HC Deb 07 March 1979 vol 963 cc1267-77
The Minister of Agriculture, Fisheries and Food (Mr. John Silkin)

With permission, I should like to make a statement concerning the meeting of the Council of Ministers (Agriculture) in Brussels on 5 and 6 March at which I represented the United Kingdom. I was accompanied by my hon. Friend the Parliamentary Secretary.

The main topic at this meeting was the future treatment of new monetary compensatory amounts—that is, increases in MCAs which might come about as a result of changes in central rates under the proposed European monetary system. The Commission made proposals for the semi-automatic reduction of these MCAs. In so far as they related to positive MCAs—that is, the MCAs of countries with prices above the common price level—these proposals presupposed increases in common prices, so as to avoid any reduction of prices in those countries in terms of their own currencies. This would have prejudiced our resolve to ensure that there are no increases in common prices until structural surpluses are eliminated. I therefore refused to agree to the proposals unless they were linked with a decision to freeze common prices. In the event, the eight other member countries agreed between themselves to behave as though the proposals were in force. This is a decision for those member States but it has no effect in Community law. It in no way affects our ability to get a sustained freeze of common prices, nor have we accepted the automatic reduction of our own MCAs.

The outcome of this negotiation formed part of a series of agreements by the Council. In particular, the Council agreed in principle to the Commission's proposals for devaluations of various green currencies, including a 5 per cent. devaluation of the green pound, which I have supported as in line with the policies set out in the recent White Paper "Farming and the Nation". It was also agreed to introduce a franchise—or reduction—of one percentage point in new positive MCAs when these appeared. It remains to be decided when these various decisions will take effect.

The Council also discussed the proposed co-responsibility levy on milk producers. I made it clear that we could not accept this proposal in its present form, which grossly discriminates against our own efficient dairy industry. I also pressed for an early decision on tariff reductions on imports of new potatoes from Cyprus, and I again urged the Commissioner for Agriculture to bring forward quickly proposals for measures to safeguard the welfare of farm animals in transit. He undertook to do so in the near future.

Mr. Peyton

May I deal first with a matter on which I especially agree with the right hon. Gentleman? Is he aware that the Opposition strongly support his attitude towards the proposed co-responsibility levy? It appears that this would have had a very fierce effect upon our relatively efficient producers whilst being especially tender to the Germans, who have played a very large part in generating the surplus.

The second matter that I should like to deal with concerns the right hon. Gentleman's statement that the other eight had decided to behave as though the rejected proposals for the MCAs had been accepted. What does he, or what do they, mean? Does this mean that the Commission will not be bound by their decision and that therefore MCAs will be paid as before? I should like the right hon. Gentleman especially to confirm that there is nothing of which the House is unaware behind all this.

Finally, is the right hon. Gentleman aware that the Opposition are glad that he has supported the 5 per cent. devaluation of the green pound, as was heralded in that rather meaningless White Paper of his, "Farming and the Nation"? It was a very vapid affair. I am being as polite as I can. When is this decision to devalue the green pound likely to be implemented, because it is one of very great importance?

Why did not the Minister insist on the right of member States to have control of such a matter, as used to be the case, and to do so as and when they please? Has there been some change of the rules, who has made it, when, and on what authority?

Mr. Silkin

I am grateful for what the right hon. Gentleman said about the co-responsibility levy. The scale of exemptions, among a number of other disagreeable suggestions in the Commission's proposals, would have exempted, I reckoned, about one-tenth as many and possibly one-twentieth as many of our farmers as would have been exempted in Germany or France.

As for the so-called gentleman's agreement of the Eight, Mr. Speaker, I think you pay your money and you take your choice. It means that there is an automatic procedure which they enter into optionally. In other words, assuming that the Commission is willing to put a proposal on the table, the Eight can agree—and they say that they have agreed—to reduce their own MCAs in line with the proposals which would have been accepted had this been agreed to by all Nine and put into a regulation. However, I make the point again that such an occasion can arise, according to the Commission's proposals, only if common prices are increased. But it seems to me to be my job to ensure that they are not increased as long as there are structural surpluses. So I hope that the position is totally academic.

