Commons Sitting of 20 March 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

  CHESHIRE COUNTY COUNCIL BILL [Lords]
  Order for Third Reading read.
  [Queen's Consent, on behalf of the Crown, signified.]
  Read the Third time and passed, with amendments.

  LONDON TRANSPORT (No. 2) BILL. (By Order.)
  Orders for Second Reading read.
  To be read a Second time upon Thursday 17 April.

  DARTMOOR COMMONS BILL [Lords]. (By Order.)
  Orders for Second Reading read.
  To be read a Second time upon Thursday 27 March.

  TYNE AND WEAR BILL [Lords]. (By Order.)
  Order for Second Reading read.
  To be read a Second time upon Thursday 17 April.

  STEVENAGE DEVELOPMENT AUTHORITY BILL. (By Order.)
  Order for Second Reading read.
  To be read a Second time upon Wednesday 26 March at 7 o'clock.

ORAL ANSWERS TO QUESTIONS
  ORAL ANSWERS TO QUESTIONS
  Mr. Speaker: Before we begin questions, may I remind hon. Members that if they ask supplementary questions that are too long they are being unfair to the rest of the House and preventing others from having their questions called.
  NATIONAL FINANCE

    Economic Measures (Progress)
    Mr. Dormandasked the Chancellor of the Exchequer if he is satisfied with the progress of his economic measures.
    The Chancellor of the Exchequer (Sir Geoffrey Howe): I refer the hon. Member to my answer to him on 21 February.
    Mr. Dormand: When will the right hon. and learned Gentleman emerge from his cocoon of fear into the real world to see what effect his policies are having? Will he comment on three aspects of those policies?—[Interruption.]
    Mr. Speaker: Order. The hon. Member for Easington (Mr. Dormand) has indicated that his question will be very short.
    Mr. Dormand: First, it was said that reduced income tax would galvanise entrepreneurs but there is not even the beginning of any signs of that. Secondly, it is said that the high exchange rate which is playing havoc with our exports is based largely on high interest rates. Thirdly, it is said that oil revenues should be used directly for investment.
    Sir G. Howe: The welcome given to the hon. Gentleman's question was so raucous that I was unable to hear his third point. There is a later question on the Order Paper about the exchange rate. As to the impact of lower income tax, I can assure the hon. Gentleman that the prospects for enterprise, success and industrial growth and investment are immensely enhanced by the presence of a Government who had the courage to reduce top income tax rates, which the right hon. Member for Leeds, East (Mr. Healey) always wanted to do but never had the courage to do.
    Mr. Hal Miller: Will my right hon. and learned Friend tell the House what

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    progress is being made in reducing the money supply as a result of high interest rates and whether it is private borrowing or Government borrowing that is being reduced?
    Sir G. Howe: My hon. Friend will appreciate that Government borrowing has been, is being, and will be substantially reduced as a result of the Government's own measures. He should also know that in the last four months sterling M3 has grown at an annual rate of 10 per cent. That represents a considerable slowing down in the rate of growth which we inherited. Other aggregates, both narrower and wider than sterling M3 are growing no faster than that and sterling M1 has fallen in the last four months. There are, therefore, encouraging signs of progress in re-establishing monetary control.
    Mr. Spriggs: When the right hon. and learned Gentleman considers his Budget proposals will he concentrate on finding jobs for school leavers?
    Sir G. Howe: My Budget would indeed be narrow if I were to concentrate on that single objective. The creation of conditions in which employment can begin to grow again is one of the objectives behind my Budget proposals.
    Mr. Alan Clark: When my right hon. and learned Friend contemplates his economic measures and their progress does he ever reflect, even in the abstract, on our prospects if we were no longer to be a member of the EEC?
    Sir G. Howe: The range of my reflections is substantial. Whenever I see my hon. Friend rising to pose a question on occasions such as this I reflect on the topic to which he refers, but that reflection is not at the top of the priorities.
    Mr. Horam: If inflation, always and everywhere, is a result of the excess supply of money, why are the Government continually blaming the high level of inflation on wage settlements? Is it not absolutely clear that the principal push to inflation in the last 12 months has been of the Government's own doing, following indirect tax increases and the other costs flowing from the Government's own decisions?
    Sir G. Howe: The hon. Gentleman should understand that the impact on
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    inflation by the once-and-for-all change in the tax structure last June is of moderate importance and will fall out of the system next June or July. The hon. Gentleman should also understand that probably the most powerful underlying cause of rising inflation is the high monetary growth rate which we inherited. Certainly, a contributory factor in the short term is a level of pay settlements beyond that which the country can afford. Unless and until pay bargainers, both in the private and public sectors, understand the consequence of unreasonable pay settlements, there will be a high and rising level of unemployment.

    Development Land Tax Office
    Mr. Lathamasked the Chancellor of the Exchequer whether he will make a statement on the progress achieved to date in reducing the staff of the Development Land Tax Office.
    The Chief Secretary to the Treasury (Mr. John Biffen): I refer my hon. Friend to the answer that I gave on 11 March 1980.
    Mr. Latham: Is my right hon. Friend aware that progress in reducing the notoriously overstaffed Development Land Tax Office under the present Government is most satisfactory, since the staff has been reduced from 174 to 147? Will he ensure that that desirable trend continues?
    Mr. Bilien: Yes. I can assure my hon. Friend that, provided that the market in development land continues roughly as forecast, we hope to reduce the number of staff to 110 by April 1981.
    Mr. Denzil Davies: In spite of the progress made will the Chief Secretary confirm reports in the newspapers today that next year the Government will be employing more civil servants than they are employing this year? Does not that show the madness of the Government's economic policies? Is he aware that the Government are putting people in the manufacturing industries out of work and have to employ more people to pay them unemployment benefit?
    Mr. Biffen: That wide-ranging question arising from evidence to a Select Committee cannot conceivably arise out of a question about the Development Land Tax Office.

    Budget
    Mr. Canavanasked the Chancellor of the Exchequer what representations he has received about the forthcoming Budget.
    Mr. Trippierasked the Chancellor of the Exchequer what representations he has received in connection with his forthcoming Budget.
    Sir Geoffrey Howe: I have received representations from a wide range of organisations and individuals.
    Mr. Canavan: In view of today's news that Barclays Bank made an annual profit of £529 million, which is 42 per cent up on the previous year, will the Chancellor introduce a windfall tax to give some benefit to the whole community from the excessive profits made by the big banks and oil companies? Would not that be more humane than turning the clock back to the 1930s by stopping earnings-related unemployment benefit and cutting the real value of other benefits to the unemployed, the disabled the sick and families with young children?
    Sir G. Howe: I cannot anticipate my Budget Statement in any respect, as the hon. Gentleman should know. The increase in bank profits substantially overstates the real growth by the time one has taken account of inflation, a phenomenon with which the hon. Gentleman is familiar. When other circumstances are going badly it is usual for bank profits to rise. It is important that they should be high to meet the demands that are made upon them.
    Mr. Trippier: Will my right hon. and learned Friend, when preparing his Budget, remember that people on low earnings suffer most from the high level of inflation as was proved under the last Government? Will he also remember that we must honour our election pledge to serve all the people?
    Sir G. Howe: I am grateful to my hon. Friend for his reminder of a pledge which we certainly mean to fulfil. I am pleased to know that we shall have his support in the Lobby throughout the difficult time ahead.
    Mr. Healey: Futher to that extremely helpful supplementary question, can the
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    right hon. and learned Gentleman assure the House that he will not cheat on the Government's election promise to help families and to increase the will to work? Will he assure the House that he will increase the child benefit in November by significantly more than £1 per week? Does he agree that anything less would be dishonest in relation to the undertakings which the right hon. and learned Gentleman gave when he tricked the British people into giving him a majority last May?
    Sir G. Howe: Even in that respect I cannot anticipate my Budget Statement. I assure the right hon. Gentleman that neither before nor after that Statement shall I need his advice or guidance on cheating.
    Mr. Forman: Can my right hon. and learned Friend confirm that among the representations that he has received concerning his Budget is one from the Child Poverty Action Group? Will he take note of the views of hon. Members, particularly his hon. Friends, that we understand and expect that there will be a substantial increase in child benefit in his Budget?
    Sir G. Howe: I can confirm that I have received representations from the CPAG, as one would expect, and I have them in mind.
    Mr. Jay: What does the Chancellor feel is the greatest success of his policy to date?
    Sir G. Howe: An increasing confidence in the firmness of the Government's monetary and fiscal policies and a mounting sense of shock among the electorate at the prospect of the Opposition coming to power.

    Interest Rates
    Mr. Dubsasked Mr. Chancellor of the Exchequer what representations he has received about the effect of present interest rates.
    The Financial Secretary to the Treasury (Mr. Nigel Lawson): My right hon. and learned Friend has received a number of representations in recent months on the effect of the current level of interest rates, in particular from business men and home owners.
    Mr. Dubs: Does the Financial Secretary think that the present high rates of

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    interest are a consequence of the rate of inflation or a major contributor to it?
    Mr. Lawson: It is clear that the present high level of interest rates is in part a consequence of the level of inflation and in part a necessary instrument in bringing inflation down. Of course, the hon. Gentleman will be well aware that this is a world-wide phenomenon. Interest rates throughout the world have gone up just as much as they have in Britain since May. The United States rate is now 19 per cent.—higher than ours.
    Mr. Peter Bottomley: Given the Government's monetary policy, am I right in thinking that, if the general level of pay settlements next year is half the rate it is this year, it would be associated with a greatly reduced level of interest?
    Mr. Lawson: My hon. Friend is right. As inflation comes down interest rates will come down.
    Mr. Robert Sheldon: Given the Financial Secretary's confusion about whether high interest rates are a cause or a consequence of inflation, does he think that it is just possible that, like indexation, high interest rates are the institutionalisation of inflation?
    Mr. Lawson: The right hon. Gentleman is both confused and deaf. At no time did I say that interest rates were a cause of inflation.
    Mr. Denzil Davies: To clarify the matter, does the Financial Secretary agree with the Governor of the Bank of England that we are unlikely to see a fall in interest rates for many months and that, until inflation falls, there is not likely to be a reduction in interest rates?
    Mr. Lawson: The Governor of the Bank of England was speaking before he had seen the contents of my right hon. and learned Friend's Budget.

    Banking Sector (Profitability)
    Mr. Meacherasked the Chancellor of the Exchequer what estimate he has made of the effects of current interest rates on the profitability of the banking sector.
    Mr. Lawson: No precise estimate is possible. Current interest rates clearly contribute to high bank profits but the effects are likely to differ greatly in different parts of the banking sector.
    Mr. Meacher: Will the Financial Secretary say why a doubling of profits to a huge level by Shell and other oil companies is apparently regarded by the Government as justification for a windfall profits tax while a doubling of profits to a huge level by Lloyds and other banks is not? In what way are MLR-induced excess profits, brought about by the Government's economic policies, of any more merit than OPEC-induced profits?
    Mr. Lawson: The hon. Gentleman may expect oil prices to fall over the coming year, as interest rates are likely to fall, but I regard that as less likely. As to the taxation of bank profits, the Prime Minister has already said that we are putting our minds to that in the context of the Budget.
    Mr. McCrindle: Will my hon. Friend move very slowly and cautiously before contemplating the imposition of an excess profits levy on the banks in the present circumstances, unless he is prepared to introduce the opposite measure at a time when banks profits are falling? Will he bear in mind the dangerous weapon that that policy would put into the hands of the Labour Party in the event of a future Labour Government?
    Mr. Lawson: I am glad to be able to reassure my hon. Friend that I always move cautiously in everything that I do, as does my right hon. and learned Friend the Chancellor of the Exchequer. My hon. Friend is right to make it clear to Opposition Members—who may not understand this—that there are technical complexities involved here.
    Dr. Bray: Does the Financial Secretary agree that, had he and his fellow Treasury Ministers had their way and introduced monetary-based control at an earlier stage, bank profits would have been even higher than they are at present? Will he confirm that the green paper on monetary control, published today, represents an abandonment by Treasury Ministers of any serious intention to move to a monetary-based control system?
    Mr. Lawson: The green paper certainly evinces a somewhat sceptical attitude to the merits of monetary-based control, but, nevertheless, it is a discussion document. We intend to enter the discussions in good faith and see what emerges.
    Mr. Dykes: If interest rates have to rise again, will my hon. Friend consider holding discussions with the banks about the

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    weakest and smallest borrowers—who often have to pay the highest borrowing rates—with a view to those people being giving an easement in borrowing rates?
    Mr Lawson: I hope that it will not be necessary for interest rates to rise again. I am sure that my hon. Friend will understand that our top priority is the battle against inflation. If it is necessary—and I profoundly hope that it will not be—for interest rates to rise further in the battle against inflation, they will have to rise.

    Manufacturing Investment
    Mr. Allan Robertsasked the Chancellor of the Exchequer when he expects his economic policies to result in an increase in manufacturing investment.
    Mr. Biffen: I expect manufacturing investment to increase in due course when the rate of inflation is reduced.
    Mr. Roberts: Does not the Chief Secretary agree—without anticipating his right hon. and learned Friend's Budget—that the tax cuts introduced in the last Budget have not released investment into manufacturing industry? Will he deny the rumours that the Chancellor of the Exchequer, in his Budget, will establish enterprise zones in areas such as Merseyside, which the people there do not want? Will he agree that the only way in which we can achieve investment in manufacturing industry in such areas is through public investment?
    Mr. Biffen: It is no part of my task this afternoon to comment upon my right hon. and learned Friend's Budget next week—
    Mr. Canavan: Why not?
    Mr. Biffen: Because I have a vested interest in personal survival.
    On the more general proposition of Government aid as a means of promoting investment, regional aid under the previous Administration covered 40 per cent. of the population. That regional policy was wholly indiscriminate. I do not believe that the sheer provision of public funds is any guarantee of success. If it were, Merseyside would be the flower of industry today.
    Mr. Richard Wainwright: Is the Chief Secretary aware that during the indefinite
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    period—which was all that he could hold out in his answer to the hon. Member for Bootle (Mr. Roberts)—British industry is desperately concerned about the many forecasts from a wide range of authorities stating that investment in real terms in manufacturing industry will fall heavily this year, and even more heavily in 1981? What action does he intend to take to correct that grim prospect?
    Mr. Biffen: The first thing that I shall try to do is correct the innate pessimism of the hon. Gentleman. Although it is perfectly true that both the CBI and the Treasury forecast a fall in manufacturing investment, it is less than that which has been experienced hitherto in this period of the cycle. The Government's policy will be vindicated, and well before the next general election.
    Mr. Bruce-Gardyne: Has my right hon. Friend noticed that the latest survey of investment intentions carried out by the CBI suggested that the greatest obstacle to investment intention was not the level of the exchange rate nor the level of interest rates, but the scale of industrial disturbance and strife? Is it not conceivable that those who respond to a CBI survey are a little more "clued-up" about the motivations for investment than is the hon. Member for Bootle (Mr. Roberts)?
    Mr. Biffen: That is undoubtedly true. Though it goes against myself, it is true to say that the CBI's forecast of the fall in manufacturing investment is lower than that projected by the Treasury.
    Mr. Denzil Davies: The Chief Secretary said that the level of inflation has an effect on the level of manufacturing investment. What level of inflation does he consider to be acceptable? At what level of inflation would there be an increase in manufacturing investment?
    Mr. Biffen: It would be absurdly presumptions of me to try to answer that question. The rate of inflation will have fallen tangibly and demonstrably come the next election.

    Interest Rates
    Mr. Dykesasked the Chancellor of the Exchequer if he is satisfied with the current levels of interest rates.
    Mr. Lawson: My hon. Friend has already asked this question once this afternoon. Once again, the answer is no; but until we have succeeded in bringing public spending and borrowing under control, interest rates at their present level are necessary to maintain firm control over monetary growth. Interest rates will come down as our policies reduce the rate of inflation.
    Mr. Dykes: While my hon. Friend often refers to United States interest rates, will he not reflect that, if we had a closer economic relationship with other European countries, where interest rates are much lower, we could emulate their example by reducing the value of the pound, dropping minimum lending rate as soon as possible by at least one point, and joining the European monetary system?
    Mr. Lawson: My hon. Friend should be aware that interest rates in Europe have risen by about the same amount—five to six points— since May, as they have risen in this country. The reason why interest rates vary from country to country is that inflation differs from country to country. There is no way in which, simply by joining more closely with other European countries, we could change that discrepancy overnight.
    Mr. Healey: Does not the Financial Secretary agree that if he had not broken all his monetary rules and lent £1,500 million to the clearing banks over the past few months, interest rates now would be over 20 per cent., in line with the rate of inflation?
    Will he assure the House that he will not follow the German example and raise interest rates further in order to protect the exchange rate? Is he aware that, contrary to what he has told the House, Mr. Poehl, the chairman of the Bundesbank, admitted publicly that the only reason why the Germans recently raised interest rates was to increase the value of the deutschemark when the dollar was strengthening?
    Mr. Lawson: On the last part of the right hon. Gentleman's question, that is not our policy, nor do we need to do that. Sterling is strong because of confidence in the Government's economic policies.
    As for the right hon. Gentleman's extraordinary comments on the sale and
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    repurchase operations, he should be well aware that it was a technical operation dictated by a temporary shortage in the money markets, which was due partly to the great success in funding and partly because the public sector borrowing requirement had gone into surplus as a result of the tax gathering season. That reflects no change in the monetary policy of the Government.
    Mr. Eggar: Does my hon. Friend believe that interest rates are influenced most by the rate of inflation or by the level of the public sector borrowing requirement? Does he believe that it is possible to reduce interest rates without reducing the level of the public sector borrowing requirement?
    Mr. Lawson: My hon. Friend is absolutely right. Interest rates are affected both by the level of the PSBR and by the level of inflation. That is one of the reasons why we are determined to reduce the level of the PSBR.
    Mr. John Evans: Will the Minister explain how the current level of interest rates, which appears to be so helpful to the banks, does not appear to be so helpful to small businesses?
    Mr. Lawson: The higher inflation rate which would result if there were not a firm monetary policy, which regrettably involves high interest rates for the time being, would be far worse for small business-men than the present level of interest rates.

    Value Added Tax
    Mr. Hannamasked the Chancellor of the Exchequer what representations he has received from English language schools for foreign students concerning value added tax; and if he will make a statement.
    Mr. Lawson: A number of representations have been made by English language schools that their tuition services to overseas persons should be zero-rated for value added tax purposes.
    The Government are fully aware of the contribution which such schools make to the economy, but I am afraid that special VAT treatment could not be justified in the context of a broadly based tax.
    Mr. Hannam: Is my hon. Friend aware that these language schools bring a large amount of invisible exports into Britain—about £60 million a year—and that compared with foreign registered companies operating English language schools in this country, which are zero-rated, they are being discriminated against? Will he reconsider their position and try to make VAT more flexible to help invisible exports?
    Mr. Lawson: The need is not to make VAT more flexible but to ensure that foreign organisations are not improperly escaping tax. The main issue is where they are established. Information is currently being sought on the exact nature of these bodies' activities in the United Kingdom. If it is discovered that they are supplying their services from establishments in this country, they will be treated for VAT purposes in the same way as United Kingdom-based organisations.
    Mr. Costain: Does my hon. Friend understand that we are talking about an export? We exempt our exports from VAT. Why should this service not be exempted?
    Mr. Lawson: It is not technically an export. It is a service that earns foreign exchange, as does the tourist industry. However, that does not mean that VAT is not levied on shops and other places that tourists frequent. My hon. Friend is suggesting a fundamental change in the value added tax system, which I do not think is warranted by this example.

