless reasonable prices are paid to the producer there is no chance of agricultural wages being increased.

Miss Maynard

I think that all the facts disprove the hon. Gentleman's statement. I ask him to look at the facts and to look at what the Agricultural Wages Board was giving to farm workers in the 1950s. When farming in this country was booming, the Agricultural Wages Board was giving out wage increases of 4s. a week, 6s. a week and 8s. a week. Whether or not the industry is booming, profitable and prosperous, I know and the hon. Gentleman knows that the real issue is that the wages that workers get are the wages that they are strong enough to get.

Mr. Howell

Does the hon. Lady compare the wages that agricultural workers are getting in the other eight countries of the EEC with those that are being received in this country? Even in Ireland. where their wages were only half of what ours were about five years ago, they have now reached our level and will soon be overtaking it.

Miss Maynard

I am not suggesting that farm workers here are paid worse than farm workers in some of the other countries of the EEC. I am merely saying that, as our farm workers produce 50 per cent. of Britain's food, they are very badly paid. If Opposition Members were as anxious to argue for good pay for farm workers as they are to argue for high prices for their products, there would be a good deal of justice in their case.

Mr. Peter Mills

Surely most of us in the House would agree that there should be much better wages for farm workers. The hon. Lady must be fair. She has been talking about milk. Can she tell me the average wage, roughly, of a cowman these days? It is very considerable and is far better than the wages of many industrial workers.

Miss Maynard

Perhaps I may answer that question by asking the hon. Gentleman a question: how many hours does the dairyman have to put in to get the wage to which the hon. Gentleman has referred? That is the real crunch issue. The hon. Gentleman says that I ought to be fair. I shall be fair to Opposition Members when they are fair to my people, which is what they have never been.

Mr. Mills

That is just not true.

Miss Maynard

I do not supose that we shall ever agree on this issue. Therefore, I should like to move on to the question of our continuing desire to try to reform the CAP.

I have every confidence in the Minister and his desire to try to reform the CAP. The industry and the people of this country are fortunate that we have such a skilful and able Minister. This applies particularly in relation to the fight that must now be conducted to save the Milk Marketing Boards, in which we are fortunate that we have a Minister of my right hon. Friend's calibre, because if anyone can save the boards it will be my right hon. Friend. The other thing that he has done is to try to maintain reasonable prices, which are in the interests of producers as well as of consumers.

Having said that, however, I still believe, as someone who has always been opposed to our membership of the Common Market, that the only real solution for the farming industry, the farmers and the people of this country is for Britain to leave the Common Market.

6.54 p.m.

Mr. David Price (Eastleigh)

As I have promised to be very brief, I am sure that the hon. Member for Sheffield, Brightside (Miss Maynard) will forgive me for not following up her arguments. I wish to raise an entirely new aspect of the CAP—namely, the possible establishment of a sheepmeat regime. In order to put myself in order, I refer you, Mr. Deputy Speaker, to paragraph 4 on page 78 of document R/3200/77.

At this point, I must declare a personal interest. I am involved, as I think all hon. Members know, in a number of companies which trade in meat from all sources. At present there is no sheepmeat regime, but one is promised. Here we have the opportunity, unlike in all the other matters that we have been discussing so far, of talking in the House about an aspect of Common Market policy which has not been settled. In other words, it is possible that we in this House can attempt to shape it.

I suggest that there are five different interests that have to be considered and, ideally, brought together in order to produce a harmonious policy. They are as follows.

First, there is the European consumer, headed, I suggest, by the British consumer. This is not for nationalistic reasons. It is because, as I shall endeavour to show, we eat more lamb than does any other European country.

Secondly, there is the European producer, headed, again, by the British farmer. Again, this is not for nationalistic reasons but is because the British farmer produces more and better lambs than does any Continental producer.

Thirdly, there are the traditional external suppliers, headed now almost uniquely by New Zealand, a country towards which, I am sure the House will agree, we have a great affinity and feeling of responsibility. Fourthly, there are the traders, the transporters, the shopkeepers and all involved in the trade. Fifthly, there is the European taxpayer, headed—without being too nationalistic—by the United Kingdom taxpayer.

I should like briefly to describe the nature of our own trade in sheepmeat, because it is important to realise how it has been established. I should add that I was up very early this morning going around Smithfield Market just making sure that my competitors as well as my colleagues agreed with the points that I wish now to put to the House.

We in Britain are by far the largest consumers of sheepmeat, principally lamb, in Europe. Lamb has been eaten in British households throughout the year for between 50 and 70 years. This has been made possible by the importation of frozen lamb from New Zealand. The New Zealand frozen lamb trade complements home-killed lambs on the British market. The bulk of New Zealand lambs are sold to the British public between January and July, when seasonally home-killed lambs are in very short supply. Thus the regular availability of New Zealand lamb maintains the habit of eating lamb among the British public. Without it, it is the general view of the trade that the market for home-killed lambs would be greatly reduced.

Equally, I must point out that prices for home-killed lambs are usually at about the same level as for beef, but New Zealand lambs sell at about 5 per cent. to 10 per cent. lower. The market for both kinds of lamb is particularly price-sensitive. I have no time to develop this point further now, but it is very important when considering what type of sheep-meat regime there should be.

Of the nine countries in the EEC, only the United Kingdom, France and Eire have any substantial interest in either lamb production or lamb consumption. I think most hon. Members will know that in France lamb is sold largely as a luxury food, at prices that are about double the prevailing levels in either the United Kingdom or Eire.

If an EEC sheepmeat regime involved a move upwards to the French level of lamb prices, the result would be disastrous, not only for the British consumer and the British producer but for the New Zealand trade. As has been pointed out time and again in this debate, all these agricultural products are price-sensitive, but lamb is particularly price-sensitive. The availability of poultry, pork and beef at relatively cheaper prices would result in a very rapid reduction of lamb consumption here.

Until the Commission publishes its precise proposals, one can only speculate. Undoubtedly, we must be ready to negotiate a liberal sheepmeat regime which would be fair to our consumers and to our producers and would also give reasonable access to the New Zealand producers.

In the past the EEC has favoured variable levies. Any variable levies placed upon New Zealand lamb must not be allowed to exceed the current 20 per cent. ad valorem duty. Most of us in the trade would prefer not to have variable levies at all. If there are to be levies, let them be at fixed levels. This is important in enabling people in the trade to plan ahead. It is important also that any transitional policy should be open-ended and not confined to six years, as is currently suggested in Brussels. If the EEC sheepmeat market were to be closed to New Zealand lamb after six years, I believe that many of the dire consequences that I have suggested would follow irresistibly.

I suggest to the Minister—I am delighted to see him here—that the object must therefore be to negotiate as liberal a sheepmeat regime as possible. Here I believe that the Government are greatly assisted by the General Agreement on Tariffs and Trade. The House will recall that, under the GATT rules, there cannot be any increase in duty on the import of New Zealand lamb above the current 20 per cent. level unless it can be shown that there is an escalation of imports. From purely commercial considerations, it is clear to me that over any transitional period there is unlikely to be any increase in New Zealand lamb entering the EEC. Indeed, it is unlikely that the present levels will be maintained regularly.

I believe, therefore, that the Minister in this respect has a good negotiable hand to play for a liberal EEC sheepmeat regime. I am sure that hon. Members in all parts of the House will wish him success in trying to negotiate such a liberal sheepmeat regime because, as I said at the beginning, it will be in the interests of the British consumer, the British producer, the New Zealand producer and the British taxpayer.

7.1 p.m.

Mr. Wm. Ross (Londonderry)

I must declare an interest, as usual, in that I am a farmer. Although I declare an interest, I intend to restrict my remarks to milk and I have never produced it commercially.

I have conscientiously waded through most of the papers for the debate that I obtained from the Vote Office. Among them I came across a letter headed Subject: United Kingdom Milk Marketing Boards". I read in that letter that before the Government would be allowed to continue with the Milk Marketing Boards, and before the boards could be authorised for recognition in accordance with the regulations, we would need to give certain undertakings.

Having read through all the regulations, I further noted that the letter concluded by saying: I shall be pleased if you will notify the acceptance of your Government to the above listed conditions as soon as possible. Having read that, I came to the conclusion that the debate was once more raising the question which was raised so often, and just as often side-stepped by the House, during the debate on direct elections. I refer to the whole question of the sovereignty of this House.

I have always thought that we who are Members of this House were elected to govern this country. Now we discover more forcefully than ever before, in clear and brutal terms, the demand from our masters in Europe that we shall conform to what they lay down for the organisation of our agricultural affairs in this country. That is only the forerunner of many more such letters which will be received by the future Governments of this nation.

I draw the attention of the House to the fact that in these documents there has been a recognition of the necessity for a derogation for the Northern Ireland Milk Marketing Board. I am very happy that that should be so. I hope that the Minister will be successful in his efforts and that we shall shortly hear exactly what that derogation shall be for Northern Ireland, and precisely how the milk producer in Northern Ireland will have his income protected.

It would appear to me that in the past the United Kingdom had a closed market, and because of this the Milk Marketing Boards were given a certain number of essential functions. Those essential functions, mentioned in the amendment, to which I have appended my name, include, I believe, all the present functions of the Milk Marketing Boards. I believe that those functions have to be maintained. They enable the boards to regulate production and distribution and to control the manufacturing of milk.

That is an aspect of the matter which has not yet been mentioned. I do not intend to go into it deeply, but I believe that the Minister will have it in the forefront of his mind whenever he meets his colleagues in the Commission. He will, I hope, be prepared to defend the powers of the boards in the manufacture of milk products in this country.

We were able in this country to do all these things purely and simply because the Milk Marketing Boards had control of the sale of milk. They had control of the entire production of this country. It may be going a bit far to say that it was the entire production. There may have been a few producers who retailed, but they were such a small percentage of the total market that they did not really matter. We had, in short, a national system in this country—it was a truly national system—which was carefully tailored to the needs of this nation. It included not only sale and retailing of milk and the buying of milk from farmers. It also included the promotion of milk and milk products.

I turn briefly to the Common Market levy on milk, which is in addition to what is already done by the Milk Marketing Boards. I ask the Minister whether the money that is being raised from United Kingdom producers from this levy will be used to expand the sale of milk in the Continent of Europe or whether it is to be used to expand the sale of milk and milk products in the United Kingdom. It is our money, and I do not see very much point in the people of the United Kingdom—that is, the producers of the United Kingdom—giving a lot of money to the producers in Europe to enable them to expand their production and their sales, with nothing being done to expand the sales in the United Kingdom. Where is the money to be spent? That is a very important point.

We are also told by various people that the changes proposed in relation to the Milk Marketing Boards will continue in large measure all the good points of our present system, but I believe that the conditions which are laid down by the EEC are such that it will be impossible to maintain our present system of marketing.

The end of the pooling arrangement for the whole of the United Kingdom was the first step in that direction. Now we have the demand as to 80 per cent. of producers supporting the boards, under the new arrangements, 55 per cent. of the milk going as liquid market sales, and allowing the producers with herds of not more than 150 cows to opt out. Not many farmers would consider 150 cows a small herd.

Miss Maynard

Does the hon. Gentleman agree that the opting out is the most dangerous proposal of all? If people with herds of not more than 150 cows are to be allowed to opt out, they will weaken and undercut the boards. I remember listening to an agriculture debate in the course of which someone used exactly this argument in relation to the first wool board, which collapsed because people were allowed to opt out. When we on the Labour Benches argue for the closed shop, we argue that it is the people outside who weaken the union. That is why we argue for the closed shop. Now that we have converted Opposition Members hope that they will all support us——

Mr. Deputy Speaker (Sir Myer Galpern)

Order. The hon. Lady has already spoken.

Mr. Ross

If the hon. Lady had only contained herself for a few minutes and left out the closed shop aspects, I would have agreed with every word she said.

I was going on to say that these three things, taken together, are a certain way to the destruction of the Milk Marketing Boards in this country. There is no doubt about it. Any one of these measures would destroy the boards. The one to which the hon. Lady drew particular attention, concerning opting out, is the most dangerous of all. There is no doubt of that. In fact, that measure in itself would swiftly mean the end of the orderly production, marketing and retailing of milk that we have seen in this country. Milk producers with relatively large herds of 150 cows, in close proximity to large towns and cities, would immediately opt out, because it would be in their financial interest to do so. Instead of getting rid of the pooling arrangements for the United Kingdom as a whole, we should be getting rid of them in Scotland and in England and then county by county. Anyone who does not understand that does not understand the effect of that kind of proposal.

