§ 11.4 am.
§ The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker)
I beg to move,That this House takes note of Commission documents 4648/79 together with its addenda and corrigenda and 4702/79 on agricultural prices and markets, R/2369/78 and 5568/79 on the milk sector, 5335/79 on isoglucose, R/2462/78 on the European agricultural guidance and guarantee fund guidance ceiling, and R/2162/78 together with its addenda, corrigendum and amendment on the balance in the market in wine; and supports the Government's intention, on the 1979/80 price proposals, to seek an agreement, in line with the Commission's aims intended to secure a reduction in surplus production and the cost of the common agricultural policy.I hope that it will not be considered as intruding into the affairs of the Labour Party if I offer my congratulations to the right hon. Member for Deptford (Mr. Silkin) on his high vote in his parliamentary party's elections yesterday. Whilst I cannot wish him success in his new post in the Shadow Cabinet, I can express personal sorrow at his departure from his present post, because, whereas we may well have disagreed on many aspects of policy—and agreed on many others—I have always had immense regard and respect for his courtesy, application and originality of thought. I am sure he will give that same application to his new task.
Although I congratulate the right hon. Gentleman, on learning of his new post I was immediately reminded of something said by Winston Churchill, or Nigel Birch, when it was announced that Hugh Dalton had resigned—"They have shot our fox." To some extent I express my regret that a fox which had been our quarry on a number of occasions is moving elsewhere.
We have before us this morning a large range of documents appertaining to the 770 common agricultural policy. The most important is the one which was presented last January concerning price fixing. The meeting on that matter will take place next week.
I should like to say a few words about the condition of the CAP in general. I think that it will be a considerable advantage to Western Europe if over a period of years of applying a common agricultural policy we can create a Europe which is self-sufficient in food supplies in those areas in which we are not self-sufficient now, and a Europe that can make a major contribution to the world's food resources. That, combined with having a prosperous and contented farming community providing a great number of jobs throughout Europe, should be the ambition of us all.
What I regret, and I am sure my predecessor regretted, is that we have a Europe where certain commodities have been allowed to go into substantial surplus. The result is a massive financial burden on the Community as a whole and a particularly large and unfair burden upon this country, because we are a major importer of foodstuffs.
Looking back upon the last Government's record, I recognise that no one Minister in the Council of Ministers can lay down the policy. Therefore, to say that the Labour Government failed to achieve a superb common agricultural policy would be to put the blame on a Government that only played one role among nine in trying to create a better position.
Nevertheless, looking back, I do not believe that the Labour Government can have any justification for claiming that during their period in office they achieved any major improvement in the CAP. Indeed, in July 1977 the right hon. Gentleman ended his period as President of the Council of Ministers by saying that there was a better balance in the dairy, sugar and cereal sections and a limit to excessive production of wines. He summed that up as his achievement as President of the Council. I think that he will agree that, looking at it in June 1979, we can hardly say that there is a particularly good balance in dairy or sugar, although, because of two bad years, there is a better balance in wine. We now have an unacceptably high cost of our surplus products, amounting to £6,676 million.
771 We must examine the documents before us in the context of what they try to achieve in tackling that major problem, the major contribution to the common agricultural budget and the problem of surplus goods. The documents contain a number of fundamental proposals. The first is the Commission's proposal that this year there should be a freeze on the price fixing. Secondly, there is the proposal for a reduction in the agricultural part of the budget. Thirdly, it is suggested that there should be an increase in the co-responsibility levy and changes in the manner in which that levy is applied. There are suggestions for a major reduction in the quotas on sugar and an increase in the butter subsidy, together with a range of other changes.
It is in this context that I should like to examine the proposals and to put forward the attitude that the Government will take.
On the major proposal for a general freeze on the price fixing, we are in total agreement with the proposals of the Commission. We will certainly be recommending that the Commission's proposals are accepted by the Council of Ministers. That will be difficult for a number of the Ministers. They have already achieved substantial prices for their products. Their nations are meeting the same rising costs as other nations. To suggest a freeze on prices is to suggest a lowering of incomes and standards of living and perhaps thereafter investment for their farmers. But, having recognised their difficulties, I believe that those difficulties will become far greater if we do not recognise the need to bring about a solution to the problem of major surpluses.
These are not surpluses that can be blamed upon the agricultural success and activities of this country. Only 4 per cent. of existing stocks of intervention butter is to be found in the United Kingdom, while 73 per cent. are to be found in Germany. Of the vast stocks of skimmed milk, 7 per cent. is the United Kingdom and 67 per cent. in Germany. If the advice of the Commission was ignored and if price increases were to take place, certainly in milk and sugar, we would be adding to the burden, delaying a solution to the problem and putting in real jeopardy the whole future of the 772 common agricultural policy. The size of the financial burden to taxpayers throughout Europe at present is of a magnitude that will demand changes. Those changes will either be made sensibly by the Council of Agriculture Ministers or they will be forced upon the Community, perhaps disrupting many of the things that the common agricultural policy could achieve.
Milk is the biggest single problem facing the Community. Obviously we support the object of a prices freeze.
On butter, the suggestion is for an increased butter subsidy for sales within the Community and an increase in the Community contribution. This would involve a subsidy in the United Kingdom of 17p. per pound provided the Exchequer subscribed 25 per cent. of the cost, compared with the present subsidy of 5½p per pound, all from the Community budget. We have to examine these proposals. We should try to examine them as a contribution of the 100 per cent. subsidy to the United Kingdom. If details are agreed in that area, we must look upon the effect on this country as a whole.
I come to the more contentious proposals for the co-responsibility levy. The suggestion is for an increased co-responsibility levy related to an increase in production over a base period so that a 2 per cent. increase in production will result in a levy being fixed at 4 per cent. of the target price for milk but never less than 2 per cent. This proposal, with the exemptions built into it, would be exceedingly adverse to Britain.
I give the House an illustration of the very unfair disadvantage British dairy producers would suffer. The proposed exemptions would mean, in terms of cows in each of the countries concerned, that there would be exemptions in Western Germany for 18 per cent. of cows, in Italy for 29 per cent., in Belgium for 17 per cent., and in the United Kingdom for less than 1 per cent. In Western Germany 33 per cent. of the farms would be excluded from the levy, 29 per cent. in Italy, 24 per cent. in Belgium, 18 per cent. in Ireland and only 6.8 per cent. in Britain. As Britain does not contribute to the surplus problem, and as it has the most efficient dairy industry—far more efficient than those industries producing the bulk of the surplus—it would be 773 totally unacceptable to have such a levy operating against our dairy producers.
I should have preferred a price reduction instead of a price freeze for milk. I know that this is the view of the right hon. Member for Deptford. But both he and I can understand the difficulties of price reductions. If one wants to achieve the effect of a price reduction by a levy, that levy must be at a flat and agreed rate and applied equally to all producers throughout the Community. That is the view we will take on the co-responsibility levy.
Another proposal of the Commission is the extension of the existing system of premiums to try to persuade people to leave milk-producing activities. These proposals have been in operation for a year. They have not been as successful as the Commission hoped. The Commission has suggested that some changes it has made will improve the system for the coming year. I believe it is reasonable for us to see how that operates and what success it achieves in the coming year.
On investment aids, the Commission suggests a ban on aids to dairy producers throughout the Community. I can understand the logic of that proposal. I am willing to look at specific types of investment aids to see whether it is sensible to eliminate certain types of aids. It would be wrong to eliminate all types of investment aids. I have had discussions with one or two other Ministers in the Community to see whether we can list the type of aids that would make sense and that would continue to encourage efficiency and proper and sensible use of the land. For example, it would be wrong to stop aids for drainage schemes, which make good sense throughout the Community, as part of this process. Likewise, it would be wrong to take away those aids that assist not so much in the production but in the processing side. These are our views on the proposals being made for milk.
§ Mr. Nicholas Winterton (Macclesfield)
My right hon. Friend has been robust in his criticism of the co-responsibility levy put forward by the European Economic Community. Will he go further and give the House a categorical assurance that in no circumstances will he accept the co-responsibility proposals 774 as at present put forward by the European Economic Community?
§ Mr. Walker
I am only too pleased to give my hon. Friend that assurance.
I should like to turn to the proposals concerning pigmeat and pigs, an area of considerable crisis in this country. The pig breeding herd in the United Kingdom has fallen by over 15 per cent. during the last four years. This is in marked contrast to the substantial increase in herds in Denmark, Holland and Germany. Since 1973, in Holland the breeding herd had increased by 36 per cent., in Germany by 23 per cent., and in Denmark by 12½ per cent. This situation has contributed to the recent closure of slaughtering and pigmeat processing industries due to increased imports from the Community.
During this period there has been a substantial increase in imports from Holland and a further increase in imports from Denmark. Our producers and our processing industry have been severely handicapped by the operation of MCAs against them. This is a matter of some urgency. I shall be stating later what we intend to do to tackle this problem.
It is interesting to study the degree to which perfectly efficient producers can be and have been affected by the operation against them of the MCAs. Of course I should like to renegotiate the MCAs and I believe that there is a good logical foundation for doing so. I regret that, at a more opportune time, my predecessors did not take full advantage of that opportunity. There was an opportunity in 1976, when, for a devaluation in the green pound—especially with the fabulous differentials in the green pound which then existed—a revaluation of the MCAs could have been obtained.
I regret, too, that the green pound policy of the Labour Party meant that in the recent changes the French were able to look after their pig breeders but the British could not look after theirs. As a result, our pigmeat producers face a serious situation.
Another commodity covered by these documents is that of sugar, where there is another major cost to the Community budget and therefore to British taxpayers. The exports of sugar by the Community at highly subsidised prices, first, have endangered the economic stability of a 775 number of countries which depend on the sale of sugar to world markets; and, secondly, they have cost £500 million a year to the common agricultural budget and therefore a proportion to our Exchequer. Again, the Commission makes proposals for both freezing the price and reducing the quotas, which we shall certainly support.
In another area of surpluses—
§ Mr. Nigel Spearing (Newham, South)
The right hon. Gentleman mentioned EEC exports of sugar, where I believe the budget now provides for 2.6 million tonnes of beet-produced sugar, which is exactly double the agreement with the former Commonwealth and ACP territories for guaranteed imports. Is it his Department or another which is dealing with the negotiations regarding that guaranteed 1.3 million tonnes of imports, which I believe are either part of or shortly to follow the negotiations on the renewal of the Lomé Convention, now taking place in Brussels? What is the Government's attitude to maintaining the 1.3 million tonnes?
§ Mr. Walker
My Department is certainly involved in those negotiations. May I ask the Minister of State to deal with that problem when he replies? We shall make inquiries to ensure that the hon. Gentleman's point is answered.
On wine, the Commission is making a number of proposals, the result of which will be to reduce the production of wine and prevent the addition of surpluses in future years. I would certainly find these acceptable.
Therefore, we shall support the Commission's attitudes in its main proposals and in the main issues in which we shall be involved in the price fixing next week. If we were successful in that and there was a price freeze along the lines suggested by the Commission, I must warn the House that we should still have a massive problem. There is no way of diminishing this substantial cost in the immediate future. It will take quite a time.
Therefore, it is no use keeping a price freeze on milk if it is thought that that will be for this year only and that next year things will be better for inefficient milk producers throughout Europe. That 776 will only encourage people to make up the difference this year by some additional milk production and the objective will not be achieved. I shall therefore be urging the Commission to make it clear that the basic policy and attitude to milk production should be sustained over a period of years until that overall problem of surplus is tackled.
I turn now to the effect upon British agriculture. Although I agree very much with the attitudes taken in the general area of price fixing by my predecessors and with their suggestion that there was a need to tackle these surpluses—overall, their success was very limited—I cannot agree with their attitude over the same period to British agriculture itself.
I inherited a British agriculture which has wrongly been adversely affected in the past few years by the policies of the Labour Party. During a period when there was a potential for considerable improvement in British agriculture, the policy of the Labour Party—which was wrongly depicted as following the interests of the consumers and, if necessary, clobbering the producers—was a short-sighted policy of virtually no benefit to consumers and of considerable detriment to British farming.
The Labour Government left office with farm incomes lower than when they came in—something virtually without precedent in Europe. They left office when there had been a considerable increase in the indebtedness of British farming. It is interesting to study the relationship of farm incomes to bank borrowing. When the previous Government came to power, the annual farm income of British farmers was £71 million more than they were borrowing. When they left office, in their last year in 1978, it was £466 million less than farmers had to borrow from the banks. That was a major transformation, leaving British farming £2,000 million in debt.
Of course, had the reason for the increase in indebtedness been a massive expansion in investment by British farming, there would have been some justification, but the opposite was the case. Not only was the British farmer getting further and further into debt; in real terms he was spending far less on farm buildings. Indeed, in two of the last three years of the Labour Government, 777 real investment in farm buildings was one-third less than when they came to power.
The pig, beef and dairy herds have constantly gone down since 1974. Over that period of government, British agriculture could have expanded; instead, there was a contraction and a substantial improvement in the position of our major competitors. It is this Government's objective to reverse that trend. We are certainly not prepared to see British farming continue to decline compared with our competitors. For example, I am not prepared to sit and watch the elimination of our pig industry and the processors by allowing this to continue.
The main argument against the devaluation of the green pound which has been offered by the Labour Party at various times is its inflationary effect on prices. That is a remarkable argument when one considers how it ignored the inflationary effects which its policies had on prices. When the previous Government agreed to a devaluation of 5 per cent. earlier this year, they were the first to point out that the effect on the RPI was only one-quarter of a percentage point.
§ Mr. Thomas Torney (Bradford, South)
Nevertheless, does the right hon. Gentleman agree with what I said in a question yesterday about specific items—that butter will go up by 5p a pound if the green pound is devalued by 5 per cent., sugar will go up 2p a kilo and cheese by 5p a pound? Does the right hon. Gentleman agree that that is very inflationary?
§ Mr. Walker
I will make sure that we publish the detailed figures of each commodity. I repeat the words of my predecessor, that a 5 per cent. devaluation adds one-quarter of 1 per cent. to the retail price index and 1 per cent. to the food index. The Labour Party is talking about the effect of 1 per cent. over the course of a year, not immediately, on the food index, but its Government increased the price of food by 120 per cent.—an increase not of 1 per cent. over a year by green pound policies but of 2 per cent. a month.
Labour Members say "How awful to devalue the green pound. Give an opportunity to British agriculture and save employment in the processing industry." We shall pursue policies that give the British farmer the same opportunities as 778 his foreign competitor rather than increase the retail price index by one-quarter of 1 per cent. The Labour Government pursued policies to the immense detriment of British agriculture.
The figure of £1,000 million for Common Market activities has been recently bandied about. I shall bandy about that figure today. In my judgment, if the Labour Government had pursued a sensible and sane policy towards the green pound, British agricultural production would be £1,000 million better off than it is today. That would have been to the immense benefit of our balance of payments.
Therefore, I shall ask the Council to agree to a devaluation in the green pound of 5 per cent. with an additional 5 per cent. for pigmeat. If agreement is obtained to achieve that dual devaluation, the result will be the total elimination of MCAs on pigmeat. However, I should warn the House that there could be difficulty in obtaining that variation. There is no doubt that if we had attempted to obtain the variation at the same time as the French, we should have been allowed to do so.
§ Mr. Peter Mills (Devon, West)
I am grateful to my right hon. Friend, and I am sure that the pig industry and the agriculture industry generally are grateful to him for what he has just announced. Will he also consider looking into the unfairness in the competition in the pig industry and the processing industry? Not only is there that competition, but there is something basically wrong. I hope that he will turn his attention to that.
§ Mr. Walker
I am grateful to my hon. Friend for his remarks. In my judgment, the elimination of MCAs would be of great advantage to our pigmeat and processing industries. However, we should face the fact that a number of our competitors have the edge in marketing and processing. There is great scope for improvement. One reason why there has not been that improvement is that the industry has been starved of capital for a long time. A further effect is that not only do we have to make up ground by trying to eliminate MCAs, but we have to make up lost ground for the loss of investment over the past few years.
779 In other areas of agriculture the effect will mean that, instead of an MCA of 12.2 per cent. operating against us, it will be reduced to 6.5 per cent. The cost of living effect of that reduction will be one-quarter of 1 per cent. on the retail price index over a year. However, there will be other factors which will be of assistance and benefit elsewhere. First, there will be the maintenance of full employment. There are 45,000 persons employed in the pig processing industry. Many of those jobs would have been placed in jeopardy unless I had taken this action.
My objective will be to achieve a 5 per cent. overall devaluation with a 10 per cent. devalution for pigmeat. However, I warn the House that the Council of Ministers made clear that when it allowed the French to do that it would be the last time. The Council said it was an exceptional circumstance and it would not consider such dual devaluation in the future. But I shall attempt to persuade the Council to allow us to do so. The Council agrees that any country may carry out an overall devaluation whenever it requests through the Commission and the Council that that should take place. Therefore, I hope that its approval will be given next week.
Another important aspect of the devaluation is the effect upon the balance of payments. The Labour Government published that now notorious document "Food from Our Own Resources". What a tragedy that, in all the policies which they pursued thereafter, they did not bear in mind that title. Their record can be judged by the phrase "Food from other countries' resources". It is interesting to look at the last quarter for which trade figures are available. Imports of foodstuffs in that quarter were up by £129 million on the previous year and exports were down by £86 million.
The immediate effect upon the balance of payments of a devaluation in the green pound will be adverse. However, I do not doubt that, within a year or two, the decisions made in the early weeks of this Government will be of great benefit to the balance of payments. A 5 per cent. improvement in production alone brings a benefit on the balance of payments of £350 million. I hope that the farming 780 industry will recognise that this Government do not use idly the phrase "Food from our own resources"—we mean it
§ 11.36 a.m.
§ Mr. John Silkin (Deptford)
In this, my swan song, I should like to change my physical shape from swan to fox in two minutes. It is not that the Secretary of State tried to shoot me in the early stages of his speech but he tried to kill me with kindness. I am grateful to him for his remarks. The House knows that he and I have been on opposite sides in a number of Departments. We have always enjoyed the fights that we have had and I regret that I shall not be able to ask him questions over the next few months of the sort that his hon. Friends asked me for so long.
The central point that we are considering is how to deal with the price fixing, the CAP and the Commission's price proposals. It is a little churlish on my part, but I should say this if only for the benefit of the future. It is not the right way to deal with matters to put down a motion, which is a "take note" motion in part, that is seen only the night before—it is normal practice before a CAP price-fixing meeting—but to add to it the words "supports the Government's intentions" is certainly not right. God alone knows what the Government's intention is. We know what their words are, but we do not know their intentions In so far as they are expressed in the motion, they are weak and feeble and do not go nearly as far as the majority of hon. Members would wish.
I have made that point but I shall not press it and I shall not ask my hon. Friends to divide on the motion. That would not be fair on them or on the Patronage Secretary, who would have to do a lot of telephoning, this being a Friday, in order to get his right hon. and hon. Friends here. I should like the House to understand that some of my hon. Friends and I will make speeches as though we were opposing the Minister in a Division, although we shall not go that far.
The basis of the common agricultural policy is, curiously enough, expressed in a manner which most hon. Members do not think relates in any way to the present CAP. Its objectives are stated in 781 article 39 of the Treaty of Rome. The major objective isto increase agricultural productivity by promoting technical progress and by ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour".There is nothing in the article about the intervention system, nothing about food mountains and nothing about the large guaranteed prices. Let us analyse it from the point of view of what is actually happening. It speaks of "promoting technical progress". What about isoglucose? I was sorry that the right hon. Getleman did not mention that, because it is an important commodity for many of us. I speak with an interest in this aspect because many workers at Tunnel Refineries live in my constituency.
§ Mr. Peter Walker
The right hon. Gentleman will apreciate that a vast number of items are involved here, although I agree that isoglucose is an important one. The Commission has put up new proposals on quotas which will improve them substantially. I still do not think, however, that they are good enough. We shall be pressing for further improvements on the quota.