    Exchange Rate
    Mr. Robert Sheldonasked the Chancellor of the Exchequer what is the policy of Her Majesty's Government on the exchange rate.
    Sir Geoffrey Howe: I refer the right hon. Member to the answer that I gave him on 27 November 1979.
    Mr. Sheldon: Does the right hon. and learned Gentleman agree that the easiest way to reduce the exchange rate would be to get the Bank of England to sell sterling on the foreign exchanges? Does he agree that the Bank is not doing that because it fears that the money supply might increase? Are we not paying a high price for the Government's economic theory when account is taken of the agon-
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    1ies of British industry in meeting competition from cheap imports and finding export markets for its goods?
    Sir G. Howe: The right hon. Gentleman will recollect that when he was a distinguished member of the Treasury team in the previous Labour Government it was decided that it was folly to continue intervening in the way that he has described, since that was having the adverse effect on money supply that he rightly anticipates. If one intervenes in that way to affect the exchange rate, the money supply and the domestic rate of inflation will be adversely affected.
    Mr. Dorrell: Is my right hon. and learned Friend aware that the effective exchange rate now stands 10 points higher than its level before the 1967 devaluation and 20 per cent. higher than in the mid-1970s? How quickly does he expect the productivity of British industry to improve to restore the competitive balance?
    Sir G. Howe: I am not prepared to comment on the precise figures to which my hon. Friend has referred. It is as well to remember that during periods when the exchange rate has been consciously depreciated in the pursuit of expanding export opportunities, that has not, as a policy, been crowned with conspicuous success. It is important, in the world in which we now live and in the conditions in which the British economy has to operate, with a petro-currency to hand, for those who bargain within British industry to recognise the importance of sensible pay bargaining as an important factor in maintaining the competitiveness of British industry.
    Mr. Woolmer: Is not one of the reasons for the high exchange rate the growing revenues that will accrue from North Sea oil and gas? Is it not true that these growing revenues are causing a massacre of our manufacturing industry? Is it not about time that the Government set out a strategy for the next few years to ensure that our North Sea oil and gas revenues are used to build up and reconstruct our industries and not to destroy them?
    Sir G. Howe: It is obviously sensible to recognise the impact of growing North Sea revenues on the balance of the economy. At the same time, it is sensible not to be alarmist about them. It is

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    worth remembering that in the past few months there has been a growth in manufacturing exports. It is also sensible not to try to pursue magic solutions. The most important thing for people throughout British industry to understand is that they can do more than any Government by the effectiveness of their working together to maintain and improve the competitiveness of British industry.
    Mr. Alan Clark: Is it not also true that the strength of the pound is a measure of the competence of the international community in the policies of my right hon. and learned Friend and his colleagues? Was not that exemplified by a remark of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), who tabled the question, during the debate on the financial White Paper, when he cited as an example of something that would lead to a run on the pound the prospect of the return of a Labour Government?
    Sir G. Howe: I have no doubt but that the prospect of the return of a Labour Government would have a number of remarkable and catastrophic effects on the outlook for the economy. I understand the arguments that are advanced by Labour Members. However, I hope that they will take account of the fact that the Government's abolition of exchange controls is one factor that undoubtedly causes the rate to be lower in the long term than it would otherwise be. I hope that commentators on these matters will now welcome unreservedly the decision that we took.
    Mr. Horam: May I refer the right hon. and learned Gentleman to the question tabled by my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon)? What is the Government's view of the present exchange rate and its effect on industry? What policy are the Government adopting towards the exchange rate?
    Sir G. Howe: As I told the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) when he asked the question on a previous occasion, the exchange rate is determined primarily by market forces. The Government, through the Bank of England, intervene in the exchange markets to moderate excessive fluctuations in the rate and to preserve orderly
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    market conditions. That is the conclusion at which the previous Government arrived, having tried to pursue different policies at different stages of their existence.

    Small Business
    Mr. Kenneth Lewisasked the Chancellor of the Exchequer what proposals he has for assisting in the provision of finance for small business.
    Mr. Biffen: The Government have made a major contribution towards helping the small firms sector by cutting income tax and undertaking to tackle capital taxes. The Government have been considering what further steps they can take to encourage investment in small firms. My hon. Friend would not expect me to reveal any details in advance of the Budget.
    Mr. Lewis: Will my right hon. Friend bear in mind, when he is giving further consideration to this matter, that small businesses in the service sector represent the greatest prospect for advance and increasing employment? Will he recognise that they do not have the same tax advantages that some manufacturing industries enjoy? Will my right hon. Friend ask his right hon. and hon. Friends in Government Departments, and those running nationalised industries, to pay their bills on normal credit terms to small businesses? They are notoriously bad payers.
    Mr. Biffen: I shall ensure that the second part of my hon. Friend's question is drawn to the attention of those primarily responsible. I very much agree with him that the small business sector of the economy, especially in the service sector, provides great hope for providing future employment throughout the country. My hon. Friend will know that the balance of taxation between industry and services is an issue that is subject to constant reconsideration. I am sure that it will be borne in mind when the Finance Bill is being considered in Committee and thereafter.
    Mr. John Garrett: Does the right hon. Gentleman agree that one result of a totemistic fixation on restricting the growth of the money supply is an inevitable increase in bankruptcies, especially among small firms?
    Mr. Biffen: Any policy that seeks to reduce inflation will have as a consequence a period of extreme uncomfortable dislocation, one manifestation of which is bankruptcies. That will happen however we set about reducing inflation. I do not deny that. I do not repudiate that for one moment. I certainly do not rejoice in it. However, if we are genuine about fighting inflation and intend not to run way at the first uncomfortable moment, we must accept that there are uncomfortable consequences and live with them and through them.
    Mr. Farr: Will my right hon Friend consider what he can do to lessen the impact of the borrowing rate on small firms, especially those in rural areas, which is preventing their expansion or their establishment, and is generally proving to be a handicap?
    Mr. Billen: The question of the existing minimum lending rate for small businesses was raised earlier, and answered by my hon. Friend the Financial Secretary to the Treasury. I cannot go further than that.
    Mr. Douglas: As the right hon. Gentle-mar has considerable knowledge of business, will he indicate what rate of return a small business might expect on an investment that would cover soaring interest rates and an abnormal level of inflation?
    Mr. Biffen: No.

    Royal Mint (Costs)
    Mr. Neubertasked the Chancellor of the Exchequer what is the total annual cost to public funds of production by the Royal Mint of each category of notes and coins currently in circulation.
    Mr. Lawson: Information about the costs of producing individual denominations of coins is commercially confidential. However, the total cost to public funds of coins produced by the Royal Mint for circulation in the United Kingdom in 1978–79, was some £14·7 million. The manufacture of bank notes is undertaken by the Bank of England, and cost £16·5 million in 1978–79
    Mr. Neubert: Would my hon. Friend be good enough to examine the contents of his trouser pocket? Does he agree that, after years of inflation, our range of coins has become hopelessly out of
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    date? Does he not further agree that the range should be adjusted to reflect present-day purchasing power? Will he take early action so that this will be seen as a result of the ravages of Socialism, and not as a result of his right hon. and learned Friend's policies?
    Mr. Lawson: I am aware of my hon. Friend's deep interest in this subject. All the coins in circulation are economic to produce. However, the question of the coinage is constantly under review.
    Mr. Freud: Will the hon. Gentleman explain why the costs are confidential? Further, what does he mean by "commercially confidential"?
    Mr. Lawson: Information is commercially confidential because the Royal Mint is in the business of producing coins for many foreign Governments, as well as for the British Government. Many competitors are also in that business.

    Inflation
    Mr. Parryasked the Chancellor of the Exchequer what is the current rate of inflation.
    Sir Geoffrey Howe: The year-on-year increase in the retail prices index up to February 1980 was 19·1 per cent. That figure overstates the underlying rate of inflation, since it includes the once-and-for-all impact of the shift from direct to indirect taxation in last year's Budget. A better guide to changes in taxpayers' costs is the tax and price index, which rose by 16·9 per cent. in the same 12 months.
    Mr. Parry: Is the Chancellor of the Exchequer proud of his achievement of almost doubling inflation in less than a year? Has he any positive plan to control inflation during the next 12 months? If not. will he do us all a favour, and resign before next week's Budget?
    Sir G. Howe: Surely the hon. Gentleman understands the extent to which the rise in inflation is caused partly by the accelerating growth rate in the money supply which we inherited from the previous Labour Government. It is caused partly by the rise in energy costs that has taken place throughout the world. That is demonstrated by the fact that the average level of inflation in all OECD countries has risen by 4½ per cent. in the

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    same 12 months. I assure the hon. Gentleman that he may have more confidence in the policies of this Government than in those of the preceding one.
    Mr. Tapsell: Is it a cause of satisfaction or concern to my right hon. and learned Friend that the latest figure on the savings ratio shows that it has increased yet further to the unprecedentedly high level of over 20 per cent?
    Sir G. Howe: It is not a factor that in itself causes me either great concern or exhilaration.
    Mr. Healey: Surely the Chancellor of the Exchequer is aware that the 6 per cent. increase that has taken place in the savings ratio since the June Budget is equivalent to a £12 billion fiscal deflation? If that does not concern him, it should. As he believes that Government increases in indirect tax, or increases in public sector charges have no effect on what he comically calls, "the underlying rate of inflation" are we to understand that we are to get another dose of the same in next week's Budget? Will there be a further increase in indirect taxation and further increases in public sector charges?
    Sir G. Howe: Even at the request of the right hon. Gentleman, I shall not anticipate next week's Budget Statement. There has been no change in the underlying savings ratio. Any temporary increase has been largely created by the increased savings that resulted from cuts in income tax, made in last year's Budget.
    Mr. Healey: Does the right hon. and learned Gentleman recall that the Government published an increase of 4 per cent., from 13 per cent. to 17 per cent., for the third quarter, before increases in tax had taken effect? We now hear that there is to be a further increase, to 20 per cent. If the Chancellor of the Exchequer is not prepared to take the question seriously, will be consult his hon. Friend the Financial Secretary to the Treasury who argued that in such a situation we should allow the public sector borrowing requirement to rise, at least in money terms?
    Sir G. Howe: I do not know where the right hon. Gentleman gets his facts.
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    In the first three quarters of last year, the savings ratio was 15·1 per cent.; about the same as that in the preceding year. It has now risen to about 16 per cent.
    Mr. Jessel: If the retail price index is supposed to be a measure of inflation, why does it contain items such as tomatoes? Such items are highly seasonal. They are particularly expensive at this time of year. Does my right hon. and learned Friend agree that many people choose substitutes and that the retail price index is, therefore, not an accurate reflection of ordinary household expenditure?
    Sir G. Howe: There are many components to the retail price index. Many of them can be escaped by a skilful buyer as they move from one level to another. I am glad that my hon. Friend is so adept at observing such factors and will refrain from eating tomatoes in the near future.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Ancramasked the Prime Minister if she list her official engagements for 20 March.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be having further meetings with ministerial colleagues and others.
    Mr. Ancram: Has my right hon. Friend had time to read the disturbing reports of the evidence given by the Civil Service Department to the Treasury Select Committee? Does she realise that, despite Government efforts, the number of civil servants will rise by 3,000 in the next financial year? Does she not agree that that is totally unacceptable? Is there no way of controlling this bloated bureaucracy?
    The Prime Minister: I am grateful to my hon. Friend. I saw those reports. They pointed out that, since the figures had been compiled, they had been overtaken by a cut of a further 2½ per cent. Assuming that the 2½ per cent. cut takes effect, the Civil Service will be below 700,000 by the end of 1981, for the first time since 1975. I agree that it is one of our highest

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    priorities to keep the increased numbers of civil servants down to a figure that the nation can afford.
    Mr. Canavan: When will the Prime Minister get the message that many of her supporters want her to abandon her disastrous economic policies? Does she not accept that such policies are causing price increases, rising unemployment, and savage cuts in essential social services? Having suffered a humiliating 13 per cent. swing against her man in Southend, a series of rebellions by her Back Benchers, and a defeat by over 100 votes in the House of Lords, does she intend to hang on stubbornly until her militant Friend the Duke of Norfolk introduces a Private Member's Bill to abolish the House of Commons?
    The Prime Minister: Most of our supporters want us to take those necessary but stern measures in order to get the country out of its economic difficulties. I am sure that the hon. Gentleman will not be surprise to know that I shall not be frightened off those policies by him or by anyone else.
    Mr. Alexander: When my right hon. Friend considers the imbalance in our contributions to the EEC will she bear in mind the simple expedient of imposing a surcharge on our oil supplies to our European partners until the account is once more in balance?
    The Prime Minister: I do not think that that would necessarily get the account in balance again. I would much rather go about it in an orthodox way by genuinely trying to get an equitable settlement of the budget between ourselves and our European partners. That will be our objective at the March meeting.
    Mr. James Callaghan: Is the right hon. Lady aware that conflicting reports are emerging about the Government's policy on that budgetary issue? Perhaps she could answer three questions. First, is it still her intention—to use her own phrase —to get her money back, or is she prepared to settle for a compromise? Secondly, is she prepared or ready to withhold our VAT contribution? Thirdly, does she intend to continue to treat the budget as a separate item, or is she ready to reach a compromise package that would involve lamb, fish or energy? In
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    particular, does she intend to maintain the price freeze on agricultural products that are in surplus? Those are questions to which the country wishes to know the answers.
    The Prime Minister: The right hon. Gentleman asked me four questions. First, I adhere to the phrase which I used immediately after the Dublin meeting, that we are prepared to compromise, but that we have very little room for manoeuvre. Secondly, in the last resort we shall have to consider withholding our value added tax contribution. Let there be no doubt about that. Thirdly, on the budget and a number of other matters which we need to settle—fish, agricultural prices, sheepmeat, and so on—we shall continue to treat each item on its merits. We simply must do so. Fourthly, the right hon. Gentleman asked about a price freeze. It is our intention to stick to a price freeze on products which are at present in surplus.
    Mr. Callaghan: I am—[Interruption.] I was proposing to say, and I shall still say, that I am obliged to the Prime Minister for clearing up a number of these issues. They are of importance, and a number of differing reports have emerged. However, on one issue, the right hon. Lady's reply was less than satisfactory. She will know that the House resolved unanimously twice—on 16 July and on 22 November—that Britain's contribution to the budget must be no greater than the receipts. Does she intend to adhere to that?
    The Prime Minister: With respect to the right hon. Gentleman, I answered that in my reply to his first question by saying that I adhered strictly to the phrase which I used after Dublin. There has to be a compromise, but I have not very much room for manoeuvre. The right hon. Gentleman is familiar with these problems. I am sure that he would not wish me to go further than that.
    Mr. Callaghan: I did not press the right hon. Lady on the details of these matters before her visit to Dublin, and certainly I have no wish to tie her hands behind her back now. But if she is still to command the support that the Opposition have offered her, it is important that we know where she is leading us. That is all I am asking her, and she has given the answers.
    Mr. Montgomeryasked the Prime Minister if she will list her official engagements for Thursday 20 March.
    The Prime Minister: I refer my hon. Friend to the reply which I gave earlier.
    Mr. Montgomery: Has my right hon. Friend seen reports of the vote in the Agriculture Committee of the European Assembly yesterday to increase farm prices to the housewife by 3½p in the pound? Will she confirm that, no matter what the views of the European Assemly may be, it is no part of her policy to allow price increases such as this?
    The Prime Minister: I saw the press reports that the Agriculture Committee of the European Assembly had approved price increases amounting to something like 7·9 per cent. Certainly I give my hon. Friend the assurance that he seeks. We have no intention of supporting any such figure—or anything like it.
    Mr. Mike Thomas: Will the right hon. Lady ponder today on the fact that, if she carries out her proposals to cancel the orders for the Torness and Heysham power stations, she will wreck the British power plant industry and throw thousands of workers on the dole?
    The Prime Minister: As I indicated in this House last week, the AGR programme is under review. One of the factors to be considered is the effect that any change would have on the nuclear power industry. So, of course, we shall take that into account in arriving at our decision.
    Mr. Churchill: In the light of the disastrous misjudgment of the Foreign Office over Rhodesia, and bearing in mind my right hon. Friend's oft-avowed friendship for the State of Israel, will she make it clear that it is no part of the policy of Her Majesty's Government to seek to undermine the Camp David agreements and the peace of the Middle East by seeking to install a Marxist terrorist Government on the West Bank?
    The Prime Minister: With respect to my hon. Friend, the opening part of his supplementary question bore absolutely no relation to the latter part. I take great offence, if I may so—and I do say so —at his remarks about the Foreign Office and, therefore, about my policy on Rhodesia, and they ill become him.
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    With regard to the Government's policy on the West Bank, as my hon. Friend knows, there are to be further talks on the Camp David agreement. We all hope that there will be an agreement. If by any chance there is not, we must prepare contingency plans to try to secure one in the future.
    Mr. Canavan: The hon. Gentleman should watch his friendships!

    EASTWOOD
    Mr. Allan Stewartasked the Prime Minister whether she has any plans to visit Eastwood.
    The Prime Minister: I have at present no plans to do so.
    Mr. Stewart: May I assure my right hon. Friend that she will be very welcome if she decides to visit Eastwood? Is she aware that the Conservative-controlled Eastwood district council has held its rate increase to 1p, without cutting essential services? That is in marked contrast to the savage and irresponsible increases imposed on ratepayers by surrounding spendthrift Labour authorities.
    The Prime Minister: I am grateful to my hon. Friend, and I congratulate the Eastwood district council on having regard to the capacity of its ratepayers to pay rate increases by keeping this year's increase down to 1p, in contradistinction to many Labour district councils in Scotland. Dumbarton, for example, has put up its district rate by 45 per cent. Glasgow has put up its rate by 30 per cent. Ratepayers in those areas must wish that they had Tory councils, too.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Dubsasked the Prime Minister if she will list her public engagements for 20 March.
    The Prime Minister: I refer the hon. Member to the reply which I gave earlier today.
    Mr. Dubs: Has the Prime Minister seen the reports in today's papers that a doctor at St. Thomas' hospital believes that up to 1,000 kidney patients are

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    dying every year for want of dialysis treatment? Will she say what action her Government propose to take to stop this appalling waste of life?
    The Prime Minister: As the hon. Gentleman knows, the Royal Commission on the Health Service indicated that it would be quite possible to spend almost the whole of the national income on the Health Service if one had to respond to every demand. It is not for us to determine the priorities. However, as far as I know, the priorities for kidney machines are different from one area health authority to another. Everyone would like very much to spend more. But to do that, we must first as a nation earn more. As the hon. Gentleman knows, our policies are directed to that end.
    Mr. Robert Atkins: Does my right hon. Friend recognise that many Government supporters welcome her contribution to increasing the number of reserve forces by encouraging employers to release more people for the Territorial Army and Volunteer Reserve? Will my right hon. Friend comment on a possible increase in bounties, which will go even further to encourage recruitment?
    The Prime Minister: We have increased the bounties and, because we think extremely highly of the Territorial Army and the services that it performs, we are doing everything possible to encourage employers to release people for service in the Territorial Army. I hope that the campaign will be successful.
    Mr. Ford: Will the right hon. Lady take an opportunity today to peruse the memorandum sent her recently by the Confederation of British Wool Textiles? When she replies to it, will she ensure that she makes a positive reply concerning unfair trading practices, instead of adding to the endless succession of negative replies from departmental Ministers about the matter?
    The Prime Minister: I have seen that document. Of course we wish to get rid of unfair trading practices. As the hon. Gentleman knows, where we find them and where we find dumping, we shall pursue with our partners in Europe the possibility of taking action.
    Sir William Clark: We must, of course, produce more before we can spend more on the social services, including the Health Service. Will not my right hon. Friend agree that the Health Service is suffering from over-administration? What can the Government do to cut down the huge bureaucracy in the Health Service, the size of which is to the detriment of various services to the public?
    The Prime Minister: As my hon. Friend knows, we are introducing legislation to reduce the administration by one layer, but I cannot reinforce too strongly what he says. It is necessary to reduce bloated bureaucracy wherever it occurs, whether in central Government, local government or public agencies. We must vigorously pursue that policy.
    Mr. David Steel: Have the Prime Minister and her colleagues given thought today to the figures announced yesterday for income increases during the year? Does the right hon. Lady agree that inflation is now at a runaway level? Will she consider the message from the people of Southend, where the swing against the Government was greater than that in the first year of any Government since the First World War?
    The Prime Minister: The figures announced yesterday were for increases in average earnings, which is different from the figures for settlements. As the right hon. Gentleman will be aware, the CBI published figures for settlements showing that 52 per cent. are at 15 per cent. or below, which gives a different picture from the 20 per cent. increase in average earnings.