As for the 5 per cent. green pound devaluation, I am sorry that the right hon. Gentleman finds "Farming and the Nation" so disappointing. However, the point that it made was a very important one, namely, that we should preserve as much right as we could to increase our own production in this country and not to have the production dictated totally by surpluses in other countries. I hope that the right hon. Gentleman will come with me at least that far, because it is a very important principle denied by many others.

The 5 per cent. devaluation will come into effect when the regulation which will be prepared as a result of these meetings is passed by the Council. The right hon. Gentleman asked me to hazard a guess. My guess is that it might be resolved on about 26 March when we next meet. It could be resolved earlier. It could be a bit later.

Finally, the right hon. Gentleman asked me since when the right of a country to devalue its own currency had been changed or challenged. The answer is simply that custom has always said, up to last year—the right hon. Gentleman may remember a little difference of opinion that we had about a 2½ per cent. devaluation of the green pound at the time and the reaction that it caused in Brussels—that any country which proposed a green currency devaluation would automatically have the Commission making a proposal to that effect. The Commissioner has since said that he did not intend to follow that procedure in future and intended only to introduce proposals for green currency changes at the time of the price fixing. We have at least changed that in this case.

Mr. Peyton

Does not the right hon. Gentleman think that the middle part of his answer about the meaning of the agreement of the Eight to act as though the proposals had not been rejected is convincing in only one respect, and that is that he must be longing for an opportunity afforded by a debate in this House to explain exactly what the position is?

Mr. Silkin

I must say that a common agricultural policy presupposes a common agricultural jargon. However, the point is clear. This could come into effect only if common prices were increased. But common prices will not be increased so long as there are structural surpluses. That remains the declared policy of this Government.

Several Hon. Members rose

Mr. Speaker

I must inform the House that there are two applications under Standing Order No. 9 to come. I shall call those hon. Members who have sought already to catch my eye, and then we must move on.

Mr. Hooson

Does not the agreement between the Eight indicate that they have been successful in bypassing the Minister's objection? Could not they do exactly the same by agreement between themselves on the price fixing—that is, that there is to be no rise in Common Market prices? Does not it indicate that we are still in a state of being half in and half out of the Common Market? Does not this need for continued bargaining arise from our failure to have a satisfactory economic performance in other spheres?

Mr. Silkin

The hon. and learned Gentleman is going over a wide range of questions. The relevant point is that it does not have any effect whatever. Secondly, it has no effect on the price fixing because there has to be unanimous agreement to move prices. Prices will remain stabilised in money terms, which means that in real terms, because of inflation even of 3 per cent. to 4 per cent., or whatever was the figure last year, in Germany—the lowest of the Western European countries—it must be a decline.

Mr. Spearing

Many hon. Members will congratulate the Minister on having sustained the approach for automatic devaluation of the MCAs. Will he confirm that if this automatic devaluation had been imposed on this country, farm gate prices would have increased by at least 28 per cent. and perhaps up to 35 per cent. by the time that it was concluded? Can he assure the House that when he uses the words "structural surplus" he is referring not simply to that amount of food in store but to that amount of food which is habitually sold, with high subsidies from the EEC taxpayers, on world markets?

Mr. Silkin

I am grateful for what my hon. Friend has said. I can confirm his definition of a structural surplus. About 45 per cent. of the Community's farm budget is spent on export restitutions and 30 per cent. on storage and disposal. We are against both of these. With regard to his first point, it is a mechanism which I regard as unreal, for reasons I have given to the House, for new MCAs, not for existing ones.

Mr. Fletcher-Cooke

Will the Minister say something about the effect of his meeting yesterday and the day before on the future of the European monetary system? Did the French and the Germans resolve their differences at this meeting? If not, what is the position?

Mr. Silkin

Of the many duties, some agreeable and some disagreeable, of the Minister of Agriculture, Fisheries and Food, the EMS is fortunately not one of them. I could refer the hon. and learned Gentleman to what has appeared on the tape. I understand a communique has just been issued by President Giscard d'Estaing.

Mr. Watt

Every dairy farmer will welcome his statement on the co-responsibility levy, but will the Minister say why he continues to set his face against a semiautomatic reduction in MCAs? Surely he recognises that a 5 per cent. devaluation this year will not in any way compensate Scottish farmers, who saw their income go down by 30 per cent. last year? This kind of devaluation will in no way excite them and get them to increase food from our own resources.