§ Mr. Silkin
I am grateful that the right hon. Gentleman has read the Commission's proposals. I think that they are scandalous. Apart from anything else, they give Belgium and Holland about a 6 per cent. advantage in production over us, they base isoglucose production anyway on the sugar levy and—this should appeal to the right hon. Gentleman if, like me, he is keen on keeping people in work—they seem designed almost to put a number of our people out of work.
Apart from that, what about the "technical progress"? This is an applied policy on an objective which is frankly perfectly laudable but which I should have thought was absolutely impossible for us to agree to.
As fora rational development of agricultural production",as one looks around the food mountains of Europe and the warehouses, and as one finds that in the Common Market there are insufficient warehouses and the Common Market has to go to Switzerland and Austria to store foodstuffs that are too expensively produced, does one 782 see a rational system of agricultural production? Of course not. It is therefore the CAP as it is applied that is falling down so badly.
If we are talking about absurdities, one point has not arisen but no doubt it will before the price fixing ends. I hope that the Minister will say "No" very firmly in any language he likes to the renewed prospect, if it comes up, of a margarine tax. We have had to deal with that every year. It is one proposal that ought to be squashed from the beginning.
Why is a price freeze necessary? The right hon. Gentleman and I, in spite of some of his strictures, agree in principle and in intention rather more than he is willing to admit. The important question is how one deals with the problem. We both agree that there should be a reduction in common prices, certainly in mainland Europe guaranteed prices. We know that that is not possible except in one commodity, with which I shall deal in a moment. I believe therefore that one must go for a price freeze. Let me deal here with what the Commission has been saying.
That brings me to another part of the motion with which I disagree. It refers to the aims of the Commission; and I am not certain that that is something that I can express. I know what its proposals are and I know what the revised proposals might look like at the end of two nights of negotiating.
The Minister looks at these matters from the point of view of the taxpayer. We are a major financial contributor, yet we do not contribute to the food mountains that are produced. This, then, is a very bad system. The Minister accepts that that is so, but why has this situation arisen? The interesting point is that the highest surpluses occur in those commodities for which EEC prices are higher than world prices.
There are two aspects that we should consider. The right hon. Gentleman made a lot of play about the increases in food prices under the Labour Government, though he did not mention that price increases for five years were compulsorily handed to us by the previous Tory Government under the transitional steps. Butter, for example, went up over 100 per cent. under the transitional steps 783 agreed to by the right hon. Member for Sidcup (Mr. Heath). The Minister did not tell us that in the last year of the Conservative Government in 1973 food-stuff prices went up by 20 per cent. under the first transitional step. He said, however, that the Labour Government were to blame for those transitional steps. That was about the only reference that the right hon. Gentleman made to the consumer.
I am glad that the Minister, in his press statement after his meeting with the representatives of the consumer organisations the other day, said:I also express my desire that there should be a closer dialogue between consumers and producers.Goodness knows there is always close dialogue between those two sides. He went on to say:It is vital in the interests of both that we obtain a proper balance between the two.Heaven alone knows what that means.
§ Mr. Silkin
Ah, I used the words, but I also did something about it, and that is precisely what the right hon. Gentleman was objecting to. I allowed the green pound to be devalued only provided we got a commensurate benefit for consumers. The Minister mentioned the butter subsidy. His right hon. and hon. Friends on the Front Bench at the time were opposing me on that butter subsidy when I first suggested it, asking why I was spending so much time with the objections. The benefit to the consumer more than made up for the difference. I should have regarded that as a proper balance.
I am sorry that the Minister thinks only in terms of the taxpayer and not in terms of the consumer, because the consumer is rather important. Article 39 of the Treaty states among its objectives:(e) to ensure that supplies reach consumers at reasonable prices."Reasonable prices"? Butter is four times the price it is on the world market, cheese is three and a half times, sugar is three times and beef is twice the price it is on the world market. Are these reasonable prices? I am sorry that the right hon. Gentleman did not speak enough about the consumer.
784 This then, is a system that is bad both for British consumers and for European consumers, and the Minister should remember that. It may be that while he talks to his eight colleagues who are Agriculture Ministers he should bear in mind that one, the Italian Minister, has to pay proportionately a great deal more than the others. He is greatly affected, but the others are not. They are Agriculture Ministers and they do not speak for consumers. The United Kingdown Minister speaks for both and he must make his voice heard.
If the system is bad for Europe—we certainly both agree that it is bad for this country, whether we are talking of the taxpayer or the consumer—we must bear in mind that it is bad for the world. What is happening as a result of these differences in prices? The New Zealanders have traditionally sent us their butter, cheese and lamb. One of the fights that the Minister will have to face is to preserve the New Zealand export of butter and cheese to this country. Cheese has been falling a great deal. He will have to fight British producers on that score because they are opposed to New Zealand sending butter and cheese to this country. They do not mind lamb so much because there is a deficiency at the moment. Butter and cheese are the lifeblood of New Zealand. Are we therefore prepared to see that go down the drain? I do not think so.
When we produce so much butter in the Community that we do not know what to do with it, and we therefore start selling it to the outside world—to Russia, South America or anyone who will take it—at cut-rate prices, we are not only producing and storing foodstuffs expensively and getting rid of them expensively by way of export refunds; we are also robbing of the right to trade those who have that perfectly legitimate right. The Minister should bear that in mind.
This also applies to Australian production of beef and fruit. It applies particularly to the Lomé countries. In an intervention during the Minister's speech, one of my hon. Friends asked about sugar.
I am very concerned about it, and so should the right hon. Gentleman be, because this is often the only livelihood which people have. Whether it be Fiji or Mauritius, it is their main crop, as it 785 is the main crop of many other countries. We must not deprive them of that. Moreover, if he is so concerned about the workers in the industry, what about the sugar refining industry in this country? What about the dangers which it faces? If cane sugar disappears in this country, those workers' jobs, too, are at stake.
These are aspects of the whole matter which the right hon. Gentleman must take into account, and his job, therefore, is much more than merely looking after the taxpayer. He must look after the consumer in this country and in Europe, and he must look after those countries, too, which are dependent on the United Kingdom, which is the only country having that voice in the Agriculture Council and which, at least in the last five years of Labour Government, spoke for them.
I now turn to certain individual questions. The right hon. Gentleman made great play of the green pound. As I say, he did not mention the transitional price consequences which his own Government had forced upon us, but I leave that aside now. The fact is that there seems to be a little uncertainty on the Government Benches about precisely what the effect of the green pound is. I know that we can talk in terms of the retail price index and ¼ per cent., certainly, or we can talk in terms of the food index and speak of 1 per cent., but the problem is really much more difficult.
There are certain foodstuffs which are eaten predominantly, especially in this country, by people with lower incomes. These are the people who will suffer most. They are the people to whom my hon. Friend the Member for Bradford, South (Mr. Torney) referred in his intervention. He talked of butter, of cheese and, I think, of sugar. These are the main items, apart from bread, in the low income budget or the elderly person's budget. The figures which my hon. Friend gave, I think, though I might disagree on a ½p or so, are pretty near the figures which the Commission was offering—and very different, incidentally, from the figures given by the right hon. Lady the Minister for Consumer Affairs. I think that she said that a 5 per cent. devaluation—I am dividing as I go—would work out at about ½p per pound on butter, at something less than ½p per pound on cheese, and on sugar an increase of about ¼p. But those figures bear 786 no relation whatsoever to reality, so perhaps a little more study of the effect on the consumer might repay the right hon. Gentleman's efforts at this time.
In any event, let the right hon. Gentleman take at least this into account. Plainly he intends to devalue the green pound, and, incidentally, he will be able to do it by dint of the right which I gained for the British Government or, indeed, any Government in the Community to do so at will. That at least is something no longer confined to the price fixing itself. He can do it at the price fixing or afterwards if he wishes But, if the right hon. Gentleman is to do it, let him ensure that there is an offsetting advantage to the consumer. Let him see that the butter subsidy which we got for this country is preserved. I agree with the right hon. Gentleman—the idea that there should be a national contribution is wrong; he should go for a 100 per cent. butter subsidy.
Incidentally, the right hon. Gentleman did not mention the question of free school milk. I do not blame him. Perhaps it is not a good idea at the start of one's ministerial career to get on the wrong side of one's Prime Minister. I speak from experience. It is always much better to be kind and perhaps to suffer a little amnesia. Nevertheless, in the still watches of the night, let the right hon. Gentleman remember, since the majority of his colleagues understand the point, that the free school milk system is a means of getting rid of a surplus. That is on the consumption side, and let him at least go to that. He will have no difficulty. The victory is virtually there.
Again on the question of commodities, one of the dangers and difficulties, and one of the reasons why I did not like the motion put down late last night, is this. The right hon. Gentleman is very cleverly—I give him credit for it—moving the zone of operations from a total freeze on all foodstuffs to those which he refers to as in structural surplus. He has made great play of this in his press statements and the motion. Everything refers to foodstuffs in surplus. He has made great play of dairy and milk products, and I agree that that is right. Obviously that is the urgent sector. But it is not the only sector.
For example, there is the question of beef. Beef is not in structural surplus, 787 yet the price of beef in the Common Market is twice what it is on the world market. There is an enormous amount of beef outside. The Australians are bursting to get rid of it. Everybody is trying to get rid of it. This also must be tackled.
Next, there is the question of cereals. This is very interesting because, after all, the position regarding cereals not only affects us with our particular kind of bread and our desire to have North American wheat, but there is also the question of animal feed as well. The right hon. Gentleman will find that the French will tell him, and argue strongly, that cereals are not in structural surplus. Are cereals therefore not to be one of the items on which he will go for a freeze?
The right hon. Gentleman will have to watch these matters carefully. Commodities which today, some will say, are not in structural surplus probably are in fact, and some commodities which are not in surplus at all will be tomorrow. That is why it is necessary to have a freeze on all these products.
I think that we both agree here, and I pay tribute to the right hon. Gentleman for it. He said clearly and forcefully—I hope that I do him no injustice when I say that I think that it is the first time I have heard him say it, though that does not matter and I am glad that he said it before the price fixing—that that is something which will have to go on not just for this year but perhaps for many years to come. He was very emphatic about that, and I am glad that he was.
I come now to a commodity which I have already mentioned in relation to its international aspects and also the question of employment in this country, but there is something else affecting it, too. I refer to sugar. As I have said, the price of sugar in the Community runs at about three times the price outside, and this has its effects on the other countries concerned. We are talking perhaps about six months' sugar in store, and a large amount—I do not have the figures but the right hon. Gentleman can easily get them—which is in process of moving, because of export refunds, out of the Community and therefore competing with the developing world which needs its market.
788 I can envisage what may well be offered in the dark watches of the night. Perhaps I may here give a piece of friendly advice to the right hon. Gentleman. Let him try to get a sleep between three o'clock and half-past three, because at half-past three he will need all his wits about him. That is when the trouble usually starts.
At about that time, I suspect, perhaps the French will suggest that there should be a reduction in the guaranteed price of sugar—not just a freeze but an actual reduction. That will sound like a marvellous concession and something beautifully wrung out of the negotiations. But it really does not make much difference in this case. What is really important here is the size of the quota, and it is that which the right hon. Gentleman must hold on to. By all means, let him take his reduction, because psychologically that is a nice thing for him to be able to get, and I shall be glad if he does, but it will not make all that much difference. Indeed, I do not think that it will make any difference. But let the right hon. Gentleman, whatever he does, keep with the Commission's original proposals on the percentage of quota. On that he will encounter great resistance from the French, and perhaps resistance in other parts of the Community, though not, I suspect, here.
Those are some individual items about which the right hon. Gentleman will have to worry. But towering above everything else is the question of milk, as he himself said. On this, above all other things—I know that he recognises this—the right hon. Gentleman will need to be intensely firm. But may I just make one or two points to him about it.
The butter mountain is so obvious and so clear that the right hon. Gentleman will not find anybody in Britain, and perhaps nobody in Europe apart from one or two Agriculture Ministers, who will be against anything that the he may decide to do about butter. However, there is a difficulty. The right hon. Gentleman has given the House some good examples of exemptions that show an enormous measure of discrimination against British farmers. Whether we have those exemptions or whether we do not, the co-responsibility levy is a tax upon farmers and milk production, which is of no benefit to the consumer. If it brought benefit to the consumer, one might say 789 that it was a rather cumbersome method of reducing prices. In theory it helps the consumer but in practice it does not. It only penalises the efficient milk producer.
It is time that the right hon. Gentleman went for the total abolition of the co-responsibility levy. I recognise one intellectual difficulty in which he may find himself. It will be said "If you were so intent upon getting rid of the surplus, why are you saying that we should abolish the co-responsibility levy?" I offer two answers. First, it is such an inefficient method of achieving what we are after. The right and obvious method is a cut in the intervention price. My second answer is that whichever way we play it our milk producers are bound to be hurt as against those in other parts of the Community.
It is not the British dairy farmers who are producing the milk surplus. We could increase our production fairly substantially, and I hope that we shall. I ask the right hon. Gentleman to forget any logic chopping that there may be on the part of others and to go for the abolition of the co-responsibility levy. In that way, together with sticking by a freeze, I have a feeling that he will be able to find the right answer to the two major problems: first, let us tackle the dairy surplus; secondly, let us ensure that British dairy farmers are able to expand. I ask the right hon. Gentleman to accept that there is nothing inconsistent in those two propositions.
The right hon. Gentleman is asking the House to support Her Majesty's Government's intentionto seek an agreement, in line with the Commissions aims …I have said that we do not really know what those aims will be. The Commission's aims are to get as near to its original base as it can by an agreement of the nine countries whose Ministers sit around the table in the agriculture chamber.
The right hon. Gentleman will be alone if he goes for a freeze on all prices, as I should like him to do. I hope that my successor will also insist that he takes that approach. However, the Italian Minister, who is a great patriot and a great friend, will be with him part of the way. I ask him to understand that the Italian Minister may be extremely helpful to 790 Britain in this instance. At least he will be with him on the freezing of dairy prices. Otherwise, the right hon. Gentleman will find himself in a minority of one rather than two.
The Commission will also find itself in that minority. If previous form is anything to judge by, at this moment Commission officials are busy working out what they believe may be the final compromise. That has happened before. I have often been chided for allowing, as though it were one country alone, an increase in common prices. Yes, but it happened that the Commission changed its ground, as it is always liable to do.
During the last price-fixing talks I received strong support from the Commission all along the line in the retention of the milk marketing boards. I received that support until the last moment, until three o'clock on the Wednesday morning. At that stage, because of pressure from other countries, the Commision produced an amendment. Had that amendment been accepted, our milk marketing boards would have been in constant jeopardy. It effectively meant that every time there was a change in the value of sterling, the right of the boards to continue would have been challenged. We could not accept that. That amendment was introduced under pressure.
I can also remember how, under the so-called gentleman's agreement on green currencies, the Commission finally gave way from a pretty firm position and joined with the other eight. I hope that the right hon. Gentleman will be a gentleman on his own and will not give way and sign the gentleman's agreement. It is a recipe for unlimited price increases.
§ Mr. Michael Shaw (Scarborough)
Does the right hon. Gentleman agree that one of the facts of life in Brussels that we must accept is that in the end my right hon. Friend will have to fight on his own? The Commission is there to carry on the business. Therefore, when all is said and done, it wants to see an agreement reached so that the machine may continue. If there is a sticking point, we cannot rely on the Commission. It is in the nature of the Commission that we shall not be able to rely on it to back us up on a sticking point.
§ Mr. Silkin
The hon. Gentleman has said much more eloquently than I 791 exactly what I was trying to say. He has clearly explained the difficulty that the right hon. Gentleman will face. I make the point not merely to give a constitutional lecture on what happens in Brussels but because of the practical effect.
The right hon. Gentleman's message is to keep in line with the Commission, but I suggest that the Commission's line will alter. If it does, the right hon. Gentleman must keep his cool. He must ensure that "no" means "no" and continues to mean "no". If he does, he will be in for a long haul. He has rightly said that when talking about dairying one year is not sufficient. He has at least a four-year haul ahead of him. I believe that it will continue for every guaranteed food price fixing. My right hon. and hon. Friends and I agree that he may give way on silk worms. That may be an advantage.
§ Mr. Silkin
Or even on tobacco, yes. However, on foodstuffs he must not give way. If he does, and this is my parting greeting to him across the Dispatch Boxes in my last speech from the Opposition Front Bench on agriculture, I hope that he will have earned after four years the honourable title—I believe it to be one—of "Thug of Europe".
§ 12.8 p.m.
§ Mr. Paul Marland (Gloucestershire, West)
As this is my maiden speech, Mr. Deputy Speaker, I want to thank you for allowing me to catch your eye in this important debate. In thanking you I want also to thank your staff. They have acted not only as first-class guides and reliable sources of information for us new Members, but with their impeccable manners and strong sense of tradition they do so much to set the tone of this establishment. For that, Mr. Deputy Speaker, I give you and them my sincere thanks.
I am proud to stand in the Chamber because never before in history has Gloucestershire, West been represented by a Conservative Member. For 61 years the constituency was held by the Labour Party. Before that it was represented by the Liberal Party. Sir Charles Dilke was probably the Liberal Party's most celebrated 792 Member. My immediate predecessor was a man who, I understand, was well liked on both sides of the House. In that respect I shall seek to emulate him.
As I have said, the 61-year hold that the Labour Party had on Gloucestershire, West has been broken. That has been achieved by many hard-working and dedicated Conservative Party supporters from in and around West Gloucestershire. I pay tribute to them because without their efforts and the sterling work of my agent, Miss Angela Darricote, I should not be standing in the Chamber now.
To be the Member of Parliament for Gloucestershire, West is for me an honour. I am sensible of the responsibility that is placed on my shoulders. In the southern half of West Gloucestershire lies the Forest of Dean, traditionally an area of mining, farming and forestry. Due, perhaps, to its geographical location, the people have developed a special and individual personality. Over the years the mining industry has declined, to leave only free miners who operate with small teams to dig coal in their own right.
That sense of independence and free enterprise permeates widely through the Forest of Dean, because there are many such small businesses in haulage, building, engineering and the tourist trade. I hope that the Conservative Budget of opportunity and my party's commitment to offer more of the same will unleash the frustrations of the foresters, for their positive reaction will be a useful contribution to the welfare of the Dean and perhaps a barometer of our success in government.
At the northern end of West Gloucestershire the majority of people are involved in agriculture and horticulture. It is to their credit that in expectation of this early debate on the common agricultural policy they have already been in touch with me so that, with their help, and as I am a farmer myself, I am able to speak for them from a position of first-hand experience.
It is sad that today, in spite of extra production and higher output, farmers' real incomes are at their lowest level for 10 years. There is no more dependable source of food for the British housewife than British agriculture. It is in the long-term interests of our housewives that British agriculture should flourish.
793 Low incomes for farmers have led to a lack of capital investment in modernisation and future projects. That, coupled with high taxation, the uncertainties created by the previous Government on capital transfer tax and their attitude towards the EEC gave just cause for concern in agriculture. A radical change of attitude and direction is needed. United Kingdom farmers ask for no special favours but seek an opportunity for fair competition with our EEC partners.
We in West Gloucestershire are pleased that my right hon. Friend the Member for Worcester (Mr. Walker) has been appointed Minister of Agriculture. We are sure that, with his usual enthusiasm and resourcefulness, he will champion the joint causes of farmers and housewives. The pig industry, although highly efficient, faces important problems with the application of MCAs, making imported European pigmeat cheaper than that produced at home. I know several pig producers in West Gloucestershire who are depending for the continuation of their business upon the right decisions being made here today. Due to unfair competition, the United Kingdom pig breeding herd is in serious decline and many meat processing factories are hard put to make the continuation of their businesses worth while, as imported pigmeat is now so much cheaper than that produced at home.
An almost similar situation exists in the beef industry, where subsidised imports, principally from Ireland, are seriously affecting our market. To restore confidence in those sectors of agriculture, positive action is needed now to eliminate unfair competition. The situation in the dairy industry is little better as the EEC Commission thrashes around trying to find a solution for our ultra-efficient industry and has so far produced only an unacceptable system of levies.