There is an attempt here to buy off the total opposition within the farming community to the destruction of marketing boards by giving something which appears to safeguard the present position but which in reality does nothing of the sort. We are being offered a carrot which, if we get it, will turn out to be rotten in the middle. The other nations in the EEC decided long ago that they would destroy the marketing system of farm produce in this country, and these proposals are aimed at that end.

If the EEC wished to help the farmer and the British consumer, proposals like this would not be brought forward. The EEC would be adopting such things as the Milk Marketing Boards, which are proven in this country, and not destroying them. If at the end of this struggle with the EEC—and it is a struggle—we have a system which does not guarantee the future of the Milk Marketing Boards, it will be a major and decisive defeat for British farming, for the Minister, for the British consumer and eventually for the sovereignty of this House.

7.11 p.m.

Mr. Stanley Newens (Harlow)

Like the hon. Member for Londonderry (Mr. Ross), I am concerned with the dairy industry. I wish to declare an interest, in so far as I am the president of the London Co-operative Society, a major consumer-owned enterprise in milk distribution, which is also the owner of a large dairy herd. However, I hope that the House will recognise that I am motivated not by narrow commercial interests but by my interest in the future of a major industry and the interests of the public as consumers of milk.

In Britain the per capita consumption of liquid milk is very high compared with that of most European—and many other countries. The main reason for this is the existence of regular door-to-door delivery services in most parts of the country. Experience shows that where door-to-door services are ended, the consumption of liquid milk falls substantially. Therefore, it is in the interests of consumers, who benefit very much in nutritional terms, and dairy farmers that door-to-door deliveries should be maintained.

The EEC recently appeared to recognise the importance of this service. Previous proposals to standardise the butterfat content of milk were, I believe, designed to facilitate bulk sales of surplus European milk in this country through supermarkets and shops. Once the practice grew up of selling milk in bulk at preferential rates, many consumers might be persuaded to cancel their door-to-door milk deliveries.

That would undermine the viability of the milk round. Since the overheads of the milk round remain fairly constant or rise, it is obvious that once sales fell, the costs would go up and this would mean that certain rounds would have to be cut out. The effect of this would be cumulative on milk sales. Without daily deliveries, many families would consume less liquid milk than at present. We have a precedent in this country, with bread deliveries. Today, door-to-door deliveries of bread have virtually disappeared, because falls in sales of bread on rounds made those rounds uneconomic.

If this happened with milk it would be a tragedy for farmers, for the rural community, for distributors and for the public as a whole. Therefore, we must pay careful attention to the effects of the EEC proposals at present, and recognise that continued price increases must diminish demand. There is no answer in continually putting up the prices.

I am glad that the EEC has accepted that the Milk Marketing Board should remain. However, the conditions that it wants to impose are still unsatisfactory and against our interests. In this respect I agree with what has been said by a number of hon. Members on both sides of the House. The condition that at least 50 per cent. of milk produced should be used for direct consumption—that is, drunk as liquid milk—is unacceptable. If we were to increase the manufacture of milk products the balance would be altered. It is totally wrong that in these circumstances the continuation of the Milk Marketing Board and our dairy industry should be at stake.

Even if we consume less than 50 per cent. of liquid milk it is still totally wrong for the EEC to try to interfere with the present system. I am opposed to the provision of an option to producer-retailers with fewer than 150 milk cows to opt out. At the very least this should be reduced to permitting those with only 20 cows to opt out. If there is a right for anyone to opt out it should not be farmers who have as large a herd as 150 cows.

Another condition laid down by the EEC is a proposal for a poll of producers at intervals of five years on whether the Milk Marketing Board should be continued. A poll may always be demanded by any 2,000 registered producers. This is safeguard enough without accepting the EEC proposals.

In the long run any thing done with the fundamental aim of finding an outlet in Britain for surplus Continental milk will be counter-productive, even from the European point of view, if it causes our system to collapse and paves the way for a substantial decline in milk consumption in Britain.

There may be a case for certain changes in the Milk Marketing Board. There may be a case for separating the commercial activities of the board from the statutory manufacturing functions. However, any proposals for change must be viewed and examined very carefully before they are implemented.

There is one other aspect of milk consumption to which I wish to refer, and that is the issue of school milk. I opposed the abolition of school milk to secondary schoolchildren by a Labour Government and voted against it. I also opposed the abolition by' Conservatives of milk for primary schoolchildren over 7. As I have already pointed out to the hon. Member for Carmarthen (Mr. Evans), we in Harlow felt so strongly about this that we used the old penny rate to continue the provision of milk to children over 7. Unfortunately, our example was not copied in as many parts of the country as it should have been.

I opposed the withdrawal of milk from schoolchildren on nutritional grounds, and not merely because I was concerned about the loss of a market for milk. That is still my position. I believe that milk is of great benefit to schoolchildren and that we should encourage its consumption among young people in the hope that we shall deflect them, to some extent, from drinking less beneficial beverages.

I of course agree that sales would also be advantageous to milk distributors and producers. It seems an ironic commentary on the EEC that a couple of years ago an attempt was made to force farmers to feed surplus milk to stock—for example, to pigs and other animals—while we refused to provide milk for children. A number of farmers regarded it as a most unsatisfactory feeding stuff and refused to use it. I believe that we need to restore school milk and that if we did so we could overcome the problems of supervising distribution, highlighted by the teachers.

I wish to end my remarks by paying tribute to my right hon. Friend the Minister. It is right to emphasise that he fought as he did for the interests of British producers, distributors and consumers. I am only sorry that so many people on the Opposition Benches, though not all, who regard themselves as spokesmen for the producers do not recognise the signal service which my right hon. Friend has carried out in fighting on behalf of us all. It is quite shameful that Opposition Members, who have always been prepared to swallow EEC principles but who carp at the inevitable consequences of such a policy, are prepared to generate a barrage of criticism against my right hon. Friend.

I believe that many farmers, distributors and members of the public recognise the value of my right hon. Friend's fight. Now that the EEC has conceded that the Milk Marketing Board should be retained—

Mr. John Silkin

I did not want to intervene earlier in my hon. Friend's remarks, especially in view of the fact that he was making some nice comments about me. However, the fact is that the EEC has not conceded the matter of the Milk Marketing Boards. The Commission did so, after I argued for some time, but the decision of the Council of Ministers on the subject still awaits us.

Mr. Newens

I accept that correction. That shows how important it is that we should make clear that my right hon. Friend has the backing of this House. I hope that hon. Members of both sides of the House will support my right hon. Friend in his battle. That is why it is important that even those hon. Members on the Opposition Benches who have so often pressed the advantages of entry into the EEC should support my right hon. Friend on this issue. He represents the interests of the industry and the public. I do not think that those interests have yet been fully thought through but I ask my right hon. Friend not merely to continue the battle for the Milk Marketing Board but to change the limitations which are proposed on it and to which I have already referred. I believe that such a course is in the interests of us all, and I wish my right hon. Friend well in the next phase of the battle that he is about to fight on behalf of the British people as a whole.

7.24 p.m.

Mr. Richard Body (Holland with Boston)

It has for a long time been my ambition to see my hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) link arms with the right hon. Member for Battersea, North (Mr. Jay) and sing the same song in an agriculture debate. It seems that on this occasion we are within an ace of that notable event. I understand that on behalf of the Opposition my hon. Friend will support the amendment tabled by the right hon. Member for Battersea, North. I am sorry that the right hon. Gentleman is not in the Chamber to hear him say it, although I have a hunch that the next time he drafts an amendment he will pitch it a little more strongly, which may put some of us in a quandary.

The hon. Member for Harlow (Mr. Newens) and others have mentioned the reduction in the amount of food consumed. The hon. Gentleman referred particularly to milk. These matters are set out in the monthly digest of statistics, and some disquieting figures are displayed. Until 1972 we were among the best fed nations in the world. Generally speaking, we were overfed—and that applied even to families with a large number of children. That is no longer the case. The number of calories eaten in the average family now amounts to 2,220 per head per day. That is just a little lower than the DHSS recommended as being the right amount in a report published in 1969. It is substantially lower than the FAO and WHO recommended in 1957.

In a document produced by those bodies we were introduced to the "reference man". He was a person aged between 20 and 39 who worked for eight hours a day in an occupation involving moderate activity. Such a man should consume 3,000 calories per day. The average man in this country is just about at that level. But when we examine the position of families with four children or more we see that the average calorie intake has fallen to 2,080 per head per day. That is 88 per cent. of what it should be, based on the Government standards laid down in 1969, and is very much lower than the FAO and WHO recommended in 1957.

I have tried to calculate the number of children who are affected. It is difficult because there are no up-to-date statistics. But, if we examine the 1971 census, we find that there were 377,800 families with four dependent children and 196,000 families with five or more dependent children—a total of 2,500,086 children. It would be a fair assumption that the figures are now about the same. If that is so, it must follow that no fewer than 2 million children are now suffering under-nutrition. On the FAO-WHO criteria, the number might be as high as 3 million children. I must contrast this with a nil figure in 1970.

This process has happened in recent years and has come at a time when the price of food has rocketed, particularly for poorer families. They are the very families who have been most affected by import levies. My hon. Friend the Member for Derbyshire, West and I may not like New Zealand butter, Argentine beef, tinned Australian fruit or South African or New Zealand cheddar. We prefer other food because we can probably afford to buy it, or we could have done so in the past. But the poorer families prefer those other foodstuffs because they were the cheapest available.

Mr. Newens

I do not know whether the situation is as bad as the hon. Gentleman paints it, but does he not agree that the facts he has presented underline the need for the reintroduction of school milk? Does he not appreciate that many poorer children leave home in the morn- ing without having eaten a breakfast? Furthermore, often they cannot afford school dinners. What they do is to obtain a few pence and spend it on chips, which fill them up but which have no nutritional value. Is that not a strong argument for the reintroduction of school milk for all children?

Mr. Body

With great regret, I have to say that the hon. Gentleman is right. I opposed free school milk, but I am driven to the view now that if we are to have about 2½ million of our children suffering from under-nutrition—the FAO would call it malnutrition—when we had no such children in the early 1970s, it is necessary to have free school milk again. To have 2½ million children suffering from under-nutrition is a horrifying figure.

It seems that we are back to the standards of the 1930s. That is one of the consequences of having a crazy and wicked scheme whereby food is made artificially more expensive than it should be. Above all, the system affects poorer families and larger families much more than those who are better off. The poorer and larger families are hit in a number of ways. They are the principal taxpayers when it comes to paying import duties and levies upon food. That is inevitably the difference between the present system and the system of deficiency payments, where the burden fell upon those who were generally better off.

The total cost of supporting agriculture in the Community has risen to an astronomical figure. It is paid for, proportionally speaking, more by the poorer people than by the better off. According to the eleventh annual report of the Commission, the total figure for agriculture now comes to 14,216 million units of account. That means that, in round figures, £1 is spent per head of population per week in subsidising and supporting agriculture. I repeat that the burden is falling primarily upon poorer people and those with larger families.

Poorer people are hit in three ways. These issues are of vital importance, and I hope that I am strictly in order in' arguing them. Structural surpluses are being created to some extent because poorer people are unable to eat the sort of food that they consumed a few years ago.

In the first place, food is being destroyed on a massive scale. That applies especially to fruit. In the previous year, 165,000 tons of apples were wilfully destroyed along with 327,000 tons of pears. The fruit is not destroyed in the way that I destroy my own apples—namely, by letting an old sow loose in the orchard and allowing her to gobble it up. The fruit is purchased by the Commission at a high price. Having been purchased with public money, and proportionately by poorer people's money more than anyone else's, it is subsequently destroyed, so that not even animals eat it.

Secondly, much of the food that we could be eating is being exported. The hon. Member for Harlow referred to bread. As he is in the business, as president of the London Co-operative Society, he will probably be aware that there has been an 8 per cent. fall in the quantity of white bread eaten in the past 12 months. The hon. Gentleman knows that that kind of bread is the commodity that used to be eaten most of all by poorer families with a large number to feed. If one was badly off, one stuffed white bread down the throats of one's children more than anything else. However, there has been a fall in consumption. That is because the price of the loaf has increased.

The reason is that import levies on wheat from North America have virtually doubled the price of wheat that is needed for the white loaf. It is appalling that we should be so taxed and that wheat should have doubled in price. I repeat that it is, proportionally speaking, the poorer people who are paying the tax. They are paying a much higher tax in percentage terms than the poorer people at the time of the Corn Laws. In those days, the most that they had to pay was 37 per cent., not 100 per cent.