BUSINESS OF THE HOUSE
Mr. James Callaghan: Will the Leader of the House state the business for next week?
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): The business for next week will be as follows:
MONDAY 24 MARCH and TUESDAY 25 MARcH—Remaining stages of the Transport Bill.
At the end on Monday:
Motions on the Mineworkers' Pension Scheme and the Redundant Mineworkers Concessionary Coal (Payments Scheme) Orders.
Motion on European Community document 4845/80 on convergence and budgetary questions.
At the end on Tuesday:
Consideration of Lords amendments to the National Heritage Bill.
Motion on the HMSO Trading Fund Order.
WEDNESDAY 26 MARCH—AS already announced, my right hon. and learned Friend the Chancellor of the Exchequer will open his Budget Statement.
At Seven o'clock the Chairman has named opposed private business for consideration.
Motion on European Community document 5394/79 on protection of workers from harmful substances.
THURSDAY 27 MARCH—Continuation of Budget debate.
FRIDAY 28 MARCH—Private Members' motions.
MONDAY 31 MARCH—Continuation of Budget debate.

BUSINESS OF THE HOUSE

  DEBATES ON EUROPEAN COMMUNITY DOCUMENTS
  The relevant published reports of the European Legislation Committee are as follows:
  4845/80 (Budget Questions): 20th Report HC 159-xx Para. 1.
  5394/79 (Harmful Substances): 6th Report HC 159-vi Para. 2.
  Mr. Callaghan: I understand that the Budget debate is to take four days, which is normal, but there is a day owing to the House on the public expenditure White Paper. I appreciate that the Government are running into difficulties because of the Easter Recess, but will the Leader of the House assure us that there will be a separate debate on the White Paper after Easter? Otherwise, there will be a departure from the usual practice, which will be ungenerous to the House. I am sure that that is not the right hon. Gentleman's intention.
  Secondly, I appreciate that the Leader of the House has moved the EEC budget debate to Monday, instead of putting it on tonight after all the agriculture measures, but the debate on the Transport Bill could run on. The budget debate is important not only for this House but for its impact on Europe, and it should have publicity. Will the right hon. Gentleman assure us that the debate will start not later than 10 o'clock on Monday, with the remainder of the Transport Bill on Tuesday? Even then it will be difficult to get publicity, but it is important that we should not start the budget debate at midnight, or some other ragged time, because the Transport Bill is running on.
  Mr. St. John-Stevas: I am grateful to the right hon. Gentleman for what he said in relation to myself.
  The public expenditure White Paper will be relevant to the Budget debate. However, the right hon. Gentleman's request for a day at a later stage is very reasonable, and I shall certainly give that sympathetic consideration.
  I agree with the right hon. Gentleman that it would be desirable for the debate on the EEC budgetary document to start at about 10 o'clock. Thanks to convergence through the usual channels, I understand that that is likely to come about. I am grateful for that facility, which will be for the benefit of the whole House.
  Mr. Peter Bottomley: Will my right hon. Friend say whether there is likely to be a Supply day before the Easter Recess? Will it be possible, through the usual channels, to have a debate on an industrial dispute that is likely to occur after Easter, which is important but not urgent under the rules of the House and which concerns the NALGO threat not to

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  collect rates from owner-occupiers but to carry on collecting from council tenants?
  Mr. St. John-Stevas: I am afraid that there is not room for a Supply day before the recess. I am also afraid that there will not be a day for a discussion of the important matter that my hon. Friend raises. However, I am sure that he will manage to have it discussed in some other way.
  Mr. Cryer: Will the Leader of the House find time for a debate on the textile industry? Is he aware that in January and February there were half as many redundancies in the West Yorkshire textile industry as in the whole of 1979? Is he further aware that the textile and clothing industry is the third largest employer in this country and is of vital importance? Will he accept that unless the Government are prepared to give time for a debate people will rightly conclude that they do not care about the Lancashire and Yorkshire textile industry and its workers?
  Mr. St. John-Stevas: It would be wrong to conclude that the Government are not concerned about the textile industry, which has been the subject of statements and questions in the House. I am afraid that I cannot promise a debate before the recess.
  Mr. du Cann: Reverting to the first matter raised by the Leader of the Opposition—it is very much in the interests of the House—namely, that due to the late publication of the public expenditure White Paper we have missed the opportunity for debate early in the year, does my right hon. Friend agree that instead of having a day soon after the Budget debate it would be preferable to have it a little later in the year? The House would then have an opportunity to re-and its timing with my right hon. Friend, bear in mind that other days appear to be slipping from the programme? For example, a debate on the reports of the Public Accounts Committee is overdue.
  Mr. St. John-Stevas: I am grateful to my right hon. Friend for his suggestion. I shall be happy to discuss such a debate and its timing with my right hon. Friend the Leader of the Opposition and other hon. Members to see what is most convenient for the House as a whole.
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  I also note my right hon. Friend's remarks about a debate on the Public Accounts Committee. I hope to be able to satisfy him within a reasonable time.
  I believe that there is some advantage in relating the publication of the public expenditure White Paper to the Budget, so that matters can be discussed together.
  Mr. Spearing: Is the Leader of the House aware that many Back Benchers with an interest in the EEC budget convergence document are grateful to him for changing the time of the debate? However, will he assure the house that in future he will not mix his subjects, which creates more trouble than it is worth? Does he agree that certain problems relating to the documents arise from tardy consideration of the recommendations of the Select Committee on procedure concerning EEC documents, and particularly their consideration upstairs? What consultations has he had since the topic was raised, six months ago?
  Mr. St. John-Stevas: Consultations have been taking place.
  On the hon. Gentleman's first point, I cannot agree that subjects were mixed. About 70 per cent. of the EEC budget is concerned with agricultural matters. Following representations made to me, and after the most generous response from the Opposition Front Bench over the Transport Bill, I was able to make a rearrangement more for the convenience of all hon. Members.
  Mr. James Callaghan: My right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) tells me that Government amendments were tabled on the Transport Bill on Tuesday, Wednesday and again today. There are four new clauses and 61 amendments. We want to co-operate to try to get the Transport Bill through. However, will the right hon. Gentleman have a word with the Minister of Transport and ask him to restrain his enthusiasm for more amendments? Otherwise, the House is likely to have to sit through Tuesday night.
  Mr. St. John-Stevas: I am always glad to have a word with my right hon. Friend the Minister of Transport. However, the progress that we make on Monday and Tuesday is determined not only by the number of amendments but by the attitude of hon. Members. I am extremely

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  grateful to the right hon. Gentleman for the co-operation on this matter.
  Mr. John Page: During the coming week will the Leader of the House discuss with Mr. Speaker, if that is appropriate, or through other channels, an arrangement whereby hon. Members taking their seats after by-elections may be called immediately at the end of Question Time, instead of having to wait for other business, so that the many by-election victors in the Conservative Party will not have to wait so long for the cheers and applause that they will receive from the House as a whole?
  Mr. St. John-Stevas: That is an interesting suggestion. I hope that my hon. Friend will not live to regret it. I shall consider it.
  Mr. Foulkes: Is the Leader of the House aware of the unsatisfactory way in which Scottish business is dealt with, in respect of statements? The Secretary of State for Education and Science has made statements that cover Scotland, and other statements about Scotland have been covered by written answers. Will the Leader of the House, either in all-party discussions or in some other way, consider some means by which Scottish Members can have an opportunity to cross-question the Secretary of State for Scotland when major announcements about Scotland are made?
  Mr. St. John-Stevas: The hon. Member has made a valid point. However, sometimes it is not possible to have two separate statements, and frequently Scotland has to take second place. I do not see why that should always be so, and I shall certainly consult the Secretary of State to see whether the position can be improved in any way. Scotland has rights in the House, and they should be recognised.
  Mr. Bruce-Gardyne: May I remind my right hon. Friend that more than two months have now passed since he promised the House a debate on British Leyland's corporate plan? I recognise that next week is fully occupied, but will he bear in mind that in the light of the latest accounts from British Leyland, this is becoming a matter of some urgency? Will he assure the House that he will fulfil that promise in the near future?
  Mr. St. John-Stevas: I promise my hon. Friend that the promise will be fulfilled. However, I cannot promise to do it next week.
  Mr. Flannery: Is the Leader of the House aware that on the 1 o'clock television news, one of the leaders of a Civil Service union whose members deal with income tax expressed the opinion that the payment of more than £10,000 million per annum due to the Inland Revenue was now being dodged? Does he not think that this is such a monumental scandal that it demands, in its own right, a major debate, in view of the fact that we now have 1,000 new inspectors to seek up to £4 million or £5 million lost in tax dodges? Does he not think that there should be an early debate on such a major issue?
  Mr. St. John-Stevas: I did not hear the broadcast in question. It is an important matter, but I do not know whether we can have a debate on it. However, I shall certainly take it up with my right hon. and learned Friend the Chancellor, who is responsible for the Inland Revenue.
  Mr. Marlow: Am I right in believing that the only debate on the European budget—which deprives Britain of £1,310 million that is fundamental to the economic programme of the Government and to various other programmes—will be on Monday night, starting at 10 o'clock? If so, will my right hon. Friend say how long that debate will be? Is it because the House can do damn-all about it that the debate is of such relatively short duration?
  Mr. St. John-Stevas: Subject to the co-operation of the Opposition, I hope that we shall be able to have a three-hour debate. That will enable any vote to take place at not too late an hour.
  I do not rule out a further debate on the subject. Let us see what happens after the Brussels conference. There will be a statement in the House, and we can review the situation then.
  Several Hon. Members rose—
  Mr. Speaker: Order. I propose to call those hon. Members who have been seeking to catch my eye, but I hope that they will help the House by asking brief questions.
  Mr. Faulds: Will the Leader of the House look into the possibility of extending the time available for discussing arts questions, which at present stand at the derisory figure of 10 minutes in the month, particularly since more and more hon. Members are now evincing an interest in such matters, as is evidenced by the attendance at recent Question Times?
  Mr. St. John-Stevas: I am aware that the time allocated to arts questions is not excessive, but there was no special question period allocated to the arts under the previous Government. Hon. Members who wished to raise matters on arts subjects had to take their chance during education questions. For the first time in the history of the House, we now have a special time for arts questions. Let us see what happens. I am keeping an eye on the matter. I would be the first person—in another capacity—to welcome more questions on the arts, particularly in view of the record grant that has been given to the Arts Council this year and the very favourable reception that it has received from all parts of the arts world.
  Mr. Rooker: When will the Leader of the House arrange a debate on the report of the Select Committee on Members' interests? Does he realise that it will be seen outside the House as nothing short of a scandal if the House has one further debate on Members' pay—such a debate is bound to take place before the summer —if we have not disposed of the disquieting report that was sent to the House and to the Leader of the House several weeks ago. He must arrange a debate as soon as possible.
  Mr. St. John-Stevas: I have had discussions with the Chairman of the relevant Committee on the subject, and if there is an opportunity for a debate in the reasonably near future I shall be happy to facilitate it. However, I do not think that it is the most urgent problem under consideration.
  Mr. Norman Hogg: Will the Leader of the House give an assurance that there will be a debate about early-day motion 505, standing in my name and in the names of several of my hon. Friends?
  [That this House deplores the failure of the employer's side of the National Joint Council for Local Authorities Administrative, Professional, Technical and Cleri-
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  cal Staffs to honour their commitment to local government officers on pay comparability, thus precipitating the present dispute; and calls upon the Government to impress urgently upon the local authority employers the need to reach an agreement consistent with the pledges given at the commencement of the joint comparability study.]
  The motion refers to the dispute that is emerging in local government and the action of the National Association of Local Government Officers, which has been precipitated by the dishonourable action of the employers' side on the national joint council. It is a serious matter.
  Mr. St. John-Stevas: I do not wish to become involved with the hon. Gentleman in a debate on the subject, because it is not an appropriate matter for debate in the House. The subject of his motion is a matter for discussion and debate between the local authorities and the union concerned.
  Mr. Jay: Is it not unprecedented that there has been no defence debate in the House and no defence White Paper before the Budget? Why have the Government got into this further muddle?
  Mr. St. John-Stevas: There is no muddle. As the right hon. Gentleman knows, the White Paper on public expenditure was delayed because of the reviews that were taking place on public expenditure. The review on the defence White Paper was part of that overall review of public expenditure. Therefore, they were both bound to be published somewhat later than usual. The White Paper will be published shortly before Easter, and I shall consider the opportunity for a debate at a convenient moment.
  Mr. Allen McKay: Will the Minister consider another debate on the steel industry, in view of the continuation of the present strike, the number of people who have now been laid off, and the fact that the Secretary of State for Industry has not made a statement to the House for a considerable time?
  Mr. St. John-Stevas: I am extremely concerned, as are other members of the Government, about that strike, both because it is damaging to our economy and because of the distress that it is causing to

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  individuals. I hope that in a short time it will be possible for my right hon. Friend the Secretary of State for Industry to make a statement to the House. That must depend on the progress made by the parties to the dispute. As the hon. Gentleman knows, it is not the policy of the Government to intervene in the dispute. We would welcome its end by a freely negotiated settlement between the parties.
  Mr. Douglas: Will the Leader of the House consider pressing his right hon. Friend the Secretary of State for Energy to make a statement to the House about the seventh round of licences, depletion policy, and the future of the BNOC? Because of their fundamental relationship to the Government's fiscal policy, should not that statement be made before the Budget debate?
  Mr. St. John-Stevas: I cannot promise the hon. Member that, but I assure him that the Government's policy of involving
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  private capital in the BNOC remains unchanged.
  Mr. Ioan Evans: On the question of the steel dispute, if we cannot have a debate can we have a statement on the serious situation that is developing as a result of the strike? Does the Leader of the House realise that hundreds of millions of pounds are being lost every week by the National Coal Board, the Gas Board, the Central Electricity Generating Board and British Railways, and that the private sector is finding life extremely difficult? The Government say that they have not intervened, but that is wrong. They have done so on cash limits, which is what caused the strike in the first place. Will the right hon. Member look at this seriously and agree to a statement being made next week?
  Mr. St. John-Stevas: I would be very glad if there were something constructive to say on this, but it really depends on the course of the negotiations, which I hope will be resumed and will result in a successful outcome.

EUROPEAN COMMUNITY (AGRICULTURE)
Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition.

That this House takes note of European Community documents 4896/80 with addenda I and II, and 5069/80 on agricultural prices and markets; 11337/79 with Addendum I, and 4885/80 on Common Agricultural Policy economy measures; R/769/78 on sheepmeat, and the Ministry of Agriculture, Fisheries and Food's supplementary explanatory memorandum; 5720/79, with Corrigendum I, and 8611/79 on agricultural structures; and 8248/ 79 on liqueur wines; and supports the Government's intention on 1980–81 agricultural prices and the economies package to seek an agreement which is aimed at reducing the production of surpluses and the cost of the Common Agricultural Policy; and on sheep-meat, structures and liqueur wines, to agree to changes in existing policies and new policies only if these are fully consistent with the essential interests of the United Kingdom.

In terms of its impact on the economy and its impact on Europe, I suppose that today's debate is one of the most important that this House could have in the course of a parliamentary year. Certainly the dimensions of the figures dealt with in the various documents before the House are on such a scale that obviously they have an immense impact not just on British agriculture and the European scene but on the whole of the British economy.
I begin by reviewing the present situation. I shall go back and look at it in the context of last year's price agreement. Last year we achieved the lowest increase in common agricultural prices since Britain became a member of the Community. For the first time we achieved a freeze on the major items in surplus—milk and dairy products. Also, for the first time we came out of that price fixing with a net benefit to Britain, as opposed to the many previous agreements in which there had been a substantial loss for this country.
Looking back on the discussions of that time, and also at the more recent statements of the right hon. Member for Barnsley (Mr. Mason) about last year's agreement, I should point out the importance of getting into perspective all the factors in complicated negotiations such as these. It was said by the Opposition at the time that it was appalling that the British Government should have given way to a 1½ per cent. increase in prices of everything other than milk when originally the Commission had proposed a price freeze.
In reality, the Commission's proposals at that time were six months out of date. The Commission revised its figures, and I made clear in a similar debate last year
3.51pm
The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker): I beg to move,
that although we were against price increases for those items in surplus we would consider the other items in accordance with the new figures. Therefore, the one point of controversy last year was the 1½ per cent. increase in the price of sugar. The fact is, of course, that the total cost of that to the United Kingdom was £12 million, but the total benefit of the butter subsidy that we negotiated and that was not in the original proposals of the Commission was £65 million. I bring that point out at the beginning.
In this debate I shall state the objectives and desires of the British Government. In eight other capitals Ministers will have made similar statements about their objectives. At the end of the day, as with the last Government, no one Government will have all their proposals and suggestions accepted. Therefore, negotiations will take place.
The objective of the British Government in these negotiations is to begin to tackle the ghastly problems of surpluses that we have inherited. Secondly, it is our objective to see that because we are at such a disadvantage in terms of the cost of the CAP Britain comes out of the negotiations as a net beneficiary without piling on a further deficit.
Last year we negotiated, for the first time in this Government, the first green pound devaluation. Since then we have achieved two further green pound devaluations. This is the first time that a British Minister has been able, at the Dispatch Box, to start such a debate by saying that British agriculture no longer has the disadvantage of negative MCAs against us. That is a major change, and it is due in part to the difference in the exchange rate and in part to three green pound devaluations.