I was extremely pleased to learn of the 5 per cent. across-the-board devaluation of the green pound and the 10 per cent. reduction for pigmeat. That will go some way to easing the difficulties faced by agriculture. Much of British farming will see that as a positive incentive and commitment by the Government to improve the lot of the British farmer.
Like many other Members of Parliament, I believe that our future lies in 794 encouraging individuals to do all that they can for themselves, by ensuring fair competition and a reduction in the role of the State. The future of our country lies in individual enterprise. In urging fair competition, I applaud the Government for their commitment to that end.
§ 12.14 p.m.
§ Mr. Douglas Jay (Battersea, North)
I am happy to congratulate the hon. Member for Gloucestershire, West (Mr. Marland) on his maiden speech and on the political record that he achieved in West Gloucestershire.
In the 1950s I used to visit Mr. Philips Price in the Forest of Dean. He was then the Labour Member of Parliament for the constituency. He held another record. He was the only Labour Member of Parliament who was also a master of foxhounds. He had the other distinction of having spent the summer and autumn of 1917 in St. Petersburg. He had been on close personal terms with Lenin, Trotsky and Stalin. However, in the mid-1950s his main interest was in foxes. I think that the hon. Gentleman is lucky to represent that part of England.
The Minister of Agriculture, in one or two ritual partisan passages in his speech, mentioned the terrible effect of the previous Government's policies on agriculture. He forgot that it was the Tory Government who in 1971 inflicted the Treaty of Accession and the common agricultural policy, with all the consequences, on this country. One of those consequences was the transitional provisions of the Treaty of Accession, which compelled increases in food prices in the subsequent four years. Another tragic consequence of the common agricultural policy was that whereas under our previous deficiency payments policy there was no conflict between our farmers and consumers, that policy inflicted upon us an inevitable conflict between those two groups.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
Is the right hon. Gentleman aware that when we joined the EEC there was not the appalling problem of the green pound which put British farmers in such a disadvantageous position on the committees abroad? He obviously ignored my right hon. Friend's point that had the farmers not been put in that position we should have saved £1,000 million 795 of imports. That would have been of great help to the balance of payments and employment.
§ Mr. Jay
The hon. Lady does not seem to understand that if we had not adopted the common agricultural policy there would not have been a green pound. As she voted for the common agricultural policy, she should reflect on that for a moment.
The motion includes a number of imposing names, starting with that of the Prime Minister and ending with that of the Minister of Agriculture. However, the motion is an extremely weak effort. It is not one that any Member of Parliament could oppose. The trouble is that it does not say very much. The freezing of prices is not included in the motion that we are asked to approve—although we understand from the Minister that that is his policy.
It is much better that the prices of CAP food should be frozen rather than that they should rise still further. However, to my mind, freezing prices is not good enough. That is small comfort, as EEC prices are far too high already. For that reason I do not believe that the Government should accept or encourage any further devaluation of the green pound until there have been drastic reforms in the common agricultural policy.
The Minister said today that there would be an increase of only ¼ per cent. in the retail price index. That is additional to all the other increases in the index that the Government have inflicted upon us at the rate of about one point each week since the general election. Are we to assume that this further increase of¼ per cent. or ½ per cent. is additional to the 17½ per cent. which the Chancellor tells us is now the expected rate of increase in prices this year?
One of the greatest of all falsehoods propagated by the pro-Marketeers in this controversy was that EEC food prices were not likely in future to be much above world prices. Over and over again we heard the slogan to the effect that the era of cheap food had gone. We now have experience. We know the facts as given in EEC Commission reports and statistics. I should like to give one or two of the figures so that we know the gap between world and EEC food prices.
796 The latest annual agriculture report of the Commission gives EEC prices as a percentage of world prices for each main food, on average, in 1977–78. For wheat, the EEC price was 216 per cent., or more than double the world wheat price; for barley it was 206 per cent.; for maize, 203 per cent. Those are the main feeding stuffs used by British agriculture. For beef the figure was 196 per cent.; for sugar the Commission figure was 255 per cent., or two-and-a-half times the world price. For butter the EEC price was 388 per cent., which was nearly four times as high as the world price, and for skimmed milk powder it was 494 per cent.
When the Minister was talking about the troubles of British agriculture in the last few years, he did not mention that one of the main reasons for the increasing cost is the 100 per cent. EEC levy on both maize and barley, which is due to the CAP and which has enormously contributed to the costs of British agriculture.
Those are not just excessively high prices. They are outrageous prices in relation to the level of world food prices at the present time. They are, incidentally, equivalent to import taxes of about 100 per cent. on staple foods. The Government defend in this House, and we argue about, a rise in VAT from 8 per cent. to 12 per cent. or 15 per cent., but nobody mentions that, thanks to the CAP, we are imposing a tax of 100 per cent. on the British consumer on most of the main staple foods. That is why, in my opinion, these prices do not need to be just frozen; they need to be cut to something much nearer to world price levels. They would be so cut, of course, if this country were allowed to import food freely from Australia, New Zealand, Canada and the United States. Prices would automatically come down.
The public are now being misled—and have been recently—by statements that United Kingdom food prices have been raised by only 12 per cent., 15 per cent., or some such figure by the CAP. That is a highly deceptive calculation, for two reasons. First, it results—I do not think that most people realise this—from averaging over all foods, including some, such as tea and coffee, which are not affected by the CAP, the price rises due to the CAP. That, of course, minimises the real rise.
797 Secondly, it appears to assume—if I am wrong I hope that the Minister will tell me—that the rise in the farm gate or the import price of food is not further increased by the distributive margins. The hard fact in real life is that if distributive margins are percentages, and if, as I think is broadly true in this country, the distributive cost is about half the total cost to the consumer, the final price is raised a further 100 per cent. by the distributive margin.
As import prices are forced up by the EEC levies to a level of about 100 per cent. above what they would be, it appears to me that the calculations sometimes bandied about are not allowing for either of these factors. Will the Minister tell us what the rise in final retail prices has been, in the official view, of CAP foods only, if real allowance is made for the increase in distributive cost? I guess that it is much more like 50 per cent. than the 12 per cent. or 15 per cent. that we sometimes hear.
§ Mr. Spearing
Will my right hon. Friend recall that, at the time when there was a suggestion of a complete devaluation of the green pound, the then Secretary of State for Prices and Consumer Protection stated at the Oxford farming conference that a full devaluation of the pound—which was what the Conservative Party wished to see—would put up farm gate prices of those commodities covered by a CAP regime by 28 per cent.? Some of my hon. Friends and I thought that that was a conservative estimate. Will the Minister tell us whether the Government agree with the estimate of the former Secretary of State for Prices and Consumer Protection?
§ Mr. Jay
I think it follows from that that the estimate of 1 per cent. and ¼ per cent. that we had today is again averaged over all foods, whether or not they are affected by the CAP.
We have all got into the habit of talking about the surpluses. But there are really no surpluses in the sense that we are producing too much and should start paying farmers to go out of business or to produce less. What is wrong is not that farmers are producing too much but that prices are so high that the consumer cannot buy what is produced. If the price were allowed to fall in a free market, and if farmers were supported by 798 deficiency payments, the surpluses would soon disappear because the consumer would buy more both at home and abroad.
Do not let us forget that the CAP, quite apart from the burden on the consumer that we have been discussing today, imposes an additional balance of payments cost on the United Kingdom over and above our budget contribution. That is due to the excessive price of the foods that we import from the EEC and on which levies are not paid. The Cambridge statisticians in the Department of Applied Economics estimate this extra cost at £300 million to £500 million a year. It is, as I say, additional to the budget contribution, which is approaching £1,000 million a year. It is also additional to the £2,000 million deficit in manufactured goods which we have incurred with the EEC since we joined in 1972.
The total balance of payments deficit falling on us due to EEC membership must be at least £2½ billion at the present time, which is equal to, if not more than, our total earnings on the balance of payments from North Sea oil. That is a solemn thought which is not often mentioned in economic debates in this House.
The latest effort of the Commission, as I learn from the press, is not to correct the effects of the CAP but to try to conceal them. The Commission does not propose to reduce prices but it is apparently intending to cook the books, an expression used by as respectable a newspaper as The Daily Telegraph. It was first reported in that newspaper on 29 May, quoting from the periodical "Agra-Europe", that the Commission was proposing to transfer slices of the CAP cost to the EEC aid and development budget, to make it look as if the CAP cost had been reduced.
That was apparently denied by some people, but in a written answer to me the Financial Secretary to the Treasury said that for the 1980 Community budgetfood aid restitutions and ACP sugar have been included in title 9 in the 1980 budget—co-operation with developing countries and nonmember States—instead of in titles 6 and 7—European agricultural guidance and guarantee fund. … Further details of the Commission's proposals are likely to be included in the … draft budget".—[Official Report, 13 June 1979; Vol. 968. c. 244.]799 Apparently, therefore, we have it on the authority of the Government that, in addition to some of the outright frauds—which some people may have seen in a television programme last night—resulting from these excessive EEC prices, we are now to have the figures fudged, if I may use that word, by the Commission. The Government should tell us, if this new accountancy device is to go ahead, how much money is involved in the change. Is it as much as £600 million, as "Agra-Europe" has suggested, and do the Government intend to resist any misrepresentation of real facts of this kind?
There is one other special question that I should like to put to the Government. Not all hon. Members may realise this, but food produced in East Germany is imported, levy-free, into West Germany or the rest of the EEC. It is another of the great triumphs of the Treaty of Accession of the right hon. Member for Sidcup (Mr. Heath) that we have to pay levies on food from New Zealand, but West Germany does not have to pay levies on food imported from East Germany. This means that the East German farmer can sell at the excessive EEC prices and does not have to pay the levy. He naturally makes large profits, which are no doubt diverted mainly into the hands of the East German Government. I would not profess to know the exact details by which that happens, but I think it is a fair assumption that it does. The remission of these levies is a subsidy by the EEC to East Germany, for which we partly pay.
I tabled a question to the Minister of Agriculture, Fisheries and Food asking how much the subsidy was, and in a written answer on 12 June he said that it was not possible to calculate it. Much of the trouble with the CAP is that we are often told that the figures are not known, cannot be worked out or are not available. It must be possible to calculate this figure, at any rate approximately. The volume of CAP foods imported from East Germany into West Germany in a given year must be known, and it must be possible to calculate the total value of what the normal EEC levies would have been on that volume of imports. Therefore, I ask the Government to think again and to give us some idea 800 of the subsidy that the EEC is paying to East Germany.
Meanwhile, the British public should know about yet another joy of the common agricultural policy. The British consumer and taxpayer are helping to subsidise the East German regime. Whether or not we think it desirable, at any rate we should know that it is going on.
The Government have at least paid tribute to my right hon. Friend the Member for Deptford (Mr. Silkin)—I think that we all regret his departure from the agriculture sphere; certainly I do—by more or less promising, if I understood the Minister aright, to stick to his policy of no further price rises for foods now in surplus. If that is the Government's policy, I think that they might have said so a year ago when my right hon. Friend first embarked on this policy. That will limit a little, but only a little, the total damage being done to the British consumer, to the balance of payments and to our whole economy by the lunacies and swindles of the CAP. In my judgment, that damage is now so great that the only tolerable solution is to go far beyond what the Government are proposing and to make clear that we are no longer prepared to accept this policy unless drastic reforms are rapidly carried out.
§ 12.33 p.m.
§ Mr. David Myles (Banff)
I am pleased to have the opportunity in this debate to make my so-called maiden speech, particularly as my hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food is to reply. I think that he may say nice things about me, and we may discover why.
I congratulate my hon. Friend the Member for Gloucestershire, West (Mr. Marland) on his maiden speech. I hope that I can match him in brevity and in sticking to the point.
Banffshire, or Banff as it is abbreviated—the constituency which I have the honour to represent—could be termed to be part of the so-called remoter areas of the EEC. It is often said to me here "I know you are miles from Banff, but what is your name?" Fortunately, one of my ancestors had the foresight to spell it with a "Y", so I cannot be metricated.
801 Banffshire's interests are closely dependent on agreements with the EEC. The fishing industry, on which the coastal communities so heavily depend, looks to my right hon. and hon. Friends with a degree of complimentary confidence to secure an agreement which will protect their interests. My constituency boundary is rather ill-defined. Who can say how far it goes out into the North Sea?
The boat building industry, too, relies heavily on EEC incentives. In this regard I hope that my hon. Friend will find a way to maintain employment in those yards by stimulating the building of new vessels in order that they may be equipped for the necessary maintenance work on our fishing fleet.
From the fishing industry I turn to farming, and here I must declare an interest. I am a former convener of the organisation and publicity committee of the National Farmers' Union of Scotland and a tenant hill farmer, as are many of my constituents in the Glenlivet and Glen Rinnes area. If grouse moor image I have, it must be from the other side of the butt. Therefore, I share the interest of many of my constituents in the retention of the landlord-tenant system. Otherwise, how could we farm? I do not want to abolish the lairds or, for that matter, the lords, but I certainly want to keep them in order. I want a structure in agriculture which will enable young men of ability and enterprise to get a start on their own account, as I did; not to mention farm workers being able once again to graduate into being farmers in their own right.
After the winter that we have just suffered, I hope that, somehow, my right hon. and hon. Friends will find some way of restoring a degree of confidence in the hill sector in order to maintain production for the benefit of all.
Other farming interests include heavy dependence on pig production. At one time it was said that half the pigs in Scotland were in an area between Turriff and Cullen, which is in my constituency. I need hardly underline the urgency that is required to restore this sector to some kind of viability. In that regard I welcome what was said by my right hon. Friend this morning.
The dairymen—I was pleased to hear what my right hon. Friend said about 802 the co-responsibility levy—the potato and barley growers, not to mention the famous feeders of beef cattle, require a degree of confidence from the Government in order to produce with the efficiency of which they have amply demonstrated they are capable.
I mentioned earlier the names Glenlivet and Glen Rinnes. Those names are famous in another industry. There are 35 distilleries in Banffshire, and in one a new bottling plant is turning out nearly 500 cases of malt whisky an hour. Just think how much revenue is being produced from Banffshire! I am grateful to my right hon. and learned Friend the Chancellor of the Exchequer for having the wit not to kill the goose that lays this liquid golden egg. This industry could be further stimulated by other sensible budgetary measures.
I should be remiss indeed if I did not point out the remarkable attraction which Banffshire holds for tourism, from the marvellous golf courses—though I do not play golf—and other seaside attractions of the beautiful coastal boroughs to the sporting interests in the upper county. Who has not heard of the Spey or the Deveron as superb salmon rivers? Added to that is the beauty of the countryside, with a fair sprinking of forestry. We must strive to ensure that these competing land use interests are integrated in a sensible way and that a balance is kept.
Other industries that must be encouraged and maintained are the two woollen mills in Keith, the bulb factory in Buckie—that factory is reputed to supply nearly all the bulbs for British Rail, but there is no truth in the rumour that there were a lot of Buckie boys on the Wembley special—the many small and enterprising businesses—the shortbread from Aberlour could use up a fair amount of the butter surplus—the lime quarries at Dufftown, the cooperages and the transport people, not to mention the numerous small industries.
With that description of Banff constituency interests, I hope that I have demonstrated the interdependence that they all have one with another. I hope that we can build in a wider sense within the Community a structure that will integrate and serve the interests of all. We want a fair and balanced society where the interests of all are seen to be complementary.
803 May I dare to say a word or two about surpluses? I hope that I shall not be controversial. Much public attention has been focused on the problem of surpluses. Politicians and public alike must recognise that any agricultural policy that aims at self-sufficiency must result in surpluses, as this is the only safeguard in the lean years caused by drought or other forces of nature.
By and large, the surpluses represent reasonable reserves. Surplus is surely a sign of success rather than of failure. Our problem is, surely, how to utilise those surpluses in times of plenty rather than stopping their production. That can result only in periods of scarcity which, in turn, massively increase prices. A surplus is a consumer's best friend, although it can cause headaches for the producers.
In conclusion, I must mention my predecessors. I purposely put that in the plural because all three Members who have been returned for Banff since the war deserve a mention. First was that well-loved and much-respected character Sir William Duthie, or Bill Duthie as he liked to be called. The House will be pleased to know that he is living in Aberdeenshire and still takes a lively interest in all the affairs of the House.
Next came Bill Baker, who served faithfully and well without ostentation for a period of 10 years. Then we had my immediate predecessor, Hamish Watt. Like me, Hamish is a farmer, although he owns his land and I am but a humble tenant. One could say that one teuchter was replaced by another teuchter.
In his time in the House Hamish became well known for his assiduous championing of his constituency's interests. I sincerely hope that I can carry on the good work of my predecessors relating to constituency work, and perhaps make a small contribution nationally as well.
§ 12.45 p.m.
§ Mr. Thomas Torney (Bradford, South)
I should like to pay tribute to the excellent maiden speech of the hon. Member for Banff (Mr. Myles), to which I listened with great care. The hon. Gentleman has great experience in the farming industry. Although I talk about agriculture from time to time, I never claim to have vast experience of the farming side of the industry. I even represent an urban 804 constituency. I note that the hon. Member for Banff is active in the National Farmers' Union. He will find that the union has a powerful lobby in the House, and I have found the NFU helpful in explaining technicalities and showing me farming.
I was interested in the hon. Gentleman's nice comments about that excellent beverage Scotch whisky. When I am in his part of the world I must ensure that I have a look at some of those distilleries and perhaps sample some of the beverage. I am sure that the hon. Gentleman will contribute much to our debates and will do it well. He has a lot to contribute, particularly on agriculture, the subject about which he knows most. We shall look forward to hearing from him.
I was interested and a little amused that I seemed to spark off some militancy in the Minister when I dared to mention the green pound. I am well aware that farmers need a fair crack of the whip as much as do consumers, but when I pointed out that there would be greater increases in the price of certain basic foods because of a 5 per cent. devaluation of the green pound than the Minister had suggested in reply to my questions yesterday, I was surprised that he became a little militant.
I could not help but feel that, in the words of the Leader of the Opposition yesterday, the Minister was still fighting the general election. I hope that I shall not do that, but I wish to refer to some potent issues mentioned by the Minister in his speech and during questions yesterday.
The right hon. Gentleman has had a lot to say about pigs and I have been concerned about the pig industry. I am not an expert on agriculture, but I have many dealings with the food industry as a whole. When I suggest to my hon. Friends that they should join the agriculture group and they tell me that they have no interest in farming and do not understand it, I reply "But you eat food. Your constituents eat food." Farming is food and food is farming. The two go together.
I should like to remind the Minister that not long ago my right hon. Friend the Member for Deptford (Mr. Silkin), when he was Minister of Agriculture, introduced a subsidy to pig farmers because of the dire straits of the pig farming industry. It was a direct subsidy paid 805 from our Exchequer—and rightly so—but my right hon. Friend was forced to discontinue it, not by the House but by Brussels and the European Court which demanded that the subsidy should cease.
There is something very wrong with a European agriculture or food structure which allows the industry of one country to suffer and decay, in the way that the British pig and processing industries have been allowed to do, while the industries of Denmark, Holland and so on are allowed to prosper. It is unfair to suggest that the cause of the plight in the pig industry has anything to do with my right hon. Friend the Member for Deptford, because, like many Labour Members when in Government, my right hon. Friend did his very best to pressurise the people in Brussels to make concessions in order to change this unfair system.
This is not a question of green pounds at all, but I must point out that, although on the surface a devaluation of the green pound may look like an advantage to the producer, it also puts up the price of the feed which the producer has to purchase. Therefore, through the back door, he could find himself at a disadvantage. The real problem concerns the monetary compensatory amounts, which favour importers of pigmeat and pigs into Britain over our own producers.