We are exporting wheat now that we are self-sufficient to the Community. We have nearly 2 per cent. surplus. In round figures, it seems as if the surplus will be about 3 million tons. That wheat will go on to the world market. I acknowledge that it is soft wheat. However, the folly is that we are heavily taxing imported hard wheats, such as Manitoba wheats. The subsidy on soft wheat is running at about £40 a ton. That has to be paid for by the taxpayer. Again, it is the poorer people of this country who are proportionally paying more than the rest.

Poorer people are being hit in three ways: by the destruction of food after it has been purchased by the European taxpayer; by the way that food is taxed when it comes into the country, especially the sort of food that poorer people used to buy, such as New Zealand lamb; and by the export subsidies that are applied, which means that food is exported that the people are unable to buy for themselves although they are being called upon to pay a subsidy out of their pockets to enable someone abroad to buy it.

I believe that it is in the interests of British agriculture for the British people to go back to eating as much food as they were able to eat in the early 1970s, and for as much of that food as possible to be produced by British farms at a fair and competitive price. In the way in which things are now moving—the documents only confirm this—the British people will be eating less than they are now, coupled with the real danger that our farms will be contributing less food to the total produced in the Community.

7.38 p.m.

Mr. John Cockcroft (Nantwich)

I should declare interests, Mr. Deputy Speaker, for there are more cows than people in the Nantwich area. I am told that that is so although I have never had time to count them. It means that there are at least 70,000 cows there. I must also say that I have a sore throat.

I speak briefly, as I have been requested, about the future of the Milk Marketing Boards. There is no doubt that in Cheshire, and in the part of Yorkshire where I was brought up there was enormous agricultural instability in the 1930s. There was a great deal of suffering and unnecessary uncertainty in the countryside during the years between the wars. There were low and unpredictable incomes. There were many bankruptcies as well as a total lack of confidence about the future.

The Milk Marketing Boards were established after the Second World War. In many ways the system was changed out of all recognition. I know that there are arguments that a monopoly is a bad thing. As a former economic leader writer for The Daily Telegraph, and with my notoriously Right-wing views, I say even so that in some instances a monopoly can be a good thing. Clearly, one must be flexible in approaching economic situations. After having been the Member for Nantwich for four years, I am convinced that what I have just said about monopolies is not a contradiction in terms.

There is a tendency to talk about one Milk Marketing Board, but we are discussing several boards. These monopolies are good from the point of view of the producer, of the consumer and of the retailer. I do not know how many public opinion polls have been taken on the subject, but I imagine that if there were to be such things we would find overwhelming support for the boards in their present form.

I have listened to as much of the debate as I could, and I agree that it must be a case of all or nothing. We cannot have a Milk Marketing Board covering 60 per cent. of England while the other 40 per cent. of the country goes its own way and sells milk at the end of the lane leading to the farm. The point made earlier about trade unions is a different aspect. I am talking about the marketing boards which are a major feature of these documents. Unless overall costs and stability are shared, the whole edifice will collapse.

There is a general feeling that the boards are doomed. The Minister reminded us that the Commission is not wholly against them, though I am not sure myself that it is actually in favour of them—and certainly the Council of Ministers is not in favour. This is a major cause of the instability and insecurity of farmers in the milk and other dairy products sector, and the sooner the situation is resolved, the better.

As a journalist, I paid several visits to the English Milk Marketing Board at Thames Ditton and wrote several articles about it. I was greatly impressed by the efficiency of the set-up there, the technological progress, its work on artificial insemination and its resurrection of English county cheeses after the Second World War, among other things. None of the valuable work that it has done would have been possible if there had been a free-for-all in milk and dairy products in the last 25 or 30 years.

I wish to say a few words about the psychological effects of the present situation. There is undoubtedly a need for a higher price for milk, even though it has recently gone up quite a lot. It may be said that farmers are never happy; but in this case they have reasons for not being happy.

In Western England, including southern Cheshire, many farms are small family businesses, involving just a husband and wife, with perhaps one or two members of the family or a couple of people from outside—though there are not so many of these since the abolition of tied cottages. They work long hours and the businesses are not always economic in the sense that a large factory of a firm such as British Leyland would be judged economic, but they represent a way of life that is not subsidised and certain aspects of British country life that are very important. They provide a good service for almost everyone concerned, and it would be a tragedy if, through absent-mindedness at a late night sitting of the Council of Ministers, a system which is widely admired on the Continent were abolished almost by default.

There are only two hon. Members on the Government Benches at the moment, but many of their hon. Friends believe that those of us who have laboured in the vineyard for many years, who at the time of Messina were like the early Christians in the catacombs—that is, dedicated Europeans in the early days—all still go overboard for the CAP. That is not so.

Many of us would argue that, in the long run, the CAP is to the benefit of the British farmers because intervention prices and entry prices on the Continent, at least until the end of the transitional period, have been higher than prices here, and there is a case for saying that the old deficiency payments scheme, which cost £300 million or £400 million a year, was not the right way, even though, technically, it was brilliantly devised, because in the end the taxpayers would say "Enough is enough. There should be some other way of subsidising farms" However, that is not the same as saying that dedicated Europeans are necessarily in favour of the CAP.

On the contrary, I am aware that, although it may account for 80 per cent. or more of the budget of the Community, there is a great deal to be said for starting from scratch with the CAP and doing it again. One can argue plausibly in favour of Europe on wider grounds, such as the wider market for our industries, lower tariffs, increased trade and the political and defence aspects, without necessarily being in favour of the CAP. I should like to dispel the myth that is widely held among Labour Members that hon. Members who are in favour of the EEC, even those sitting for wealthy agricultural constituencies, regard the CAP as holy writ, like the laws of the Medes and Persians.

We need to restructure the policy—it is too late to do away with it—more towards the needs of those who joined the Community later. It is our fault that we were not in sooner and could not participate when the policy was structured in 1962, but let us now recognise that the Community is much wider and the policy must be restructured towards the needs of nations such as Britain which has 55 million people, only 3 per cent. or 4 per cent. of whom work on the land.

I appreciate that the Minister has faced some difficult problems. We do not agree about Europe, but he has been kind enough to talk to me in private several times about the problems. He has done well to take the rest of the Community so far towards being persuaded that the Milk Marketing Boards are, if not essential, not entirely undesirable. I wish him every success in his aim of preserving, virtually intact, the marketing boards.

There is a lot to be said for taking a low profile, to use a cliché. It may be wrong to imply a British attitude of "Methinks he doth protest too much" in the Council of Ministers. If it can be done, let us not make too much fuss about it and, on the Milk Marketing Boards, let us agree that it is best, as Walpole might have said, to let sleeping dogs lie.

7.48 p.m.

Mr. Peter Mills (Devon, West)

I must immediately declare my interest. I start by turning to probably the most important aspect of our considerations, namely, the price proposals. I agree that the future of the Milk Marketing Boards is crucial, but the price determinations are extremely important this year.

The Opposition Members who were supporting the Minister so strongly and seeking to defend him have left the Chamber. I do not criticise the Minister much for what he said earlier. There were a number of matters on which I disagreed, but the real problem with the right hon. Gentleman—I have told him this to his face—is his attitude.

If, over the years, we had heard him put forward as strong a defence of producers as of consumers, it would have been a lot better. The Minister should not be a Minister of Agriculture or a Minster of Food; he must get the balance right and be a Minister of Agriculture and Food. That is our criticism of the right hon. Gentleman.

It would be a great help if the Minister or one of his hon. Friends said that agricultural producers had suffered tremendous increases in costs, as have other manufacturers and producers—but we do not hear that from the Minister. We want him to agree that there must be some price increases to compensate farmers for the alarming rise in the cost of fuel and other commodities. It is no good the Government expecting to get food from our own resources without paying a fair price for it. That is the fundamental difference between the two sides of the House. We want the Minister to make a statement about the tremendous problems of producers. He has not done so and that is why we say that he is not being the Minister of Agriculture.

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

I wish that the hon. Member would read the recent review White Paper, which explains the problems of the industry and mentions that there has been an impressive recovery in spite of the problems of the last two years.

Mr. Mills

How many people in this country read White Papers? They see and hear what the Minister says in the Press and on television. The Minister should get the balance right. I appreciate that he is in a difficulty, because he is so opposed to the concept of the Community.

I turn now to the price proposals. A 2 per cent. increase is adequate. In some sections of production it should be considerably less. It is no good talking of 5 per cent. increases when we are in surplus. The farming community must accept that we cannot go on producing to intervention. I do not support the view of COPA that the increase should be 5 per cent.

I sought to persuade British agriculture to enter wholeheartedly into Europe, with all that that means. We should be working towards parity. I want our consumers to be able to pay for the food they consume, and that is where the Government have let the country down. If we had enjoyed the economic growth that we should have, and if wages had increased as they should have in recognition of productivity and harder work, the consumer would now be able to pay the true price for food. British agriculture should be given a gradual revaluation of the green pound to reach parity with the Community.

We must do something about the surpluses. Perhaps without blowing my own trumpet I may be permitted to refer to the paper that I, my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) and another hon. Member wrote about the changes that are necessary. We do not say that our suggestions are the right ones—simply that they should be examined on the basis of both the long and short term. In some areas we need to reduce production and in others to increase it. Prices must be fixed on the basis of the more productive not the least productive farms. Areas that are producing simply for surplus must be provided with alternative work. It is for that reason that we want more money spent in the Community on giving guidance to deal with these matters. We believe that there should be schemes to encourage farmers to abandon certain types of production. If a country wished to support some sections of its farming, that should be done on a national basis, because it is social aid. There are many other ways of dealing with surpluses, and action must be taken, because it is ridiculous for Community farmers to continue producing them. Tough measures are needed.

I am sometimes accused of speaking too much in support of the Milk Market- ing Board, but it is one of our finest examples of co-operation among producer, processor, retailer and consumer. If other sections of our community and our productive and distributive industries adopted the same sort of arrangements, we should not now be in the trouble that we are. We must maintain the Board. Many other people feel as I do, that it will be over our dead bodies that anything will happen to it.

It is easy to take the board for granted, because it is so successful. It is easy to suggest changes. But if we do not take care we shall damage the structure of that carefully-constructed edifice. So, while it is easy to suggest changes, it is not so easy to make them.

There is no point in the Community's sticking out on this matter. I did not advocate joining the Community because I thought that it would fiddle and fuss over such matters, I did so because I wanted to see peace in Europe for my children and my grandchildren, and for the other political factors which are crucial to the future of Western Europe. I wish that the Minister would adopt a more militant attitude on this question. I can assure him that those who are concerned with agriculture and who represent the consumer will take steps to see that nothing untowards happens.

I do not know whether I am permitted to average my speeches in order to bring them within the seven-minute limit. The last time I spoke I did so for only five or six minutes—

Mr. Deputy Speaker

I am aware only that Mr. Speaker said that each speech should stand alone and occupy less than seven minutes. I realise that the hon. Member is anxious that his speech should not be registered as having taken place. Perhaps I may also tell the hon. Member that the proper designation of the Minister is the Minister of Agriculture, Fisheries and Food.

Mr. Mills

Thank you, Mr. Deputy Speaker. My point was that he seems so often to be just the Minister of Food.

Let me now turn to the question of the maize starch industry. It may appear strange that I, as a farmer, should support maize starch and isoglucose producers, but I do so because farmers should never be Luddites. That is the worst that could happen. This is, after all, an important industry and it has had a raw deal from the Community over the last few months. The starch industry should, above all else, know where it is heading. At present it does not. There is an overwhelming need for the Commission and the Council of Ministers to establish, with the industry, a stable policy for the next five to 10 years upon which the industry can base its expansion plans. It is only fair that they should do so. If the Dutch, with their potato industry, want to help that section of their community, I believe that it should be done out of national funds. It is a social problem and it should be dealt with in that way rather than that the maize starch industry should be affected.

I should briefly like to refer to the isoglucose industry, which is a new one. The sugar beet producers could be affected seriously, but I believe that there is room for both industries so long as the isoglucose manufacturers keep their production to the small amount which they have already started to produce. It would be wrong for the sugar beet growers of this country to think in terms of being Luddites over this matter. The isoglucose industry is an interesting one. Its sugar is very effective in the manufacture of sweets. It puts a nice gloss on boiled sweets, and so on. I believe that it should have a fair share of the market so long as production is kept very low.

Agriculture has extremely high costs. It is only right that we should ensure that those costs are covered. It is an entirely different matter when one is producing goods for intervention, as is happening in some parts of the Community. In a situation like the present one, where these is a surplus, I believe that the very minimum of price increases should be allowed. But I believe that our own farmers should have their prices increased towards parity.