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The benefit of those green pound devaluations will primarily come through in the income to British farmers during the calendar year 1980. The devaluations will also give them considerable advantage in terms of competition. Looking back on the period before this Government came to power, I believe that it will be decided by history that the positive decision of the Labour Government not to devalue the green pound and to maintain a massive MCA disadvantage against British agriculture was a classic error. It was a mistake for which British agriculture is now paying a considerable price.
For two years the negative MCAs against us never went below 24 per cent., and at times rose above 40 per cent. This created a situation in which a whole number of spheres of British agricultural production were at a massively adverse disadvantage. Perhaps of paramount importance, it also created a period in which it was not possible for British agriculture to look at the possibility of exporting to Europe because the disadvantage was so total and complete. Therefore, the advantage that we could have been building up in that period of establishing potential exports abroad was lost to us by the positive decision of a Government.
Mr. Douglas Jay: Does the Minister agree that the disappearance of MCAs was primarily due to the rise in exchange rates? As the Chancellor of the Exchequer told us earlier today, that is wholly due to market forces and not the Government. Therefore, the Government can hardly claim credit for it.
Mr. Walker: I said that it was due partly to exchange rates and partly to three green pound devaluations, none of which was welcomed by the Opposition and all of which were refused by the Opposition when they were in power. I would be very happy if the Opposition made clear their position today. However, whenever I announce a green pound devaluation all I hear is the Opposition saying that this will have an effect upon prices.
Mrs. Gwyneth Dunwoody: Of course it will.
Mr. Walker: Yes, quite. I think that British farmers and British agriculture generally would like to hear that that is the Opposition's prime concern.
The fact is that under a Labour Government food prices went up by 120 per cent., of which 10 per cent. could be attributed to measures of the CAP. Therefore, 110 per cent. of the increase in food prices was nothing to do with the CAP. But in order to pursue that green pound policy the previous Government did immense damage to British agriculture. I am very pleased that I inherited from the then Shadow Cabinet —for some reason I was not a member of it—a promise and a firm pledge that we would abolish the green pound differential in the lifetime of a Parliament. We have achieved that in only nine months, and it is of considerable advantage to British agriculture.
In a debate like this it is important to reflect on the development of the CAP to the position that we face today. That development is interesting. It is particularly interesting in the light of the Opposition amendment, which I warmly welcome and applaud. The amendment demonstrates a remarkable conversion. I am happy that we have an Opposition who so clearly state that they hope that I would withhold any agreement rather than have anything other than a plan to reduce the surpluses of milk and sugar. That is good. I am glad that my teach-ins over the last nine months have brought them round to that frame of mind, because I am referring to a Government who, in their lifetime of responsibility for the CAP, watched the budget worsen. In 1974 the CAP budget was £1·6 billion and when I took office it was £7 billion.
As regards price fixing for which they were responsible, not only were there increases every year, and not only were there increases for items that were in surplus every year, but quite remarkably—
Mr. Dick Douglas: On a point of order, Mr. Deputy Speaker. I apologise to the right hon. Gentleman for interrupting his speech.
During the announcement of next week's business, the Leader of the House read out long statements with long numbers on them about the orders that are

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to be debated. It is difficult for Back Benchers to take down such numbers and the Vote Office, when we go to it, finds increasing difficulty in knowing the numbers of the documents. May we have some indication, either through the Chair or through the usual channels, how we can obtain these orders? Perhaps a notice could be put in the No Lobby giving next week's business as soon as possible.
Mr. Deputy Speaker (Mr. Richard Crawshaw): As I understand it, every hon. Member has the documents. If there is any unusual difficulty, perhaps the hon. Gentleman will notify the Chair of it.
Mr. Richard Body (Holland with Boston): Further to that point of order, Mr. Deputy Speaker. The Vote Office could not have been more helpful to anyone making an inquiry. The Vote Office had readily available for each of us who went there a great bundle of documents parcelled up ready to take away.
Mr. Deputy Speaker: The Vote Office is always helpful. If it cannot provide the documents, it is not normally its fault. As I understand it, the documents are there. However, I do not want to waste the time of the House. Does the hon. Gentleman wish to persist?
Mr. Douglas: I apologise, Mr. Deputy Speaker. I am talking not about the orders that are being debated now but the orders for next week.
Mr. Deputy Speaker: I misunderstood the hon. Gentleman. I thought that he was talking about the documents being debated today. I do not know whether the orders for next week are in the Vote Office. I shall have inquiries made and if it is not possible to obtain them I shall try to discover the reason. However, I do not think we ought to take time in this debate on that matter.
Mr. Walker: I hope, Mr. Deputy Speaker, that the last few minutes will be taken as injury time.
As regards increases, in 1977–78 the Commission proposed an increase on milk of 3 per cent. in spite of the fact that it was in surplus, and the Government agreed to an increase of 3½ per cent. On sugar, the Commission pro-
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posed an increase of 3 per cent., and, in spite of the fact that it was in surplus, the Government agreed to an increase of 3½ per cent. The following year there was an increase of 2 per cent. on both milk and sugar, and as regards sugar it was way above the price paid by the Commission.
I agree with the Opposition—I am glad they have at last come to this conclusion—that it was a mistake to agree to all those increases for items in surplus. It is certainly our policy that when an item is in surplus it is a mistake to go for price increases in that way.
I should like to say a word of explanation which I believe is important about the current state of the budget proposals as put forward by the Commission. A whole range of phrases and words are being used by the Commission and others that give a rather distorted impression of what is proposed.
First, there is an impression that what is proposed is a package that shows great savings. That is not so. The current revised proposals of the Commission will show a total expenditure on the CAP of £7,153 million, which is £4 million higher than last year. So compared with last year there is not a proposal from the Commission showing a saving on last year; but there is a proposal showing a saving on the first proposals of the Commission as regards this year. I think that that piece of mythology should be cleared up. We are talking not about a package showing savings as compared with last year but about savings compared with the proposals that were rejected by the European Parliament.
Mr. Tom Ellis: Is the right hon. Gentleman referring to the normal value of the expenditure or its value in real terms?
Mr. Walker: I am referring to its value at current prices. One could argue that, because of inflation fluctuations, the position had changed in real terms and therefore that it was less. But there is a myth that, compared with last year, a saving of 828 million units of account is proposed. That is not a reality. It is savings on the original proposals about which I am talking.
The second factor is that I strongly object to the use of the word "saving"

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when for a large chunk of it we are talking about additional levies and taxes. I hope that both the Government and the Opposition will avoid misuse of the word "savings". A very substantial proportion of the savings on the original proposals—about 550 million EUA out of 820 million EUA—are proposals for levies on both milk and sugar which will bring in extra income to meet the extra cost.
Further, I should like to make it clear that, of this enormous budget, about 70 per cent. is involved with the problems of surpluses and the disposal of them. That is the total adverse effect of the CAP in its present form.
Then we come to the difficulty of revising the budget. Again, I want to put clearly before the House certain basic figures which relate to the manner in which the budget operates, which is positively against countries such as our own which is basically an importing country as opposed to an exporting country. I have given figures to the Scrutiny Committee—which I hope members of the Committee who are present will forgive me for repeating—of the gainers and losers because of the budget effects of this system. I shall take the figures for 1980, based on a projection of the current position of the CAP. I believe that it is safer than doing it on the Commission's proposals in that it is unlikely, as I shall explain later, that the Commission's proposals in their present form will be accepted.
If we had a projection of the current CAP price system operating throughout 1980, the gainers in the budget would be Holland, with a gain of £379 million, Denmark £278 million, France £205 million, Ireland £255 million, Italy £292 million and Benelux £38 million. The only two losers would be Germany, which would lose £228 million, and the United Kingdom which would lose £1,170 million.
Mr. Jay: Those figures are the effect of the CAP only and not of the whole budget, as I understand it.
Mr. Walker: These are the effects of the CAP only—and they are figures which have been prepared not by myself but by the Commission. They come from Commission documents.
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Germany is understandably perfectly happy to pay that price, partly because it can well afford £228 million but also because the operation of the MCA system gives Germany a colossal trading advantage in foodstuffs and food products over this period. So for Germany the CAP is a beneficial regime. Therefore, we have the problem that the United Kingdom is the country that is most adversely affected by the CAP, and it is for this reason that Her Majesty's Government are, quite rightly, demanding a very substantial readjustment in the budget.
Mr. Nigel Spearing: I was with the right hon. Gentleman a week ago when he gave those figures. Will he agree two matters? The first is that that position was perfectly clear in 1971 before we entered the Common Market. Secondly, will he reconsider the suggestion that I made to him a week ago that the CAP is the result of a price, production and political spiral in that whatever people may want when it comes to political clout individual members of the Council cannot disagree with the CAP because of the political position in their own countries or parts of those countries? For reasons of construction, it is now out of control. Britain will always be the least benefited because of the structure of the matter.
Mr. Walker: I hope that the hon. Gentleman has an opportunity later to complete his speech. His first point is a most unbelievable criticism of his own Government. If the hon. Gentleman believes that this was recognisable in 1971, it is a monstrous condemnation of his acceptance of the deal renegotiated many years later by the Labour Government. When the Labour Government came to power in 1974, the CAP budget was £1,600 million. The disposal of surpluses was not primarily involved. In 1974, let alone 1971, the present size of dairy surplus was not foreseeable. If it was, that is an enormous condemnation of the Government that the hon. Gentleman supported.
It is important to have security of food supply in Europe. It is immensely important to have the trading advantage, of considerable food resources of our own. There is advantage in having a common external policy for food. I agree that a system has evolved in a number of commodities where a number of countries

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have a deep vested interest in continuing Community financing of unnecessary surpluses. It is in the interests of Europe, over a period, to change that position. I know as a political fact, like my predecessors, that this will take time. It will mean directing Europe into other areas of production. It will mean understanding the social, political and other economic problems.
It is the task of the British Government to point out constantly and to erode the principle of producing surpluses that Europe does not want. These surpluses can only be disposed of at the cost of disrupting world markets, with adverse effects for many countries.
That is the road we should pursue. It is the road I shall pursue at the talks. The inbuilt position of the European countries concerned means that we shall not achieve dramatic change. It is, therefore, correct for the British Government to pursue overall adjustment of the budget to compensate Britain for the adverse effects of the CAP.
Mr. Geraint Howells: Does the right hon. Gentleman agree that the common agricultural policy can be reformed within the next five years?
Mr. Walker: To answer that, I would have to be able to speak for eight other member countries with all their diverse problems. I believe, however, that one can shift over five years—I shall deal with this matter in regard to the Commission proposals—to a much greater degree on the principle that those who produce the unwanted surpluses should meet the cost of disposing of them outside the agriculture market. I believe that this principle could be pursued with some success over the years.
Mr. Tony Marlow rose—
Mr. Walker: This is the last time I shall give way. I have already given shall give way.occasions.
Mr. Marlow: I am grateful to my right hon. Friend. He says that there is unlikely to be any dramatic change in the CAP and that he is striving—we are all behind him—to get each country to pay its own contribution towards surpluses. On top of that, this country is paying £35 a head more a year for food
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than we would be if we were buying at current world market prices. Not only should we be getting money back on the budget deficit; we should also be getting money from Europe because we are subsidising its farmers.
Mr. Walker: Throughout my period in British politics, we have never gone out and bought food at world market prices. We have always had a system of agricultural support that has cost a great deal of money—[HON. MEMBERS: "A cost to the housewife".] The housewife makes some contribution to the Exchequer. This separation is part of Labour mythology. One can never measure in reality what would be the effect on world market prices if people were buying in different markets and different places. One has to be careful when using that argument.
Having expressed the difficulties of change, I should like to describe the current negotiations. There have, been two meetings of the Council of Ministers to discuss the latest proposals of the Commission. There is an incredible disparity of view on virtually all the Comission's proposals. It is not the case that Britain has one view and the rest another view. Almost every individual country has a separate view of the proposals. The majority of countries want a substantial increase in prices above what the Commission proposes. The major proposals on sugar quotas and the two levies on milk are rejected by the majority of the other countries.
The French Government have stated that our budget contribution should be linked with sheepmeat, fishing and CAP prices. This is not a fishing debate. In the view of the British Government—I am sure both sides of the House agree about this—fishing will be settled on fishing rights and fishing aspects. It has nothing to do with a trade—off in relation to other aspects. The destruction of the British fishing industry is not available as part of the negotiations.
The reality on sheepmeat is that the French Government have been acting illegally, not for six months, since the European Court decision, but for two and a quarter years. The court decision was made six months ago. It stated that for the previous 21 months the French Government had been acting illegally. I read in my newspaper this morning "Accept

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the rules or quit the game, Chirac says". I would say to Mr. Chirac that this is a very good motto. I would certainly say to Mr. Chirac "Accept the rules or quit the game".
The only country in Europe that has not accepted the rules, that is acting illegally—and the only Government in the history of the Community who have decided to ignore a decision of the European Court for more than six months—is France. This is not an Anglo-French dispute. This is the Community in its totality, the Commission, and the other member States taking the view that the French are acting not only illegally but wrongly on this issue.
I should like to take advantage of the debate to make clear a number of points on sheepmeat and the illegal position of the French. Some commentators, particularly one or two newspapers, constantly take the line that we should understand the position of the French sheepmeat producers and be more tolerant and understanding about it.
I wish to make clear, as the French Government know and the whole of the Community know, that the reason I have had the backing of all other member countries and the French have not is that, from the beginning there was never the intention or the proposal to undermine the position of French sheepmeat producers. From the day that this matter was discussed following the court decision, I made clear, like other member States and the Commission, that the French Government would be perfectly free to support their sheepmeat producers to whatever level they wished. That was always available to them.
We have always made clear that we would be agreeable to a Community-financed scheme based upon premium payments that would safeguard the position of the French producers. Such a scheme would also recognise that Britain produces 47 per cent. of the sheepmeat in Europe. If there is to be the advantage of a sheepmeat regime, who better to take advantage than the country that produces 47 per cent. of the sheepmeat? As for sheep on French mountains, there are one or two mountains in Scotland and Wales on which sheep are kept. We have equally difficult areas for sheep as the French.
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Therefore, we said we would support a Community-financed scheme that would accept a sheepmeat regime and recognise producers, with all their problems, throughout the Community. At the last Council of Ministers' meeting the French were totally isolated and condemned by the Commission and the Italian President. At that meeting the Council of Ministers said to the French "You can have a Community-financed premium scheme that does not undermine the French sheepmeat producers, is based on Community principles, and is perfectly fair and reasonable. We think that is enough to satisfy the needs of your producers. If you still feel uncertain about it you can have public intervention in France if you wish to pay for it. We will allow you to have that on top." Given that alternative, the French Government said "No, we want a scheme with Community-financed public intervention."
I say to those commentators who said, during the dispute, that the British were awkward and tried to make it difficult for the French, that that is just not true. I was pleased to have the opportunity, a week or so ago, of going to the main agricultural show in Paris and attending a press conference with the French media present. It was the first time that the French media were told that we would not go in and totally undermine sheep producers in France and then run scared—because that myth had been perpetuated in France.
The Commission has now taken that case to the Court for an interim injunction. It will be decided, and an announcement will be made within the next week or so. I trust that when it is announced the French will take the advice of Mr. Chirac and realise that it is important that any member of the Community should accept the rules of the Community and abide by them.
We are still prepared, as we have always been prepared, to have a properly based Community sheepmeat regime that recognises the role of Britain's sheepmeat producers on a fair and equitable basis.
Nor are we involved in paying compensation permanently to countries for the benefit that they have obtained by acting illegally. We are acting in the true spirit of the Community. In terms of being

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communautaire and European on this matter, it is not a case of Britain against France, with Britain being awkward; it is eight countries of the Community against France—although Ireland could perhaps be put in a bracket on its own, as it greatly benefited from the French illegal position. I suppose that it would be perfectly happy for some form of intervention to take place. The other seven countries have been against intervention. They have been in favour of a proper Community scheme—as we have—and totally united in condemning the French action.
Our own sheepmeat producers have had a difficult time as a result. For that reason, I announced substantial increases in the hill sheep subsidies for last winter. They are now running at £44 million a year. That was of considerable help to hill farmers.
Tcday I am announcing revisions in the fat sheep guarantee scheme. I am increasing the average rate for the year from £1.40 per kilogram to £1·55 per kilogram. That is scheduled in weekly payments throughout the year. It means that in the week after next the figure will go up to £1.68 for that week. In the immediate position it will push the price above what it is currently. Obviously, the figure varies It goes down below £1·50 at the peak of the season and comes up again. By next March it will be at £1·70 to £1·73 per kilogram.
The wool scheme is a mutual scheme based upon a wool price that creates an insurance fund against bad years. Therefore it is based on insurance principles. We are able to increase the amount to £1·15. I hope that these measures, combined with my hill sheep subsidy measures, will make it clear to the sheep farmers of Britain that we are determined to see that their presence and their skills continue to the benefit of this country.
I turn to the major items in the CAP proposals. We are faced with a surplus of milk of between 17 per cent. and 20 per cent. There is no easy way of tackling that surplus. The Government advocate—obviously, from the Opposition amendment, we see that they also advocate this—that basically one of the best methods is to put a price freeze on milk. That has its limitations in terms of its effect upon the surplus. I was the first Minister to
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succeed in obtaining a price freeze on milk. I did so last year. However, in the year since, milk production in Belgium, Italy and Germany has gone up by 2 per cent.; in France and Ireland it has gone up by 3 per cent. There is a substantial increase of milk over the whole Community. In the United Kingdom the quantity has remained broadly level. When one puts a squeeze on the milk price, people take on another cow or try to increase the yield from the existing cows, and it does not have an immediate effect. However, in principle it must be better to improve consumption by keeping the price low rather than putting it up. That will be our view on that matter.
I now turn to the two levies. The super levy has considerable interest, with the departure from Community principles that is involved. The super levy, in reality, for the first time is imposing national quotas. It provides that if one produces more than 99 per cent. of the milk that one produced in 1979 one will pay a levy of 84 per cent. of the price—obviously making it totally unprofitable to produce milk. That is a very interesting departure in principle. It provides that those who produce the future surpluses will meet the cost of disposing of them. I should like that principle to be extended to those who produce the existing surpluses over a period of time—obviously it could not be imposed immediately—so that they recognise that the cost must be borne in this way.
In principle, that is an interesting departure. In my judgment, in practice it would, in its details, operate unfairly towards the United Kingdom. First, it would freeze our self-sufficiency at about 64 per cent. of what we could produce. Secondly—here I need further exploration with the Commission—I am slightly nervous of a system that is based upon production going through the dairies. In this country, with the milk marketing boards, there is no difficulty in obtaining the figure. I am not so sure how we would obtain the figures in Italy and a number of other countries in the Community. Because of the degree to which milk was not carefully tabulated through the dairies, we might find that we were paying a levy, totally fairly, in accordance with Community milk production and

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our milk production, but that other countries were paying far less than the levy that they should produce.
Having discussed the super levy, I must inform the House that from the discussions at the last Council of Ministers I can see no possibility of its being accepted by the Council. All the other countries are against it. The Germans and the French now make the proposal that there should be a super levy upon milk production and farms that goes beyond so many litres per hectare. That would be superb for Bavarian farmers and small French farmers but totally disastrous for the British dairy herd. I must make it clear that there is no way that I shall accept any such scheme.
We did not oppose the 1½ per cent. basic levy suggested by the Commission—the principle of a flat rate co-responsibility levy—if it was not compensated by price increases. However, the new exemption proposed by the Commission would be unacceptable to us.
Last year both sides of the House were totally united when the Commission put forward proposals that would have created considerable exemptions for those with smaller dairy herds but very few for us. The latest proposals on the flat rate levy from the Commission show the exemptions that would apply to milk production—21 per cent. of the milk production of France, 40 per cent. of the milk production of Germany and 4·4 per cent. of the milk production of Britain. Therefore, I made clear to the Commission that if there is to be a coresponsibility levy it is not acceptable to us with any additional exemptions.
In terms of sugar, the other main area of surplus, there is a 4 million tonne surplus of production in Europe, which is equal to 42 per cent. of the sugar consumption of Europe, and we are perfectly agreeable to a reduction in quotas. But we have made it clear to the Commission that we are not agreeable to a reduction in quotas that reduces our quota by 24 per cent. and that of an equivalent producer, in terms of efficiency—that is France—by 4·2 per cent. The Commission has moved from that position. It has brought forward fresh proposals that improve our situation, but not enough. It has now agreed to pro-
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duce new proposals that will improve our situation still further, and obviously I will consider those when they are received.
I think that the whole House would agree that of all the surpluses that are sensible in terms of food production that of cereals is the most sensible. It is the most usable crop world-wide and, if we are going to pursue policies vis-a-vis the Third world and elsewhere, cereal surpluses will be more useful than milk surpluses. Also, in terms of security of supply and of the food chain, I would prefer a surplus of cereals to a shortage of cereals, and I am sure that is right.
In terms of cereal prices, however, I do not believe that there is a need for the increases suggested by the Commission, particularly in areas of hard wheat and maize, where the Community is incapable of producing what is required and we have to pay levies on imports from outside. I therefore hope that it will adjust the prices as far as these are concerned.
In beef—another important aspect, particularly for this country—I want first to make clear the position of the beef premium scheme. There have been many rumours and speculations about this, but I have no intention of agreeing to the elimination of the scheme unless something better is available in terms of the security and confidence of our beef producers, and that is certainly not available at the present time.
The Community proposal for a subsidy on suckler cows is a perfectly sensible one, and in principle we welcome it, but there is no justification for its applying only to the first 15 cows. In this country we have many herds of 40 or more cows; therefore the degree of help that we would receive would be much smaller than that received by other member countries with smaller herds. If the principle of a beef subsidy on the suckler cow is right, it is right for the whole European herd and not just for small herds. Therefore, we would pursue an extension of that.
It is certainly right that there should be some changes in the intervention system. A number of countries have abused the system with beef. The proposal that, in principle, there should not be intervention over a period of the