As to pigmeat—that is, bacon—I am personally concerned about workers in the industry. The Minister referred to unemployment in the processing industry. I am equally concerned about it. Over the past year or two, I have repeatedly made my feelings known about this matter. I think every hon. Member knows that I am sponsored by the trade union USDAW—the distributive and allied workers—which has a considerable membership in the bacon industry. That industry has suffered redundancies, short-time working, loss of jobs and so on because it has been forced to run down by the Common Market.
I should like to refer in a little more detail to the programme on television last night which has already been mentioned. I watched it with a great deal of care. I saw pigs going to and from Southern and Northern Ireland three times a day. I learned that for pigs there is a subsidy of £7 on entering the United Kingdom from Southern Ireland They 806 are then smuggled back. In that programme I saw an Irish farmer—this was not propaganda against the Common Market—admitting and agreeing that his pigs could travel back and forth three times. Therefore, if he took across 100 pigs—I do not know how many he took across—for each pig he would get £21.
That adds up to a phenomenal sum of money over a period of one month or one year. It is a fiddle of Common Market funds. In other words, it is a fiddle of British taxpayers' money, because British taxpayers contribute by far the biggest net amount towards Common Market funds, and we all know that the great mass of Common Market expenditure is devoted to the CAP.
I could go further and talk about the great butter scandal which occurred a year or so ago, when thousands of tons of surplus Common Market butter left the Common Market en route to Russia, travelled half-way around the world, ended up in Como in Italy and was then sold back to the Common Market. It went out at about 28p a pound and came back at 60p a pound. All of that subsidy went into the coffers of some swindlers of Common Market funds and British taxpayers' money.
§ Mr. Torney
I accept that point of information from my right hon. Friend. I could go into this matter more deeply, but my point is that we cannot tolerate a CAP which allows this kind of thing to go on. We saw the ridiculous attempts to count the number of olive trees in Italy in order to stop the swindles in olives.
We must change the basis of the CAP. I hope that the Minister of State will tell his right hon. Friend that he should apply his mind basically to changing a system which allows this kind of thing to happen.
I offer two suggestions on how to achieve that. One is to abolish the system of levies whereby we are forced to pay increased prices on third country supplies that come to this country, particularly foodstuffs. The levy system contributed largely to the increase in the 807 price of food during the period that the Labour Party was in power. What the right hon. Gentleman blamed us for was, in effect, the fault of the Common Market. Therefore, we could abolish those levies.
Conversely, if the French or Germans want to build surpluses of butter, beef and all the rest, let them do so, but, instead of being paid for by the British taxpayer, let them be paid for by the German or French taxpayers. In other words, there could be a simple change in the structure of the CAP so that subsidies were the responsibility not of the EEC but of individual Governments and exchequers. In that way, if the British pig industry, for example, experienced some difficulty, we could use to assist our pig producers some of the money that we are now pouring into the coffers of the Common Market to be wasted.
I want to refer briefly to milk. We all know that the Common Market tried to abolish our very effective milk marketing board. We all know that my right hon. Friend the Member for Deptford was able to stop that. We know that the Common Market does not like our milk marketing board and that it has its eyes on our liquid milk market. We know that there are moves at present to try to force us to accept French and German liquid milk into our shops and supermarkets, which might well be sold at a lower price than we are selling delivered milk. That could undermine our delivery system, upset our own home-produced milk industry and cause considerable unemployment. I do not want to go into this question in detail because of the lack of time, but it is an important point. The Minister did not say very much about it in his opening remarks. I ask that this point be noted and that whoever replies says something about the question of milk.
Incidentally, I do not believe that this matter is particularly controversial, because when we were in government my experience was that there was a great deal of support from both sides of the House for the defence of the British milk industry and the milk marketing board.
§ 12.59 p.m.
§ Mr. Robin Maxwell-Hyslop (Tiverton)
My right hon. Friend the new Minister of Agriculture, Fisheries and 808 Food, has taken over—as he rightly pointed out—at a time when financial resources of the milk producers in this country are desperate. They are in this desperate position for two reasons: first, because Britain, although the most efficient milk producer in the EEC, receives the lowest returns of any milk producer within the Community, and, secondly, because indebtedness has risen so dramatically as part of the price of the increased efficiency, coupled with returns which have not covered it. The position becomes even more desperate when one considers the 2 per cent. increase in the minimum lending rate, which will have a very burdensome effect on the interest charges which the industry must pay.
What has been the position over the last 10 years? My hon. Friend the Member for Banff (Mr. Myles), in his excellent maiden speech, referred to his predecessor, Mr. Hamish Watt, with whom I had the pleasure of sitting on the Select Committee which did a deep analysis of the problems of milk production in this country. Without that Select Committee's unanimous recommendation of an immediate increase of 8p a gallon, we would have seen complete disaster overtake our milk production and milk processing industries. As a result of the Select Committee's recommendation there was a major injection of income into the milk production industry. This was accompanied, purely fortuitously within the next six months, by a recovery in calf prices and prices received for cull cows and barreners.
Instead of that recapitalising the industry as it might have done, it was accompanied by the most dramatic peacetime inflation under the previous Labour Government that this country has known. That, together with the tight policy subsequently for milk prices in this country, resulted in the seed corn being wasted. The capital position of the milk production industry might have been restored, but instead it is now in a position of gross indebtedness.
If we imagine that burden coupled with the increased rates of pay made to highly skilled workers in the agriculture industry, and coupled also with the dramatic increase in fuel prices—where derv can be secured, and that is by no means universally the case—we can see the 809 result in a dramatic running-down of our dairy herd and breeding stocks. That is the great danger facing us.
It might be asked whether this situation applies to other EEC countries. The short answer is "No." For example, in Germany, where so much of the surplus is generated, there is no system of production which is price-elastic to anything like the same extent as in this country. Also, German internal policy is designed to secure the political support of a large number of totally unviable part-time milk producers. Because they do not depend on milk production for their income, they do not go out of production when the economic screws are turned. Nor can the political realities of West Germany permit the German Government easily to apply financial screws anyway. Thus, the paradoxical result of trying to control the milk surplus by freezing prices can be that efficient producers are driven out of business while the part-time inefficient producers, whom any sane industry would want to rid itself of, remain.
That is why it is necessary for hon. Members taking part in this debate to know what they are talking about. The hon. Member for Bradford, South (Mr. Torney) engagingly admitted that he did not. Thus, it is difficult to apply overall economic principles on the assumption that they will work rationally and relevantly in the circumstances in which we find ourselves today.
This country, which is nothing like self-sufficient in milk production, finds itself regarded by inefficient producers of surpluses as the outlet—potentially or actually—for those surpluses At the end of the day, I believe that the inescapable reality will be the introduction of national quotas. Because of the characteristics of milk production in some EEC countries, the rationale of a price system will not have the effect on the structure throughout the Community which is so necessary if the original intention of the CAP, namely, that agricultural products should be produced where they can be most efficiently produced, is to become a reality.
The objection of the farming community to the quota system is not theoretical on the ground of illogicality but on the practical ground that if such a quota system were built on a base year on the 810 percentage of our total milk products consumption that is presently produced domestically, that would freeze our industry in a posture of less than economic optima.
Although it may well be that a quota system will have to be the policy adopted by the EEC, we cannot accept the present percentage of self-sufficiency in milk products, or the present contribution which we make towards that, as the base for an acceptable quota system.
If we are to preserve an efficient milk production industry in this country, it will have to be based on expanding production. That is the only way to keep down average production costs when the unit costs of the productive agents are rising. Labour costs, fertiliser costs—based on the petrochemical industry—fuel costs and farming machinery costs are all rising. That is compatible with a fixed price only if there is tremendous progress in the expansion of production. Even then it is not compatible with fixed returns in any real sense of the word. This cannot be a policy with which we can live.
Several hon. Members have already referred to the fickle nature of surpluses. Some of us have memories not of surpluses but of shortages and the scandalised cries from housewives who had to pay dramatically increased prices. Even with marginal surpluses, prices can get out of control. I remember how, in the days of the deficiency payments, which some have extolled, Ministers of Agriculture had to come to the House for Supplementary Estimates because of unexpected changes in the surplus and shortage position.
There are still in the House, and certainly outside it, those who are unaware of the relationship between milk and beef production and the extent to which our beef herds are dependent on the supply of calves from the milk herds, without which the cost structure and, indeed, the physical size of the beef herds fall rapidly below the requirements of the market. That relationship is shown clearly to anyone who cares to read the report of the Trade and Industry Sub-Committee of the Select Committee on Public Expenditure on milk production, or, indeed, the evidence given to the Committee. The relationships are basically 811 unchanged, even if the figures attached to them have been overtaken by changes in relative costs of the various productive agents. Therefore, a rational milk policy throughout the EEC, unless the other countries are prepared to grasp the nettle of driving out of milk production inefficient sectors within their own countries on which they are politically dependent, can lead only in the direction of national quotas.
Unless I failed to hear his comments on the subject, my right hon. Friend said nothing about egg production. That side of our industry cannot be allowed to pass entirely without comment. If, with the ending of disparity in the green pound relationships, we find that there is a significant increase in the cost of grain, the pressures not only on the pig producer, who has been the subject of some debate today, but on the egg producer could prove financially lethal.
Competition throughout the EEC was intended, when the CAP was originally proposed, to be a form of pure competition, including equal availability to helpful facilities from Government. However, I understand that in Western Germany, for instance, producers can obtain loans at infinitesimal rates of interest, often as low as 1 per cent., 2 per cent. 3 per cent. or 4 per cent. Yet in Britain today, with the increase in minimum lending rate, those with whom the West Germans are in competition, to whose greatly increased burden of debt the Minister has referred, will be paying 17 to 17½ per cent. That is not real competition when the access to the necessary capital is on such completely different bases.
I should like my right hon. Friend to bear in mind that there was taken to the EEC Court the scurrilous agreement between the Government of the Irish Republic and the French Government, which admitted free of duty to France lamb from the Irish Republic at the same time as lamb from the United Kingdom was subject to levy. What has the Commission done about that? What is happening in the court? We are now in mid-June, and that situation cannot be allowed to continue.
It is possible to make a good case for the common agricultural policy as it was intended to function by those who drew up the original Treaty of Rome. How 812 ever, there is no case in favour of a CAP that has become as perverted, both in intention and effect, as that to which we are now party. That reality is completely unchanged by the change of Government.
The posture of our representatives in the EEC, whether they be from the Ministry of Agriculture, the Treasury or the Department of Trade, must be that the CAP could be the executioner of the EEC as a whole and that it is not a matter of marginal adjustment, of fining down certain of the gross anomalies. It must be a matter of a return to the original concept of the CAP or the abandonment of the CAP altogether. There is no tolerable median position between those two.
This problem does not become easier to solve with the accession of Greece and Spain. It becomes not less but more difficult a nettle to grasp. Time is not on our side. Our EEC partners must not be allowed to lull themselves into the belief that with a change of Administration in the United Kingdom will come a change in this reality.
I do not doubt that improved personal relationships between those with whom the government of this country is now charged and their opposite numbers in the EEC will make the process of negotiating less painful, but the targets that must be achieved and the realities that must be faced will not go away because of any change of Administration here.
The importance of agriculutre to this country when the riches from North Sea oil are no longer available to cover balance of payments deficits will be very important. The importance will be enhanced rather than diminished when this unnatural interlude of having a richesse of hydrocarbon exports has gone. Go it will one day, we all know. It is only the timing that we cannot judge with any precision.
The reality will then revert to being that of a country with 55½ million people, importing half the food it eats, paying with foreign exchange which it will certainly not be earning, thanks to the ministrations of British Leyland. That is why we must have an agriculture which continues to increase its output and its productive efficiency. It cannot do the former if it cannot meet the interest payments on its indebtedness, and by definition it cannot do the latter if its output is frozen, and if its output is frozen its costs will 813 rise dramatically, because the increased overheads will be spread over a fixed volume of output.
Therefore, my hon. Friend the Minister of State and my right hon. Friend come to office at a time when the rooks are coming home to roost, when the injection put into agriculture, and in particular the milk sector, after the Select Committee report has been whittled away, when the most efficient sector of the industry throughout the EEC has been deliberately permitted by the Labour Government to run out of capital, and when the other economic policies of the Labour Government have resulted in interest rates which cannot be borne on a heavy indebtedness at fixed prices. That is the situation which our Government face. The fact that it is not of their making does not relieve them of the duty, however difficult, of negotiating with our EEC partners the remedial action which must be taken.
§ 1.20 p.m.
§ Mr. Geraint Howells (Cardigan)
Like many right hon. and hon. Members, I should like to congratulate the Minister on his appointment. Although he has left the Chamber, I am sure that the Minister of State will convey that message to him. I also wish the Minister well in his efforts on behalf of the British agriculture industry and the consumers of this country. I am sure that the right hon. Gentleman is well aware of the difficulties that lie ahead and realises that his major task must be to see Britain through a phase of adjustment in her membership of the Common Market.
I should also like to pay tribute to the right hon. Member for Deptford (Mr. Silkin), the previous Minister of Agriculture. I often disagreed with him, but he fought hard to retain the milk marketing board and the daily delivery of milk to consumers.
In every agriculture debate over the past few years the argument has been dominated by pro and anti-Market speeches. All of us must now accept that we are full members of the Common Market and adopt a constructive approach towards reform of the common agricultural policy from within the framework rather than adopting a negative or even destructive attitude. I believe that right hon. and hon. Members on both sides today have been constructive in their approach. They realise 814 that we must be united to make sure that the interests of producers and consumers in this country are safeguarded. I honestly believe that our future lies in Europe, but I have always held the view that unless the common agricultural policy is reformed within the next two years it could disintegrate within five years.
It is important to concentrate on home production and to make the most of our own resources. I know that you, Mr. Deputy Speaker, and many other right hon. and hon. Members are aware of the provision in the Agriculture Act 1947 which says that the agriculture industry must produce food in the nation's interest at reasonable prices. Agriculture is the only industry in Britain that has to live with those conditions. It is difficult to imagine how other industries would like to compete in a similar market within Europe if those conditions were written into their agreement.
We need a 10-year plan. I believe that the Minister will examine this in due course to make sure that home producers are not deprived of the opportunity to produce food on equal terms with their counterparts in Europe.
I should have declared an interest; it is a tradition of this House. I am a farmer and a vice-chairman of one of the marketing boards in this country. As a practical farmer and politician, I find that it is difficult to explain to farmers in different constituencies that there is to be a freeze on their prices this year. Many hon. Members understand MCAs and the green pound, but it is difficult to explain to the ordinary farmer—the dairy farmer, the hill farmer, the marginal farmer or the wheat farmer—what we mean by a price freeze.
I know that right hon. and hon. Members on both sides were in full agreement a few months ago that there should be a price freeze until July this year. I do not believe that the agriculture industry will survive if there is to be a price freeze indefinitely. Nor will the principle of giving 3 per cent., 5 per cent. or 10 per cent. across the board be acceptable in the long term to the producers of this country. This means that the standards of living of those at the top of the league are safeguarded while those at the bottom never have an equal opportunity.
815 Under the old system that operated in this country, the Government were in a fortunate position: if they knew that the sheep industry needed financial aid, they could give the extra financial aid to that sector during that year. I believe that we will have to vary the system within Europe as well. Farmers have been accustomed over the past 25 or 30 years to know the price review negotiations in February or March of every year. Under the present system, I wonder whether farmers will know from one year to another the price increases that are to apply and the Government's plans for other sectors.
While reorganising the common agricultural policy, steps should be taken to deal with the present surpluses without causing offence to consumers in this country. A scheme should be devised whereby surpluses could be distributed to the elderly and the needy throughout the Community rather than being sold at cut prices outside Europe. If it had been the policy of the Europeans to give surpluses to the needy throughout the world, I would have accepted that policy. I cannot accept the selling of surpluses to others at a very low rate, thus depriving our own elderly and needy of the opportunity to purchase those surpluses. The duty of producers, whether in Wales, England, Scotland, Ireland or any other country within Europe, is to produce. We should not penalise them. Those responsible for forming the common agricultural policy have to devise a marketing system to sell what the producers produce.
I was proud of the system that existed in this country. We could teach the Europeans a great deal. Our system of marketing was the best in Europe, if not in the world. Many of those countries should follow the lead given by our industry during the past 20 or 30 years.
I am worried about a sheepmeat regime. I must congratulate the hon. Member for Tiverton (Mr. Maxwell-Hyslop) on one of the best speeches I have heard him make in this House. He was very constructive. Most sheep farmers are not in favour of a sheepmeat regime. I know that we have to await the judgment of the European Court. The Government should bring pressure to bear to ensure that the court's 816 findings are known as early as possible. I hope that the Minister will say something about this.
People talk about the intervention system and deficiency payments. I am in favour of the latter. We already have a guaranteed deficiency payment for lamb in this country. If it was unworkable and the sheep producers were not in favour of it, many of them would have lobbied us, but I have not received a letter from any sheep producer saying that we should abolish it. I beg the Minister to think seriously before accepting the Community's proposals in this regard. In the long term, they will greatly harm sheep farming.
In the operation of the CAP we should be careful not to ask for the abolition of part-time farmers. In some parts of this country the social fabric and local economy depend to some extent on part-time farming. In some circumstances it should be encouraged; and its extent should be controlled by national Governments rather than by sweeping regulations covering the whole of Europe. In Wales, especially Mid-Wales, and in other rural areas, I am sure, the role of the part-time farmer is important to the economy. We must do everything we can to keep those farmers there if that is their wish.
I wonder how many people understand the operation of the green pound and MCAs. I find it difficult at times. What will the Minister do to ensure that British farmers can compete on equal terms with their European counterparts?
Dairy producers and the co-responsibility levy have been mentioned. If the proposals here are implemented, practically every producer in this country will have to pay. The United Kingdom milk producers should not have to pay an additional levy, since we do not contribute to the surpluses of dairy products; we are, after all, only about 70 per cent. self-sufficient in milk and milk products.
Currently, our milk producers pay a co-responsibility levy of 0.5 per cent. of the milk target price and a promotion levy in England and Wales of 0.056p per kilogram to our milk marketing board. Germany and France, which are the biggest culprits in producing milk and dairy products surpluses, should tackle their problems first before expecting others to take a further cut in income.
817 We all agreed a few months ago on a price freeze, but we should be united in our deliberations and stand firm, asking the Minister to do all he can to ensure that the co-responsibility levy is abolished in the near future. We do not need it, and the British dairy producer should not be penalised for being so efficient.
The Government of the day have the right to increase the hill beef cow subsidy, set in 1976 at £29 per head—without having to talk to our counterparts in Europe—to a maximum of £33.93. Taking account of inflation, the real value of the subsidy has dropped considerably. Greater incentives to production from the hill beef herd are sorely needed, both to help income in those areas and to maintain soil fertility.
Although the Minister condemned the White Paper "Food from Our Own Re-sources", British agriculture could produce much more. As I said yesterday, I believe that our marginal hill areas could increase production by 100 per cent. in the next 10 years, given the right incentives. The Government would be wiser to give more incentives to those areas than to throw taxpayers' money away on the intervention system.
The pig sector badly needs safeguards, because the pig cycle is short and profitability hinges on feed prices and the undercutting of prices by imports from Denmark and Holland, especially the latter. I am glad that the Minister announced that he will devalue the green pound by an extra 5 per cent. for pig producers in this country. That is a step in the right direction which will particularly help the small producers.
My next subject is one on which I have spoken many times. We are proud of the people who work in British agriculture. They produce much of the food that we consume. But a prosperous agriculture needs a dedicated work force. My biggest worry is about the many young people who would like to start farming on their own. Many will say "Where will they find the land or the farms?" But this Government have made much of their intention to encourage small business men and the self-employed.
I agree that those starting small farms must be talented, courageous and determined and that they must possess vision. But, even with all those virtues, young 818 people will find it difficult to get the necessary finance—the risk capital element. When we had our agreement with the Labour Government, I pressed for the setting up of a land bank. People in Europe are fortunate. They can get cheap interest rates to start farms in Germany and France. Things are more difficult in this country.