Mr. Silkin

The point of the 5 per cent. green pound devaluation is that it will take effect before the price fixing. Neither I nor the hon. Gentleman can prophesy when that price fixing will come to an end. Others might object to a freezing of common prices that we are determined should take effect. Green pound devaluation, so far as the Government are concerned, will take place in the national interest alone. I was determined to ensure, without prejudice to any other arguments we may have about green pound devaluation, that it was not used as a blackmail weapon against us and it therefore had to take place before the price fixing.

Mr. Torney

While congratulating my right hon. Friend on his stand on keeping farm prices as they are, may I say that I find the part of the statement dealing with MCAs somewhat confusing? Will he explain what this will mean in real terms, particularly its effect on the bacon industry? Because of unfair competition from Denmark caused by the MCAs, this industry has faced a tough position in recent times. Considerable unemployment has been caused.

Mr. Silkin

It will not make any difference to the bacon industry. My hon. Friend mentioned the bacon industry—which is really, I suppose, the Danish bacon industry. What it really means is that if there was a change in the spot value of the Danish kroner, the normal procedure would be for the MCAs also to go up to meet it. It was agreed that, if it went up, the increase in the positive MCAs would be dismantled over two stages at the beginning of the two successive marketing years, but not without an increase in common prices. That was why we had to stop it.

Mr. Emery

A number of us understand the difficulties of the Minister. Some hon. Members want to see Britain in the European monetary system, so getting the benefits of the world reserves of Europe behind our own monetary structure. Will the Minister assure the House that if we entered the European monetary system it would not preclude him in his efforts in negotiations to do away with the structural surplus position, nor would it preclude a sensible continuation of the devaluation of the green pound or the application of MCAs?

Will he accept the support of the West Country for his stand on the co-responsibility levy? Can he give milk farmers, who are obviously thinking of the future, any indication of how he sees the outcome of that problem?

Mr. Silkin

With regard to the question of the EMS, I have frequently made the point in the Council—I think it eventually came to be accepted—that I saw no link between the two. I was dealing with an agricultural problem. From the start, I said that the United Kingdom disapproved of the reservation applied by the French in December because it stopped a lot of important discussions, such as those on the co-responsibility levy, and delayed the proposals. How do I see it in the future? I will not take this as it is. I can promise that to the hon. Gentleman and his farmers.

Mr. Wm Ross

The differing values of the Irish and United Kingdom green pounds have caused serious difficulties in the past. Can the Minister say by what amount the Irish green pound will now be changed? Will he say what effect he thinks that will have on the problems that already exist? Will he speak to his right hon Friend the Leader of the House, who is sitting beside him, to try to arrange a debate on "Farming and the Nation"?

Mr. Silkin

We have asked for a 5 per cent. devaluation. At the time of our request and, therefore, when the Commission proposal was put on the table, there was a propsal equally for a Republic of Ireland devaluation of 4.3 per cent. I gather that there have been movements, as always, of the two pounds, and these figures, or at least the figure of 4.3 per cent., may not be all that accurate. But the proportion will be much the same. That is the basis. My right hon. Friend has no doubt heard what the hon. Gentleman said about a debate on "Farming and the Nation".

Mr. Corbett

As well as pressing the Commissioner for Agriculture to introduce proposals to improve safeguards for farm animals in transfer, will my right hon. Friend make clear that the critical factor is enforceability and the willingness of the Community and individual nation States to enforce those regulations? Will he say that, unless that is done, he will unilaterally ban the export of live animals for slaughter from this country?

Mr. Silkin

I agree that enforceability is an important point. There is also a time basis that needs to be considered. For various reasons, the distance between the point of production of the animal and the slaughterhouse in this country may be much further than the distance from one country to another on the Continent of Europe. We have to watch that point carefully. The difficulty about a unilateral ban on the export of live animals is that the Government who issued such a ban, as the matter stands at the moment, could be sued in the European Court of Justice. That might not be the most desirable thing to happen. Let us see whether we can achieve it by other means.