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summer months in Europe has a great deal of sense in it, but there must be a safeguard in that mechanism for a country such as ours because of our geographical and regional position. Otherwise it could happen that a substantial export of Irish cattle to this market in the summer months resulted in the total collapse of the market. Therefore, we shall obviously look at any Community proposals on the intervention system in terms of the improvement that it would make in respect of the confidence of British beef producers.
There are in the structural package some proposals that would benefit our pigmeat industry, but I must warn the House that I do not see any likelihood of that package, in its totality, being speedily agreed, partly because it has not been well prepared. It carries within it a whole range of very expensive and not very cost-effective schemes. Although the part that is connected with pigmeat is perfectly suitable for Britain and France, the other parts are of gigantic size, and many of them are not particularly appropriate for the common agricultural policy that is already costing too much.
I see no justification for substantial increases in wine prices, particularly as it is quite possible that there will be a substantial surplus again there.
Therefore, we are in for what would appear to be many weeks and months of difficult and tough negotiations, and I will just mention the factors that will affect my own thinking in conducting those negotiations.
The first is the importance to the British economy of retaining and, indeed, improving the position of British agriculture. It is of fundamental importance to us, in terms of our balance of payments, in terms of its being an industry with good labour relations and in terms of the overall contribution that it makes to the economy, both socially and in economic terms. In nine months we have brought about three green pound devaluations, the income benefit of which will be felt mainly this year; we have given the biggest-ever increase in hill farm subsidies; I have announced further increases for sheep farmers today. We have had a rather better winter than most would have expected, and providing the snows do not continue we look like having a much
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better lambing season than last year. The crops are looking good, and there are other similar factors that may help us.
I can assure the British farmer that the intention of the Government—it is our first desire and concern—is to see that by a combination of these measures, together with the action that may or may not be needed, depending upon circumstances, British agriculture continues to play an important part in the revival of the British economy. We must now concentrate a great deal on the potentialities of abolishing the MCAs. Anybody who takes the trouble to visit some of those areas where our people have succeeded in exporting on a substantial scale to Europe will recognise the range of the opportunities. For example, while in Paris for talks with the OECD and to visit the French agricultural show, I spent some time at the food counter of Marks and Spencer, where the biggest selling line is British bacon and another of the biggest is British cottage cheese, which is not available in France from other sources. Just on that one counter, in one location, the dimension of potential markets as yet largely unexploited was obvious, so I hope that we shall be taking advantage of those.
I can only end by saying that I do not think that a speedy change is possible in the CAP. I think that our influence is a good one, and my conclusion is that having a bad agricultural policy and supporting a bad agricultural policy is not being a good European.
4.37 pm
Mr. Roy Mason:: I beg to move, in line 6 of the Question, to leave out from 'wines' to the second 'and' in line 8 and to insert
"calls upon the Government to press for a price freeze on milk and sugar, and, noting that these two commodities which are in structural surplus account for over half the total cost of the Common Agricultural Policy, urges the Government to withhold agreement from any proposed settlement which does not include a plan to achieve a steady reduction in these surpluses".
I am pleased that the Minister of Agriculture welcomes this amendment on behalf of the Government. I believe that when he goes to Brussels he will need the solid backing of the House of Commons. The situation has worsened in the past two years, greatly to our disadvantage, and the more we can unite in giving the

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right hon. Gentleman support to fight the battles in Brussels, the better it will be.
I am sorry to say that for the first time in the 22-year history of the Common Market a survey conducted throughout all the member States has revealed that there is growing disillusionment with the image of the Community, and not just in the United Kingdom. Although it is true to say that the dissatisfaction is deeper and more widespread in this country, it is spreading throughout the other member States. The Germans are up in arms about the cost of food and the size of the budget; the French are continually dissatisfied with the CAP and the attitudes of the British; the Italians are angry at the lack of sufficient regional aid; and the Danes are concerned about a whole range of problems, especially fishing rights.
I believe that a clear indicator of this dissatisfaction and growing disillusionment with the Common Market, particularly within the United Kingdom, was the turnout at the last European elections, when less than one-third of the electorate of the United Kingdom bothered to vote, compared with 75 per cent. generally in our elections. This pattern was repeated in nearly every other country in the Community.
So my first point is that the image of the Community is bad and is tending to get worse. I think the House is now well aware of this disenchantment with the Common Market, and hon. Members as a whole, I think, see as one of our major tasks over the coming years the redefining of our country's attitude to Europe.
In our manifesto for the European elections we made our policy quite clear. We set out a programme of radical change for the Community including a fundamental reconstruction of the common agricultural policy. Indeed, we suggested a tentative timetable for that programme of change. Furthermore, we stated quite openly that if these changes were not achieved we, the Labour Party, would have to consider very seriously whether continued Common Market membership was in the best interests of the British people. This line of approach has also been endorsed by the Trades Union Congress.
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What does this policy of reconsideration mean? The Press and members of the Opposition party at the time immediately branded it as a thinly veiled threat to withdraw from the Common Market, despite the fact that the Labour Party conference in 1978 had overwhelmingly rejected a withdrawal motion.
The reality, however, is completely different. We said that we would make a real and genuine effort to transform the Community and our relations with it, we would work to change its underlying philosophy and if we failed—success was by no means guaranteed even by the Government—we would take a long, hard look at the position. We might decide to use varying degrees of sanctions or a policy of nonco-operation to achieve our ends.
For, let no one be mistaken, we are convinced in our belief that the Community must change and change radically. Our beliefs are not based on narrow nationalism or British self-interest. The fact is that the present structured common agricultural policy can never satisfy our needs and operates greatly against our consumers. Membership of the Community has clearly not brought with it many of the economic benefits for which we had hoped. A major cause has been the switch that was effected in 1970 in paying for the Common Market budget from the Community's own resources. The import levy system in particular hits Britain hard. Food prices have risen. Our trade balance with the Community has got worse rather than better and this year we have to pay more than £1·3 billion for these doubtful privileges.
Withdrawal from the Community would bring great problems—of that there can be no doubt. But it would bring with it some benefits. As we are a net importer of food, the consumer would be able to benefit from Community food surpluses—no doubt they would increase dramatically on our departure—instead of having to subsidise them. We would have to re-establish our traditional trading links. This would be difficult but not impossible—let no one doubt the size of the task. We could once more assert the sovereignty of Parliament and our electorate, and be able to determine our agricultural policy and progress. But I

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stress that withdrawal is not yet on the cards.
In the meantime, the Government, backed by the Opposition, should work hard for change. The most immediate and important problem is that of the unfairness of the Community budget and the common agricultural policy. These two problems are symptomatic of the problems of the whole Community.
As I said, currently our net contribution to the Community budget is more than £1·3 billion a year. In another three years, if there is no basic change, the contribution is expected to rise to £1·5 billion—nearly £30 for every man, woman and child in the country. Yet we, one of the least prosperous countries in the Community, are being forced to subsidise the economies of some of the richest countries in the Community, if not in the world. The reasons why our contribution is so unfair are manifold, but, keeping to the confines of this debate, I stress that the CAP is totally unsuited to the British economy.
The coming enlargement of the Community, with Greece, Spain and Portugal soon to join, provides the ideal opportunity to make the necessary changes to the Treaty of Rome and to the common agricultural policy, which has never had a British input.
Mr. Hugh Dykes: Why did not the right hon. Gentleman's colleague, the Minister of Agriculture, Fisheries and Food in the previous Labour Government, use his executive power, or use the veto against some of the price increases in the CAP, instead of just shouting about it?
Mr. Mason: He did.
Mr. Dykes: Does the right hon. Gentleman agree with me that, apart from a lot of hot air and shouting, no action was taken by the previous Government to keep prices down, and the only time the excess budget contribution was mentioned in a Labour White Paper was in the last of the six-monthly White Papers just before the election?
Mr. Mason: My right hon. Friend constantly used his veto powers and stood firm for Britain. On every occasion when, he was sent across to Europe he had the backing of the then Opposition. He
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genuinely tried to stand up for the interests of Britain within the Community on many occasions against all his eight colleagues.
The accession of three new countries to the Common Market will, among other things, mean an increase in the Common Market population of 20 per cent., a doubling of the numbers who work in agriculture and a 50 per cent. rise in the size of the Community's fishing fleet. The old policies, especially the CAP, simply will not work for the new and enlarged Community. Therefore, the enlargement of the Community could be the opportunity to deal with some of the structural problems, and a revision of the CAP is all the more urgent now.
Farmers and farm workers alike are appalled at the absurdities and iniquities of the CAP. They are appalled at the price of food and the fact that agriculture consumes at least 70 per cent. of the total budget. They are dismayed at the relative inefficiency of the "pocket-hankie" farms of some member States which are supported largely by Britain's unfair budgetary contributions. We do not deny for one minute that where these small farms are the sole source of income for the family, there is a social need to support them, but the support must surely come from the national taxpayer and not from the Community consumer. That is one major reform which needs to be pursued. Each country has its own peculiar problems in that regard, social as well as agricultural. If that social need were dealt with by national Parliaments, the burden on the CAP budget would be lessened.
As a contrast, Britain's agricultural industry has a fine record of production and productivity. The agricultural work force—2·7 per cent. of our working population—contributes 2·6 per cent. of our gross domestic product, and that is the best ratio of any member State. The average size of a farm in the Common Market is 42 acres, ranging from 17 acres in Italy to 32 to 35 acres in Germany, Belgium and the Netherlands and 54 to 57 acres in Denmark, Ireland and France. The United Kingdom average is 153 acres. While only 20 per cent. of holdings in the Community are of more than 50 acres, in the United Kingdom 55 per cent. of farms are bigger than 50 acres.

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The Community's farm structure, with its multiplicity of small farms, has seen changes over the past few years, but the continuing recession in Europe has slowed down that process. Alternative employment is now hard to find and the habits of a lifetime are hard to break. The restructuring that was being encouraged has now slowed down. Hence my suggestion of national financing for a social need.
At the same time, food prices in Britain—a matter of great concern to us all, especially to consumers and politicians—have risen to a level almost equal to those of our wealthier Common Market partners. It is about time the consumer received more consideration. This is just like our problem on fisheries. The common fisheries policy was fixed before we went into the Common Market and, therefore, there was no British input. The same applies to agriculture. The terms of entry did not take sufficient account of the very different circumstances of agriculture in Britain compared with those of other EEC member States.
The CAP is too producer-oriented and not sufficiently concerned with consumer interests. One of our main aims is to prevent the creation of food surpluses. The CAP can also be criticised for the way in which surpluses are disposed of to non-EEC countries with little chance of Community consumers benefiting from the existence of the surpluses. More thought and vigour should be applied to disposing of these surpluses to pensioners, schools and hospitals. Why should we be taxed on surpluses which we have not created and practically give away the surpluses at dumping prices, thereby affecting the economies of other nations, when, with a little ingenuity and thought for our consumers, our own needy could benefit from the food mountains created?
There is also scope for improvement in our relations with the Third world in disposing of food abroad. This is a major reason why the image of the Community is so tarnished. All in all, Britain gets the worst of all worlds from the CAP and the Community. Our generally sluggish industrial performance and our dependence upon imported food, coupled with our smaller but efficient agriculture industry, are totally outside the policies and
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the structure of the Community which were designed originally to accommodate the economies of other member States. Unless there is a complete reconstitution of the budget make-up and the CAP, Britain will continue to suffer. Unless we are able to get out of the present straitjacket, our economic future is threatened.
The export of lamb to France and the threat of imports of milk into the United Kingdom have created heated debate over the last few weeks. The Minister has done well to resist an expensive sheepmeat regime. But he knows that if the French allowed the unrestricted import of sheepmeat there would be serious detrimental consequences for French sheep farmers. The unrestricted import of liquid milk into the United Kingdom would have the same effect upon British dairy farmers, the household delivery system and our consumers.
The two issues are clearly related but in reality they have far more to do with the power of the European Court and our right to determine our agricultural policy than with particular problems of either British or French agriculture. It is not only the French sheep farmers who will suffer if France allows unrestricted access to her market. I am obliged to the right hon. Gentleman for dwelling on that problem during his speech. Let us, therefore, examine it.
There are 140,000 French lamb producers, most of them with flocks of fewer than 20 sheep. They are dependent upon expensive brought-in foodstuffs. Lamb is therefore a luxury meat in France. It is sold at high prices compared with United Kingdom lamb, which sells at two-thirds the price of French lamb. If British lamb had unrestricted access to France, the French believe that lamb prices there would fall by 20 per cent. and that most of their sheep farmers would be wiped out.
There would be a mass exodus to the towns, resulting in serious social and economic problems in a number of politically important rural areas. Cheap New Zealand imports of lamb to Britain—50 per cent. of our consumption—anger the French. They see British lamb exports crippling their industry while we import cheap New Zealand lamb.
Exporting to France will result in higher prices for British lamb. There will be

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an equalisation or a coming together of price differentials which will mean 10 to 20 per cent. price increases on lamb. That is likely to produce a knock-on effect on the prices of other meats. If there is an increase of 20 per cent. in the price of British lamb, consumer resistance may well reduce consumption, and that in turn will hit our own producers.
The Commission estimates that a 10 per cent. price increase results in an 11 per cent. drop in consumption. Therefore, the effects are not all one way—we have something to lose and something to gain. The French will not allow unrestricted access. They will argue that we should cut back New Zealand imports irrespective of the damage to the New Zealand economy. The French want a sheepmeat regime where the CAP budget bears the cost. If that happened there could be a high level of support prices, possible intervention buying and the prospect of a lamb mountain.
The problem for the French is not simply political. It is also a major social problem. There is a social need for support, but—and here I agree with the right hon. Gentleman—that support must be provided by the French. The United Kingdom should not have to help finance that. We must not allow a new sheepmeat regime in the Community that will add to our budgetary problems.
Mr. Geraint Howells: Is the right hon. Member aware that under the Treaty of Rome there is no need for a sheepmeat regime in Europe? Why bother about it?
Mr. Mason: The Minister has so far resisted such a regime. But we are afraid that gradually, as pressure increases, he will weaken and that consequently there will be an increase in the United Kingdom budgetary contribution for the introduction of a new sheepmeat regime.
Mr. Peter Walker: I fear that what the right hon. Member for Barnsley (Mr. Mason) has just said will be quoted by the French Government to illustrate how right they have been. There has never been a proposal for unrestricted access without a proper system of premium payments available to the French Government. The damage that the right hon. Gentleman says will be done to France has never been a threat. It is a myth put
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out primarily by the French Government and one or two commentators.
Mr. Mason: I am glad that the right hon. Gentleman is clearing up the matter. He went out of his way to try to explain that in his speech and it is a pity that he did not do that earlier. The French will not allow unrestricted access of sheepmeat to France. That would create great social problems in sensitive political areas in France. So far, the Minister has managed to resist the demand for a sheepmeat regime. He gave some assurances in his speech and in his last intervention. His announcement of increased guarantee prices for lamb today will boost confidence among our own hill sheep farmers.
Because I have dealt at length with that issue, it is now necessary for me to look at the threat posed to Britain by the import of ultra heat-treated or long-life milk. It is likely during this year that the European Court will once more be pressed to rule that UHT milk from France should be granted free access to Britain. If that happens, what will the Minister do following his posturing over the French resistance to British lamb?
The Minister should be warned that there will be a solid phalanx of opposition to the unrestricted entry of long-life milk. Trade unions, including the agricultural workers' union, USDAW, the General and Municipal Workers' Union, the Transport and General Workers' Union, the co-operative movement and the Labour Party will oppose its entry. The price of milk under this Government has increased by 22 per cent. in the past 12 months. We now have the dearest liquid milk in the Common Market, and so the British market has become especially attractive.
It must be recognised that if the unrestricted import of UHT milk is allowed it will remain a cheap import only until it has destroyed our household delivery system. The plan will be to flood the supermarkets and use UHT milk as a loss leader. That will threaten the profit margins of liquid milk retailers and will undermine the relatively costly doorstep operation. People will gradually become dependent upon this imported product and once UHT milk is established our personal delivery service will have been ruined. That will mean the loss of up

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to 50,000 jobs, from those employed in processing down to the delivery man at the door. The price of UHT milk will rise and our household delivery system will have been wrecked.
Therefore, we warn the Minister, the European Court, and the French that we will not be stampeded down this road.
Mr. Douglas Hogg: I am interested in the scenario depicted by the right hon. Member for Barnsley (Mr. Mason) in which supermarket sales of UHT milk will ultimately destroy our doorstep delivery service. How does the right hon. Gentleman reconcile that general statement with the experience in Scotland where about 50 per cent. of milk is sold by supermarkets and corner shops and where the remainder is still sold by door-step delivery?
Mr. Mason: The hon. Member for Grantham (Mr. Hogg) can ascertain what happened in Holland. When UHT milk was introduced there the doorstep delivery vanished very quickly. That is a practical example in Europe itself. Long-life milk which has a shelf life of six months will be much cheaper than our milk. That will be the initial attraction. Gradually people will be drawn to the supermarkets for their stocks. There will be no concern for the disabled or the old or those who are unable to travel to the supermarkets. That is how that service will be ruined. I warn the Minister and the House that if the European Court rules in favour of UHT milk we will oppose its import.
Mr. Douglas Hogg: Will the right hon. Gentleman give way?
Mr. Mason: No. So far, the Minister has been able to give some assurance that because of our health standards he may be able to argue within Europe that until there is harmonisation of health standards we shall resist.
The whole question of Community surpluses, especially of dairy products and sugar, must be solved soon. They are an expensive scandal which the British taxpayer and consumer cannot tolerate any longer. Just as we are seeking to serve the interests of the consumer and farmer on the sheep issue, so we are in this sphere. There can be no denying
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the urgent need for action to curb the ever-increasing surplus of dairy products.
The Commission estimates that there is a Community dairy surplus of about 17 per cent. That is probably an understatement, because nearly 40 per cent. of butter and the bulk of skimmed milk powder sold within the Community is sold at subsidised rates. The position is likely to become worse. As milk yields rise and the size of the dairy herd continues to increase, despite the Community schemes to reverse that trend, consumption of liquid milk and butter has declined everywhere in the Community. The consumption of cheese has increased, but that has had only a marginal effect on the overall problem.
The total cost to the Community is staggering. The milk industry alone now accounts for about 40 per cent. of total CAP spending. It is the equivalent of a subsidy of about £100 on every Community cow. In global terms, the Community's dairy policy costs about £250,000 each hour.
In the light of that, we must consider the question of the co-responsibility and super levies. First, we must ask whether there really is a dairy surplus or whether it exists only because of the level at which Community prices are fixed. Instead of debating the relative values of co-responsibility and super levies, should not we be debating what should be the proper price level for Community dairy products?
The main aim of the co-responsibility levy is to raise funds to be used to stimulate consumer demand. Surely, the best way to stimulate demand is to reduce the real level of retail prices instead of lining the pockets of the advertisers and European bureaucrats by introducing schemes which have dubious value and none of which has started to solve the problem.
We accept the need for action in the dairy industry. A price freeze is only the start. Last year the Minister managed to maintain the butter subsidy. That one act helped to save his face on the whole package. There is no proposal for its continuance. It would be ironic if we failed to maintain the full, wholly Common Market-financed butter subsidy for our own people and the Common Market continued to subsidise butter exports to the Soviet Union. There are no proposals to

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continue the beef premium scheme. The farmers need that scheme. The proposed suckler cow premium, though it is welcome, is biased against the United Kingdom as it is limited to the first 15 cows. The numerous small farmers of other nations will benefit to a far greater extent than our farmers who have larger herds.
We oppose ending the variable beef premium on at least two grounds. First, while maintaining adequate returns for farmers it ensures reasonable prices for consumers. Secondly, in the context of the general demand for a reform of the CAP, it is illogical to give up a scheme which exhibits many of the qualities for which we are looking in the CAP—namely, low prices, national support measures and taxpayer support for agriculture.
I turn to the question of the new sugar quotas. I do not believe that the Commission's recent proposals will be implemented without radical changes. That is the way in which the Community seems to work. I am convinced of the need for a different regime. With consumption falling, over-production increasing and the cost of £400 million to EEC taxpayers, things cannot go on as they are.
I warn the Government against cooking up any deals or trade-offs. That is the way of the Community. We cannot allow a concession on fish to be traded for a concession on lamb. We cannot accept a deal on sugar linked to a deal on budgetary contributions or oil prices. That is no way to determine a rational agriculture policy.
The Lome convention is sacrosanct. The African, Caribbean and Pacific countries would never forgive us if we allowed any inroads into their sugar entitlement of 1·3 million tonnes into the EEC. The proposal for sugar quota cuts is especially unfair to the United Kingdom. The initial proposal meant a cut of 29·4 per cent. I agree with the Minister that the cuts must be resisted as unfair and inequitable. We must recognise that a vast sugar mountain has accumulated. The cost of maintaining that surplus was a staggering £400 million last year. Prices must be frozen and agreement must be found on an equitable basis to cut the surpluses. The investment in cane sugar, the history of suffering caused by refinery closures and the needs of the
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ACP countries mean that the cane refineres must not again be subject to cuts.
We supported the Commission's request last year for a freeze on all products. At the outset, the Minister also supported that request. In his total endeavour he failed. This time we must take a stand to stop the creation of surpluses and stop increasing prices, because that brings about consumer resistance and more products are left unsold. We must force a reconstruction of the CAP. The United Kingdom must stand fast and be prepared, if necessary, to withhold levies or VAT, and to apply vetoes or sanctions. If we do not, the withdrawal syndrome will be real and the wave of anti-European anger will not be quelled.
This time we want a price freeze on all products in structural surplus. We want a plan to achieve a steady reduction in surpluses. A reconstruction of the CAP must begin with the objective of giving consumers and taxpayers a better deal. This time it is more crucial than ever that the right hon. Gentleman succeeds and that he is seen to succeed. If he fails and in his wake the Prime Minister also fails, that could be the spark that sets off the chain reaction for the withdrawal of Britain from the Common Market.
5.9 pm
Mr. Peter Mills: I welcome the chance to speak in the debate because it is time that the House had a full debate on these important issues. The House was treated to a pretty poor speech by the right hon. Member for Barnsley (Mr. Mason). The previous Administration had four and a half years to deal with the problems. The Labour Government had every opportunity. The right hon. Gentleman was right in many of his comments. The problems should have been put right long ago. It is now harder for my right hon. Friend the Minister to deal with these matters after four and a half years of failure to act. The agriculture industry looks in dismay at the failure of the previous Government to deal with those matters which hurt it so much, such as MCAs, the green pound, and the pig industry, which was clobbered.
It is double talk to suggest a total price freeze on all products. I wonder whether the right hon. Gentleman would be prepared to allow a total freeze on