I know that every hon. Member is creditworthy—
§ Mr. Howells
—but where would it get us if we wanted to start farming on our own? If one goes into a bank on one's own behalf or introduces a friend as a trustworthy client, will the bank manager help him, if he has no assets, to start on his own? There are thousands of youngsters in this country, not only in the agriculture industry, who could work well if they were given the risk capital to start on their own. I know that they will do first-class jobs in the years to come. I hope that the Parliamentary Secretary will do all in his power to ensure that they are safeguarded.
It is a great shame that county councils are selling off their smallholdings. Many tenant farmers start by having a council holding. I hope that the Government, in their wisdom, decide to help the councils. More money should be given to them so that they might purchase more land—perhaps one or two large farms—instead of the institutions buying the land. That would ensure that three or four young farmers were able to start on their own.
We could continue discussing the various sectors of the agriculture industry for hours. As I said earlier, the debate has been constructive. I was delighted to hear right hon. and hon. Members agreeing that we should unite in our deliberations to reform the CAP to make sure that consumers and producers in this country are safeguarded in the years to come.
§ 1.41 p.m.
§ Mr. Richard Body (Holland with Boston)
I add my tribute to the two maiden speakers. Once again the Benches have been strengthened by the presence of two farmers.
As so often in the past, I agree with the last point made by the hon. Member for Cardigan (Mr. Howells). He was 819 right to address his remarks to my hon. Friend the Parliamentary Secretary, whom I congratulate most warmly on his appointment, because he has become ministerially responsible for the large smallholding estates in my constituency. He knows only too well that ministerially he owns a large number of what used to be smallholdings but which have been amalgamated over the years. There are now fewer opportunities for youngsters, and those who tend to remain, regrettably, get older. There is less and less opportunity to rent farms elsewhere or even to buy them. The so-called farming ladder that we heard so much of in the past has now largely—if not entirely—disappeared.
I am delighted by the appointment of my right hon. Friend the Minister. I am sorry that he is not present at the moment, but as the Parliamentary Secretary is here I shall address my remarks to him. The Minister is now safely in the Tory craft sailing down the mainstream of modern political thinking, but every time he utters a cry of import substitution or self-sufficiency his hand on the tiller inches the Tory craft a little out of the mainstream. Those of us who were concerned in the argument a few weeks ago made great play, and rightly so, of the freedom of choice, the freedom of the British to have money in their pockets to spend as they wish.
An essential condition of any import must be that somewhere in the country there is one consumer who would like the freedom to choose that import rather than something home-produced. Self-sufficiency, or import substitution, if induced by State control—that is essentially what the debate is about—must be an attack upon that freedom of choice. We should think more carefully about imports. We speak of them as if they are missiles being hurled at us by a hostile enemy or as a disease or virus which we must repel. It is felt that we should take action to safeguard ourselves against imports. That is the language of extreme protectionism, and it is dangerous. It will impoverish the people of this country. What is worse, it will impoverish people abroad.
We have already discussed the shutting out of agricultural exports from New Zealand and Australia. Many farmers in those countries have gone out of business. 820 Some of us were shattered when the Prime Minister of Australia said to an audience in London not many months ago that one-third of the dairy farmers in his country had been driven out of business as a direct result of the CAP. They were good and efficient farmers who were able to produce dairy products many times more efficiently and cheaply than any farmer on the Continent and, regrettably, sometimes more efficiently than our own dairy producers.
When supporters of the CAP say that those who are criticis of the policy should not refer to world prices because they relate only to a small quantity of world surpluses, they are using a dishonest argument. The world market in those surpluses has been wilfully narrowed because so many good and efficient farmers have been driven out of business. If that had not been done by the CAP, the needs of the world market would have been supplied at a price infinitely less than the one we pay now—perhaps even less than the price quoted by the right hon. Member for Battersea, North (Mr. Jay). However, Australians, New Zealanders and Canadians are able to look after themselves—they are not poor.
I should like to refer to the effect upon the Third world of the CAP. According to the figures published by the EEC, 49 per cent.—half, for the sake of simplicity—of imports come from developing countries. If we are to further the policy of import substitution and increase the level of self-sufficiency, it is self-evident that those countries will be gravely affected.
The Library was good enough to get me the most up-to-date figures published by EEC sources. They are of the utmost importance. Every time we speak glibly of reducing food imports, seeing it as a desirable objective, we should pause and consider the effects of such a policy upon the poorer countries. I understood my right hon. Friend to say that he proposed to save £350 million on imports as a result of his proposals today. That is a lot of money to the Third world, especially to a few countries which are heavily dependent upon some access to this country for their produce. Of course, that access is already limited. Those countries are already bitter about the way that import levies work and about the import duties which are added to the existing barriers to their trade with us.
821 It is wrong to argue, as some do, that these countries are concerned only about tropical products, about items which do not compete with our own. The figures that the Library was good enough to provide show that that is wrong. They show that 47 per cent. of our imported beef comes from Third world countries. That is worth £171 million to those countries. If we were to become self-sufficient in beef, therefore, as some of my colleagues would argue we should, it must follow that developing countries—and thre are only two or three primarily responsible for this trade—would lose foreign exchange worth £171 million which, presumably, they spend mainly in this country.
The figures show that 33 per cent. of our fish imports, worth £257 million, comes from developing countries. In all, 29 per cent. of our imported cereals, worth £394 million, comes from developing countries. Much of the rice that we buy is grown within the Community, but 47 per cent. of our rice imports, worth £58 million, comes from developing countries. No less than 52 per cent. of our fresh fruit and vegetable imports, worth £637 million, comes from developing countries.
I hope that I am not being tedious about this, but I submit that this is an essential argument in considering a policy of self-sufficiency, a policy which means refusing entry to this country of food produced by countries whose peoples are so poor that they are almost totally dependent upon that kind of foreign exchange to increase their living standards. The figures show that 42 per cent. of our processed fruit and vegetable imports, worth £272 million, comes from developing countries. The final figure concerns fats and oils, and it is the most startling of all. It shows that 46 per cent. of our imports of these commodities comes from developing countries and that those imports are worth £1,297 million.
We have heard a great deal about the butter mountain and the way in which butter circulates round Europe, moving back and forth between East and West, and how Communists make millions of pounds in the process. We can laugh about it, but it is not quite such a laughing matter when one of the purposes of expanding butter production is to displace the imports of fats and oils from 822 Third world countries—imports that are of great importance to them.
I remind hon. Members that we are talking here about the future of very poor people who are much poorer now as a result of the impact of the common agricultural policy. I therefore ask my hon. Friend the Parliamentary Secretary to make inquiries about how these Third world countries will be affected by a policy of increased import substitution. Are we going to displace imports from Australia and New Zealand only, or will we displace imports from Third world countries?
The countries in question are not just in Africa. They are located also in politically explosive areas. It is no good our wringing our hands when we hear of the advance of dictators, of Marxism and all the rest in those countries when we are doing so much to drag those countries down, when over the years we have afforded them ever less access to our markets.
Two countries in particular that have been savagely affected by the CAP policies are Uruguay and Argentina, both of which used to ship considerable quantities of beef and wheat to us. That was cheap food for millions of people in this country. Both those countries have been seriously undermined politically as a result of our selfish attitude in terms of trade.
There is another aspect of the Third world which relates to the devaluation of the green pound. All of us who are concerned with agriculture and who represent agricultural constituencies are glad to see any devaluation of the green pound, but it seems that this will add to the costs of supporting agriculture in the EEC. It will be a further item in the FEOGA budget. The whole purpose of devaluing the green pound is to stimulate more production in this country, and that will be fine and wholly justified. But if, at the same time, that is not accompanied by a reduction in the amount of food being produced in the rest of the EEC, it must follow that surpluses, will be greater, not less, and that those surpluses will have to be dumped on the world market to a greater extent than in the past.
Every act of dumping is an item added to the FEOGA budget. A little dumping 823 can be done quite cheaply, but the more one resorts to dumping the more expensive it becomes and the more one depresses world prices. The more world prices go down the more one has to resort to dumping or, in plain terms, the more one has to subsidise one's exports for them to find a place in the diminishing world markets. It seems obvious, therefore, that in the first place, as a result of a devaluation, there will be the risk of increasing the amount of money we spend on export restitution.
In that context, I think it worth while to make one comment about the television broadcast which some of us saw last night, when it was made pretty plain that probably one-quarter of the amount of money going out on export restitution goes not to farmers but to those merely dealing in food—who are fiddling with it. One is sorry to have to add that some of the worst fiddlers are some of the largest companies in the food business, companies with expert knowledge about how to manipulate the market, how to manoeuvre themselves round the corridors in Brussels and how to exploit the system.
Some of these dealers have been making a great deal of money in the past few years as a result of the export restitution system, whereas that money should be going to support farmers. It is outrageous that as much as £1,000 million should be going to the dealers in food rather than to the producers.
The other consequence of this dumping is the effect on Third world countries. Even as things are, they are finding it more and more difficult to export their own surpluses of food upon which they are so heavily dependent for foreign exchange. If world food markets are dislocated even further by the export restitutions and the EEC's dumping policy, there will be even greater poverty among Third world farmers who are trying to hold on to such access to the world markets as they now have.
We should always remember the example of sugar 10 years ago when, because—or largely because—of what the French and others in the EEC were doing in dumping sugar on the world market, the price fell at one point to only £13 a tonne, and for quite a long period to £17 824 a tonne, which was just half the cost of producing it even in the most efficient Community countries. This caused a degree of poverty and bitterness in countries such as Jamaica which will not be eradicated for many years. It was dumping that caused the world price to become so utterly unrealistic and to fall as low as it did.
It may sometimes be thought that dumping does not do much harm except to developed countries. In fact, the real mischief is in the poorest countries of all, some of which have become very poor and bitter as a result of the dumping policies of the EEC in recent years.
I hope therefore that, whenever he again refers to import substitution and a policy of self-sufficiency, my right hon. Friend will have regard to the effect that it must have upon millions of the human race who are desperately poor and who, over the past 20 years, have been able to have ever less access to the markets of the developed countries and especially the markets of the EEC.
It is not good enough to say that these people are going hungry and therefore it is wrong for us to take their food. They are going hungry because they cannot afford to buy the food. It is wrong—the figures have been gone through over and over again to substantiate this—to say that there need be any shortage of food in the world. The United States Department of Agriculture published the essential statistics not long ago that only 44 per cent. of the arable land of the world was now being cultivated. We could at any one time double the amount of land capable of growing arable crops. I take, for example, Sudan, a country where there is a great deal of poverty. Only one-tenth of the arable land of Sudan is under cultivation at present.
There need be no shortage of food in the world. All that there is is desperate poverty which prevents millions of people from being able to buy food from those who are willing to produce it, and they will continue to be poor and unable to buy it so long as we continue to be as selfish as we are in refusing to give them a reasonable share of our market so that they may get on to the launching pad and be able in the future, one hopes, to attain a more reasonable measure of prosperity.
§ 2.6 p.m.
§ Mr. Wm. Ross (Londonderry)
At the outset, I declare an interest since I also am a farmer—the second, I believe, to speak from these Opposition Benches. When, as a farmer, I look at the present situation in agriculture, with costs steadily increasing, margins diminishing and, as has been said, capital vanishing, I am concerned about the future.
Yesterday, at the lunch table, one of the new hon. Members remarked to me that he thought that the National Farmers' Union had a very powerful lobby, and the reason that he gave was that he had heard from it about problems which it saw coming two years hence. I reflected upon what the hon. Member said and came to the conclusion that if both Front Benches had had their thoughts projected that far ahead we might well have escaped some of the problems which farmers have had to face in the past.
In his opening speech today, the new Minister of Agriculture—I congratulate him on his elevation to the Front Bench once again—talked about the high level of farmers' debt and, if I understood him aright, he gave that debt in actual figures. A few minutes later, however, he gave further figures in real terms. I suggest that it would be helpful not only to the House but to the country at large if figures given in a single speech were given in the same terms so that we might have some solid basis for comparison rather than an effort to make party-political points. This has been a serious debate today. It has escaped a good deal of the slapstick which we often witness in debates on agriculture, but it was, I feel, to some extent demeaned by such a mixture of figures.
Having made that general comment, I shall speak for a few moments on the special position and difficulties of Northern Ireland, where the United Kingdom has its only land frontier. I express my thanks not only to the Minister and the new Government in general but to the Secretary of State for Northern Ireland in particular for continuing with the special aids which have been found necessary because that border is not properly controlled. This is a matter to which I hope to return later.
Some years ago—there has already been considerable reference to this—the House 826 was presented with the White Paper "Food from Our Own Resources", a document prepared at a time when, apparently, food was in short supply and, despite what the hon. Member for Holland with Boston (Mr. Body) has just said, it was feared that the problem of short supply of major food commodities would be with us for all time.
More recently, we had a further White Paper, "Farming and the Nation", and I confess to being rather sorry that we have not yet had a debate which enabled us to discuss the differing approaches evident in those two documents. The differences were significant and I am sorry that the House has not had an opportunity to compare them.
Perhaps we shall shortly be confronted with a third White Paper from the present Administration. If so, the House will have an opportunity to examine in depth the different philosophies and differing circumstances of different times as well as the basic difference in the philosophies between the two Front Benches.
A question that has escaped the attention that it deserves is where farming is expected to go and what is expected of it. Farmers do not really know what the Government or the Opposition want. The right hon. Member for Deptford (Mr. Silkin) recently criticised self-sufficiency at any cost. Anyone who considers the matter at all must agree with him. However, the Minister was talking about seeking self-sufficiency where it does not now exist and apparently seeking some sort of surplus within the EEC that could be used as a food reserve for the world. Later the Minister referred to the difficulties that the Government fear about the cost of such a scheme. I am not too sure that policies have been properly matched in a way that will be intelligible to the House, never mind the farmers.
I should like to know what the limitations of production costs will be and what British farmers are expected to produce. Even if we decide that a small surplus is desirable, surely the increasing efficiency of farmers in the EEC and on the Continent of Europe, who are still, I understand, far behind British farmers, will continue to create problems. Such problems have existed for many years in the United States. I do not think that any 827 hon. Member would say that the United States had solved those problems.
We are wrong in our thinking because the United Kingdom has moved from being an area permanently in food deficit to one which is in food surplus. We refuse to confess to the farming community what that move must inevitably mean to it in the long run.
The problems of British farming are deep-seated and will not be solved by fiddling about with the system. We have already had 5 per cent. devaluation of the green pound. I understand that we shall get another 5 per cent. That will take us through this year. The same system will take us through next year, even with the condition of the price freeze. That will continue until the green pound is in line. I hope that someone from the Treasury Bench will tell us what will happen then. That position will be reached in two years' time. Are the Government or the Opposition in a position to forecast or to seek answers for two years ahead in the same way as the British farmers?
Yesterday, during Question Time, I questioned the Minister about the problems that will arise in pig and poultry production as a result of the decrease in the value of the green pound. It is a matter parochial to Ulster, which has to import 70 or 80 per cent. of its grain. Small farmers in Ulster, like small farmers throughout the United Kingdom, have as their mainstay pig and poultry production. Some hon. Members have drawn attention to the 1 per cent. increase of food, while others have said that the 1 per cent. is concentrated on specific food items.
I draw attention to the difficulty that will arise for the small fanner, the highly intensive farmer, in the pig and poultry business. Many of his problems will come home to roost with the increased price of grain. A great deal of the burden of food production will be concentrated on the small farmer engaged in those activities.
The French always seem to be able to solve their problems much better than anyone else. I think that they are able to do so merely by being bloody-minded. They solved their pigmeat problem by a special devaluation two years running. 828 The Minister tells us that he intends to do the same. Surely it was made clear to the French that they would not get away with it again.
If that is so, is it not wrong for the Minister to indicate that he thinks that he can obtain a special devaluation? What reason does the right hon. Gentleman have for believing that he will get an extra devaluation? I shall be delighted if he gets it because it will solve many of the problems in Northern Ireland and, no doubt, in many parts of the rest of the United Kingdom. It would change the price ratio to the advantage of pig and poultry producers. However, will the Minister get it? I personally doubt it. I want the Government to bear in mind the problem that will exist for pig and poultry producers in Northern Ireland.
The hon. Member for Bradford, South (Mr. Torney) referred to a programme that was shown last night on television—unfortunately I missed it—dealing with the movement of pigs across the border between Eire and Ulster three times a day. I felt like saying "Only three times a day?" bearing in mind the stories that we hear. I am sorry that the hon. Gentleman is no longer in the Chamber. He made the case that I and other Ulster Members have so often made, namely, that many problems in Northern Ireland, including those in agriculture and terrorism, stem from the lack of control of the border.
If we have converted the hon. Gentleman to that point of view, it was well worth a programme appearing on television showing pigs going backwards and forwards across the border. We have been aware of the problem for many years. Where pigs can travel, so can dangerous terrorists, the results of whose activities are not necessarily solved by money. They can travel across the border and do a great deal more damage.
It has been said that the milk problem towers above all others. Undoubtedly United Kingdom farmers will suffer because, with their larger cow numbers, they will be caught by the co-responsibility levy. Other nations and small producers in northern nations will escape. However, they will escape only for the moment. In the long term there is no escape for that type of farmer. Do not the mechanics 829 of the modern farming industry mean that the steady increase of size that we have seen in this country, and which I have seen in my Province, will continue as mechanisation continues, deepens and becomes more efficient across the whole spectrum of farming?
Is not the small farmer being quietly squeezed out of business? If he is, are we sure that the definition of the small farmer in terms of his production is correct? Are we sure that the definition used by the EEC is correct? Have Ministers and Opposition spokesmen put to the other nations in Europe our criterion that is based on man days? That provides a far better definition of what is or is not a viable farm.
We have tried to solve the problem of the overproduction of milk in Britain and elsewhere in the EEC by keeping farmers out of dairying. The national dairy herd in the United Kingdom decreases annually by about 1½ per cent. Unfortunately, the farmers who continue to maintain dairy herds increase their number of cows by the same percentage. On top of that, the cows which remain, or which are brought in, are better cows. Even with cow numbers remaining the same, our total milk production is inevitably increasing. There is no point in denying that fact. We should ask whether what is being done is being done at the cheapest possible rate. That would open a large area of dispute. I do not propose to go into it today.
Another matter was brought to my attention recently. I refer to Statutory Instrument No. 600 of 1979, the Milk (Northern Ireland) (Amendment) Order 1979. It is interesting. I read it and wondered what it meant. Having inquired, I was told that it related to the distribution costs of milk in Northern Ireland and that it would increase the trade margin on the distribution of milk in Northern Ireland by 23p per gallon. That is an astonishing sum, especially as the current trade margin is 45p per gallon. That is an increase of over 50 per cent. Looking at the matter more closely, we find it means that the trade margin is now 68p per gallon on distribution in Northern Ireland. That is set against the total cost to the housewife of £1.02 per gallon. Those figures are subject to alteration. It is time for an inquiry into changes that could be 830 made to bring about a more reasonable level of cost in the manufacture and distribution of the pint of milk on the doorstep.
Far too many people believe that the way to get rid of the milk surplus is to have more beef cows. The trouble is that beef cows are not profitable animals. I know; I kept them. I never made much money out of them. Nor did anyone else.
We were told the numbers of cows to be raised on marginal and hill land. I wonder whether that figure can be accurate if we put cost restrictions—as we must—upon what the finished beef animal is worth. At the end of the day, it comes down to what the 10 cwt bullock is worth in the fatstock market. The trouble is that he is not worth enough to pay for his mother, his milk and his keep.
We may try to solve the problem in many ways. We may argue about it. We may put up smokescreens. However, at the end of the day, if the Government are to shift many people from milking cows to keeping calves on the hills, or even in the lowlands, it will cost the Exchequer much money in subsidies. Those are the hard facts. There is no other way. If farmers keep sheep, exactly the same facts apply unless we are prepared to pay French prices for lamb.
Under the common agricultural policy, either national interests must be subordinated to the interests of the EEC or we must defend our own interests. If they are defended to the extent necessary, there will very soon be no CAP. If we defend the interests of the CAP, there may soon be much less United Kingdom farming.