I also believe that the consumer must realise that it is all very well to talk about surpluses, but it should be remembered that things can change very rapidly. I still believe that the best future for the consumer is a healthy and prosperous British agriculture.

8.3 p.m.

Mr. Peter Hardy (Rother Valley)

I agree with the hon. Member for Devon, West (Mr. Mills) that there should be a healthy farming industry. I also agree that the Milk Marketing Board should be retained. It might be of benefit for Europe if the example of our own board were emulated more widely within the Community.

I also agree with the hon. Gentleman that the Community ought not to be obsessed by small details. It must accept the broad need for amendment of the CAP. I have an almost romantic attachment to deficiency payments, because the scheme was born in my area. Tom Williams, its progenitor, spent part of his life in my small town. I remember his giving me considerable advice when I was candidate in a different constituency from the one that I now represent. I believe that that constituency is still represented by a Conservative Member. Farmers were impressed by Tom Williams's information. However, they did not vote for me. Farmers have never been given to voting in their best interests.

I accept the point that if we do return to a deficiency payments system it will cost a great deal of money. It is incorrect to suggest that we could get away from the CAP and that the alternative would be light, easy and pleasant. I do not think that is a tenable argument. But the CAP does need amendment, and we need to go further than my right hon. Friend has been able to go in recent months.

The cost of the CAP is large. It will grow. It may grow to proportions which will cause increasing political dispute and perhaps even stronger feelings than that. However, it needs to be changed so that individual nations bear some of the social problems that are currently transferred to Community funds. We need a more vigorous policy in order to reduce the mounting surpluses of certain products.

But perhaps the most serious weakness of the CAP is its international effect. When world prices fall the CAP effect is to push them down further, to the grave disadvantage of international producers, particularly in the underdeveloped countries. When prices rise the CAP tends to push them still higher, which makes the lot of the more deprived even more difficult. There has to be change. I hope that this view will be reflected in our representation not merely in this House but in the European Assembly, and in a small way, through the Council of Europe.

At present, I am preparing, and hope to present to the Council of Europe, a report on agriculture which may strengthen the common sense view that is beginning to be expressed in this country. I recall that during our recent discussions, one European Member of Parliament said that surpluses were the alternative to shortage. I suppose it could be said that in this simplistic point of view there was an important message, which is that we are better off having rather too much than too little. But we can always have too much of a good thing, and we have certainly had too much of a good thing with regard to the number of agricultural products entering intervention.

If we are to see the CAP expending large sums of money, I believe that some of it should be diverted to the promotion of consumption, perhaps by the establishment of bodies like the Milk Marketing Board, to give encouragement to distribution and consumption in other countries. That would be far better than having butter mountains, which tend to go rancid if we do not sell them quickly at a ludicrously and offensively low price.

We ought to go further and demand a continuing reappraisal of the role of the individual members of the Community. I believe that specialisation should be encouraged. The British Isles and Ireland should be increasingly seen as the dairy headquarters of the Community. We can produce milk and milk products far more efficiently and effectively than can most other countries of the Community. If Europe is to be sensible it will accept and embrace such a policy.

I accept that there may be embarrassment for us in certain areas if we accept the specialisation principle. It could be argued that Denmark has a natural claim to be the principal pigmeat producer of the Community, but Denmark has always had a large share of our own market, and it has recently increased that share. We have seen that share reach dangerous proportions in recent years, particularly in 1976 and 1977. I in no way condemn my right hon. Friend for that position. He has had to fight for assistance for our pig producers. It proved more difficult, because he had no help from Con- servative Members, who seemed to be rejoicing in the fact that the Community was extremely obstructive in that regard. We must maintain pig production in this country. Our system of production and use of skimmed milk, and methods of curing, need to be reformed. I welcome the steps that my right hon. Friend has taken, but we need to go a great deal further.

One thing that my right hon. Friend has done—these documents show it clearly—is to accept the fundamental fact that for the first time for many years, the consumer needs production and the producer needs markets. If the producer's costs are too high the consumer will not be able to purchase in the market. We must exercise care, as the hon. Member for Holland with Boston (Mr. Body) suggested in his reference to calorific consumption.

My right hon. Friend has won a lot of battles in Europe. It would be a great deal easier if Conservative Members were constructive rather than unhelpful and were encouraging rather than gleeful when certain situations arise.

My last two speeches have been rather shorter than those of the hon. Member for Devon, West—one minute and three minutes—and I wish to be brief. But I must say that I recognise that farm costs have gone up in the last four years, during which time we have been through the worst recession in living memory. I recognise the increased costs faced by farmers and I have discussed them with farmers in my own constituency.

It would be as well if Opposition Members recognised that, although costs have increased mightily in the last four years, since oil prices quadrupled and other commodity prices soared, there was marked inflation in British agriculture between 1970 and 1973. I rarely hear the Opposition protest about that. For example, in 1970 a combine harvester cost £3,500. It had almost doubled in price by 1973. However, there was not a squeak from the Opposition. I recognise that the increase has been even greater since 1973, but the fact remains that costs increased during the lifetime of the Conservative Government, and they did very little to assist.

The plight of British agriculture when the Labour Government took office——

Mr. Peter Mills

Will the hon. Gentleman give way?

Mr. Hardy

No, I shall not give way. I shall see the hon. Gentleman afterwards. I think that he will accept that my statements are correct. If not, I shall apologise to him.

British agriculture was not in booming and blooming health in February 1974. Some sectors of agriculture were in grave difficulties. I accept that certain sectors have had to face serious problems in the last two or three years. However, I am confident that if my right hon. Friend maintains his polices, we shall secure not merely justice but increased production, which will not be assisted if the benefits of North Sea oil are squandered in the way suggested by the Leader of the Opposition this afternoon.

8.11 p.m.

Mr. Ralph Howell (Norfolk, North)

I declare my interest as a dairy farmer. I am sorry that my hon. Friend the Member for Devon, West (Mr. Mills) has just left the Chamber. I follow very much his line of thought and agree with the sentiments that he expressed about the Minister.

We recognise that the Minister is a tough negotiator. The trouble is that he has not directed his efforts aright. I believe that he has done a great disservice to agriculture by antagonising his colleagues in the Council of Ministers. He has not got the best that he could have got had he taken a more sensible line than he has in the Council of Ministers. Furthermore, he has done a great deal to destroy the good will which existed towards this country within the EEC.

I believe that, by being so rigid in refusing to realign the green pound, the Minister has done a great disservice to agriculture generally. British farmers have been cheated in a big way by his refusal to realign the green pound. The House forced a 7½ per cent. revaluation of the green pound. The fact that that has not yet reached the farmer is an indication of the resistance put up by the Minister and of the damage that he has done. In the meantime, the Irish Government had the good sense to realign the Irish green pound with the pound sterling. That is proving a great service to Ireland's agriculture.

The livestock industry particularly has been hit. People are leaving the industry. That is adding to and causing unemployment in the food manufacturing industry.

I am amazed how little regard the Minister and Labour Members have for the fate of agriculture workers. The National Union of Agricultural and Allied Workers fully understands that, unless there is a full alignment between the green pound and the pound sterling, its members will never have fair wages. I remind Labour Members that wages for agriculture workers in other parts of Europe are far better than they are in this country. A week or two ago I heard at a farmers' club that a tractor driver in Europe earned £8,000 a year.

Before dealing with the Milk Marketing Board and the milk surplus, I should like to express my views on the price review and the proposed 2 per cent. increase. I do not agree that this general price increase is designed in such a way as to solve the problems in agriculture. It will not. Neither the 2 per cent. nor 5 per cent. will solve problems across the board. The 2 per cent. will have a different effect in each of the nine member States. Another way must be found. I believe that we must have a quota system, if only to stop the milk surplus from getting larger.

I congratulate the Minister on his work in maintaining the functioning of the Milk Marketing Board in its original state after 1st January 1978. That is a considerable achievement. It is good to know that the Treaty of Rome can be flexible. It has been flexible in this instance. I encourage the Minister to be at his firmest in insisting that no change takes place.

What is wrong with the Milk Marketing Board as it is? It has served this country extremely well for 45 years. I see no reason for any change at all. There may be a reason for the importation of milk to some degree, but I see no reason for the structural changes which are suggested. Therefore, I hope that the Minister will stand firm.

I had the honour to conduct a party of members from the Committee on Agriculture of the EEC on a visit to the Milk Marketing Board. They were mightily impressed with what they saw. We should tell our European partners that the way ahead is to create similar boards in each of the member States. With such machinery, they would be able to solve the problem of ever-increasing milk surpluses.

The co-responsibility levy introduced last year is a total failure. It is nothing more than a dressed up mini price cut. It will not solve the problem of milk surpluses. Last Wednesday, in the European Parliament, Commissioner Gundelach said that there was no market for 15 per cent. of the milk produced within the EEC.

There are about 25 million cows within the EEC. It is a simple matter to deduce that there are 3 million cows too many in Europe. These surplus cows exist in Germany and France, and to a lesser extent in Belgium and Holland. We must ensure that we do not go on maintaining these cows wastefully and creating this embarrassing surplus.

The answer lies not in price cuts and squeezes. The price squeeze that we have suffered will mean that dairy farmers and other producers will try to keep up their incomes by increased production. There will come a breaking point. At that point, everyone will go out at once and we shall have a period of shortage.

We should consider having quotas for milk production, not necessarily in this country, because we are net importers of dairy produce, but in countries where the excess production occurs. We accept quotas for sugar and for hops. Indeed, thought is now being given to devising a quota system for wine production.

I urge the Minister to give careful consideration to this matter and to persuade his colleagues in the Council of Ministers to think on these lines. We must persuade them to set up the necessary milk and marketing boards. I agree with the hon. Member for Rother Valley (Mr. Hardy) that we need marketing boards in other areas. I believe that, far from trying to change our first-class Milk Marketing Board, we should urge our partners to copy it and to set up similar boards in the other member States.

I believe that we must recognise the need to increase food production in this country. The economic situation demands it. The whole country has been put into a false position by listening to Labour Members talking about producing food from our own resources when they have done nothing but restrict production and create a general fall-back. The time has come to look over the fence and see what is happening in other member States, to see how well the German economy is progressing and to realise that they have a different attitude from ours to agriculture. We would do well to take note of that attitude.

8.20 p.m.

Mr. W. Benyon (Buckingham)

This is a great day for me because this is the first time I have been called to speak in an agriculture debate in this House. It is easier for a camel to go through the eye of a needle than it is for a Conservative Member who has an interest in agriculture to take part in these debates. I declare my interest as a farmer, and I add my support to the remarks that have been made by so many of my hon. Friends today about the retention of the Milk Marketing Board. I do not propose to say anything further about that. All the arguments have been made, and generally throughout the House we are agreed that this is the right thing to do.

I turn immediately to deal with the whole problem of monetary compensatory amounts. One can imagine the situation that would arise in this House and outside if a manufactured product, such as a motor car, were to come into this country with a 25 per cent. import subsidy. There would be delegations, deputations and motions in the House until the matter was put right, and nothing could be more ironic than the silence on the Government Benches. No party has been more vociferous than the Labour Party about unfair competition, and yet here we are, in the pig sector in particular, having to fight what is essentially totally unfair competition. It is only the incredible productivity of this industry—5 per cent. still last year—that has enabled it to keep its head above water. If the rest of British industry had a similar record, we should have no economic troubles at all. The most important concession that the Minister must obtain is the recalculation of the MCAs. This is vital.

After your strictures, Mr. Deputy Speaker, I turn quickly to deal with the price proposals themselves. The overriding criticism that has been made by many hon. Members today of these proposals is that they do not attempt to deal with the problem of surpluses in particular products. There are three ways in which one can change a situation of surplus. One can do it through the price mechanism, through structural change of one form or another, or through a combination of the two. My criticism of these proposals is that no attempt is being made to use any of those methods to deal with the surplus.

Where does that leave the British farmer? We are, of course, concerned about the European position, but, as hon. Members of this House, basically we are concerned about the problem of the British farmer and of the consumer, too. What has happened leaves the British farmer in the position of having the worst of all possible worlds because he is having to experience European costs while he receives British prices.

I was glad to hear the hon. Member for Cardigan (Mr. Howells) say this afternoon that he and his party are in favour of working quickly towards parity, because that is what we are after. We are not talking about the price level in the Community as such. We are talking about the disadvantage which the British producer experiences in relation to the market as a whole. This means a realignment of the green pound in various stages.