Mr. Fairbairn

Since he is in charge of the agriculture industry, the Minister will I am sure appreciate that the devaluation asked for by the farmers' unions of Scotland and England was 15 per cent. Can he tell us what effect the proposed devaluation will have on the balance of two things which are central to agriculture, and deteriorating—first, the level of debt on each farm unit per acre; secondly, the level of price per product, be it a hundredweight of barley, a head of sheep or a score of pigs, compared to the equivalent price of the fertiliser, seeds or machinery required to produce it? This is a long-term matter and I am not sure whether the Minister will be able to give me an answer now, but will he keep it in mind?

Mr. Silkin

I do not think that it is possible to give an answer now and I doubt whether it would be possible to give an answer which would not vary from day to day for a variety of reasons. Broadly speaking, of course, a 5 per cent. green pound devaluation would be equivalent, I suppose, to an increase of about 6 per cent. in support prices so far as the farmer is concerned, but that is an average figure and once one starts taking an average in farming one is taking the average of many disparate parts of the industry—for example, between the cereals producer and the livestock producer.

Mr. Grocott

Will my right hon. Friend confirm that the fact that he was once again in an eight-to-one negotiating position on a stance which no one in the House so far has yet seriously contested is further evidence that our difficulties in Brussels are caused not by any inherent British cussedness but by a fundamental conflict of interest between the Eight and ourselves? To what extent has his negotiating position been undermined by the knowledge that the Opposition and the right hon. Member for Yeovil (Mr. Peyton) are very anxious, as the other eight countries know, to have a further increase in food prices by a far more substantial devaluation of the green pound?

Mr. Silkin

With great regret, I have to contradict my hon. Friend on those two points—at least on their implications. First, it was not eight-to-one against us. I have to pay tribute to the enormous help that we received from the Italian agriculture Minister, Mr. Marcora, who backed us all the way. What happened on this very small point was that he was prepared to go with the others because he has a slightly different view from ourselves about automatic dismantling and a somewhat different problem. On the second question, I should like to be able to say that the Opposition make a great deal of nuisance of themselves; but, frankly, no one talks about them in Brussels.

Mr. Peter Mills

Will the right hon. Gentleman return his thoughts to the White Paper on agriculture and bear in mind that, especially when compared with the last three White Papers, this is probably the most anaemic White Paper that British agriculture has ever had? Will he look at this again? It is very important that British agriculture should know what this Government want the British farmers to produce, and not enough guidance has been given about future requirements. Other White Papers have done that.

Mr. Silkin

The basis of "Farming and the Nation" was best described by Mr. Richard Butler, the new president of the National Farmers' Union. In the first place, he thought that a marketing inquiry was a good idea. Secondly, he said, in effect, "This is very good if the Government keep to it." That is precisely what the Government are trying to do. They are insisting on it.

On the hon. Gentleman's last question, which related to targets in previous White Papers, I would point out that they were never intended to be targets, as he knows: they were always taken as that, but it is not a good idea to have targets. Just occasionally, for example, there are two droughts in a row. The green pound can intervene, or inflation, and so on. One can say "This is what we believe the net product ought to be over a period." That is precisely what we have done.

Mr. Wiggin

Do the British Government now intend to place on the agenda of the next meeting of the Council of Ministers any matters dealing with food or agriculture?

Mr. Silkin

There will be plenty of matters relating to food and agriculture on the agenda anyway. The next meeting is on 26 March. I cannot remember a Council for some time where there has not been something along these lines that we or other countries have felt to be urgently necessary at the time.

Mr. Peyton

In view of his characteristically cheap response to his hon. Friend the Member for Lichfield and Tamworth (Mr. Grocott), will the Minister, first, confirm that the Opposition have always been careful not to embarrass him in the difficult negotiations that he has to carry out? Secondly, since he made the point very personal, is he aware that we would much rather not be spoken of as he is spoken of in Brussels?

Mr. Silkin

The second point is a fair point of difference between us. The question is not how one is spoken of but what results one obtains. I know perfectly well what results I need to obtain, and they are extremely good. I am afraid that I do not entirely agree with the right hon. Gentleman's first point. I am not necessarily talking about the right hon. Gentleman now—I have always found him a courteous and agreeable opponent—but I wish that I had had all the help that he tells me I have had.