I believe that we should have debated the White Paper. To some extent, this is the wrong debate. If we are to debate agriculture in the United Kingdom, we should consider a far longer term than the eight or nine months of the EEC farm year that are left. I want to discuss the future of Northern Ireland farming, but before we do so I want to find out what the Government want.
§ 2.24 p.m.
§ Rev. Ian Paisley (Antrim, North)
I congratulate those hon. Members who have made their maiden speeches. I 831 congratulate also the Minister on being appointed to his task. I should like on behalf of many people in Northern Ireland to pay tribute to the work done by the former Minister of Agriculture, who was held in high repute by the people of Northern Ireland as a man who was prepared to fight for the interests of the British people. His work in Brussels was deeply appreciated by many people in Northern Ireland.
I want to deal with the subject of the debate purely on a Northern Ireland basis. Parliament and the country should remember that there is still a deep divide in this nation on the value of the Common Market. It is all very well for Members of Parliament to make pleas that we should unite and back our interests in the Common Market. If our people had an opportunity today to make a decision, they would record a "No" against our continuing membership of the Common Market. The recent deplorable attendance at the polls, especially on this side of the water, indicated the deep feeling at the heart of the nation. Although this debate is not on that subject, that fact needs to be underlined.
In continuing the negotiations with the EEC, the Minister must keep in mind the special position of Northern Ireland, which is the only part of the United Kingdom which depends largely on agriculture. Agriculture is the largest industry in Northern Ireland, together with the ancillary industries which flow from it. That makes Northern Ireland vulnerable to decisions which may be cushioned in other parts of the nation but which act harshly against the farming community in the Province.
Farming is at the heart of the Province. I asked a question in the previous Parliament about how many of our farms had gone out of business since we joined the Common Market. I received the staggering answer that 10 per cent. of farming businesses—3,500—had gone out of existence. They did not all go out of existence simply as a result of our Common Market membership, but they were pressed as a result of that membership to do so. We in Northern Ireland cannot afford to allow any more farm businesses to go out of existence, because we are dogged with the worst unemployment problem in the United Kingdom.
832 I was amazed to read that the other members of the Common Market had 16.3 million farms in 1961. The figure is now 8.4 million. There has been a rapid decrease of farms on the Continent. However, we in Northern Ireland have nothing to offer those who leave the land. We have no industries in which to employ them. Therefore, it is essential that farming should be protected.
We in Northern Ireland have a further difficulty. We have a 300-mile border with the Republic, which is also a member of the Common Market. The farming community in the Republic is reaping vast benefits from Common Market membership. The farmers in the Republic have become an elite. There is a serious confrontation between trade unions and the farming community on the special benefits to farmers flowing directly from membership of the EEC. However, the Government of the Republic are not prepared to discuss the fair allocation of taxes to the farming community. Farmers in the Republic occupy a special place. They compete with and win against the farmers of Northern Ireland.
There is also the problem of smuggling. There is the rapid dismantling of our meat processing industry. I welcome the fact that the Secretary of State for Northern Ireland is prepared to help that industry. Anyone with knowledge of the meat processing industry in Northern Ireland realises how acute the shortage will be, with some meat processing firms going out of existence. That again puts people on the dole and adds to the cancer of unemployment that is so rife in our community.
The Republic pays into the Common Market about £68 million annually, and gets out about £400 million. In the light of that, one is aware of the inequality of the whole arrangement. In relation to Great Britain, we in Northern Ireland are not merely on the periphery. We are on the periphery of the periphery. We are feeling the squeeze very greatly.
The hon. Member for Londonderry (Mr. Ross) referred to the milk marketing margins. The House may not be aware of the fact that a constituent of mine, who is the owner of the Rathkenny creamery, decided that he could put milk on the market at a reasonable price. The milk marketing board said 833 "No, you will not do it". He went ahead and was able to sell milk to the schools, to the big wholesalers, to the consumers, and so on, at a cheaper price than that of the milk marketing board. He now tells me that the milk marketing board has gone to the Ministry and that, as a result, the Ministry is stepping in to keep the price of milk high.
Here we have the Ministry in Northern Ireland saying "We shall keep the prices up". This man has been able to take milk from the farmer, sell it and make a profit. As a result, the milk marketing board has intervened in the manner that I have described. This is a serious matter, and I hope that the Minister concerned will investigate it and make a statement about it. Why cannot the milk marketing board process milk at the same price as that at which my constituent can do it? It has far more capability of doing so and is in a far better position to do it.
I should like to go to the root of the matter and mention how this situation arose. In so doing I want to deal with surpluses. It has been said that these are a good guarantee to the consumer because they will help to keep the price down. But that is possible only if the surpluses are on the market, and these surpluses are not. They are there because of the price that is being asked. They cannot be purchased, therefore they are put into intervention. We ought to look at this matter very carefully indeed.
In Northern Ireland we have had a dairy industry with a certain degree of prosperity, but when the tight clamp comes down on over-production our dairy farmers will be put in great jeopardy. It would be all very well—and here I agree with the Liberal spokesman, the hon. Member for Cardigan (Mr. Howells)—if we could take the surpluses and give them to the people who are in need in our own country, but the hon. Gentleman knows very well that the Common Market will do no such thing with these surpluses. It will do what it has always done with them.
The CAP is, in my opinion, the foundation of the whole Common Market, because the greater part of the budget of the Common Market relates to the CAP. Today, even those who are pro-Market 834 are finding that the foundations are wrong. The hon. Member for Tiverton (Mr. Maxwell-Hyslop) said whatever could be said about the CAP at the beginning of its life, but no one could justify it today. Even the most ardent Common Marketeer would not try to justify what is happening today with the surpluses.
In Northern Ireland we also have difficulties concerning our fishing industry. I was very alarmed, when I was in Kilkeel recently, to see a large boat, which cost about £1 million, tied up and not in use. I said to its owner "Why is this boat not in use?" He said "Because of the quota system we are not able to go to the fishing grounds off Cornwall and fish, yet today there are Dutch boats fishing in those very grounds. The reason why they are there is that if action were taken against them they would go to the Court against the British Government. So, while I am tied up, these Dutch vessels are fishing in the grounds in which I, as a British subject, should be allowed to fish."
The fishing industry in Northern Ireland is suffering, as is the fish processing industry. There is pressure on our sea towns because of lack of supplies, and we are running into great difficulties. Northern Ireland fishermen have said to me "We look on the flag of these other EEC countries as a pirate flag. It might as well be the skull and crossbones, because they can do the things that we are not permitted to do." This arrangement cannot be right. This country must safeguard its own fishing grounds for its own fishermen. That should be the primary principle to be followed in any negotiations.
The Liberal spokesman also mentioned part-time farmers. We have them in Northern Ireland, and they have been connected with farming for generations. Unfortunately, because of the advancement of farming and amalgamations, they have had to take other jobs to eke out a living. They have made a valuable contribution to the community, and it would be terrible to see them pushed out.
We have a problem also with our part-time fishermen. Because of the time of the season when they do their drift net fishing, these men are part-timers. They have other employment as well, but they now stand in jeopardy because of the rules and regulations coming from 835 Brussels. In Northern Ireland, already an area of terrible unemployment, there are now pressures upon us as a result of these rules and regulations which are pushing farmers and fishermen into unemployment. All the ancillary industries flowing from agriculture and fishing will also be affected.
§ Mr. A. P. Costain (Folkestone and Hythe)
We in Folkestone and Hythe are much nearer to the Common Market than are the people of Northern Ireland, and we have the problem of part-time fishermen. These are English people who are fishing part-time, almost as a hobby. The fishermen in my constituency resent this. It has nothing to do with the Common Market. Is there not a similar position in Northern Ireland?
§ Rev. Ian Paisley
No, it is not a hobby for our part-time fishermen, but a livelihood. They need this money in order to eke out their existence. They have always done it. Their jobs do not bring in enough money. For generations these people have been involved in fishing. They are not simply making a hobby of it. I would understand the fishermen of the hon. Gentleman's constituency objecting to people who are simply making a hobby of it and taking away their livelihood. That is not the case around Kilkeel, Portrush and in other areas.
Across the border the farming and fishing communities have an advantage because of EEC rules and regulations. Therefore, Northern Ireland is under very severe pressure. I hope that when the Minister conducts his negotiations he will do what previous Ministers have done, namely, take with him the Northern Ireland Minister responsible for agriculture so that the voice of Northern Ireland can be raised in support of Northern Ireland, because it needs special consideration.
A far better solution would be for us to keep the large amount that we pay into the Common Market and divide it among ourselves by our own decisions rather than have it spent by the Common Market in helping others to the disadvantage of our own citizens.
§ 2.41 p.m.
§ Mr. Gerard Fitt (Belfast, West)
I immediately lay claim to being the most 836 ignorant Member in the House concerning agriculture. However, I also lay claim to being closely in touch with the needs and aspirations of my constituents.
Throughout the past two months, having been engaged in the Westminster elections and in supporting a colleague for election to the European Parliament, I can say that the one subject repeatedly raised by all those to whom I spoke was the common agricultural policy. There is bitter resentment in my constituency about the CAP. I speak today as the representative of Belfast, West, which has the highest unemployment, the worst housing and greatest social deprivation of any constituency within not only the United Kingdom but western Europe.
There are 20,000 unemployed in my constituency living on social security benefits. There is no hope for any of those people finding employment in the near future in view of the slashing cuts announced by the Government this week. Indeed, many more may become unemployed.
Many people in my constituency are in receipt of unemployment benefit, invalidity benefit, supplementary benefit and so on. I am not certain who assesses the needs of families in such circumstances, but I am certain that no provision is made in any allotment for the best cuts of steak or pork. During the recent election campaign I asked hundreds of my constituents "Do you eat steak or the best cuts of pork during the week?" The answer was, no; they have to buy the cheaper cuts of meat. Therefore, it is on their behalf that I voice my bitter objection to the operation of the CAP.
The right hon. Member for Sidcup (Mr. Heath) said that he had reservations about the number of Conservative Members who had been returned to the European Parliament because it might bring opposition from this side of the House to the whole concept of European identity. The right hon. Gentleman was quite right. There is bitter resentment among the working classes in my constituency. I am sure that I speak also for the working classes in all industrial cities throughout the United Kingdom. Unless immediate steps are taken within the next three months—not next year or the year after—to bring about reform of the CAP and to initiate a price freeze, there will 837 be even more resentment. There must be a price freeze. No increase in food prices can be tolerated. I am sure that this is the feeling of all unemployed throughout the United Kingdom.
Almost weekly on television current affairs programmes we see the enormity of the swindles. They should not be tolerated. The Common Market can take only punitive action against the countries engaged in these swindles. I know from inside sources that the countries in which these swindles are taking place are refusing to take action against those engaged in the massive swindle of EEC funds.
The British public have been asked to accept this position. As has been said, article 39 of the Treaty states that there should be reasonable prices and guaranteed quantities. We have neither at the moment. The prices of food throughout the United Kingdom are not reasonable. We have the quantities, but they are not for use on the market. They are being stored throughout the countries of the Common Market.
The surplus milk that is dried, put into bags, dumped and fed to animals would be most acceptable to schoolchildren in my constituency whose parents are in receipt of sickness or supplementary benefit. Whatever the dictates of the Common Market, it is up to the Government to have the social conscience to tell their partners in the EEC that they will not tolerate the storing and dumping of food surpluses.
The cheap food policy has been a pattern of British life throughout many centuries. I support it. I see no reason why we should depart from it. We should have a cheap food policy.
Reference was made earlier to underdeveloped countries exporting food, which we imported, and those imports now being stopped because of EEC restrictions. Poor people in those countries cannot export the food and poor people in my constituency cannot afford to buy food because of the present high prices. We are going round and round in this vicious circle.
However reluctant the Minister of Agriculture may be, he must make it clear that this country cannot go on accepting the dictates of the Common Market. The price of food in this country is far too 838 high. It is no exaggeration to say that if people cannot afford to buy the right kind of food protein, it will in the long run have an adverse effect on their health. Many youngsters in my constituency are not getting the protein which they should have. Yet this is supposed to be one of the most highly developed countries in the world.
The fact that cuts of £35 million are to be made in Northern Ireland, allied to the present prices of food and the proposed increases, will lead to a disastrous situation in constituencies throughout the United Kingdom. We are told that food has always been expensive in Common Market countries. The problem is that we now have Continental prices for food, but we do not have Continental wages or social security benefits. In the long run, it is the poor, the underprivileged and the socially deprived throughout the United Kingdom who will suffer because of the structures within the EEC.
As a Socialist and a representative of the working class, I have bitter objections to the obscene butter mountains and surpluses in the EEC. They run contrary to everything in which I believe. There are millions of starving people throughout the world and most agricultural land is not being used. If we are sincere in saying that we want to improve the conditions in which our people live, we have to take a stand against our European partners and tell them "Thus far and no further".
§ 2.50 p.m.
§ Mr. Hugh Dykes (Harrow, East)
The House will have listened with great care and interest to the last three speakers, all of whom are from Northern Ireland. We sympathise with them and, if I may say so without embarrassing the hon. Member for Belfast, West (Mr. Fitt), I certainly sympathise with the chronic economic problems in Belfast and particularly in his constituency. He is right to continue to remind us of the 20,000 unemployed in his constituency.
However, although the hon. Gentleman would not agree, I believe that he was unwittingly constructing the case and the general argument for our membership of the EEC in the wider economic sense, as well as in the political and social sense. The hon. Gentleman knows, although he did not admit it, that the 839 CAP is only a marginal matter in comparison with the chronic social and economic problems in his constituency and other parts of Northern Ireland.
Those matters must be dealt with, above all, by internal, domestic United Kingdom economic and social policies which will create a better future for those who have substantially lost hope in Northern Ireland and elsewhere.
The Common Market can also assist in the wider economic and social sense if we are more enthusiastic and positive about our membership than we have been in recent years. The EEC can help in the general development of greater prosperity in all the areas of the Community. That is what the principle of redistribution in the Common Market is all about. The social fund, the regional fund and other instruments are intended to help deprived areas in the United Kingdom and in other member States.
§ Mr. Dykes
There is developing pressure on our time. We have just had 45 minutes on Northern Ireland alone.
The help that can be given by the EEC should be taken on board by those who continually trot out depressing scepticism about our membership. It is interesting to relate the political conclusion that has to be repeated time and again that the Conservative Party's reputation as a pro-European party did us no harm in the general election. Electors also demand optimism from politicians, and when the optimistic arguments in relation to the EEC are put forward our people see the logic and overriding common sense of them and of membership.
This debate must concentrate on agricultural matters, but it is important to see it against the general background of the EEC because there are a number of indictments against the former Minister of Agriculture. It was depressing to hear him say at the end of his speech that he was proud to be called the thug of Europe. The right hon. Gentleman did a great disservice to the general 840 proposition of EEC membership and to the progress and success of the agricultural policy. It sounds ironic, but it is a fact.
When the right hon. Gentleman was responsible for tackling the complicated problems of the CAP on behalf of the United Kingdom, we had nothing but rhetoric and high-flown and aggressive noises. There was precious little by way of positive results. That is why the new Government have inherited a heap of chronic problems connected with the CAP. Some of the problems seem to verge on the insoluble, though I hope that that will not be the case. It is long overdue that the problems should be dealt with, and the Government are right in their sagaciously drafted motion to support the European Commission's bold attempts to start doing something about the CAP. It is no contradiction to say that one can be an enthusiastic arguer for our membership of the EEC and all it stands for as well as being disturbed by some aspects of the CAP.
Apart from the rhetoric of the former Minister and his pride in being called the thug of Europe—what a depressing title—nothing was achieved apart from the first devaluation of the green pound and some small details in certain negotiations. Little was achieved in relation to the commanding heights of the CAP where reform is long overdue.
I congratulate the new Minister on his appointment and on his excellent and positive speech, which will create a new atmosphere and a tremendous change of attitude with a much more positive reaction among our fellow members in the EEC. The House should join me in those congratulations. We must now proceed to tackle some of the problems.
The documents before us are so enormous that it is difficult to go into detail about them, but the Commission's proposals, which I support deserve the full support of the House, with the exception of the co-responsibility levy and the proposals on milk, which are difficult for this country and will have to be discussed again.
It seems that the first negotiations in the Council of Agriculture Ministers next week will succeed in fixing the 5 per cent. devaluation in the green pound which has already been agreed. There should be no problem about the final 841 assent and I hope that the Community will also agree on the Commission's other proposals. They are long overdue.
Those proposals were delayed by the obscurantism and obduracy of the former Minister, who achieved nothing by way of substantial progress. All he did was to earn the repeated and unthinking plaudits of his party. That may have had some effect on the vote for the Shadow Cabinet. The right hon. Gentleman's reward is to be spared the agonies of dealing with the CAP on behalf of the Opposition. He is to go on to something else, and I hope that he will learn rapidly about industry.
It was a pity that the right hon. Gentleman's rhetoric was a substitute for real suggestions. The most important and pressing need in the CAP is to go ahead with the incipient devaluation of the green pound and the essential concomitant adjustment of all the other green currencies in the Community.
I agree that it is intolerable that the Germans should have a 36 per cent. or 37 per cent. subsidy for their agricultural exports to this country. That is essentially a currency distortion and has nothing to do with real food prices. It is intolerable that that process should continue and adversely affect imports from the Third world. That must be corrected. But if Labour Members agree with me they cannot rabbit on about the effects of food prices at the margin in terms of an inflationary increase.
If the differences in the green currencies are to be phased out over a long period—we suggest over the whole of a Parliament—and the first effect is an increase of ¼ per cent. in the RPI, that must be accepted because if the distortions in the policy continue they will add to the chronic and artificial developing surpluses that arise not intrinsically from real food price relativities but from gross currency distortions. Fortunately, we can now also do it because in net terms the MCAs are smaller as a result of the recovery in the pound.
There are various other aspects of the CAP that must be tackled as well. Some of them are referred to in the detailed documents, but one of them is not, namely, the general proposition that the mechanics of the intervention system must in future be reconstructed and operated much more efficiently and flexibly. In 842 terms of the actual intervention prices fixed, I hope that we will be able to consider the possibility of price reductions next year in certain of the key basic managed products, if that is justified on all the relativities and the conditions of farmers in the different member States.
These things can be done and must be done. The Government have revealed their initial determination to do them. I hope, therefore, that they will have the support of the new Shadow spokesman on agriculture when the rest of the policy flows.
§ 3 p.m.
§ Mr. Nigel Spearing (Newham, South)
The hon. Member for Harrow, East (Mr. Dykes) is concerned about the distortion within the Common Market agriculture system. I suggest to him that the so-called CAP is one big distortion, not only internally in respect of so-called competition but in respect of world food markets. It effectively prevents a regulation of world food supplies in the way in which so many pro-Marketeers claim the Common Market assists.
I want immediately to come to the earlier part of the hon. Gentleman's speech, where he courteously declined to give way, when he referred to the points made by my hon. Friend the Member for Belfast, West (Mr. Fitt) in relation to the economic problems of that part of Northern Ireland. The hon. Gentleman suggested that this was something which could be dealt with by national policies, although that has to be done within the straitjacket of the EEC regulations. He also suggested that we should make a success of the EEC so that economic activity could speed up, thereby helping my hon. Friend's constituency.
We all know that competition, at least in terms of manufactured goods, capital and movement of labour, is the essence of the EEC, where the stronger areas grow stronger and the weaker grow weaker. That is the philosophy behind it. Therefore, while the hon. Gentleman may be right in saying that there is a greater GNP in the area, which I happen to doubt, what he is saying is that we shall first knock between the eyes the weaker economic areas, such as those suffering unemployment and the decline of older industries, and, having knocked them to the ground, we shall pick them 843 up by the hand and say "We are very sorry, old fellow", after which we knock them down again. That is the essence of the so-called EEC regional policy. The sort of recirculation of cash which the hon. Gentleman indicated, and which some people advocate, is nothing more than giving a helping hand to someone who is initially knocked on the head. That shows not only the illogicality of that policy but the way in which it hits at the areas which are thus disadvantaged.