There are not many Labour Members present to whom I can say this, but those in the governing party pride themselves on their knowledge of industrial conditions and they must know, if they are honest with themselves, that the chances of British industry being able to do great things in exports are not there. Gone are the days when we used to manufacture cheap products and sell them abroad in return for our food and raw materials. Of course, a lot can be done for British industry, but everybody agrees that it will be a great struggle to keep our head above water in export markets.

In those circumstances, is it not both sensible and prudent to look towards import savings for success in the future? We have seen the dramatic transformation that oil has made to our balance of payments. An equally dramatic transformation could be made by the expenditure of a relatively small amount of money to provide import savings. It is, therefore, not a case of farmers versus consumers. Both have a vested interest in having a prosperous and efficient agriculture industry. What that means is producing a financial climate in which farmers can have confidence to invest and expand.

Mr. Bishop

Does the hon. Gentleman realise that last year total agricultural exports of livestock, machinery and foodstuffs amounted to £3,400 million? That was a great record, which shows how the productivity of our agriculture is helping the balance of payments.

Mr. Benyon

I am grateful to the Minister for that statement, but he has misunderstood what I have said. I am looking for import savings as opposed to export effort. By a relatively small investment, we could achieve enormous import savings to rival even the change in the balance of payments brought about by oil.

The real problem is that the majority of hon. Members represent constituencies where most of the people either live or work in towns. The result is that there are two temptations to which it is easy to succumb. The first is to fudge the green pound issue and the second is to blame the Common Market for all our ills. It is true that a revaluation of the green pound raises food prices. It is right to say that firmly and definitely, but it is not such a dramatic rise as many people believe. It is, none the less, a rise. But, in any event, the policies that have been pursued by the Government since they took office had had a far greater effect in increasing food prices than has the revaluation that has taken place or could take place of the green pound.

The important thing is to reinforce success, and British agriculture is a success. The question really is whether one should pay £500 million to resuscitate British Steel or British Leyland when one-tenth of that amount spent on supporting agriculture would make an enormous improvement to our economy.

I turn quickly to the common agricultural policy, which always seems to go by default. Its aims are worthy. I have the greatest respect for my hon. Friend the Member for Holland with Boston (Mr. Body), but I find his statistics hard to understand. If the position is so parlous, if people find it so difficult to buy food, why is consumption of the cheapest items of food, such as bread and potatoes, going down when one would expect it to rise?

As I said, the aims of the CAP are worthy. They are to make the Community as self-supporting as possible, to produce the various products as efficiently as possible and to raise the standards of living of the agricultural section of the population to bring it nearer the standard of living enjoyed by the industrial section.

It is the faults in the operation of the system that are to blame. The system itself should not be totally blamed for those mechanical faults. If the system is distorted by the operation of the MCAs, if we are not allowed to compete on equal terms with our competitors in Europe, if we are taxed more heavily than our counterparts in Europe and if those who produce surpluses do not have to bear the full cost of supporting them, the system cannot and will not work.

All that British agriculture is asking is that it should be allowed to have the ability to compete on equal terms and to make the market work.

8.30 p.m.

Mr. Nicholas Winterton (Macclesfield)

I am pleased to make a brief contribution to this important debate. Like my hon. Friend the Member for Buckingham (Mr. Benyon), despite the fact that I am an officer of our parliamentary committee, I have found it difficult to be called in these debates, because so many of my colleagues seek to catch the eye of the Chair to make positive contributions on a subject of vital importance to this country.

I come from a part of the country—Cheshire, in the North-West—where milk and the dairy industry are very important. The dairy farmers may not be large in number, but they produce something of considerable importance to the consumer, particularly the housewife. Their position should be understood by the Government. In dealing with our European partners, the Government of the day should adopt an attitude and promote a policy that will help the dairy industry in this country.

Before I come to the industry, and to the milk industry in particular, I should like to make one or two remarks about the position of British farmers—the food producers—and compare them with farmers in the EEC.

At present we have in this country the most efficient farmers in the EEC. I say that not in a boasting manner but because it is a fact. I say to the Minister of State—I am pleased that he is present, because he and I have confronted each other across the Floor of the House on less important occasions—that unless action is taken to improve the position of United Kingdom farmers our European competitors, who are coining the cash at the expense of the British producer, will shortly have all the cash they need to provide them with the ability to carry out the investment that will make them as efficient as the British farmer.

The British farmer is suffering at present. I shall not discuss the subject of taxation, which was mentioned by my hon. Friend the Member for Buckingham, but it is an important aspect of farmers' ability to cope, to plan and to invest for increased home food production.

It was interesting earlier to listen to the well-thought-out and well-argued contribution of the hon. Member for Gloucestershire, West (Mr. Watkinson), who talked about a common food policy in place of the common agricultural policy, but his view must not eclipse the unique position of the United Kingdom within the EEC. I shall not trespass on remarks made by my hon. Friend the Member for Holland and Boston (Mr. Body). The hon. Member for Gloucestershire, West stated that both France and West Germany, within the Council of Ministers and other bodies in the EEC, stood up to the rest of Europe for their national interests, and that both had been highly successful in doing so.

I say to the British Government that we must more responsibly, forcefully and constructively stand up for our own interests within the EEC. That does not mean that we must make enemies of all the other Agriculture Ministers within the Community. We must also safeguard our balance of payments. Although we are members of the Community, if we buy from other Community countries we are still expending exchange currency. This is dangerous for our balance of payments, and unnecessary, too.

I have no doubt that the British farmer could produce very much more of the food that we need. The President of the National Farmers Union, Sir Henry Plumb, has also said this. Farming represents one of the most effective and efficient sectors in our manufacturing scene. It has an unparalleled record. How right some of my colleagues are to say that if other sectors of our manufacturing operations had increased their production and proved as efficient as farming we would not be in our present economic mess. It is the duty of any Government, Conservative or Labour, to ensure that farming can continue to play its vital role in the future economy of the country.

I turn now to the milk sector and to consider the future of the Milk Marketing board. There is no difference of view in the House about the vital need to maintain the Board with its present structure and procedures. It is sad that, despite the fact that the status of this organisation is supposed to have changed under EEC regulation on 1st January, no firm proposals have yet been agreed. I do not know whether to blame our partners in Europe or the Government—the Secretary of State in particular. It is extraordinary that the dairy industry, which believes so fervently in the Milk Marketing Board—which has proved so useful to producer and consumer alike—should be kept waiting on this issue. We have, however, had proposals put before us in this debate.

It is right to say that the board and the Dairy Trade Federation, which represents the interests of most milk retailers in the country, take the same view. There are few differences between them. These bodies wish to see the board continue. They believe that some of the proposals put forward from Europe are unacceptable. The board, which has managed to promote the continuing large consumption of liquid milk, should be allowed to continue to do its job.

Some of my hon. Friends have clearly implied that far from importing ultra-heat-treated milk from Europe we should export the Milk Marketing Board to all the other countries of Europe. I believe that we are the only country within the EEC—though I stand to be corrected in terms of the Republic of Ireland—to have a daily delivery service, putting a pint or more of milk on the doorstep.

Moreover, the fact that our pint of milk costs something under half the price of a pint of beer, both of them being highly nutritious, highlights the importance of milk and the daily "pinta" which our households receive at least six times a week.

Perhaps, after mentioning beer, I should declare an interest, in that I am involved with a small company which runs a few public houses that are outlets for traditional real ale. I have, therefore, a constituency interest in the dairy industry, which produces milk and, in another capacity, I have an interest in a company which promotes real beer, both, as I say, of considerable benefit to our people.

At present, the responsibility lies entirely with the Government, and they must get the EEC, whether from the funds which it will have from the co-responsibility levy or however it may be done, to promote liquid milk sales throughout the Community.

Perhaps, in lighthearted vein for a moment, I should refer to what was said by my hon. Friend the Member for Hereford (Mr. Shepherd). By what I took to be a slip of the tongue, my hon. Friend referred to litres rather than to pints. If anything is liable to get the British people hot under the collar and really angry it is the European mania for changing everything that we hold dear to European measurements of one sort or another.

Mr. Shepherd

I want my hon. Friend to realise that I am delighted that the litre should persist on the other side of the Channel and that people there should have a litre delivered to their doorstep, but on this side of the Channel let it be the "pinta".

Mr. Winterton

My hon. Friend is held in high respect by his constituents for the excellent work that he does for them, not least in farming matters, and I am sure that they will be pleased that he has made his attitude clear on that somewhat emotive subject.

It is essential that the proposals that the EEC is putting to us for certain changes to take place in the practices and procedures of the Milk Marketing Board should be resisted. In my view, the proposal that there should be an election every five years is unacceptable and, in the light of experience here, totally unnecessary.

What is more, I believe that for certain producer-retailers to have the ability to opt out would undermine the whole business of the Milk Marketing Board and the valuable service that it gives. The same applies to the proposal regarding a fixed percentage of liquid sales. To tie a future board down to a specific figure would be dangerous, since it obviously cannot be guaranteed.

I want to leave this message with our Agriculture Ministers. They have the full support of all parties on the Opposition Benches—I know that I can speak on behalf of all on my side—in any steps that they take to maintain the Milk Marketing Board with its present structure, its present objective and its present powers. It is vital to the British consumer and British producer. When the interests of producer and consumer run together, which does not happen all that often, there is a damned good case for ensuring that our position is accepted and adopted within the European Community. Having studied both sides of the case. I see no need whatever to change the Milk Marketing Board and damage the achievements that it has rendered for the benefit of the British nation.

I shall now say a word about the pig sector, because I have in my constituency a number of people who are very active in this branch of agriculture. It is important to ensure that at an early date the MCAs are recalculated to give our pig industry a fairer deal.

It was interesting that the hon. Member for Rother Valley (Mr. Hardy) stated that he felt that the United Kingdom and the Republic of Ireland should become the headquarters of the dairy and milk sector of the EEC, but that it was likely—I am delighted that the hon. Gentleman has just returned to his seat—that Denmark would be likely to form the headquarters of the pig industry of the EEC.

The hon. Member went on to say that the Danes had achieved a dangerous proportion of our market in pigmeat. How right he was to say that. But would that have been the case if our pig industry had received more justice from the EEC, and if our Government had been successful in achieving a recalculation of the MCAs, which even the Minister and the Minister of State have admitted time and again is vital if the industry is to survive?

In addition, this crisis is carried through into the food processing industry, which needs a very stable home-based pig industry. With the size of the pig herd in this country dramatically decreasing, I believe that urgent action is required.

This is an important debate, because it enables hon. Members with constituency interests to range very widely over many subjects, because the documents, as was stated earlier, are very prolific and cover, I believe, most subjects in the agriculture arena. We need to ensure that we continue to have a successful and flourishing agriculture industry.

I repeat that if there were many sectors of our manufacturing scene which had achieved success comparable to the increased productivity and efficiency of our agricultural industry, this country would be in a very healthy position today.

We do not seek bias in favour of our farming industry. We are not seeking any special privilege for our farming community. We are seeking justice, so that this very valuable sector of our community can continue to play a vital part in our economy.

My hon. Friend the Member for Norfolk, North (Mr. Howell) was quite right to refer to the Government's failure to grasp the fact that the industry needs a stable future and a fair return if it is to pay its work force the sort of wages about which the hon. Member for Sheffield. Brightside (Miss Maynard) is for ever talking in the House. I am pleased that my hon. Friend the Member for Devon, West (Mr. Mills) has returned to his seat, because earlier I was going to apologise to him for not being present to hear the beginning of his speech. I always listen with very great interest to his contributions. But Members of Parliament need to eat, and I had retired to the Members' Dining Room in order to help the British farmer by having a couple of slices of excellent beef.

I was joined at the same table by the hon. Member for Londonderry (Mr. Ross), who made a very positive and forceful contribution to the debate. My hon. Friend the Member for Devon, West and I do not always agree. We have the same objective, which is to ensure that agriculture prospers in the future and that it can carry out the work that it necessarily needs to do. We do not necessarily go along the same path to reach that objective. However, I believe that we found ourselves in considerable agreement today, particularly about the future of the Milk Marketing Board. This agreement has been reflected in every speech that has been made from the Opposition Benches.

The Minister of State has shown considerable sympathy for farmers and, if I may say so, some genuine understanding. In saying that, I am not being patronising. Apparently, the Parliamentary Secretary will be replying to the debate. Although the Parliamentary Secretary has shown some misguided moments and, unfortunately, some misguided policies, he is genuinely concerned that agriculture should play its full part in our economy.