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coal prices. The coal miners received a pay increase recently. The agricultural workers also received a pay increase, and rightly so. However, the farmers' costs have to be recouped. It is nonsense to talk in such a manner if we want increased and continued production. The right hon. Gentleman made an unsatisfactory and unfair speech.
Mr. Thomas Torney: Apart from being so shocked at the speech of my right hon. Friend, will the hon. Gentleman also take into account that it was the Tory Government of 1970 who took Britain into the Common Market? Does he not agree that they should have seen the very pitfalls that he is complaining the Opposition did not see when they were in Government? That Tory Government should have seen the pitfalls and not taken us into the Common Market with the CAP as it was constructed.
Mr. Mills: That was a very unfortunate intervention. The hon. Gentleman is a pleasant hon. Member, but he should remember all the chances that the Opposition were given for renegotiation. We have not had a chance to renegotiate. My reply to him is "Come off it".
On the CAP, we suffered four and a half disastrous years under the previous Administration. Now, thanks to the action of my right hon. Friend, we can compete on fairer and more level terms. The future may be uncertain because of high interest rates and rising input costs, but the Government have shown in concrete terms their willingness to support British agriculture, which I believe is vital to Britain's economic outlook.
Agriculture is a success story, despite four and a half years of Labour Government. My plea to my right hon. Friend is that he will continue to support that industry. Other industries are declining, and I challenge the Opposition to cite any other British industry that compares with the success story of agriculture. It is an industry without strikes, with high productivity, and one that responds to help, aid and encouragement-unlike many of our other industries. The message is clear. If we want to feed our people and help with the balance of payments, my right hon. Friend must build on that suc-
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cess and continue the good work. He will be well rewarded.
I have some pretty hard remarks to make about France and about some of our supporters. It is well known that the French have defined the Community over British lamb. Much is at stake over that issue. It is a matter of principle. The future success of the Community depends greatly on countries obeying its laws and legislation.
It may appear that some of my remarks are advocating changes that are illegal. However, the time is coming rapidly when we have to consider carefully the French Government's attitude towards Britain.
Mr. Robin Maxwell-Hyslop: My hon. Friend suggests that he may advocate a change that is illegal. If hon. Members recommend a change in the existing domestic law, they are not accused of making a recommendation that is illegal. It is not illegal to recommend a change in the existing EEC laws.
Mr. Mills: With respect to my hon. Friend, he has not yet heard my suggestion. We cannot allow the present position on lamb to continue. It is a Community matter. We may be forced to take some retaliatory action. Farmers in my part of the country are advocating that. It is sad for me to say that—as I am extremely pro-European—but I cannot envisage the French Government changing their attitude unless a message is sent to them in loud and clear terms. The Government must take action. Retaliation is not a pleasant word, but the French Government must be made to see common sense.
I hope that my right hon. Friend will consider the imports of Golden Delicious apples. They are destroying the market of British growers. The apples are heavily subsidised, and I believe that some of the subsidy is illegal. What would happen if this country was exporting Golden Delicious apples to France? We have played the game and obeyed the rules. We allowed potato imports because it was pointed out that it was right to do so. We have been consistent in our attitude. The French Government, in a small way, must be shown that we mean business. There must be some retaliation.

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We must support the Government's stand on the export of British lamb. I regret to report that in my county action is being taken which annoys me considerably. The organisers of the Devon county show have, once again, asked French producers to take part. It is totally wrong that French produce should be on show when we are not allowed to export our produce to France.
The position is even worse than that. I know of an individual company that has been forced out of the show because there is no room as a result of the French producers taking part. I hope that, throughout the whole of Britain, show organisers will consider the position carefully before allowing the French to display their produce while we are not allowed to promote and sell our lamb in France.
Even my local newspaper—which I rarely criticize—says that this is a matter for the politicians and for my right hon. Friend. It is right, but our policies must be supported loyally by people throughout the country. I hope that my point has been taken.
I turn to the state of agriculture in Britain. It is relevant both to the EEC document and the price review. If a balance sheet were drawn up, it would show that not all was gloom in agriculture. However, the concern felt and the difficulties faced by farmers can be understood. The green pound devaluations will be working their way through during the coming year. The effect of the devaluations will be a welcome uplift. Increases in milk prices will be reflected back to the farmer in due course. My right hon. Friend mentioned the hill cow subsidy, and payments are being made. We did not have much extra support from the Socialist Government when they were in power.
I welcome what my right hon. Friend has said about lamb, wool and potatoes. Producers will have extra confidence. I welcome the inquiry into the pricing mechanism in the dairy trade that will be carried out by accountants on my right hon. Friend's behalf. If we move forward in that area, it may be that producers will obtain a slight increase in their end prices. It is true that New Zealand lamb imports will be down. That should encourage our own producers. A major
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triumph for the Government is that the unfair competition that we had over MCAs has been considerably reduced. Surely that is a plus.
There are minuses. It is no good denying that interest rates are a terrible burden, not only on British agriculture but on every other business. The Government will have to consider the problem carefully. We cannot expect borrowings to decrease if interest rates remain so high. I know that overdrafts in my farming interests will increase considerably in the coming year as it will be necessary to borrow more to pay for the interest. Costs are rising at the rate of about 15 per cent.
I welcome the increase that our farm workers have had, but it will have to be paid for eventually. There are many problems for the British farmer. Unemployment is no friend of British agriculture. It depresses demand and makes it difficult for farmers to sell their produce. There is a gap between prices and production costs. If we intend to go forward and to build on success and on a successful industry, a way must be found to compensate for these costs, or at least to bridge a large part of the gap, otherwise production will fall.
The House may be interested to know that there is already a danger signal. Heifers in calf are 4·1 per cent. down, the lowest level for 10 years. Next year's June dairy herd could be down by 3 or 4 per cent. That is not a pleasant thought for the Government as they seek to maintain agriculture production.
I turn lastly—
Mr. Russell Kerr: Hear, hear.
Mr. Mills: I shall speak for a little longer now.
It was sad when the European Parliament voted for a 7·9 per cent. increase across the board. I hope that it realises the effect that that increase will have on the consumer and on Britain as a whole. If implemented, it would only increase surpluses. I am told that the United Kingdom contributions would increase by £160 million beyond the figure mentioned by the right hon. Member for Barnsley. A 1 per cent. increase in Community prices means about £20 million extra in United Kingdom contributions to Europe. A 7£9 per cent. increase

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is far too much and the decision was totally unwise.
I hope that my right hon. Friend will resist large increases in the Community price review, especially for products that are in structural surplus. However, there has to be a small increase to go some way to cover increased costs of production and, above all, to return to national Governments, if there is a social problem, the increased sums that they make available to their producers.
Mr. Maxwell-Hyslop: Will my hon. Friend be opposing the Opposition amendment, which calls upon the Government to press for a price freeze? He must do that if he shares the view that that is the wrong policy.
Mr. Mills: Yes, I shall be opposing the Opposition's amendment.
We must be selective. Where it is necessary to do so, my right hon. Friend is holding back. That is his policy where he has the power to implement it. He is holding back in wool, potatoes and sheepmeat. He can increase the end price, and he has done so.
I hope that my right hon. Friend will pay particular attention to horticulture. I know that he is doing so. There is much that needs to be done. Hidden subsidies are being paid in Europe. The Government of the Netherlands are assisting with oil prices. The German Government are to help pay the interest on the money borrowed to purchase oil for heating. The French Government are providing between £4½ million and £5 million to subsidise apple growers. The Government of Denmark are actively considering restricting imports from Dutch glasshouses. I am not an expert on these matters, but it is clear that they require careful examination. If we do not take action, many of our growers will go out of business.
I end by saying—I am sure that the hon. Member for Feltham and Heston (Mr. Kerr) will be pleased to hear me say that—
Mr. Torney: Yes, but we like the hon. Gentleman.
Mr. Mills: British agriculture has succeeded in spite of a Socialist Government. We must build on that success. We must do so in the interests of the
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United Kingdom, including the interests of farmers, farm workers and consumers.
5.18 pm
Mr. Thomas Torney: First, I thank the hon. Member for Devon, West (Mr. Mills) for the entertaining light relief at the beginning of his speech. The common agricultural policy existed before Britain entered the Market in 1970. It existed when the Government of the right hon. Member for Sidcup (Mr. Heath) took us into the Market. It was designed for the original six members, which in the main are self-supporting in food. As we all know, Britain is a long way from being self-supporting. That is why we are in the mess that we face today.
The previous Labour Government failed to obtain a better deal—I predict that the present Minister of Agriculture, Fisheries and Food will also fail—because of the original bad design of the CAP, inasmuch as it was designed for the Six and not for the Nine. It was certainly designed for the French and Germans and not for the British.
Mr. Douglas Hoggrose—
Mr. Torney: No, I shall not give way now.
The present Government and subsequent Governments will have problems because the French, the Germans and the other members of the Community will never agree—they are on to a good thing—to fundamental changes resulting in their having to pay for their surpluses instead of Britain.
Mr. Russell Kerr: That is right, Tom.
Mr. Torney: I turn to the milk and dairy industry generally, which is a vital part of British agriculture. The characteristics of our dairy industry are completely different from those of the other dairy industries within the EEC. The fundamental difference is that the United Kingdom does not produce all the milk that it needs, whereas all other EEC countries, except Italy, are in surplus. Milk production is more capital-intensive in the United Kingdom than in most other EEC countries. It has a relatively small work force with higher yields and herd sizes. Our herd size is more than four times the EEC average. Liquid milk consumption accounts for 49 per cent. of milk

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production in the United Kingdom. However, it accounts for only 14 per cent. in the rest of the EEC. Sales volume per person is higher than anywhere else in the EEC, with the possible exception of Ireland. Common Market countries would like to reduce our production of milk and abolish or slash our daily delivery system.
Our doorstep delivery system is excellently organised It is now unique, with the exception of Ireland. We are the only country in the EEC, and probably in the world, that operates such a widespread system. That system is threatened by the EEC. It is threatened by its attempts to abolish our Milk Marketing Board. In turn, its abolition would create chaos in the industry and cause the inevitable loss of our delivery system.
Our doorstep delivery system is threatened by the import of cheap and often inferior milk from the Continent for sale in supermarkets. The Minister may disagree about the time scale of that threat. However, he knows that sooner or later that threat will become a reality. Our excellent health regulations can only put off the day when the French and others will once again ride roughshod over Britain.
Mr. Selwyn Gummer: Does not the hon. Gentleman agree that at the very time that he is crying wolf about the importation of UHT milk, the Milk Marketing Board is preventing retail shops from selling milk in bottles? It insists that shops should sell more expensive milk in cartons. Those cartons are not as distinguishable from UHT cartons as others. The hon. Member cried wolf once before about the Milk Marketing Board and was proved wrong.
Mr. Torney: The Milk Marketing Board has not prevented milk from being sold in bottles in shops. Large dairy combines are doing that. I have evidence, although I do not have it with me, that certain large dairy combines have refused to sell milk in bottles to small retailers. I accept that many problems are involved in the sale of milk in bottles. I agree that bottles should continue to be sold in shops. However, I do not agree that sales should reach such proportions as to cause the abolition of our daily delivery system.
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When the Milk Marketing Board was threatened, hon. Members from all parties protested loudly. They fought with the Milk Marketing Board against the threat. The farming community maintained its confidence in the Milk Marketing Board and the French threat was therefore resisted.
Mr. Dykes rose—
Mr. Torney: I shall not give way again.
Mr. Dykes rose—
Mr. Torney: Good Lord, I shall not give way again. I have just given way to the hon. Member's hon. Friend.
Mr. Dykes rose—
Mr. Torney: I shall carry on with my speech.
Mr. Dykes rose—
Mr. Torney: I shall not give way again.
The loss of doorstep deliveries means not just a drop in our consumption of liquid milk, not just the loss of convenience to the consumer and not even the loss of that social service to the aged, sick, and disabled-although that is important. It means the loss of 50,000 jobs in milk processing, transport and distribution. It means that the whole electric vehicle industry in the United Kingdom, with all its benefits for energy conservation, would be destroyed. That would lead to further unemployment. [HON. MEMBERS: "Ah".] Conservative Members may jibe and laugh, but it is an established fact. If the hon. Member for Eye (Mr. Gummer) does not believe me, he can ask the spokesman for the Dairy Trade Federation.
Mr. Dykes: I am sure that the hon. Gentleman would wish to avoid any misrepresentation of the Commission's draft proposal to examine all sorts of bodies with a monopoly, including the Milk Marketing Board. It issued a statement 18 months ago that was not published in British newspapers. It said that it had no intention of mounting any attack on the Milk Marketing Board. It said that it was up to this country to find a suitable arrangement. It examined the monopoly effect of that board.
Mr. Torney: I would think differently, whatever did or did not appear in the press. I am convinced that the French intended to abolish our Milk Marketing Board. Many Conservative Members also held that view.
Mr. Gavin Strang: Conservative Members made a point that has been frequently repeated in the British press. I was in the Council of Ministers when, in the final and most difficult stages of negotiation, the Commission came up with a proposal. If we had not resisted that proposal at 3 o'clock in the morning, the Milk Marketing Board would not have survived. That is on the record. The fact that the board survived is an important achievement. If the hon. Gentleman takes the trouble to talk to the chairman of the Milk Marketing Board, Mr. "Steve" Roberts, he will find that he is of the same opinion.
Mr. Torney: Those hon. Members who make such accusations should read Hansard and see what their hon. Friends said when we had that little bit of bother. It was not only Labour Members who resisted that move. It was resisted by Conservative Members as well.
I heard jibes when I spoke about the electric delivery vehicle. Some Conservative Members do not understand anything about the milk delivery system. I do. If one looks in any street in the morning, one will see that milk is invariably delivered by means of an electric vehicle. The industry said that 90 per cent. of its production is taken by the dairy industry. I did not read that in the press or make it up. It is an established fact, not hearsay. If doorstep delivery is lost, fewer electric vehicles will be needed. The industry has no other outlet. The electric vehicle is suited to its task. Firms will go out of existence if doorstep deliveries cease. There will be greater unemployment.
Mr. Dykes: That is sheer scaremongering.
Mr. Torney: The hon. Member may heckle, but I can handle that. It also means that there will be severe cutbacks in cur bottle-making industry.
Mr. Gummer: Ah.
Mr. Torney: You can say "Ah", but thousands of bottles—
Mr. Deputy Speaker: Order. If the hon. Gentleman wishes to refer to a Conservative Member he should use the term "the hon. Gentleman". By using the word "you" he refers to the Chair. I have not said anything this afternoon.
Mr. Torney: I apologise, Mr. Deputy Speaker. I had wished to refer to those hon. Members who were heckling. I am capable of dealing with them if they wish to continue. I am sure, Mr. Deputy Speaker, that you are also capable of dealing with them.
If doorstep deliveries are lost, severe difficulties will arise in the bottling industry. The makers of bottles already suffer severe setbacks as a result of the refusal of the French wine industry to supply in bulk. It insists on bottling in its own country. No doubt it receives some encouragement in that regard from the French Government.
It is fallacious to suggest that cartons are cheaper than bottles. Bottles are produced in the United Kingdom and cartons would come mostly from abroad. If we wanted to produce sufficient cartons to sell all our milk through supermarkets, it would involve considerable capital expenditure. We should have to purchase expensive machines, which are mainly manufactured abroad.
The annual surplus of milk in the EEC is between 17 per cent. and 20 per cent. Not a single centilitre of that surplus comes from Britain, yet our Common Market masters want to impose on us a considerable increase in the co-responsibility levy, which would force British dairy farmers to decrease production or to come out of milk altogether. However, it is France, Germany and other EEC countries that produce the surplus.
To add insult to injury, our Common Market masters dream up exemptions that apply before the co-responsibility levy takes effect. As a percentage of total production, the exemption for Belgium is 32 per cent., France 39 per cent., Germany 32 per cent., Ireland 45 per cent., Italy 66 per cent., and Luxembourg 67 per cent. The United Kingdom has no surplus yet our exemption is only 8 per cent., which is utterly ridiculous.
In the draft EEC budget for 1980 the surplus will cost about £130 for each cow in the EEC or £12 for every EEC citizen, which is double the cost of the

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American space programme. Our Common Market masters want to reduce that surplus, but only in Britain. They insist that we should make a higher contribution to enable them to give away butter to Russia and other countries. They want to cut down our dairy herds and abolish our daily deliveries, which would result in less milk being sold, thus adding to the already huge surplus.
As regards butter, we are more than aware of the huge surplus in the Common Market created by France, Germany and other countries, but not the United Kingdom. We produce about 44 per cent. of our butter requirements. A good proportion of the remainder is supplied by New Zealand, which has for generations supplied us with food. I am concerned about the noises being made by the Dairy Trade Federation and the National Farmers' Union to stop, or at least severely to curtail, our supplies of New Zealand butter.
We have traditional political ties with the Commonwealth. New Zealand's climate and super-efficiency produce quality dairy products at an unbeatable price. In the past Britain purchased food to supplement home production in the best markets in the world. New Zealand is one.
I wish to refute rumours and suggestions to the effect that while New Zealand sells us her butter and lamb it takes little or nothing from the United Kingdom. The facts are these. In 1975, United Kingdom exports to New Zealand were about £250 million. In 1979 they amounted to £314 million. That disproves the suggestion and demonstrates that our exports to New Zealand are increasing. Our alternative to imports from New Zealand is other EEC countries, where the quality is no better.
Mr. Douglas Hogg: The hon. Gentleman suggests that the alternative to New Zealand butter is butter from EEC countries. However, surely another alternative is to encourage the United Kingdom to produce more milk for the manufacture of dairy products, of which butter is one. If the present level of New Zealand imports were maintained, that would be extremely difficult.
Mr. Torney: That would be fine, but we must consider the practicalities. We
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have to consider whether we can increase our milk production sufficiently and whether we have the machinery, and so on, to increase butter production. Meanwhile, we have to get our butter from somewhere.
I am in favour of increasing milk production but the EEC wants to cut production. If the Commission is allowed to get away with the proposed measures, Britain will have to cut her milk production.
Unfortunately, the housewife suffers because of the higher price of EEC butter. The taxpayer suffers by paying for EEC butter to be sold cheaply to Russia and other countries. We must take action against proposals that would stop our imports of food from the Commonwealth, and especially New Zealand.
I have listened patiently to Ministers in this and previous Governments promising to try to reform the EEC, particularly the CAP. I listened carefully to such statements from both Front Benches this afternoon. My patience is exhausted. Many of us have pressed for reforms over a great number of years, but it is painfully obvious that the French and Germans will not yield a fair deal for Britain. That would mean that they had to pay for their own surpluses and inefficiencies. Britain is asking not for advantage but for justice and fair play, which will never be conceded by the one-sided Common Market.
I ask the Government to get us out of the Market, for Britain's sake. Take us out now, and do not waste a further three or four years banging our heads against the brick wall of the CAP. That is my message to the Government.
5.47 pm
Sir William Clark: We are all agreed that there is something wrong with the common agricultural policy. It was interesting to hear the hon. Member for Bradford, South (Mr. Torney) advocating that we should come out of the Common Market. The right hon. Member for Barnsley (Mr. Mason) did not go as far as that, but mentioned the possibility of coming out.
It would be extremely difficult but not impossible for us to opt out of the Common Market. As a nation and as negotiators, we should not forget our