I hope that the fact that we have debated the EEC on consecutive Fridays will not be regarded as a precedent. These EEC debates will be very important in this Parliament, and I hope that Friday will not become the customary day for them.
I should like to make a few brief points about the CAP. The first is that it is not good for farming and small business. Conservative Members are very keen about small businesses, and Labour Members are not unkeen on them, particularly where people give a good return for money, work hard and are socially responsible in their actions. Many small farmers are, particularly family farmers—the sort referred to by the hon. Member for Antrim, North (Rev. Ian Paisley), who has now left the Chamber.
I suggest that these sorts of farms are knocked on the head by the CAP in two respects. First, the guidance fund of the CAP, about which we have not heard much today, is expressly designed to get the small farmer off the land. That is what it is all about. Theoretically it was to enable him to go into industry and so produce more goods for everyone else, but we know that it does not happen like that. It certainly cannot happen in areas where there is no adjacent industry. The example from Northern Ireland is a good one. Therefore, the guidance part of the CAP does not help that sort of farm.
What about the guarantee side? It is true that prices may go up, but, as has been mentioned by several hon. Members, it is clear that technical innovation and the degree to which, in order to keep one's farming head above water, one needs to invest heavily in capital are all the time pressing against the small business and are all the time advantaging the "agri" business—the barley barons, 844 the storers, the distributors and exporters of food and, above all, the racketeers, who are not at all legal. I suggest that the nearer one gets to the end of my list, the greater the profit. That is one of the characteristics that we are seeing. Some of us saw it in principle nearly 10 years ago and have opposed it ever since. Other hon. Members are now learning from hard experience.
The CAP does not help the Government's small businesses policy one bit. If one is to have competition between farmers over a wide area, one needs to provide not just regional aids but aids for specific geographical areas, related to the conditions in which farmers must work. Hill farming is one area which has been referred to by the hon. Members for Banff (Mr. Myles) and for Cardigan (Mr. Howells). They highlighted the problems there. Therefore, quite apart from the surplus aspect, I believe that the CAP needs wholesale rethinking.
The second aspect that I wish to underline is the degree of money spent on export refunds. In an answer to me on 25 January this year, the then Minister gave a budget figure of £2,800 million on export refunds, of which £500 million went on sugar and £1,000 million on milk products. I understand that the Dairy Trades Federation estimates that there are 4 million surplus cows in the EEC. That is a large figure. The cost of £1,000 million in exporting surplus milk products is a massive total, although the total support for milk products is £1,876 million.
The lesser figures are not unimportant. Within the EEC there is support for tobacco growing, totalling £158 million, of which Britain's share is one-fifth. That is an enormous and extraordinary amount of support for a controversial product which is not even a foodstuff. A total of £203 million is spent on support for olive oil. At least this has an advantage of being a carbohydrate for energy purposes, but it is an industry in which Britain plays no part at all.
The third item to which I shall allude is the matter of competition—something very dear to the hearts of Conservative Members. However, it does not really exist under the CAP. The Conservatives are particularly keen on competition in relation to these wicked MCAs. The 845 National Farmers' Union urges us to devalue the green pound. It claims that this will put our farmers on a par with other EEC farmers and enable them to compete.
I am glad that the Minister of Agriculture has come back into the Chamber. He will have to devote his considerable political energies to a difficult task, as he has said that he intends to ask for an additional 5 per cent. for bacon. I do not think that it will be so easy for him to get his 5 per cent. My right hon. Friend the Member for Deptford (Mr. Silkin) got 5 per cent. agreed in principle when he was a Minister, but an extra 5 per cent. will be a different matter. It will by no means be automatic. Even if it were, let us suppose that the bacon curers and processors were in a better position to compete and that the green pound was removed altogether. That still would not guarantee viability to the British bacon curing industry. Even if the Conservatives achieve devaluation of the green pound in three, four or five years—to which I am totally opposed—that will not guarantee the survival of any sector of British agriculture. In fact, it may do the reverse.
Within the Market our position is different from that of five, 10 or 20 years ago. Many farmers look back to expansion of production as a state of normality. They look back to what they regard as "normal conditions", rather as the motor manufacturers look to the past 20 years as normal conditions. But at that time there was, through the Tom Williams Act, a period of continual expansion of agricultural output. The Act enabled the farmers to expand. They reached a standard of technical efficiency which was noted throughout the world. However, they have probably reached the margin of diminishing returns. Any further expansion of production requires a more than proportionate input of capital or a more than proportionate increase in prices, the very thing that we are fighting against.
On the mainland of the EEC it is different. In technical terms, the production revolution has not yet finished its course. Indeed, some would claim, and show by the figures, that it has hardly started. Our farmers may have to think again if they think that they will compete with farmers who have different 846 social conditions, perhaps importing workers from Morocco, Yugoslavia or Turkey, workers whom they can send home and whom they can keep on relatively low wages, without their dependants and families.
Apart from the different social context of EEC farmers, there is the different climatic context. I remember telling the right hon. Member for Lowestoft (Mr. Prior) nearly 10 years ago, when we were debating the European Communities Bill, that if he thought he could impose a common price policy from Sicily to the Shetlands he had better think again because farmers further south had the advantage of more sun and might also have a longer growing season. A longer growing season and more sun constitute a natural resource against which those areas with lower temperatures, shorter growing seasons and heavier rainfall cannot compete. They are bound to lose, other thing, being equal.
Many farmers have spoken today, and no doubt many more will speak in future Even if they have their devaluation of the green pound, and even if they achieve their ideal of competition within the EEC. let them not deceive themselves that because they are noted for being efficient they will be efficient in the new competitive situation. Their efficiency, for which I pay them tribute, was achieved in the social context of a British agricultural policy, not an EEC common agricultural policy with which we are now landed.
That brings me to my final point. Any agricultural policy worthy of the name would try to minimise the difference in interests between the consumer and the producer, between individual farmers producing one sort of product and other farmers in another part of the country producing other products, between the producer, the wholesaler and the manufacturer of food products, between one region of the country and another, and, on a world scale, between one country and another. On every criterion that I have outlined the CAP does the very opposite. Therefore, it is a question not simply of reforming the CAP but of examining its very foundations and starting again from scratch.
§ 3.14 p.m.
§ Sir Anthony Meyer (Flint, West)
So eloquent, so ingenious and so persistent is the opposition of the hon. Member for Newham, South (Mr. Spearing) to everything that the EEC stands for that it almost passes credulity that under successive Governments, stretching back to that of Mr. Harold Macmillan, then the Government of the right hon. Member for Huyton (Sir H. Wilson) and now the present Government, on three occasions the British electorate has massively endorsed British membership of the EEC, on the ground that, despite all the draw-backs, it presents overwhelming advantages for the people of this country.
I am glad that my constituency engagements have made it possible for me to be here on a Friday to participate briefly in this debate on the common agricultural policy. I am particularly glad that it has given me the opportunity of hearing two outstanding maiden speeches. I congratulate the two speakers, particularly my hon. Friend the Member for Banff (Mr. Myles), who made one of the most entertaining, witty and relevant maiden speeches many of us have heard. We shall look forward to hearing his future contributions and those of my hon. Friend the Member for Gloucestershire, West (Mr. Marland).
I want to congratulate my right hon. Friend the Minister of Agriculture, who has made a most impressive start on what I am sure he recognises is probably the most difficult job in this Administration. British agriculture now has a very powerful voice in the Cabinet. We have a Minister who understands that what is good for the producer is good for the consumer, and not solely in the long run. This is true in spheres outside agriculture. It is perhaps the distinguishing mark of this Administration. My right hon. Friend has understood that and has made plain that he intends to translate his understanding into practice. He faces an extremely difficult job. In two important respects, however, his job will be easier than that of the right hon. Member for Deptford (Mr. Silkin), whom he follows in the post, now translated to other duties.
Despite the great courtesy with which he invariably addressed this House and the courtesy with which he treats hon. Members of this House, the right hon. 848 Member for Deptford succeeded in alienating all his colleagues within the EEC to such an extent that they were no longer prepared to give a fair hearing even to his most reasonable propositions. He overplayed his hand in the same way as the hon. Member for Newham, South so consistently overplays his hand.
§ Mr. Spearing
The hon. Gentleman is perfectly entitled to his view about my speeches. He is at liberty to challenge any factual references of mine and to make deductions from them, although I do not recall his doing so at any time. Is the hon. Gentleman saying that the words and propositions put forward by my right hon. Friend the Member for Deptford (Mr. Silkin) were not even listened to? If so, he may perhaps tell us how he knows, because the Council of Ministers meetings, as far as I know, are officially secret. The information I have heard is that my right hon. Friend addressed what he had to say in courteous terms, although his actual words may have been firm.
§ Sir A. Meyer
If the hon. Gentleman had been listening carefully, he would know that I never accused his right hon. Friend of discourtesy. I said that the way in which he played his hand in Europe ensured an unreadiness on the part of his colleagues seriously to consider the points of view he was putting forward, even though they were themselves inherently reasonable. That is precisely the mistake that my right hon. Friend will not make.
My right hon. Friend has a larger advantage. He is part of a Government prepared to play a constructive role within the Community. No one pretends that the application of the common agricultural policy in its present form—I am not talking about its underlying theory—is acceptable, or even that the measures now being proposed by the Commission in order to amend that policy are adequate. But the British Government have a weak band in relation to the common agricultural policy because the only weapon that we can use is the ultimate deterrent. The only weapon we can use is the threat to withdraw altogether from the operation of that policy. Anyone who supposes that we could withdraw from it and remain part of the Community is being wildly unrealistic.
849 I admit freely that the threat to withdraw from the policy would be fatally damaging because of the large quantities of foodstuffs that we import. However, that deterrent, although terrible, is not credible. It has become much less credible because of the frequency with which the right hon. Member for Deptford threatened to use it.
My right hon. Friend, on the other hand, can exploit the fact that in other fields where the British Government have many more cards to play—most notably in energy policy, where we have a great deal to contribute—the present Government, unlike their predecessors, are prepared to play a constructive role. By "constructive role" I mean a policy of giving as well as taking. Without that, there can be no useful co-operation and no constructive achievement.
With the advantage of being part of a governmental team who are playing a constructive role, my right hon. Friend may be able to secure essential British interests within the CAP. I take those essential interests to be the preservation of our dairy industry, the safeguarding of our fishery stocks for the future, and—this is not quite on the same level—some first aid for the pig industry.
In milk production, there is a direct clash between the minimum British interest and the maximum concessions which we are likely to secure, even supposing that the Commission can be stiffened in its resolve.
I acknowledge readily that it is here that my right hon. Friend will encounter severe opposition. I know that it is common wisdom to accept that there is a basic clash of interests over fishing policies. The fishing industry talks as though our vital national interest were threatened. Certainly the conservation of fish stocks is a vital national interest, but I wonder sometimes whether the fishing industry is not trying to conceal a clash in this country between the interests of the inshore fishermen and those of the deep water fishermen, and whether my right hon. Friend does not have much more room for manoeuvre than the industry sometimes likes to pretend.
At all events, my right hon. Friend has the priorities right; I am sure that he will defend the vital interests of the British fishing industry—even, if need be, at the cost of some flexibility over the details.
850 I know that my right hon. Friend is not a Euro-fanatic. Almost the first occasion that we met was when he was still some-what sceptical about the advantages of the Common Market. I confess to having been a Euro-fanatic of long standing, and we first met at a public debate in his constituency, I was speaking for, and he against, the EEC. However, he now well understands the value of the Community to this country.
My only hope is that my right hon. Friend will remain in his present uncomfortable job long enough to consolidate the reputation that he is building up as a great Minister of Agriculture and that he will not be required too soon to fulfil other and even more important duties within the Government.
§ 3.25 p.m.
§ Mr. Gavin Strang (Edinburgh, East)
We have had an interesting debate on the common agricultural policy and on the current price proposals from the Commission. This is the first time for many years—certainly it applies to the last two debates—that I can recall this type of debate being held on a Friday. Perhaps that is why the whole affair has been much more relaxed than usual.
I should like to congratulate the Minister and his colleagues on their appointments. I wish them well. However, I was a little disappointed and surprised by the abrasive remarks of the right hon. Gentleman about the Labour Government's record in agriculture. The only hon. Member to follow him in those remarks was the hon. Member for Harrow, East (Mr. Dykes). I shall reply to the charges and cirticisms against my right hon. Friend the Member for Deptford (Mr. Silkin), which I believe are wholly unfounded. The central issue with which I shall deal is the price proposals and the stance which the British Government must take in the forthcoming negotiations that will be resumed at the beginning of next week.
The right hon. Gentleman said that my right hon. Friend the Member for Deptford spent his time in office clobbering the producers to the disadvantage of British agriculture. That statement was in sharp contrast not to the remarks of my hon. Friends but to remarks made by hon. Members from the minority parties. I include the hon. Member for Antrim, 851 North (Rev. Ian Paisley), who explained to me that he could not remain in the House, for Londonderry (Mr. Ross) and for Cardigan (Mr. Howells), who spoke for the Liberal Party. All were fulsome in their praise of my right hon. Friend in his period of office at the Ministry of Agriculture, Fisheries and Food—and justifiably so.
How on earth can the right hon. Gentleman talk about clobbering producers when it was the Labour Government who rejected the Layfield committee's recommendation that agricultural land should be rated, the Labour Government who achieved the major breakthrough of allowing farmers to average their tax from year to year—something which they sought for 30 years—and the Labour Government who provided substantial tax concessions to farmers in the last Budget in terms of building capital allowances? Indeed, it was the Labour Government who fought to restore the deficiency payments scheme for beef producers.
We took over the chaos of 1974 and fought in the renegotiations to achieve a variable premium. It was my right hon. Friend who put up such a stout battle to retain the pragmatic Socialism of the milk marketing board. Therefore, it is wrong to portray the Labour Government as having been opposed to the agricultural producers in this country.
§ Mr. Geraint Howells
I am grateful to the hon. Gentleman for his praise of the achievements of the Labour Party in the past five years. Does he agree that a great deal of credit should also be given to the Liberal Party for its achievements during the 18-month agreement with the Government?
§ Mr. Strang
I do not think that I can accord a disproportionate share of the credit to the Liberal Party. However, the hon. Member for Cardigan supported the Government on their stand over the milk marketing board and rejected any idea of a laissez-faire approach to the issue.
I should like to refer to the state of the right hon. Gentleman's inheritance. Perhaps it is a natural tendency for a new Minister to wish to play down the state of the industry when he takes it over, in order to create a picture of 852 success when he leaves that Department. We have record production in milk—the major commodity—in this country and in the next major commodity—cereals—there has been record production for the past two years. Does anyone suggest that the potato industry or the hill lamb and beef producers have been in dire straits in the last two or three years?
Agriculture is in a fairly good state at the moment, with one striking exception. The pig sector is in an almost disastrous position. I certainly accept that the severe decline in that sector represents a very grave state of affairs. However, as my hon. Friend the Member for Bradford, South (Mr. Torney) pointed out, the blame cannot be attributed to my right hon. Friend the former Minister or to the Labour Government
We introduced a special subsidy for the pig industry and removed it only when we were taken to the European Court. As the Minister acknowledged, there are some matters where it is not possible for one Government alone in the Community to achieve change. It is necessary to get the full agreement of the Council. We achieved significant reductions in the pigmeat MCA, and one of the reasons perhaps why we did not achieve as much as we should have liked was that at each price fixing we had to fight to claw back something that the previous Conservative Government had lost in order to retain a certain control over our domestic agricultural affairs. The last time it was the milk marketing board, and the time before that it was the variable premium.
Because of the appreciation of sterling and the recalculation of the pigmeat MCAs coupled with devaluation of the green pound, the Minister was able to say earlier today that a double devaluation of the green pound would wipe out the pigmeat MCAs altogether. I hope that the Government will achieve a complete abolition of the pigmeat MCAs at this price fixing. That was certainly the objective of the Labour Government. I hope that the Minister will achieve it through a recalculation of the MCAs rather than through a double devaluation.
§ Mr. Peter Walker
If that was the objective of the last Government, why, 853 when the French asked for an additional devaluation for pigmeat, did not the Labour Government put in an application at the same time? They did not do so, and after the French obtained their concession the Council of Ministers decided that no one else would obtain such a concession.
§ Mr. Strang
That is a fair point and I shall answer it. Quite simply, the Labour Government were not prepared to accept the automatic commitment to the subsequent 5 per cent. devaluation which would have had to apply later to other products. The Minister knows that if he comes home from this price fixing with a 5 per cent. devaluation on all commodities but a double devaluation on pigmeat alone, he will be required to apply the extra 5 per cent. to the other commodities at the start of the ensuing marketing year at the latest. That was why on balance the Labour Government decided, out of concern for the effect on the retail price index, that we did not want to commit ourselves in advance to these increases in prices, and why we believe that the right way to achieve this was to achieve a calculation of the MCAs related to the feed costs in pig production rather than to continue the present arrangement.
We fought the isoglucose levy and are still opposed to it in principle. We shall be unable to prevent the levy completely, but we achieved a halving of the levy as it was originally proposed. I hope that the Government will continue this resistance of a proposal which is wrong in principle in that it penalises industrial innovation.
Our position on the variable premium has now been accepted thanks to the efforts of the Labour Government, but I hope that the right hon. Gentleman will seek to achieve 100 per cent. FEOGA financing of the variable premium. It should be paid for completely out of Community funds.
I listened carefully to what the Minister said about the milk levy, and I could not fault him. He said that he wanted to achieve a milk levy which applied equally to all production in the Community. We cannot criticise him on that ground. We would have preferred to see the problem tackled by the suspension of intervention in the milk sector for at least part of the year, but, having failed to 854 achieve that—and that was the Commission's preference—we hope that the new Minister will insist that the levy applies fairly throughout the Community.
A further point has not been touched on in the debate, and it appears on the fringe of the major argument that I want to develop this afternoon. It is the proposed increase in the ceiling on the guidance fund. I hope that the British Government will resist this. If we really mean business—I shall touch on the Chancellor's statement in his Budget speech—we cannot accept the proposed increase in the guidance fund, although I accept that expenditure on the guidance fund is lower than that on the guarantee sector.
I turn now to what was said by my right hon. Friend the Member for Battersea, North (Mr. Jay) and my hon. Friend the Member for Bradford, South in drawing attention to the television programme last night on the degree of fraud in the Community. I agree with them. I believe that it was British television at its best, with some really effective investigative reporting.
I suppose that all of us found the interview with the Irish farmer who had been filmed smuggling his pigs across the border somewhat endearing, but that must not deflect us from the enormity of the scandal, with so many hundreds of millions of pounds at least being wasted in this way. The central focus of the present debate and of all discussions about the CAP must now be directed to the grotesque misuse of European Community resources implicit in the common agricultural policy.
I take this opportunity now to congratulate the two hon. Members who made their maiden speeches from the Government Benches, the hon. Member for Gloucestershire, West (Mr. Marland), whose speech I unfortunately missed but whom I wish well—he certainly succeeds a very effective and able Member in John Watkinson—and also the hon. Member for Banff (Mr. Myles).
I must make the point to the hon. Member for Banff that, although I recognise that there are those who share his attitude towards the CAP, there is a great difference between a small seasonal surplus and the grotesque structural surpluses which now exist in the Community. How can we justify a situation in which 855 we in the Community are to spend about £2,500 million on the milk sector alone? That represents a waste of money. The bulk of that money, as my right hon. and hon. Friends have said, is involved in a transfer of resources to other countries, which in the past have included the Soviet Union and others which one could not describe as being most deserving in terms of their standard of living. In no sense does this massive subsidisation of exports represent food aid. On the contrary, as hon. Members, including, notably, the hon. Member for Holland with Boston (Mr. Body), have pointed out, it is detrimental to the interests of the developing world.