However, our agriculture cannot do that within the European context unless we stand up for our own interests. In terms of our pig interests and the Milk Marketing Boards, we must win our way, and we must also do that in regard to the promotion of liquid milk sales in Europe.

These other countries in the EEC have made mistakes. If all the boasting that has been carried on by ardent pro-Marketeers is to carry any weight, we must show our people that we mean to get our way. It is up to the present Government, in the immediate future, to ensure that we do that. In a few months' time it will be up to the present Conservative Opposition, by then in Government, to show the way to successful agriculture in this country.

8.51 p.m.

Mr. Robert Boscawen (Wells)

After the speech of my hon. Friend the Member for Macclesfield (Mr. Winterton), it seems that I have nothing to add. He has underlined the two points that have been underlined by Member after Member. They concern the strength of feeling throughout the House and agriculture that the Milk Marketing Board must continue and must function broadly in the way in which it is functioning now.

In the West Country, representing large numbers of dairy farmers, we find it essential that the Minister goes back to Brussels to negotiate with the Council of Ministers to ensure that the Milk Marketing Board continues with its present powers. The most dangerous proposal is that about producer-retailers and the size of the producer-retailer that is suggested. We have seen the way that the Egg Marketing Board went in very similar circumstances. We must not allow the Milk Marketing Board, which has done so much positive good for the dairy industry and the consumer in this country, to go in that way.

The strength of feeling that has been shown in the House this afternoon should encourage the Minister to go to Brussels and fight, and fight hard, for the future of the Milk Marketing Board, the dairy industry generally and the British consumer.

The only other point to which I briefly turn has been made many times. That is the position of pig producers and our bacon industry generally. We all know of the difficult times that pig producers have had over the last 18 months. What is worse is that not only is the level of production dropping but pig producers are becoming fewer and fewer and larger and larger. If the present position continues for much longer, there could be a danger of our whole pig industry being driven out of business. But that, perhaps, is what our competitors really want—to destroy the British pig producing industry. They would then really have us by the throats.

This is a great danger. I urge the Minister to redouble his efforts to try to achieve a recalculation of the MCAs. Whatever else he achieves, he must go for that. He knows the dangers to our pig industry as well as we all do. He knows how our smaller pig producers have been falling by the wayside recently and how the big producers have also been squeezed. He must get a return from the Council of Ministers on the MCAs. We shall really be very dissatisfied if he-fails to achieve this. We shall back the Minister in whatever measures he can bring to bear in his fight.

The Minister has enormous responsibility in the coming year to bring back the goods for the British farmer and the British consumer. We wish him well in this, and we hope above all that he will achieve the main things for which we have been asking.

8.55 p.m.

Mr. James Scott-Hopkins (Derbyshire, West)

It is always a little depressing to rise to wind up a debate and find that all the Labour Members who have taken part have left the Chamber. Some of them have pressed the Minister, and some have attacked my right hon. and hon. Friends. It is a little difficult to make a coherent winding-up speech if they are not here. But I am very grateful to those of my right hon. and hon. Friends who have remained in the Chamber for the end of the debate.

As is usually the case at this time of the year, it has been a most important debate, although slightly diffused, as there are so many documents to consider. But, even though we have a mass of documents from the Commission, it is possible to pick out three or four of the most important strands which have been running through the debate.

Many Labour Members, and also my hon. Friend the Member for Holland with Boston (Mr. Body) and the hon. Member for Londonderry (Mr. Ross), have attacked the whole system of the common agriculture policy and asserted that it would be much better to go back to the system of deficiency payments. I am sure that the Parliamentary Secretary will refute this proposition, as I do.

As my hon. Friend the Member for Hereford (Mr. Shepherd) said, there would be an additional cost in going back to the system of deficiency payments. There are all the various restrictions which have had to be imposed by the Treasury because of the open-ended nature of the deficiency payments system. We recall the difficulties and problems with the farming community at the time. I do not think that there is any hope of going back to that system. Indeed, I am convinced that it would be wrong to do so.

Of course, the CAP has its mistakes, its problems and its deficiencies, but, as my lion. Friend the Member for Buckingham (Mr. Benyon) said, basically it is the right system for the Community's agriculture, and, despite all those deficiencies and mistakes, the one thing that the CAP has managed to achieve over the years is stability of supply. That is one of its great achievements. Although at times there have been surpluses in various commodities, there have never been deficiencies throughout the Community. People have never gone short of the basic foodstuffs that they require. That in itself is of vital importance.

I was rather surprised when the Minister—I am glad that he is now present—spent so much of his speech in referring to Mr. Wynne Godley and the Cambridge review. As I am sure the Minister knows, the review will not be published until next week—

Mr. John Silkin

I was quoting only the summary, which is all that is available at the moment.

Mr. Scott-Hopkins

I am sure that the Minister has had more than that available to him.

Mr. Silkin indicated dissent.

Mr. Scott-Hopkins

I still think that it was a little discourteous to use it as the centre of the right hon. Gentleman's speech, because it happened to bear out one of his old anti-Market attitudes. I think that we shall have to come back to this subject when we have the full text, so that we can study it in more detail.

I turn to the problems arising from the debate. Many of my hon. Friends, particularly my lion. Friend the Member for Wells (Mr. Boscawen) referred to the Milk Marketing Boards. My hon. Friend the Member for Westmorland (Mr. Jopling) made our attitude quite clear: we give the Minister full support in the Council of Ministers when he negotiates the Commission's proposals.

By far the most difficult of the conditions proposed by the Commission is that concerning the limit of 150 cows for producer-retailers. I find it difficult to draw a line at all. If one draws a line and says that it is all right for small producers—those with 30, 20 or even 10 cows—to opt out, one runs into difficulties immediately. People would start splitting their herds—10 cows for the wife, 10 for the son, and 10 for the grandfather. This would lead to most appalling difficulties. I hope that the Minister will resist this proposal. This is the key to the whole problem, because the Milk Marketing Boards are of the greatest importance to this country.

I was surprised that the hon. Members for Cardigan (Mr. Howells) and Londonderry should say that the Commission's proposals might mean the end of the pooling ability of the boards. This is untrue. Pooling has been accepted by the Commission in their proposals. The Milk Marketing Boards will be able to pool all prices.

Mr. Wm. Ross

I am afraid that the hon. Member is mistaken. I was drawing attention to the fact that pooling arrangements for the United Kingdom as a whole have already gone.

Mr. Scott-Hopkins

I take the hon. Member's point. In the Commission's proposals pooling is accepted for the separate boards.

Mr. Geraint Howells

May I put it on record that I never mentioned anything about pooling arrangements?

Mr. Scott-Hopkins

I am sorry; I thought that the hon. Member did.

There are two other conditions that are unacceptable or difficult. Obviously, it will be extremely difficult if, to justify its continuation, the board has to hold a poll of producers every five years and get 80 per cent. in favour. I hope that the Minister will put forward the point that if there are a certain number of producers requiring a poll on the continuance of the Milk Marketing Board, such a poll may be held. I am certain, listening to Mr. Gundelach and others in the European Parliament, that they will insist on some form of democratic control of the board, of a voluntary nature. I imagine that it would be acceptable if a certain number of producers—say 5 per cent.—after a certain period of time wanted a poll on the acceptability of the board. This would be an acceptable solution.

The other unacceptable condition is that sales of liquid milk of 52 per cent. are a necessary requirement for the board to continue. I hope that the Minister can negotiate a much lower figure than that. Some area boards in Scotland, for example, will have great difficulty in reaching that figure. The hon. Member for Harlow (Mr. Newens) said that if we did increase our sales of manufactured milk products in the future it could present a problem.

Before I turn to the main burden of the proposals, I wish to comment on the green pound and MCAs. It is right to say that if the Minister had been more acceptable in the European Council, we might not have had to wait until the beginning of every crop year to obtain 7½ per cent. rather than 5 per cent. This is all "old hat", and I shall not go over the same ground again because the Minister knows the situation. However, there is no doubt that in the coming years we must devalue the green pound—whether one argues on the basis of seven years as the Commission proposes, or two years. These are matters to be debated. Our view is that the shorter the period the better, because the effect on cost of living and the food index will not be so great as to cause any difficulty.

My hon. Friend the Member for Holland with Boston made great play of the fact that less food was being eaten in this country and instanced numbers of calories. The problem is that because of the Labour Government's policies in the past three and a half years our cost of living has risen greatly and there has been a lower standard of living in this country compared with that of other European countries. It is grossly unfair that our business men should be penalised for the inadequacies of the Government not only in agriculture but in economic matters.

The Minister smiles at that statement. He must recall the drop in the value of sterling and the inflationary spiral, both of which are the fault of the Government. We must accept that the farmer has to bear the brunt of the increased costs that accrue from the spiral of inflation which has occurred since Labour took office.

Mr. Newens

I do not accept the hon. Gentleman's argument in which he lays the blame at the door of the Labour Government. I think that the problem can be laid at the door of world conditions. Surely, in circumstances in which we recognise that there has been an increase in the cost of living, it would be totally wrong for us to devalue the green pound, as the hon. Gentleman suggests, because it would further increase the cost of living. Certainly for ordinary people Conservative policies would make the situation worse.

Mr. Scott-Hopkins

If we devalued the green pound over a period of three years, it would mean a 0.35 per cent. increase per year on the retail price index. That is not an insufferable burden. When we consider how the pound in our pocket has gone down in value during the time of the Labour Government, I do not think the hon. Gentleman's argument stands up to scrutiny. As for our Irish friends, the situation has been particularly detrimental in terms of the differential between the two figures.

Another aspect of the debate related to the subject of MCAs, which are linked with the green pound. We were given some information on this matter by Commissioner Gundelach last week in relation to renegotiation of the MCAs. I hope that at the next meeting the right hon. Gentleman will be able to achieve the desire on both sides of the House to renegotiate the basis of the MCA calculation.

It seems clear from what was said in the European Parliament by the Commissioner that he was not merely looking for a renegotiation of pigmeat MCAs; he wanted the renegotiation to range over a much wider area. This would be acceptable if we—"we" being the United Kingdom—could get what we wanted at the end of the day, and I think we shall get what we want, judging by what Mr. Gundelach said. There would be a considerable diminution in the amount of MCAs payable on pigmeat coming into this country.

There is no doubt, as my hon. Friend the Member for Wells said, that the bacon industry is in the gravest difficulty. It is not merely a matter of recalculating the basis of the MCAs; it is also a matter of recalculating the different bases for the coefficients for the different parts of the carcase.

I am certain that the Minister has been approached by the many interests concerned. It is clear that they are in a difficult position. There has been no change in the coefficients since 1973. The coefficients comprise, for example, the Wiltshire side, the back, middle, shoulder, gammon, streaky and canned ham. They must be renegotiated down rather than up. I shall not go into detail, as it would be boring for the House if I were to do so. I hope that the right hon. Gentleman will bear in mind what I have said when the negotiations take place. I see that he is shaking his head. That is very bad if he means what I take him to mean. That is if he knows what I am talking about.

Mr. John Silkin

I understand the hon. Gentleman perfectly well. He seems to be living in some curious sort of cloud-cuckoo-land. He is dealing, first, with the Commissioner's proposals, secondly with what the Commissioner has not yet proposed and, thirdly, with what he thinks the Commissioner might propose in certain circumstances. He does not speak of the fact that we are one of nine nations in the Council of Ministers, each one of which has its own axe to grind.

Mr. Scott-Hopkins

I am aware of what the right hon. Gentleman says and I am aware that he has to do a great deal of horse trading and negotiating. Who could do that better than the right hon. Gentleman? However, I do not think that he has followed the argument with his usual assiduity.

Do the proposals represent what the right hon. Gentleman wishes to renegotiate? It seems that Commissioner Gundelach is agreed that there should be proposals and, therefore, negotiations in the Council of Ministers for the renegotiations of the method of calculating the MCAs. We know that the right hon. Gentleman's follow Ministers from France and Italy—fortunately, there will not be any change in the French representation—are especially keen. The right hon. Gentleman will have their support. I understand from Danish colleagues in the European Parliament that the Danish Minister is not opposed to examination and renegotiation of this type of MCA as long as that process is not confined solely to pigmeat.

The right hon. Gentleman shakes his head and implies that I am wrong. However, it seems that he is on the same formula. It seems that he is understanding at last.

The coefficients raise an entirely separate issue, and that is something that has been worrying the trade. I hope that the right hon. Gentleman will take that into account as well when he gets down to considering these matters at a later stage.