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position. If we left the Common Market, the European countries that export many commodities to us would lose that market. The French, Germans and so on would have to find their own £1,300 million for their farmers. We should not be too defeatist about our negotiating position.
In our negotiations over our budget contribution, we must not fall into the trap of leaving aside the structure of the CAP budget. We must not be led up a blind alley and believe that we can get regional or industrial aid from the EEC's total budget. At present, Britain's borrowing requirement is so high that we can hardly cope with the amount of overspending in which we are engaged. If we were to take as our kickback from the Common Market budget sums of money for various projects, the British Government would be committed to finding half the expenditure—which would increase further our public sector borrowing requirement. The Minister should concentrate on the complete structure of the Common Market.
The Opposition Front Bench should treat the history of the Common Market with more humility. If they think that the butter mountains and the wine lakes have occurred only in the last 10 months, they must all be Rip Van Winkles. That has been happening for years. We all agree that the common agricultural policy is wrong in structure and that it must be altered. So be it. The Conservative Government negotiated the terms, and we had had four or five years' experience of how those terms were operating. But the present Leader of the Opposition went to Brussels, in a fanfare of trumpets, and renegotiated the terms, and now we are in a worse position than before we negotiated originally. We must be more humble, and we must not try to make party points.
I should like to concentrate on the problem of sugar in the Common Market. I declare an interest because I am a director of a sugar-procesing factory in Belize. There is a battle between cane sugar and beet sugar within the Common Market. Cane sugar is grown in semi-tropical climates, and invariably it comes from Third world countries—with the exception of Australia, which we can discount because we are not including it in this argument. Those sugar-producing Third world countries must export their sugar.
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The Conservative Party has always said that it believes in trade rather than aid. Apart from the moral responsibility that we assumed when we entered the Common Market, we must also accept our responsibility under the Lomé convention on sugar imports. In Britain we consume about 2·38 million tonnes per year. We produce 1·15 million tonnes. The figure for ACP sugar is 1·225 million tonnes.
A total of 2·57 million tonnes of sugar is therefore available to Britain, and our projected consumption is a little less than 2·4 million tonnes. Consequently, there will be a surplus. How are we to get rid of that surplus? Britain is the only member of the Common Market that refines sugar. Consequently, we are once again on our own. Under the international sugar agreement we are not allowed to export cane sugar, but will the British Sugar Corporation export its surplus beet sugar?
A meeting took place between the ACP members and my right hon. Friend the Minister of Agriculture, Fisheries and Food on 17 March 1980. At that meeting it was agreed that Britain would deal with the surplus EEC sugar. The likely surplus in EEC sugar this year will be just under 4 million tonnes.
The EEC needs to be pushed in respect of the international sugar agreement. We must realise that Third world countries have a quota from the EEC. They may also have an American quota, which gives them continuity of supply. But the surplus sugar must go on to the world market. If the world market for sugar is as volatile as it was 20 or 30 years ago, some of those countries will be in great trouble. It is of paramount importance that the EEC joins the international sugar agreement.
Mr. Mark Hughes: Will the hon. Gentleman accept that the act of putting surplus EEC sugar on to the world market, with export refunds, adds to the depression in the world market and depresses the cane sugar producers' returns?
Sir W. Clark: That is correct. As I said, any cane sugar-producing country will have an EEC quota and it may have an American quota. Invariably the two prices are advantageous to the producing countries. The balance must go on to the free market. If the EEC pushes sugar on

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to the free market, there will be a depressed price. I fear that if some of the sugar-producing countries cannot get a living for their population, Britain, as a country and as part of Europe, will be creating vacuums all around the world, and we all know what may happen to those vacuums. I hope that the Minister will comment on the possibility of the EEC joining the international sugar agreement. There is no subsidy from the British taxpayer for refining. Over the past two years some refineries have closed and there has been a loss of around 2,000 jobs. If the Lomé convention figure of 1·2 million tonnes is reduced, there may be further job losses in the refining industry.
Mr. Robert Parry: The hon. Gentleman mentioned the loss of 2,000 jobs in the sugar refining industry during the past two years. Around 1,000 of those jobs lost were on Merseyside. If there is any further recession, a sword of Damocles will hang over the Tate and Lyle factory in Liverpool, where another 2,000 jobs are at stake.
Sir W. Clark: I am delighted that the hon. Gentleman is reiterating my point. If the amount of cane coming into Britain is reduced, obviously other refineries will close, and there will be a further loss of jobs.
I should like to quote from a speech made by my right hon. and learned Friend the Member for Hexham (Mr. Rippon) in 1971 when we were negotiating the terms of entry into the Common Market. He said:
"If quotas for beet sugar production were increased in such a way that imports from Commonwealth countries were threatened, it would be a breach of the undertaking by the Community. The Community's regulations clearly laid down that production in excess of quotas must be disposed of on the world market, and therefore could not be a challenge to Commonwealth can sugar."
Can the Government guarantee that the ACP countries will have access over the next four or five years to the United Kingdom as they have in the past? How can they have this access if beet sugar is not reduced? I know that the Minister is fighting in the EEC not to have a reduction in the beet quotas, but over the past five years I do not think that as a nation we have once equalled either the "A" or "B" quotas. How can
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we guarantee cane sugar coming into this country if beet sugar is not reduced? The ACP imports have not been increased at all in the last 15 years.
As an exporting and trading nation we have a moral responsibility to the cane-producing countries of the world. I hope that the Minister will make absolutely certain that British refineries—the sole refineries in the EEC—are not out on a limb and that we shall guarantee access for cane sugar in the years to come.
6.2 pm
Mr. Geraint Howells: Thank you, Mr. Speaker, for calling me so early in this debate. I have listened to all the speakers this afternoon and I have found their approach most constructive. In the last few years this debate has been a hardy annual, but too often it has consisted solely of anti and pro-Market speeches. However, this time we have heard more constructive speeches, and I shall do my best to maintain that tradition for the next few minutes.
I thank the Minister for clarifying the position, as he sees it, in Europe. However, a great deal more clarification is needed. I do not think that I will have many supporters for my point of view, but nevertheless I intend to put it. At present we pay £3,951 million for temperate foods imported into this country. That is a colossal sum. Because we pay so much for imported foodstuffs, we must pay levies into the European fund, and at present we make a net loss of about £1,100 million. Can we afford that in the years ahead?
Whatever views we hold—and I am not criticising the Minister or the Parliamentary Secretary—the fact remains that we would not be in the present dilemma if successive Governments had taken heed of the pleas made by the leaders of the unions in England, Scotland and Northern Ireland and the president of the Farmers' Union of Wales to give extra financial support to agriculture during the last 20 years. Farmers recouped their costs only twice between the 1950s and the 1970s. Farmers could have increased their production from the land by 50 per cent. or even 100 per cent.
It is very difficult on an occasion like this to support an amendment that we should have a freeze on prices across

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the board in Europe. We must remember that our dairy producers are not producing the requirements of the consumers. I disagree with the hon. Member for Bradford, South (Mr. Torney), who said that they produced 44 per cent. of the butter for our requirements. I say that they produce only 35 per cent., so perhaps we could compromise on 40 per cent. This indicates that incentives should be given to dairy farmers to increase production.
Mr. Douglas Hogg: The hon. Member said that incentives should be given. That is a broad-sounding phrase. What incentives has he in mind?
Mr. Howells: To be honest, we should be more selective and more money should be given by the Government to dairy producers in this country. This is a social problem.
Reference was made earlier by the right hon. Member for Barnsley (Mr. Mason) to social problems in Europe. In this country big business will survive, but we must protect the interests of small farmers and family farmers. We are proud of their record. In Wales we have nearly 70 per cent. of family farmers, some of whom own their own farms and others of whom are tenant farmers. Whether we like it or not, these farmers depend a great deal on politicians. Here I must declare an interest in that I am a farmer. I do not think that it is possible or even desirable to remove agriculture from the political arena. Therefore, it follows that there must be a deliberate political will to support agriculture and, in effect, the family farm, which is an essential part of British farming.
In theory, the family farm could face a threat from an unsympathetic national Government. The Government make the tax laws, decide the farm prices and have a hand in creating the social and economic climate in which agriculture and the family farm can flourish or not, as the case may be. Governments necessarily have their priorities, but it is important for them to appreciate the vital part played by agriculture, which is our most efficient industry. Governments must understand the need for incentives and encouragement. They must keep the balance between the consumer and the producer.
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On several occasions we have seen an unwise decision to give short-term benefits to consumers to the long-term detriment of the industry and, eventually, of the country as a whole. Ideally, national policies should balance the needs of consumers and producers. Governments should also learn to produce long-term policies rather than short-term expedients. This would enable individual farmers to plan ahead with more confidence and success.
The other political threat to British agriculture comes from the present working of the common agricultural policy, the details of which are currently under discussion. I am a convinced European, but I feel that the time has come to adjust the balance in our favour. For too long other national Governments have been inflicting their own social problems on the Community to our disadvantage, in order to avoid trouble at home. That is not the true purpose of the Community, and in my view it is important that the British view of the situation should be heard and heeded.
To sum up, the threats that I see to the family farmer, whether he is an owner-occupier or a tenant, come first from poor management of marketing skills and a conservative attitude to a changing industry; secondly, the high cost of land and a lack of easily available capital for investment; thirdly, punitive tax laws and generally unsympathetic Government policies; fourthly, the attitudes of our fellow members of the EEC and the present working of the CAP.
As I have said on many previous occasions, I believe that the CAP must be reformed within the next year or so, otherwise I am sure that it will disintegrate within five years. I have always held the view that we should abolish the intervention system now operating within the Community. It is wasteful, and there is no need for it. I honestly believe—this is the view of the majority of sheep producers—that we should hold on to our guaranteed deficiency payments for lamb. I hope that the Minister will persuade his counterparts in Europe to introduce similar schemes for other commodities within those countries.
I have always held the view that the deficiency payments scheme has worked well in this country. This afternoon we

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have talked a great deal about lamb imports to France, but as a sheep producer I believe that our best market is here at home, in Britain. I am delighted that the Minister announced this afternoon that an extra 15p per kilogram live weight will be given to fat lamb producers and 3p per kilogram, if I understood him, for old sheep. That is a step in the right direction.
Reference has been made to the sheep-meat regime. I believe that we do not need one. [HON. MEMBERS: "Hear, hear."] Let the others be. Let us hold on to our present support system. Without any doubt it is the best in Europe, if not in the world. It has looked after our interests on the hills and in the lowlands, and the sheep farmers know that.
At present British agriculture is not competing on equal terms with our counterparts in Europe, so we shall have to change the system. Until the rules are changed justice must prevail in this country. We cannot ignore the pleas of those who are treated unfairly within the agriculture industry.
Mr. Maxwell-Hyslop: I entirely agree with the comments of the hon. Member for Cardigan (Mr. Howells) on sheepmeat, but does he not think it unfortunate that the policy that he has just put forward, which is embodied in the Government's motion, is cut out by the Opposition amendment? The whole of the reference to sheepmeat—
"to agree to changes in existing policies and new policies only if these are fully consistent with the essential interests of the United Kingdom"—
is now cut out as a result of the Opposition amendment. Does not the hon. Member think that that is unfortunate?
Mr. Howells: Yes, but it has happened and there is very little that I can do about it.
Mr. Strang: I suggest that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) looks at the amendment carefully. Certainly it was our intention—I believe we have got it right—to leave that part of the Government's motion in and simply to insert what we have put forward as a replacement for the reference to reducing surpluses.
Mr. Howells: I hope that both sides now understand where they are going and that there will not be a vote at 10 o'clock, so that we all go home happy and contented hoping that everything will turn out better than we had thought at the beginning of the debate.
Finally, the Government of the day must look after the interests of the agriculture industry. At present it is being crippled by production costs, and an unfair price is being given on many of the end-products.
Mr. Speaker: May I just say to the hon. Gentleman, without in any way criticising the length of his "short speech", that his three or four minutes turned out to be almost a quarter of an hour? However, it was Welsh time; we understand each other but perhaps others did not.

ROYAL ASSENT
Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967. that the Queen has signified Her Royal Assent to the following Acts and Measure:

1. Residential Homes Act 1980

2. Gaming (Amendment) Act 1980

3. Reserve Forces Act 1980

4. Police Negotiating Board Act 1980

5. Protection of Trading Interests Act 1980

6. Bees Act 1980

7. Slaughter of Animals (Scotland) Act 1980

8. Consolidated Fund Act 1980

9. National Health Service (Invalid Direction) Act 1980

10. New Hebrides Act 1980

11. County of Merseyside Act 1980

12. West Midlands County Council Act 1980

And to the following Measure, passed under the provisions of the Church of England Assembly (Powers) Act 1919:
I. Deaconesses and Lay Workers (Pensions) Measure 1980

EUROPEAN COMMUNITY (AGRICULTURE)
Question again proposed, That the Amendment be made.
6.15 pm
Mr. Hugh Dykes: I should have thought that all hon. Members, without difficulty, could have commended to their constituents the extremely thoughtful and restrained speech of the hon. Member for Cardigan (Mr. Howells), who, although from another party, represents the same territory, in a different sense, as Mr. Speaker. It was so refreshingly different from the speech of the hon. Member for Bradford, South (Mr. Torney), who has temporarily left his place below the Gangway.
The Liberal spokesman on this subject reminded us that he is a convinced European. I am sure that the House was grateful for that reiteration. Therefore, it could be said that he had even more moral, political and literal authority for saying that there is a lot wrong with the CAP than did the previous speaker, because of his view on Europe. It was so refreshing, if I may embarrass the hon. Member for Cardigan by saying so, to be able yet again to get this sensible separation from the whole series of legitimate anxieties that we all have on the workings of the CAP and its effects and on our excessive budget contribution, without going into the nasty, narrow-minded, myopic, chauvinistic, anti-foreign feeling of Labour Members, including the hon. Member for Bradford, South, which we have had again and again in all these debates. Again and again such speeches do a disservice to this country's reputation abroad.
Mr. Marlow rose—
Mr. Dykes: I will not give way for the moment. I have only just begun, and Mr. Speaker has exhorted us all, quite rightly, to be brief.
Mr. Speaker: I was not making an appeal; I was only reminding the hon. Member for Cardigan (Mr. Howells) that he had promised three or four minutes, which I did not ask him to promise.
Mr. Dykes: I was recalling your exhortation of yesterday, Mr. Speaker, not your words today. I am grateful for your reminder.
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There is such a difference between the speech of the hon. Member for Cardigan and the depressing, lugubrious reiteration of an absurd series of fundamental consequences and conclusions which have no real relevance or application to the position of this country in the world as a whole, let alone in Europe. I wish that the Labour Party, which is increasingly going down this dangerous and silly road, would, once and for all, stop this kind of crude, unthinking nationalism, which makes us a laughing stock in Europe and, indeed, among thoughtful opinion in this country. There is much more favour towards our membership of the Community than thoughtless Labour spokesmen often think.
We must get back to the hard facts of the problems facing us with regard to the CAP and not indulge in these ridiculous fantasies which have been shown up again and again, not only in this debate but on other occasions. When the Labour Party was in Government, only once did it refer to the budget contribution in one of the six-monthly White Papers—the last one before it left office—and then only in one line. It was not a major issue in the six-monthly White Paper.
To remind us, I have some notes here on the Labour Party's performance. The previous Minister of Agriculture, Fisheries and Food and his predecessor, now Lord Peart, apart from a lot of noise, histrionics and hysteria when they returned home, did not do all the heroic price restraining that Labour spokesmen now try to suggest.
Mr. Marlow rose—
Mr. Dykes: I hope that my hon. Friend the Member for Northampton, North (Mr. Marlow) will forgive me. I am not going to give way for the moment. I may give way to him later, but I am not convinced that I shall. He has been a little mischievious himself this week in respect of a certain early-day motion. That does not do this country any good. I shall ponder while I speak whether to give way to him.
I do not recall the previous Minister of Agriculture or Lord Peart resisting heroically every price increase proposal. Without being unfair to the Labour Party, one can see, looking back, that they tended to go along with most proposals. In their

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last year or so they took a slightly stronger stance. There was a butter subsidy agreement with the Commission, but the general picture was of no real resistance and no use of the veto in the formal sense.
It ill behoves the Opposition now to indulge in absurd, exaggerated drama about wicked foreigners imposing this drastic and terrible CAP on us. I wish that the whole debate could be couched much more in terms of the unfortunate mechanistic effects that accrue to us because of the objective reality—this involves no criticism of foreigners or other member States—that the agricultural trading patterns of this country are different. We knew that there would be a special problem when we joined the Community. The matter was not renegotiated in 1975 by the Labour Government. Why did that not happen, if it is now so terrible?
It is a regrettable reflection on this country that we have a high propensity to import all sorts of goods, including temperate foodstuffs.
The third part of the trilogy in the reality of our position as an economic Power in Europe is that our lower standard of living than that prevailing in other member States and the fact that our economic performance has been so abysmal in recent decades, in comparison with other countries, have produced a lower prices and wages structure. This automatically builds in an adverse effect for us when we compare our prices with prices, excluding those prevailing in agriculture and foodstuffs, in Europe.
Mr. Marlow rose—
Mr. Dykes: My hon. Friend is very patient.
The fallacies and contradictions in the speech of the hon. Member for Bradford, South are shown by his comments, almost in the same sentence, that the surpluses in the Community were wicked—all hon. Members are worried about them—and that we must protect our own agricultural production but that we must take anything that comes our way from the Commonwealth. The objective weakness of this country is that it imports too much of everything, from agricultural products and foodstuffs to Japanese cars. We should be encouraging our agriculture industry to produce much
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more food in future years. The irony is that we possess the most efficient and best-organised agriculture industry, but it still does not produce 100 per cent. self-sufficiency in most agricultural products. That is the target that must be reached. A figure of 70 per cent. self-sufficiency has been mentioned. I think that the overall figure is now higher. I compare our feeling of defeatism in Britain with what happens in France. We say "We cannot do these things. Foreigners expand their economies. We do not. There is some disease preventing us."
France now produces over 3 million cars. This year we shall fall back to producing less than 1 million. Ten years ago, the figures for both countries were the same. Our agriculture industry is the best in Europe but still incapable of being self-sufficient. Germany is self-sufficient. France is a net exporter. It is important to keep these matters in perspective. If only we could import fewer non-agricultural products from all over the world, we would be contributing much less, pro rata, to the Community budget.
While 75 per cent. of the total EEC budget is concerned with agriculture, which is too high and requires efforts to reduce it and bring it to the original strategic target of 40 per cent., that is not the same as saying that 70 per cent. of our net contribution to the budget—the excess—also goes to agriculture. If one breaks down the figures into levies, customs duties and contributions and the VAT equivalent, one sees that there is a much greater imbalance accruing to non-agricultural products. This country needs to produce more of its own non-agricultural goods as well.
There is a tremendous amount of hyperbole and exaggeration that does this country no good. It does France no good. My right hon. Friend was right to refer to the absurd exaggerations in France about our lamb attack. It has been grossly overdone. This harms the impetus for real reform of the CAP. Member States become locked into positions that, due to their own nationalism and national constituency, they find difficulty getting out of. Ultimately, all politicians think first of what people at their own home base want.
Mr. Douglas Hogg: My hon. Friend touched on the question of reform. Does he agree that the essential reform that