It is fantastic that we now have a state of affairs in which, of the estimated total Community expenditure—I mean total, including the regional fund and the social fund, not just Commission expenditure but even the small cost of the European Court—more than one-quarter will in 1979 be spent on this gigantic milk surplus.
It is crucial that the British Government stand out and insist on holding the Commission to its present proposals. That means a freeze on all common prices, and it means a reduction in the B quota for sugar. There can be no compromise here.
We are talking about something which is not just in the interests of the Community but is in the interests of this country. I recall what has been said in the past by right hon. and hon. Members now on the Government Benches, and I think particularly of the rather unfortunate speech of the right hon. and learned Member for Hexham (Mr. Rippon) after my right hon. Friend the previous Prime Minister raised this issue again in a major speech at Guildhall. But whatever hon. Members may have said in the past, I think it fair to say that the present Government have laid it on the line that they accept the stance adopted by the previous Government that we must achieve a drastic change in the state of affairs which in 1979 involves a net transfer of over £1,000 million from Britain to the Community.
The Treasury's own figures, which were repeated earlier this week in an answer to my hon. Friend the Member for Fife, Central (Mr. Hamilton) and were touched on today by my right hon. Friend 856 the Member for Battersea, North, show that the budgetary cost alone in estimated net deficit for 1979 is £780 million, and I do not think that anyone will dispute that the net increased cost as a result of the higher price that we pay for our food which we import from the Community takes the figure over £1,000 million. It is crucial to our national interest that we achieve a change in that state of affairs.
The right hon. Gentleman, if he stands firm and insists that we have the freeze as proposed, and if he achieves in the next two or three years a freeze on the price of commodities in structural surplus, will not achieve an immediate change. I believe that it will take at least five years before that policy will come through in terms of achieving a real reduction in the enormous waste of money implicit in these surpluses. The right hon. Gentleman will have to do that if he wishes to get things right in future.
Another reason why the right hon. Gentleman has to stand firm is that he is in a pivotal position if the Government are to achieve the change to which the Chancellor committed himself and mentioned in his Budget speech when he referred to the transfer of resources. He said:We have already made it clear to our partners that this cannot be allowed to continue."—[Official Report, 12 June 1979; Vol. 968, c. 238.]The right hon. Gentleman cannot tell the House that he means business if he comes back from Brussels having conceded increases in common prices, or conceded fiddles such as the dropping of the B quota for sugar, which enables the enormous juggernaut of the CAP to continue.
Conservative Members and Government spokesmen criticise my right hon. Friend the Member for Deptford for the stance that he has taken in the Community and criticise the stance of the Labour Government, but I think that historians will recognise that it was the Labour Government who first took a strong line.
I have read last year's debates on the CAP price proposals. I am sorry that the former hon. Member for Derbyshire, West, Mr. Scott-Hopkins, is not present, because his speeches in each of the debates adequately reflected the stance of the Conservative Party on these matters.
§ Mr. Dykes
The right hon. Gentleman is missing the point of what has been said in the debate, especially regarding his right hon. Friend's attitude. Yes, there was a lot of shouting, a lot of noise and a lot of posturing in the Labour Party, but there was no substantial achievement in solving the problems which have now become very difficult to solve. Why have they been allowed to develop in the last few years? Why was rhetoric the exclusive substitute for real results?
§ Mr. Strang
I reject that utterly. The hon. Gentleman forgets that the introduction and retention of the milk marketing boards was not insignificant to Britain. The Labour Government—especially my right hon. Friend—took a strong stand two years ago when we were virtually on our own. We did not receive the support of the official Opposition. Last year the position had changed substantially and I acknowledge that. I suspect that pressure was put on the right hon. Member for Yeovil (Mr. Peyton), who was the Opposition spokesman on agriculture, by some of his colleagues who realised that the Tory Party would get itself into a preposterous situation if it tried to defend the enormity of the misuse of resources. There was a significant change in the positions of the right hon. Member for Yeovil and the former hon. Member for Derbyshire, West when they began to support to some degree the stance of the Labour Government in holding down prices.
It is important that this year we have the Commission putting forward a price freeze. My right hon. Friend's contribution has been to make a significant move in creating the environment, opinion and circumstances which led the Commission to put forward the freeze. If the Commission sticks to its guns, and the British Government insist that it does, the other member Governments will not be able to modify the proposals.
§ Mrs. Kellett-Bowman
Will the hon. Gentleman acknowledge that the milk marketing boards were never in danger? The Commission so admired our milk marketing boards that it tried to bring forward proposals to enable other countries to develop along similar lines, quite the reverse of the impression the hon. Gentleman and the right hon. Gentleman for Deptford (Mr. Silkin) have given.
§ Mr. Strang
Rubbish. I was in the Council of Ministers—the hon. Lady was not—at 3.30 a.m. when the Commission brought forward proposals which meant that the milk marketing boards would not have survived.
The present Minister of Agriculture and his colleagues, thanks to the stand of the previous Labour Government, are in a strong position. Indeed, the Government are in a strong position on the CAP and budget changes. There must be a mass of compensatory payments made across the exchanges to Britain in the next two or three years until the freeze begins to bite and corrects the situation. The Minister is in a pivotal position. We do not need a settlement. The other countries want that. Our farmers do not need these increases in common prices, in view of the 5 per cent. devaluation. I hope that the Government will stand firm. I do not mind whether it is in the stentorian, authoritarian voice of my right hon. Friend or the dulcet tones of the right hon. Gentleman, but it is important to say "No: we insist on a price freeze this year."
§ 3.46 p.m.
§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith)
I do not know whether we speak any more in terms of dulcet or stentorian tones or of swans or thugs, with which the right hon. Member for Deptford (Mr. Silkin) endeavoured to entertain us earlier this afternoon.
This is a useful debate on an important subject. It affects agriculture, consumers, the food industry and processors. In that sense the debate, coming as it does immediately before the meeting of the Council of Ministers next week, is extremely opportune. It is right that we should have it. It is useful to my right hon. Friend and myself in relation to the discussions that we shall have.
This is the first occasion on which I have spoken in a debate on agriculture since the general election. I am honoured to speak on behalf of our food industry and consumers. I have taken a considerable interest in this important matter over the years. I am interested in farming. That is my family background. I hope that my interest in the subject over the years enables me to take a broad view of the interests of the industry and 859 to understand the points that I hope to develop.
The interests of the different sections of the industry and consumers are fulfilled only when we all work together towards the common end. There is an identity of interest which it is the duty of all Members of Parliament to foster, instead, as I fear sometimes happens, of putting a division between the different interests involved. Our most important task is to foster that identity of interest.
I congratulate my two hon. Friends who made maiden speeches. My hon. Friend the Member for Gloucestershire, West (Mr. Marland) referred to the role of small businesses. We should stress that more often. Farmers, from whatever section, and small businesses of all kinds have a community of interest. As my hon. Friend's election as a member of the Conservative Party demonstrates, he champions that interest. That is recognised by his constituents. I commend him because his voice will be echoed by those with farming interests in his constituency. Agriculture does not ask for special favours. It asks only for a fair deal and to be allowed to compete on level terms. That is the policy of the Government. I look forward to hearing my hon. Friend on this and other aspects in the future.
I am not so sure what I should say about my hon. Friend the Member for Banff (Mr. Myles). I must declare an interest. For three years he was chairman of my constituency association. Perhaps for too long I have been accustomed to taking orders from him. I had hoped that on his arrival in the House he would start to take his orders from me, but, as any hon. Member who heard him speak this afternoon will have realised, he will take his orders from no one and is master of himself. He is a robust champion of the industries of his constituency—fishing, agriculture and whisky.
The House should ponder on what my hon. Friend said about surpluses. When there is a repetition of surpluses of one sort, that is obviously a bad thing, but surpluses of themselves are not necessarily wrong. It is a good principle of housekeeping to have a surplus, and if we think of it in that light we are much 860 more likely to have a constructive approach to the problem. My hon. Friend used the word "teuchter". I understand it and have been brought up with it. If we had more teuchters we might have more common sense in our affairs of State.
It is significant that the maiden speeches have been from Conservative Members who won their seats from other parties. As I heard them speaking, I could not help reflecting on the words of the right hon. Gentleman the Leader of the Opposition earlier in the week in the Budget debate. Seeking to make fun, he said that it was those who were recently elected to this House who were the first to compliment the Chancellor of the Exchequer on his Budget. I hope that since then the Leader of the Opposition has reflected on his words, because the hon. Members who were the first to welcome the Budget were those who had been putting over those very policies in their constituencies during the three or four weeks of the general election campaign. They are therefore the best able to judge the success of the policies put forward by the Government.
In the debate today we have had the inevitable and perhaps almost corny discussion on whether or not we should have the CAP as it is. These arguments, as hon. Members know, have come up time and time again in the House. I say particularly to Labour Members that the Government recognise that the common agricultural policy needs reform but that the way to reform it is not by slamming it on every possible occasion, as though there were some automatic alternative ready to put in its place. Our eyes are totally open, as my right hon. Friend made clear, to the faults and weaknesses of that policy. We know that we have to improve it. Where its mechanisms are good we have to make them work better. Where they are bad we have to seek reform. Labour Members should realise that we shall never achieve that reform simply by slamming the common agricultural policy as the Labour Government did. We must try to make it work better and in doing so persuade others to try to do so in future.
Many hon. Members harked back to our old deficiency payments system, as though that might be the automatic alternative on which we would fall back. I 861 beg Labour Members to search their memories. That policy did not suit agriculture in this country in the way that is sometimes claimed. I ask them to reflect also on the standard quantities of the early 1960s. That system did not necessarily serve the general economy of this country in relation to the taxation which was required to support the deficiency payments system. At that time the burden of the cost of that policy fell directly on the British taxpayer in one way or another. We must make that kind of comparison when pointing out that the CAP in its turn costs us a certain amount.
There is no direct automatic alternative, no panacea, to the common agricultural policy. It has faults—we do not dispute what those faults are—and our task is to try to put them right. Destructive criticism will not achieve the reforms which many of us want. I prefer to follow the approach of my hon. Friend the the Member for Tiverton (Mr. Maxwell-Hyslop), who, in a thoughful and penetrating speech, demonstrated that we should take, amend and improve the CAP.
§ Mr. Buchanan-Smith
I understand that I have until 5.30 this evening to reply to the debate. Therefore, I shall have time to deal with those questions, and I intend to do so. I am surprised that the right hon. Gentleman is not aware of the procedures of the House.
I do not think that our aspirations and hopes of reforming the CAP are in any sense served by those who try to mislead the House about some of the effects of that policy.
I am sorry that the hon. Member for Bradford, South (Mr. Torney) is not in his place. He quoted figures of what a 5 per cent. devaluation would mean to the prices of butter, sugar and cheese. He said that it would mean an increase of 4p on a pound of butter, 2p on a kilo of sugar and 5p on a pound of cheese. The hon. Gentleman must not mislead the House. Indeed, I answered a question of his only yesterday. Having tabled the question, he cannot have bothered to read the answer. With a 5 per cent. devaluation, 862 the price of butter per pound is likely to increase by 3½p, not 4p; sugar by 1½p a kilo, not 2p; and cheese by 3p a pound, not 5p. That kind of misleading of the House and of people in general does not serve the interests of those genuinely trying to seek reform of the CAP.
As regards possibly misleading the House, I must make an apology on behalf of my right hon. Friend. In answer to an intervention my right hon. Friend said that a 5 per cent. devaluation would mean one-quarter of 1 per cent. on the retail price index. I must apologise on his behalf for misleading the House to some extent. I have since read a press statement issued by the right hon. Member for Deptford on 3 April on the meeting of the EEC Council of Agriculture Ministers on 29 March. The right hon. Gentleman pointed out that a 5 per cent. devaluation of the green pound was expected.to increase the retail price index by about one-fifth of 1 per cent.
§ Mr. Buchanan-Smith
Therefore, as he said, my right hon. Friend apologises. At least, if we mislead the House we do not try to draw the wool over its eyes in the way that the hon. Member for Bradford, South did.
I come now to the point made by the right hon. Member for Battersea, North (Mr. Jay) on cheap food from outside Europe. The right hon. Gentleman was right when he said that at times cheap food was available. At present, there is food available which is cheaper than that which we receive from the Common Market. But the right hon. Gentleman, who understands these matters, must appreciate that we have to relate the price not only to the price itself but to the availability of the food. Cheap food is often available only in small quantities, and if we sought to rely on those sources the housewife and consumer in this country would find themselves held to ransom on many occasions because we would be in the hands of the world market.
The other aspect that the right hon. Gentleman neglects is that if we went into the world markets to get the cheap food that is allegedly available it would have a dramatic effect on prices on the world market. The right hon. Gentleman quoted 863 some prices and said that the price of cereals was 100 per cent. higher in the EEC than outside.
There is one area where I agree that action is necessary. The previous Government tried to take action here, and we shall do the same. I refer to the hard wheat used for bread making. It is grown to only a limited extent in Europe, and we rely on imports from North America. However, even in that case, the levy on hard wheat from Canada is £44 per tonne, which represents 34 per cent. rather than, as the right hon. Gentleman suggested, 100 per cent. of the import price plus the levy. That is the sort of matter that we must get into proper perspective.
§ Mr. Jay
But grain levies as a whole fully paid by other members of the EEC amount to something not far from 100 per cent. Does the hon. Gentleman not realise that although buying more food from outside the Common Market might tend to raise world prices, the food that the Common Market is selling to us would then have to be sold at lower prices, which would counteract the effect of the increase in world prices? The hon. Gentleman must take both factors into account.
§ Mr. Buchanan-Smith
As the right hon. Gentleman knows, economic effects do not always work through in the simple way that is sometimes suggested. If the right hon. Gentleman wants to use the argument that he used today, he must bear in mind the consequences of following the course that he proposes.
§ Mr. Spearing
I am grateful to the Minister. I agree that he is on an important point relating to the calculation of levies on relatively small parcels of available food. That being the case, does he agree that it is wrong to calculate the levy on what he claims to be relatively unrepresentative world prices 864 charged, for example, for Canadian hard wheat on the full amount, and even more wrong that the export restitutions, of which £1,000 million is scheduled for wheat this year, should be scheduled on that unrealistic price, since that gives a racketeering advantage to the export contractors?
§ Mr. Buchanan-Smith
I have never attempted to deny that there are problems. The hon. Gentleman is aware of that because we have participated in EEC debates for many years. I am trying to indicate that one cannot present just one side of the argument. Equally, where there are areas that discriminate against our consumers—and I am thinking particularly of imported hard wheat—action should be taken, and we shall try to take it.
I should like to return to a number of individual points. My right hon. Friend dealt with a number of general matters, particularly the important commodities that we shall be dealing with next week, namely, milk products and sugar.
I should now like to deal with some of the other points, which are of equal importance to those hon. Members who raised them, in relation to our negotiations next week. I first mention the point raised by the right hon. Member for Deptford and by the hon. Member for Edinburgh, East (Mr. Strang) with regard to isoglucose. As the hon. Member for Edinburgh, East knows, when we were in Opposition we expressed considerable concern about the proposals that came forward from the Commission. Fresh proposals have now been put forward by the Commission. We are examining them, and only two days ago I met representatives of the industry—soft foods, confectionery, and so on—to be briefed by them and to hear their views on the proposals that have been put forward. I assure the hon. Gentleman that I shall bear in mind the points that he made.
I now turn to the very important question of sheepmeat, which was raised by my hon. Friend the Member for Tiverton and by the hon. Member for Cardigan (Mr. Howells), who, I know, has a particular interest in this matter. As the House knows, we are awaiting the decision of the European Court with regard to French controls on sheepmeat imports 865 from the United Kingdom. In the light of the European Court's decision on potatoes, we all look forward with interest to that decision. As the House knows, certain proposals have been put forward by the Commission, which we will be discussing with it.
We want to ensure that this country's interests are properly safeguarded in any common organisation for sheep, mutton and lamb. I should like to mention two this afternoon which I believe are crucial to whatever proposals come forward from the Commission. First, sheep producers in this country must have fair and proper access to the French market. Unless we get that out of what is proposed, we shall have to look critically at this whole matter. Secondly, we must make sure that the interests of New Zealand, as traditional suppliers to the United Kingdom, achieve proper safeguards. That is important for the consumers of this country as well as for the producers in New Zealand. In any proposals that come forward there could be a number of ways in which those ends could be achieved, but in those two respects those are the principles that will guide us in the negotiations on the sheepmeat regime.
I should like to add a third point, which is of particular importance to sheep farmers in this country. No one has an interest, particularly those at the producing end, to see the price raised artificially to a level which could discourage consumption. I believe that already within this country there is tremendous scope for the encouragement and extension of the consumpton of lamb and mutton. That is a factor which I hope the industry itself, in the discussions that it has had with us and with other producers in Europe, will always bear in mind.
I now turn to the question of third country markets, a matter which was raised particularly by my hon. Friend the Member for Holland with Boston (Mr. Body). I apologise that I did not hear the whole of his speech. I understand that one of the points that he raised, absolutely fairly, is that where a policy operates on the principles of a common agricultural policy it is important that we pay attention to what happens in the markets of third countries, especially 866 those supplied by countries of the Third world.
In following our policy, particularly where there are surpluses which are disposed of, and where perhaps we have closed access to markets which these countries previously enjoyed, we have a responsibility, in negotiations and in the disposal of surpluses, to pay particular attention to the effect of that policy. That is something of which my right hon. Friend and I are sensitive.
A number of other points were raised. Some hon. Members raised the question of sugar and the Lomé convention. It is important to realise that the commitment to import 1.3 million tonnes of sugar is no longer a United Kingdom commitment but an EEC one. That has been overlooked. In the Lomé II negotiations we intend to do the best that we can for the interests of those producers who are already protected under the arrangements. This guarantee of access is effectively of unlimited duration and is not subject to renegotiation. We shall do our best to maintain that position.
I have covered most of the detailed points that have been raised this afternoon. The whole purpose of this debate was to help my right hon. Friend and myself to know the feeling of the House and to have that strength behind us when we negotiate. We are seeking to achieve negotiations which are in the interests of all sections of the community, not just one. We believe that the previous Government were too sectional in their approach to the CAP, and this has been demonstrated by many of the speeches today.
We have the interests of the producer, the processor and the consumer at heart. The interests of the consumer are the security and continuity of food supplies in the future. This is a service to the consumer which the Government must ensure. If we neglect any of these people, everyone will suffer. That is why it is important not to dwell on rhetoric but to take action. In that respect I found the speech of the right hon. Member for Deptford very strange, particularly his words relating to the phrase in the motion "supports the Government's intention". I remind him that in the motion debated in the House on 21 March 1978 he used those very words on two separate occasions. 867 That demonstrates that it was rhetoric and not action that the previous Government were following.
The right hon. Member for Deptford tried to castigate the Government, asking whether we would hold to the price freeze, be strong and make genuine efforts. I remind him of his record. On the last two occasions of price negotiations in Europe, in 1977–78, he achieved not a freeze but a 3 per cent. increase and in 1978–79 the increase was 2.1 per cent. In each case, not only was there an increase in the prices but the increase was in excess of the proposals of the Commission. That demonstrates that in their approach to this problem the previous Government tried thuggery by the right hon. Member as a substitute for protecting the interests of the producers, processors and consumers of this country The Government have tried to make thuggery and rhetoric a substitute for action.
We do not underestimate the difficulties. We are under no illusion that it will be easy. But the House can be assured that we shall stand up for these interests in a proper way.
§ Question put and agreed to.
That this House takes note of Commission documents 4648/79 together with its addenda and corrigenda and 4702/79 on agricultural prices and markets, R/2369/78 and 5568/79 on the milk sector, 5335/79 on isoglucose, R/2462/78 on the European agricultural guidance and guarantee fund guidance ceiling, and R/2162/78 together with its addenda, corrigendum and amendment on the balance in the market in wine; and supports the Government's intention, on the 1979/80 price proposals, to seek an agreement, in line with the Commission's aims intended to secure a reduction in surplus production and the cost of the common agricultural policy.