In turning to the question of surpluses and the milk sector we come to the Commission's main proposal for 2 per cent. The right hon. Gentleman knows that I am one who believes that the Commission made the right proposal. At last there is harmony between my right hon. and hon. Friends and the right hon. Gentleman, in that it is accepted that the Commission's proposals are right in the circumstances of this year. His hand has been strengthened to the extent that the European Parliament supported him.

The hon. Member for Durham (Mr. Hughes), who is unfortunately not present, was the rapporteur. The hon. Gentleman made an excellent speech and put forward a good report. It was received with approval in respect of the proposals that the Commission put forward, but that still leaves us with the need for increases in the areas in which there is a structural surplus. That applies especially to the milk sector. Many hon. Members have talked about how that should be done. There is a proposal from the Commission that there should be an increase.

Of course, the effects will be different in each country. The rise will be minimal in Germany. I hope that hon. Members will read the recent speech by Commissioner Tugendhat, who said that Germany holds most of the surplus production in this sector. Let me give the House some astonishing figures to indicate this fact. The Federal Republic has 73 per cent. of the Community's butter stocks and 61 per cent. of its skimmed milk powder. In addition, 22 per cent. of the intervention purchases of beef have taken place in Germany. That is where the Commission's proposals will have the maximum impact this time, and I believe that to be right. I hope that the Minister will not weaken in his negotiations with fellow Ministers at the end of the month.

It is always difficult, when we have a 7½ per cent. rise above what is proposed by the Commission, to hold other countries down to a lower rate than that which we are to get, but it is important that we should do so. The Commission's proposals for scaling down the subsidy for butter—mentioned by my hon. Friend the Member for Hereford, who said in his interesting speech that we were bumping against the top level of prices—should be resisted by the Minister. I cannot believe that there is the elasticity of demand to allow this to happen. When a small increase in price results in a large drop in consumption, it would be a great pity if we allowed the subsidy to be scaled down.

There has been little mention of the proposals to change the structure of the Community's agricultural policy. My hon. Friend the Member for Devon, West (Mr. Mills) talked about the need to put more money into the guidance section rather than the guarantee section. This is essential if we are to make progress along the lines of what was said by Commissioner Tugendhat. Through various measures proposed by the Commission, we need to take the smaller farmers in Germany out of their present production. I have thought for some time that the way we are going about the essential structural reformation is not right. It is also wrong to blame agriculture for all the difficulties and to put a whole load of expenditure on the agricultural vote. There should be a combination of the guidance section, the Regional Development Fund and the Social Fund, under a new heading, to develop rural areas.

I am sure that the Minister will accept that it is outrageous for the isoglucose industry to be clobbered as soon as it has started. We have a surplus of 3½ million tonnes of sugar in the Community, but this young industry is producing only 80,000 tonnes a year throughout the Community and it is wholly wrong that, after it has made an investment, without knowing that action was to be taken, it should be penalised restrospectively.

I hope that the solution proposed by my hon. Friend the Member for Westmorland will commend itself to the Minister as a negotiating position. It is intolerable that as a result of these machinations this industry should be put into grave financial difficulties.

One of the leading exponents of the sugar beet lobby, Dr. Orth has been saying around the world that in 10 years' time there will be a grave shortage of sugar—about 2 million tons in Europe. Who am I to doubt this eminent gentleman? I am sure that he is right. If there is to be a shortfall between production and consumption because, as he maintains, cane producers cannot expand to fill the gap, and if there is not much option for the European beet producers. that presents an opportunity for isoglucose production partly to step in, and that is the right way to look at these matters.

The Commission's proposals in these documents for the price review are correct. The Minister can go to the negotiations confident of our support. I hope that he can secure renegotiation of the MCAs across the board. That would be the right approach.

In the past the Minister has had his problems. His hon. Friends and other Ministers have often doubted whether what he was doing was in the interests of agriculture. He has pursued a purely sectional selfish interest. That has led to the difficulties that he is experiencing now. We hope, therefore, that there will be understanding and respect for the reasons for supporting the Commission's proposals, and we hope that the Minister will be successful.

9.22 p.m.

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

Hon. Members who took part in the corresponding debate last year will recall that on that occasion it was more heated. They may reflect that this debate has been striking because of the low key of its contributions. Conservatives might suggest that the low key is because there was recently a heated de-debate on the green pound, but I do not believe that that is so. I believe that it reflects growing acceptance throughout the House of the rectitude of the Government's stance on this issue.

Mr. Peter Mills

Absolute nonsense.

Mr. Strang

If the hon. Member for Devon, West (Mr. Mills) is in any doubt about the change of attitude on the Opposition Front Bench, he would do well to read last year's speech by his hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) and compare it with the speech that his hon. Friend made tonight. He will then understand my point. The Opposition Front Bench has made a substantial shift in its position and is supporting the Government in their stance in seeking restraint in the proposed increases in common prices.

My right hon. Friend the Minister indicated earlier that I would cover some of the more detailed issues, and I propose to do that by working through the various commodities and picking up points as I go.

First, let me make a brief reference to sheepmeat. There is no proposal before us, but the hon. Member for Eastleigh (Mr. Price), whose speech I unfortunately missed, refered, I am told, to the Commission's forthcoming proposals for a sheepmeat regime. Our primary concern is to ensure a fair return to producers but to avoid abrupt and unnecessary price rises for consumers. We wish also to ensure adequate access for imported imported supplies from New Zealand.

The United Kingdom is the largest producer of sheepmeat in the Community. In fact, we produce more sheep-meat than the rest of the Community put together. We import more sheepmeat than the rest of the Community. We export more sheepmeat than the rest of the Community and we consume more sheepmeat than the rest of the Community. I can assure lion. Members that we are determined to see that any sheep-meat regime adequately reflects the dominant position of the United Kingdom in this sector.

Mr. J. Enoch Powell (Down, South)

In that case, why is it necessary to have a sheepmeat regime at all?

Mr. Strang

Because we are members of the European Community. If we get this regime right, it could be in our national interest. We have the potential substantially to expand our exports of sheepmeat, particularly to the French market. The French market has been shutting out these exports through its levy system and, indeed, has only recently increased the magnitude of those levies. Provided we get it right and protect the interests of our consumers and the New Zealanders, we can end up with a regime which is in the interests of our industry.

In passing, I should like to refer to horticulture. No one raised this issue today. That largely reflects the fact that these price proposals are not very important with regard to horticulture. The returns to our horticulture industry are determined largely by other factors.

A number of hon. Members touched on the question of cereals. Here again is an area where we need to recognise the importance of achieving a, balance in the market. On the proposal for an average 2 per cent. price increase we have presented a tough approach, because this reference price for bread-making wheat would give too much encouragement to the production of poorer quality bread wheat. The hon. Member for Westmorland (Mr. Jopling) referred to this in his speech.

We believe that the Commission is right to make a new proposal with regard to the price for bread-making wheat of minimum quality. However, the United Kingdom position has concentrated on the proposed increase of the wheat target price, which would directly affect the cost of our North American imports. Although we have a reasonable degree of restraint in relation to the proposed increases, there are a number of important elements in the support arrangements which we want to see modified in order to reflect the needs of the United Kingdom.

I now turn to the question of starch. A number of hon. Members raised this issue. My hon. Friend the Member for Bury and Radcliffe (Mr. White) has made strenuous representations on this issue and is in correspondence with my right hon. Friend the Minister of State. My hon. Friend the Member for Hemel Hempstead (Mr. Corbett), as well as the hon. Member for Westmorland, mentioned the regulation relating to cereals. It is the case that document R/1969/77 recommended ending starch refunds in the food sector. They were very unwelcome to the United Kingdom. We do not have an industrial starch sector, and we took a leading part in the opposition to these proposals. We believe that as a result the Commission is having second thoughts. Indeed, the new proposals contained in volume III of the price proposals provide only a limited form of assistance to the potato starch industry. We intend to ensure that no further proposals will derive from the Commission's earlier report.

I now turn to sugar. This is an area of structural surplus. The serious situation is well documented in the Commission's proposals. If anything, the economic prospect is worse than expected. In 1977–78 the Community had a sugar surplus of about 3.5 million tonnes. That is about 30 per cent. of the expected Community consumption in that year. Approximately four years ago, one of the great crises facing the United Kingdom, and to some extent the Community, was the acute shortage of sugar in the world. Indeed, in 1973 the price of sugar was £100 a tonne. By 1974 it had shot up to £650 a tonne.

Mr. Body

But how many tonnes of sugar were sold at that price?

Mr. Strang

I agree that that was the peak price. I do not think that I am making a point to which the hon. Gentleman would object.

There has been a complete turn-round in the position regarding sugar over the last four years. There was a serious sugar crisis. The hon. Gentleman will no doubt recall the representations made in the House for sugar rationing in 1974. There has been a complete transformation. There is a structural surplus in the Community. There is no question but that the Community is right to propose a restrictive price increase of just over 1 per cent. We are supported in that decision by the Scrutiny Committee. We do not believe that there is any justification for a price increase on any commodity when there is a clear structural surplus.

Last year there was a proposal by the Commission to reduce the sugar B quota. The United Kingdom argued forcibly that that proposal should remain in the package. Finally, largely in response to pressure by the French, it was withdrawn, and that exacerbated the position. The Commission has again proposed a reduction in the B quota. We are determined this time to see that the reduction goes through.

I turn now to the livestock sector—first, pigmeat.

Mr. Scott-Hopkins

What about isoglucose?

Mr. Strang

I am glad that the hon. Gentleman should draw my attention to that subject. A number of hon. Members referred to isoglucose. Last year we resisted the proposal for a levy on isoglucose. We had the proposed levy halved and we got agreement that the Commission would look at the whole balance of costs between sugar and isoglucose. We are waiting for that report. We want to study it before we agree to or consider any proposed extension of that levy. The hon. Member for Westmorland suggested that perhaps we should get agreement on a quota-free quantity for the companies which have already made an investment. That suggestion obviously has some merit. At this stage, however, we are not reconciled to any levy on isoglucose for the forthcoming marketing year.

I do not want to spend a lot of time going over the points which have been made on pigmeat. The Opposition are quite wrong in what they have said. I believe that they have failed to convince the country of their essential thesis—that we have not tried hard enough or done anything about the pigmeat sector. No one could have tried harder than my right hon. Friend to achieve an improvement in the position. According to the Opposition, one would think that nothing had been achieved. One would think that the pigmeat MCAs had remained unchanged since we raised the question in 1976.

In November 1976 we achieved a reduction of about 8½ per cent. in the pigmeat MCAs and we introduced a pig subsidy. The Opposition may have forgotten about that by now. We managed to get the ACAs abolished six months early. We also implemented the 7½ per cent. devaluation in the green pound in a way which has reduced the pigmeat MCAs but has not as yet affected the cereal price.

We are not for a moment suggesting that there is not a problem in the pigmeat sector. My right hon. Friend, like myself on occasions, has time and again emphasised in the Council the magnitude of the problem facing our industry but—this is in the nature of the Community, and the hon. Member for Derbyshire, West ought to appreciate this—we cannot change this on our own. We must win acceptance in the Council of the situation facing us.

Mr. Peter Mills

Surely the hon. Gentleman will agree that the acid test is the number of pigs in the herds in this country, plus the effect that this has had on the processing industry. That is the real test.

Mr. Strang

I am sorry, but I do not think that the hon. Gentleman can have been listening to what I was saying. I am not disputing the seriousness of the situation. I am not suggesting that the changes that we have achieved over the years have been adequate to meet the depth of the crisis. What I am doing is rebuting the nonsensical charge thrown across the Chamber by Conservative Members that the Government have not been taking the situation sufficiently seriously. They know in their hearts that that is wrong. They know that if anyone can get the pigmeat MCA calculated on the basis of cereal costs and not in the present way, it is my right hon. Friend who can do that, and we are determined to take this opportunity to achieve a reduction in the pigmeat MCAs.

Mr. Hardy

I ask my hon. Friend to comment on the situation which applied in March 1974 when the pig farmers of Britain faced a great crisis. The Government then took action, which it was allowed to do by the Community, and a few months into 1975 I remember meeting the Yorkshire pig producers' association in the very week that pig prices reached £6.42 a score. Unfortunately, as the cycle moved on and problems arose the second time around, the Community would not allow my right hon. Friend to take the very action that had saved the industry from the position that it had inherited from the Conservative Government.

Mr. Strang

My hon. Friend is right. We have to accept that if we are members of the Community, and that if there is a common regime for a particular commodity, we are no longer masters in our own house, as it were, and that to secure changes in the MCA we have to get agreement within the institutions of the Community. I hope that I have said enough to emphasise the seriousness with which we view the situation It is not just a question of producers. Perhaps even more critical is the position of the processors, where important jobs are being lost.

Mr. Nicholas Winterton

This sector is probably in as great a crisis as any in agriculture. Is the hon. Gentleman saying that there is nothing in the Treaty of Rome that would enable us to take unilateral action? If, as he said, this sector of the industry is in grave crisis, as is the processing industry, surely we are entitled to take unilateral action.

Mr. Strang

I do not know where the hon. Gentleman has been for the last couple of years. We introduced a pig-meat subsidy precisely because of the crisis, and we were required to end that subsidy. I should have thought that the position was understood by all hon. Members, including the hon. Member for Macclesfield (Mr. Winterton).

I turn to the subject of beef. We welcome the Commission's report on the whole operation of the beef market, the variable premium and the intervention arrangements. The report supported the variable premium that we achieved as part of our renegotiation of the CAP. It is clear that that premium will not be applied throughout the other member States for some time. What is important is that it has been included by the Commission in its proposals for this year. The fact that the report comes out in favour of our premium means that we can regard it as a permanent element of our agricultural support arrangements in the United Kingdom.

It is necessary to have a cautious approach on prices in the beef sector. We welcome the fact that the Commission proposes an increase of 1.25 per cent., which we regard as cautious and sensible.

I turn to the major commodity, major in that it accounts for the largest part of our agricultural gross domestic product but also the major product in these debates. It dominated the debate, because the milk sector is the dominant area of crisis in the Community. About 20 hon. Members took part in the debate, and almost all spoke in support of the milk boards.

We are determined to retain the boards. Without them it would be impossible to sustain the complex machinery of collection and distribution which moves milk from the farm to the doorstep to meet all demands, at all times of the year and in all weather. Without this level of service, consumption would be bound to fall, as would producers' returns and the number of jobs in the industry as a whole, especially on the delivery side. What would increase would be the mountains of butter and skimmed milk powder, the cost of the CAP and ultimately end prices, reflecting a less rational and more costly system of support.

Despite a total lack of evidence to the contrary, many EEC countries have so far been reluctant to accept these arguments, the main objections being dislike of the so-called monopolistic and compulsory powers of the boards and a basic belief that the boards somehow distort trade by pooling returns to producers. It is a case of principles being preferred to common sense. The important thing is that we have a system that works and we intend to keep it.

My right hon. Friend and many hon. Members referred to the three prime areas of concern in relation to the regulations put forward by the Commission to ensure the maintenance of the boards. I refer to the requirement that they should send at least 50 per cent. of their milk to the liquid market, that producer-retailers with up to 150 cows can opt out, and the proposal for a five-year poll, where 80 per cent. of those voting would have to vote in favour. My right hon. Friend has made clear that we recognise that these requirements give cause for concern, and we intend to seek improvements in the regulations.

However, let us not forget that it is the Government's stance that has got us to this point. The hon. Member for Nantwich (Mr. Cockcroft) seems to think that this proposal does not exist. He hoped that the boards would not be lost in the early hours of the morning when Ministers were not paying much attention. Hon. Members do not seem to appreciate the enormous amount of work that has been done to get us to this position, where we have these proposals from the Commission.

All my hon. Friends spoke very forcefully on this matter. My hon. Friend the Member for Gloucestershire, West (Mr. Watkinson) drew attention to the particular importance of milk delivery in country areas. The hon. Member for Westmorland, speaking from the Opposition Front Bench, referred to Mr. Gundelach's letter of 22nd December, which raised a number of points. The first thing we must do is to secure the continuation of the boards and achieve so far as we can an improvement in the regulations. We can consider these points later.

Mr. Nigel Spearing (Newham, South)

My hon. Friend spoke about obtaining improvements in the conditions, if possible. Surely the condition about opting out for those with fewer than 150 head of cattle is sufficient gravely to undermine the marketing boards as we know them.

Mr. Strang

My hon. Friend is right to make that point. I should not like to leave the impression that we lack determination here. My right hon. Friend has already pointed out that we accept the amendment which has been tabled relating to this issue and the need for maximum restraint of common prices.

I turn now to the crisis area in milk, namely, the surplus. That surplus is now colossal. It is encouraging that even Tory Members now recognise the seriousness of the position. Last year the Commission put forward a number of proposals in what was called an action programme.

In addition, we accepted a co-responsibility levy. We do not particularly like that levy, but it is clear that it will continue. We are determined to ensure that we can use the money raised to finance the important publicity work carried out by the boards. If there has been some delay in getting the money, it is because we are determined to achieve that end. As for the application of the levy—a point raised by the hon. Member for Carmarthen (Mr. Evans)—the Commission has assured us that the levy will be applied throughout the Community, subject to minor derogations which have been agreed. We intend to see that the Commission stands by that.

Mr. Corbett

May I encourage my hon. Friend to say that, rather than using the co-responsibility levy for the purpose of publicity, he will use it to bring about the consumption of milk through the supply of free milk to schoolchildren?

Mr. Strang

I was coming to that point. It is clear that on all sides there is a strong feeling that we should take maximum advantage of this proposal to subsidise school milk.

On the subject of butter, the Commission has not been as forthcoming as we should like. The butter subsidy has been a success in this country, holding down the price and bringing about higher consumption. We are determined to ensure that the subsidy is extended. I remind the hon. Member for Derbyshire, West that he was not as enthusiastic about the butter subsidy last year as were the Government. Here again, we welcome the support of the Opposition Front Bench.

We have not changed our position with regard to aid to dairy investment. The non-marketing and conversion premiums have not been a success. On the basis of the take-up figures, it is plain that they have not had the impact predicted by the Commission.

That brings me to my central point, namely, that we must clearly have maximum restraint on the common price of milk. It is nonsense to suggest, with this enormous surplus, that there should be an increase in the common price.

Mr. Scott-Hopkins

No one is suggesting it.

Mr. Strang

The hon. Gentleman may say that, but the Commission is proposing an increase in the price of milk. In the Opposition's eyes it may be a small increase, but our view is that in the present situation no increase can be justified since any increase can only add to the enormous cost of the milk sector.

Let me remind hon. Members of the sort of costs we are considering here. It is estimated that in 1977 the support arrangements for milk will cost 2,485 million units of account. That is 35 per cent. of the guarantee section of FEOGA, and it is 26 per cent. of the total European Community budget. Is that not a staggering statistic? At a time when there are 6 million people unemployed throughout the Community, over one-quarter of the whole Community budget is going into coping with this enormous milk surplus, whether it be in the massive intervention buying of skimmed milk powder, in butter intervention buying or in the massive subsidising of exports to third countries.

Mr. Scott-Hopkins

The Minister must keep things in proportion and not over-dramatise. He is right in his figures, but the significant figure is that it is 35 per cent. on the milk side of the CAP budget, and when he talks about the whole of the Community he must remember that the whole of the Community budget is only 2.4 per cent. of the total national budgets. That is all it is, so we are talking about a very small sum in relation to Community expenditure as a whole. The Minister should not exaggerate the issue.

Mr. Strang

Yes, but we are talking about the Community. This is a debate about the Community, and all I am saying is that not only has the Community got its priorities wrong in that about three-quarters of its total budget goes on agriculture, but it has them drastically wrong when over one-quarter of that total budget can be spent on the milk sector. Clearly, therefore, the Government are absolutely right in taking the toughest stance in relation to holding down the common price for milk.

I have covered the commodities and I have touched on the main points raised by hon. Members. I shall now say a few words on one or two general attitudes expressed in the debate. As I have said, I welcome the Opposition's conversion on the question of common prices. Undoubtedly that is the key. I shall not elaborate on Godley, because my right hon. Friend spoke about that, but the central point of Godley was the transfer across the exchange not as a result of higher-priced imports of food, though that was a factor, but, above all, because of our large net contribution to the large CAP budget. Clearly, it is overwhelmingly in our national interest to hold down common prices, because that is the most effective way of reducing the size of the budget in the agriculture sector.

We are in agreement on the common prices issue, but there is still fundamental disagreement between Government and Opposition on the green pound question. I am glad that the position has at least been clarified, because, after the debate on the green pound, when both the Conservative Opposition spokesmen and the spokesmen for other Opposition parties committed themselves to parity, there was some suggestion that at least some members of the Shadow Cabinet were a little unhappy about the endorsement of a dear food policy by the official Opposition. Indeed, the tenor of the remarks of the right hon. Member for Yeovil (Mr. Peyton) at the Farmers' Club provoked the headline in the Farmers Weekly Tories water down Green Pound promise". Perhaps that was a little unfair, and certainly the hon. Member for Westmor- land has put it on the line, and his hon. Friend for Derbyshire, West went even further, saying not only that it should be totally devalued in two to three years but—this was his phrase—the sooner the better.

I hope that hon. Members fully understand the Government's position on this issue. We have explained why we are in favour of restraint in common prices. We believe that those who work in British agriculture, whether farmers or farm workers, deserve a fair return on their investment and a fair return for their labour. We can achieve that by making the necessary adjustments to the green pound. In other words, we can use the green pound as other member States do to try to achieve the right balance between the interests of the consumers and of the producers.

Conservative Members tend to forget that it is this Labour Government who have devalued the green pound at regular intervals. When the Conservative Party was in power, it did not devalue the green pound. The hon. Member for Westmorland suggested that there was not much of a discrepancy. I have news for him. When the Conservative Party was in power, our discrepancy reached 19 per cent. I am looking at a whole range of figures—16 per cent., 13 per cent. and 11 per cent. So there was a discrepancy when the Conservative Party was in power.

The central point that I want to make is this. Is the Conservative Party saying that there is not much of a discrepancy although the French use this system to reflect their national interests and the French MCA at the moment is 23 per cent. and ours—after we have completed the 7½ per cent. devaluation—will be 25 per cent.? Do Opposition Members say this even though Ireland has an MCA of 7 per cent., Italy has an MCA of 20 per cent. and the Germans find it necessary to operate a positive MCA of 7.5 per cent.?

Is it the contention of the Opposition Front Bench that Britain, and almost Britain alone, ought to move to parity? If the position is that everyone should move to parity and that the policy of Conservative Members is that every country should move to parity, I hope they appreciate what that means. It means a rise in the average price of agricultural products throughout the Community of around 10 per cent. It is somewhat contradictory to say that we want to hold down the common prices but want everyone to average up.

The only point of holding down the common price is to hold down the actual prices and try to minimise an increase in the budget. Conservative Members are in an absurd position. There is no case for adopting the policy to which they are now clearly committed. It is a dear food policy. It would mean higher cereal prices. That would not help the livestock producers. It would mean that less food was eaten.

Mr. Jopling

I am astonished to listen to this hyprocrisy coming across the Chamber in this way. I am astonished to listen to the Parliamentary Secretary trying to criticise Conservative Members for arriving at a policy which implies that in each of three years the cost of living index would rise by about two-fifths of a penny in the pound. I am amazed to hear such criticism from a Government who have presided over probably the biggest fall in the real value of the pound that any Government have ever presided over. This Government have presided over an increase in the retail price index of 85p in the pound.

Mr. Speaker

Order. Is the hon. Gentleman intervening?

Mr. Jopling

I shall now come to the end of my intervention, Mr. Speaker. Since the last General Election, during the period of office of the present Government, the pound in one's pocket is worth only 54p.

Mr. Strang

I am not surprised that Conservative Members should be so touchy on this issue. There is no way that they can avoid it. Of course there will be increases in prices in forthcoming years, just as there have been increases in prices over the last three years—although, thanks to the Government's counter-inflation policy, we can look forward to the hope of a smaller increase in the cost-of-living index in the next two or three years than there has been in the past two or three years.

However, the question is whether, in view of all these increases in prices, we should impose on ourselves the additional increase involved in going towards parity when it is totally unnecessary. It is in the interests of neither the agriculture industry nor the country.

In conclusion, I make it quite clear that restraint of common prices is the central thrust of the Government's policy in this area. That restraint is in the interests of the United Kingdom consumers, of the industry, of the European Community and of Britain.

Question, That the amendment be made, put and agreed to.

Main Question, as amended, put and agreed to.

Resolved, That this House takes note of Commission documents R/3200/77, R/3200/77 Addendum 1 and R/545/78 on agricultural prices, and document R/27/78 on the Milk Marketing Boards; calls upon the Government to insist upon the maximum restraint on all Common Agricultural Policy prices and especially on the prices for milk products, cereals, sugar and other products in structural surplus as a result of the operation of the Common Agricultural Policy and to press for an agreement which fully safeguards the milk marketing boards and the discharge of their essential functions.