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we must seek within the CAP is to move support for the inefficient farmers on mainland Europe from the agriculture budget to the social budget? Does he agree that to use the pricing mechanism of the CAP as a means of ensuring adequate living standards for relatively inefficient farmers is disastrous to the proper operation of the CAP for the rest of us?
Mr. Dykes: I thank my hon. Friend for his thoughtful contribution. I tend to agree, subject to the details and further thought on the matter. I feel, however, that rather than thinking along lines of national aids, although there are bound to be some, we should think of using EEC funds other than CAP funds either to help farmers to leave the industry or to support them if it is considered desirable for social reasons to keep them in operation.
I wish to refer to the submission by the Food Manufacturers Federation, sent to Members of Parliament in time for the debate. It is important to resist the grotesque exaggeration displayed in histrionic speeches in this country and, to a lesser extent, in other member States about wicked foreigners and the wicked CAP.
Over the period of the Labour Government, prices in general went up by 100 per cent. They doubled over the four year period. Some hon. Members said that the increase was 120 per cent. We could have an auction. The answer would probably be found between those figures. It was the fastest growth in retail prices that this country has ever experienced, under a Labour Government. The Opposition like to forget that matter, but we shall remind them. It has been statistically proved that over that period only about one-tenth of the effect emanated directly from the common agricultural policy. The orginal CAP intervention prices and other managed prices in the system for the 12 key products are a far cry from the final price to the hapless housewife in this country who is grappling with the fastest rate of inflation in Europe.
The Food Manufacturers Federation, which, like me, is strongly against anything other than the Commission's proposals, which, I think, amount to an average of 2½ per cent. price increases,
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does not wish to go further than those proposals. It wants to protect the consumer and, of course, represent its own interests. The federation reminds us that the impact on this country of the price proposals—one waits with bated breath for this dramatic figure—is a total consumer expenditure rise of 0·1 per cent. The national food bill goes up by about £130 million. That sounds large. It is not large in comparison with the total size of the economy. The food expenditure rise, in total, is put at 0·6 per cent. That would be the effect of the Commission's proposals. The European Parliament is to be criticised for going further. Even its proposals, however, would produce no more than 1·2 per cent. on food expenditure.
I do not wish to skate over the effects of these figures on poorer families. They can be serious. By the time that the costs of middlemen and lorry drivers' wages have been taken into account, that is what really concerns people in this country. They are concerned about getting down the rate of inflation instead of rabbiting on like my hon. Friend the Member for Northampton, North about the wickedness of the CAP.
Mr. Marlow: I am grateful to my hon. Friend for eventually giving way. He referred to the hon. Member for Cardigan (Mr. Howells) and, I believe, to himself as convinced Europeans, as if it were next to decency and godliness. Would he define for the benefit of the House what is a convinced European? Is he someone who accepts without criticism all the institutions of the Common Market and someone who accepts all the recommendations of the Common Market?
Mr. Dykes: The definition of a convinced European is someone who is not the right hon. Member for Battersea, North (Mr. Jay). He has now arrived in the Chamber. I shall apologise later for not having given him warning that I intended to refer to him. However, I did not know about the intervention. That is the best definition. The right hon. Gentleman adds to his long-standing antipathy his dislike of these foreign countries linking themselves in an arrangement with the European Community.
There is a contradiction emanating from the Opposition. Two years ago

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Opposition Members said "Do not misunderstand us. We are all Europeans; we love them. We do not want the institutional arrangements in the Treaty of Rome and the Community, but we want free trade." I may be misrepresenting the right hon. Gentleman, but some of his colleagues in the Opposition have called increasingly and clamorously for import controls on this, that and the other. What a contradiction that is. We shall see more shifting of ground as the circumstances alter.
In answer to the direct question put to me by my hon. Friend the Member for Northampton, North, a better definition of a European is someone who believes in building up the Community institutions and in nations working together. There is strength in numbers, and they can obtain a better effect than an individual country working separately, especially in a recession. However, if I were to continue with those romantic definitions I should be testing your patience, Mr. Speaker, as I should be straying from the documents being debated.
Although I represent an urban constituency, there are seven small farms in it. I am not in any way beneficially interested in them. However, there are seven small farms and smallholdings in my constituency. Therefore, I am entitled to take a close interest in the matter and to help my constituents.
There is great sympathy on both sides of the House for the plight of the British farmer. The dilemma is that because of these surpluses, the most efficient industry in Europe must face the prospect of the most modest price increases, at a time of raging inflation, which is now, unfortunately, reaching 20 per cent. Therefore, there must be a lot of rethinking in the future.
However, none of that should be an excuse for precipitating on a Community that needs, above all, tremendous unity and cohesion at this moment of grave recession and unemployment a grotesque and unnecessary crisis because of ill-thought-out arguments emanating from various parts of the body politic. In the context of all those worries and anxieties—the excessive contributions and the fact that the CAP costs so much—if we retained the old deficiency payment support system, undoubtedly it would now cost up to twice the amount of the
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equivalent of our net contribution to the CAP.
Most hon. Members think that the figure for the excess British contribution is made up of agricultural payments. I do not think so. It is only the straight inflation increase on the original estimates—the real figures going back to 1971—of what we thought our membership of the Community would cost us.
Perhaps this is the most chilling statistic of all. The excess contribution that we are making to the Community—we must, of course, do something about it—is the equivalent of one-tenth of what the Labour Government, in their last period of office, spent on the wasteful, useless nationalisation of industries such as steel, which have done no good to the country's economy and to the strength of the United Kingdom.
Mr. Peter Mills: Perhaps I might refresh hon. Members' memories. The exact sum of £30 per head per person throughout this country is exactly the same as that being given to the steel industry.
Mr. Dykes: I am grateful to my hon. Friend for that intervention. The traditional deep dislike of large farmers by the Labour Party is interesting. I do not refer to the hill farmers. The Opposition have double standards in the thinking that they apply to different industries. I wish that there could be a more positive approach to all the benefits that we can get out of our Community membership, including the modern reform of farming. Why cannot this country become an exporter of agricultural products?
My right hon. Friend the Minister of Agriculture referred to our lamb exports. I hope that there will be a sheepmeat regime. I understand the French resentment that we have not agreed to a sheepmeat regime in the past few years in this country, because of understandable problems. We should have done that. This country should be a most successful exporter of lamb to the other member States under a sheepmeat regime. However, I refrain from going into the details of the matters.
I must be the first speaker in the debate to refer to one of the more esoteric documents listed in the original motion, namely, that on liqueur wines. This is

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the conclusion of my remarks, proceeding from the global scene of the CAP to one small area. It is not correct to say that this document should have been included. However, I do not criticise my right hon. Friend the Leader of the House too much for putting it in. Once one sees the word "wine", one thinks that it comes within the CAP and that it may be included. These two documents concern what we call fortified wines and what the people on the Continent more often call liqueur wines.
I declare an interest here—a respectable one—in that I occasionally give parliamentary advice to the National Association of British Wine Producers. There is a substantial generic and real difference between our British fortified wines, or liqueur wines, and wines in the sense of French and Italian wines. The document is anomalous in this debate. None the less, I am glad that at long last, under the pressure of the Scrutiny Committee, the document has been thrown into the EEC tank of our debates for inclusion, so that we may express briefly some important thoughts on the matter.
The fortified wines in Britain are a special kind of beverage. I cite some names to remind hon. Members of what the wines are. I refer to British sherry and VP wines and attractive beverages like those. They are drunk in a widespread way in this country, and in a special way. I do not think that any other country in Europe has this kind of drink. Hon. Members may say that that is understandable, but they would be saying it for a positive reason. It is a tradition in this country. There is a special kind of beverage, which has developed over the years and which provides an important drink to substantial numbers of people. It is a legitimate part of our industry. It is made not from grapes in the normal sense but from concentrated grape juice. There are others that I could name.
I say this as an enthusiastic European. There is no contradiction. This industry in our country demands, needs and deserves special support from the United Kingdom authorities when they consider this document at the next meeting of the Council of Ministers. I think that this is already the position of the Government. Therefore, I do not argue the case
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too strongly. I am sure that it would have been the position of the Labour Party if it had won the last election.
The point is important because of the employment effect, the size of the consumption of these beverages and, above all, because of the particular theme in these two documents and all that will flow from geographical definitions of origins of drinks and beverages of different kinds in the Community. The industry and various bodies within it—not only the national association—are most anxious, quite rightly, to protect the original and present legal force and independence of the term "British sherry", as opposed to sherry coming from the grape in the normal way and imported.
British sherry is a respectable and popular drink in this country. If Spain joins the Community, subject to the difficult negotiations—most people would like Spain to join—there could be a grave problem here. In view of previous decisions taken in the Community prior to her entry, Spain may seek to mount an attack upon the legal definition and term "British sherry" because we wish to continue to use it in this country. It is not the same as sherry in the Spanish sense, or "Jerez", which is the Spanish word for sherry. It is misleading of the Spanish to seek to take the word "sherry" as their own generic name, as it is the English name.
The reason why the Spanish originally sought to claim that goes back to a legal judgment in the 1930s. A law was promulgated in the Spanish Parliament at about the same time under which, to be on the safe side, it put the word "sherry" into its own legal definitions. But it would be wrong if it sought to remove from British fortified wine manufacturers a chance of using the total appellation of "British sherry" for our own special product.
Mr. Maxwell-Hyslop: Surely it is just as reasonable as having Danish camembert, or Derbyshire cheese made in Somerset?
Mr. Dykes: I think it is, but I should like to stick to the drinks in order not to complicate the matter too much.
That is the end, you will be glad to know, Mr. Speaker, of this particular submission on this document, and I am sure that it is the only time it will be

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mentioned tonight. But it does highlight the fact that it is possible to build a modern and dynamic Community—we have to solve the problem of the economic recession in Europe before we can continue this essential process—but at the same time safeguard in a civilised way and in a spirit of genuine compromise—which is a phrase frequently used nowadays—the essential interests of the member States. It is because there is resentment in France—because the French think that we are doing the wrong thing, and we resent them because we think that they are doing the wrong thing—that we get this most dangerous and alarming nationalism developing.
Irresponsible politicians—I use that adjective in a fairly mild sense—seek to build these things up either for local reasons, to protect a local industry, or for wider national reasons, because they think that there are votes in it. The overwhelming feeling of most people in this country is that they are depressed by the economic prospects in Europe as a whole. That makes them relatively unenthusiastic about building an institutionally co-operative Europe, and so they are beguiled by the arguments of people who say that the thing has not worked.
Of course it has worked. It has worked in the same way as any political structure works when it is created and built. That does not mean that there will not be many problems within that structure in the future, but because there are problems in the House of Commons and maybe there are problems facing the Government we do not say that the House of Commons or the Government should be abolished. So why should we reach that visceral conclusion about the European Community? Let us make it work. Let us build a proper, modern CAP. Let us uphold British interest legitimately.
6.44 pm
Mr. Robert Parry: I am grateful to you Mr. Speaker, for having called me to speak in this debate. I apologise for not being present at the beginning of the Minister's statement, but I had to attend a briefing meeting for a visit to Dublin on Sunday. No disrespect was intended to you or to the Minister.
I shall keep my comments as brief as possible because I know that many of
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my hon. Friends who have been present since the beginning of the debate wish to take part, and I am in a hurry to catch a train to Liverpool. I shall therefore raise only one subject—the question of the EEC sugar beet surpluses as they affect my constituents.
This issue has caused grave concern to many of my constituents who are employed at the Tate and Lyle refinery in my constituency. This situation has been hanging over their heads for the past eight years. Merseyside is a depressed area, with more than twice the national average of unemployment. In fact, in the part of my constituency where the Tate and Lyle refinery is situated there is more than 25 per cent. unemployment. The House will therefore appreciate the grave concern of my constituents.
In recent years Tate and Lyle has tried to play its part. It has closed several refineries, one of them at Sanky on Merseyside, and has shed more than 2,000 jobs, 1,000 of them being on Merseyside.
The situation is straightforward. If the Government do not support the Commission's proposal for a reduction in sugar beet production and in the surplus, there will be a grave threat to 1,700 people employed directly by the refinery. But when we consider also the jobs that could be at stake in the docks and in the spinoff industries, we are thinking in terms of well over 2,000 jobs at stake on Merseyside. In the present economic and unemployment situation on Merseyside, we cannot even consider the loss of a further 2,000 jobs.
In many cases employment in a refinery such as Tate and Lyle's is a historic matter, and if this refinery closes we shall see whole families on the dole queue, many of them people who have worked at the refinery for generations. I therefore ask the Minister to support the Commission's proposals for a reduction in sugar beet production and not to look at this as a battle of sugar beet versus sugar cane, which is the argument that has always been used.
I am opposed to any further expansion of the British Sugar Corporation, but the port refinery trade unions have never suggested that there should be the loss of one job in the BSC. I should like to make this position quite clear. What we are trying to do is maintain employment

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in the port industries and, of course, also to support the ACP countries.
I therefore support the comments made by my right hon. Friend the Member for Barnsley (Mr. Mason) to the effect that we should continue our unlimited support, our sacrosanct support, of the Lomé convention and agree that we should support adherence to the international sugar agreement.
I conclude by making one specific point concerning the question of the Minister's refusal to meet the trade unions from the port industry. I see that the Minister is not in his place, but I am sure that his hon. Friend will pass on my views. I know that the Minister of State has met these people. The trade unions are rather anxious. In the immediate past, the last three or four Ministers of Agriculture have met these trade union representatives. In an area such as this, where there is real concern about employment prospects, I sincerely hope that the Minister will make a positive attempt to meet these people in the very near future.
6.48 pm
Mr. Paul Marland: As a practising farmer, I must declare my interest in this subject.
I should like to tell the House how much my farming constituents appreciate the strides that have been taken by my right hon. Friend the Minister of Agriculture, Fisheries and Food in the interest of improving the lot of farmers in this country. Some of the benefits he has arranged are still filtering through the pipeline, but the farmers of West Gloucestershire cannot fail to notice the stark contrast between the treatment they receive from the present Minister of Agriculture, Fisheries and Food and that which they received from his predecessor, which was so completely consumer-oriented, in only the short term. His legacy was a declining industry, especially in the livestock sector. I do not want to give the impression of continually whining on in the farmers' interest or to be thought to be reaching out for more money, but, with so many of our products having their end prices dictated by the Government, farmers cannot afford to be shrinking violets.
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As the House well knows, what the farmers crave today is fair competition. The three devaluations of the green pound we have seen under the present Administration have done much to even up that score. But, even so, there is much suspicion among farmers that our EEC partners are not playing fair. Examples of the ways in which they can be seen to be bending the rules are the way some of them close their markets to our exports, the way cheap credit is offered not only for production but also for marketing, and the way in which some Governments subsidise the inputs to their agriculture and horticulture industries. These are problems that we have to face.
I emphasise that the problems of agriculture are unique and should be treated as such, for not only the future of the industry hangs in the balance but also the future of many of our rural communities, which are dependent on farming, fishing and forestry.
United Kingdom agriculture, as my hon. Friend the Member for Devon, West (Mr. Mills) has said, is one of the success stories of this country. We have an incredible record in output, productivity per man and import saving, and we could do a great deal more. The Government should have no qualms about ensuring that British agriculture survives and should continue to back its success.
Farmers are worried about unfair competition within the EEC, the high interest rates from which all businesses are suffering and the recent large pay award to agricultural workers, which has reduced their margins, although there is not a farmer in the land who does not agree that farm workers deserve the money that they are given. No one disputes the need for a thriving domestic agriculture industry and to ensure that there is a substantial recovery in the level of farmers' real incomes, which must be maintained.
The CAP and our national contribution to the EEC are two of the most vexed questions we face in this Parliament. I have two suggestions to make. Our national contribution to the EEC is 0·8 per cent. of our gross national product, whereas the average contribution of the nine members is only 0·4 of their GNP. That is clearly unfair. My first

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suggestion is that we should ask our partners to match our contribution. Our burden would then not seem to be so out of step with the rest of the Community, and we should have more money available for areas of real need. We might try that one on the French and see how we get on.
My second suggestion—which I prefer—is that we should stabilise the CAP prices and allow a much greater degree of national financing, so that each member country tops up farming incomes where it sees a social need. The free exchange of goods would still continue, but that suggestion would have the effect of bringing into the open the clandestine help that is now being given by some member States to their farmers, and it would remove much of the suspicion that exists in the farming industry about what our partners are up to.
Like many other hon. Members I am committed to our future in Europe, but I believe that we must concentrate our minds most sharply on the reorganisation of the common agricultural policy.
6.52 pm
Miss Joan Maynard: The most interesting aspect of the debate is the conversion of the two Front Bench spokesmen to the view that the Common Market is a disaster for this nation. They both spelt out that view very effectively. I only wish that they had made those speeches 10 years ago. Had they done so, we might today have been in a completely different position.
My right hon. Friend the Member for Barnsley (Mr. Mason) said that the Common Market had a bad image. I would say that not only is the image bad; the reality is bad. It is a reality which our people have to live with. My right hon. Friend also talked about working for change. We have been working for change for a little over seven years without any effect. Labour Members in Europe are now working for change in the common agricultural policy, and it will be interesting to see how successful, or otherwise, they are.
My belief is that the EEC is the greatest disaster for Britain in this century, apart from two world wars. As a result of the EEC, Western Europe will achieve what it was unable to achieve by those two
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world wars: it will make Britain into an offshore island dependent on tourism.
Our agriculture is suffering, our people are suffering from high food prices and our industry is being ripped apart by the EEC. I do not say that all the blame lies with one side. The Tories took us in, but 67 Labour Members voted with them on that night, otherwise we would not have gone into the EEC. The renegotiation was a way of blinding the British people. There was no renegotiation; there was no hope of any renegotiation.
Mr. Douglas Hogg: Is the hon. Lady saying that her party deliberately deceived the nation—that there was deceit on her side?
Miss Maynard: I am not saying anything of the kind. The Labour Party and most of the Parliamentary Labour Party have always been opposed to Britain's membership of the EEC. That does not mean that the Labour Government in office at the time did not mislead people about the renegotiation. I believe that they did mislead people and that neither side dared to go to the country with a referendum until we had gone into the Common Market. They knew that if there had been a referendum before we went into the Common Market the answer would have been "No".
I am sorry that the hon. Member for Devon, West (Mr. Mills) has left. He made all the usual sweet noises about farm workers. He congratulated them on their production record, their skill, their dedication and their co-operation, but farm workers know that when bosses are patting them on the back with one hand they are taking the money out of their pockets with the other. Farm workers require not pats on the back but pounds in the pocket. Then we shall believe that the farmers care about the people whose production record is second to none.
Mr. David Myles: Will the hon. Lady accept that during my 30 years of farming and employing labour never once has a farm worker come to me and complained about not getting high enough wages?
Miss Maynard: That shows that farm workers are much too easily satisfied.

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British agriculture, with its reduced labour force, is highly efficient and productive. It is highly skilled and scandalously badly paid. Yet in 1978 we imported food worth £2,212 million from EEC countries, and I have no doubt that that figure is rising. We make the highest net contribution to the Common Market budget. I believe that that must stop, and I think the Government also believe that. I do not want the Government to reduce our contribution to the Common Market by trading off our oil or our fisheries. Our fisheries industry has already had a terrible beating.
Much of the money which we pay to the EEC is spent on dumping food and on storing surplus food. Food should be produced not for storage or dumping but for consumption. I was pleased to hear the Minister say that we should be thinking of helping the Third world with the grain surpluses. I hope that he means that. It would be a step in the right direction.
When we joined the Common Market in 1973, the problem of surpluses of unsold food was emerging. Britain, being a major importer of food, was the obvious country on which to unload some of the surpluses. To facilitate that, we had to abandon our traditional markets, and the system adopted was the imposition of import levies. We are now only too conscious of the famous food mountains. But we are suffering not from over-production but from under-consumption, which derives in the main from the EEC's dear food policy.
CAP expenditure accounts for 70 per cent. of all EEC expenditure. What is the reason for this monstrous cost which the British taxpayer is being asked to Pay? It is the result of the basic approach of the CAP, which is compelled to operate within the framework of unbridled capitalism.
Mr. Douglas Hogg: The hon. Lady criticises unbridled capitalism. Would she care to reflect on the unbridled socialism of the Soviet Union, which produces extraordinary scarcities?
Miss Maynard: I am not arguing that two wrongs make a right. The hon. Member for Grantham (Mr. Hogg) is trying to put words into my mouth.
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The threat to our food supplies arises from the concept of the Treaty of Rome. The CAP is a misnomer. It is not a well-thought-out long-term strategy for agriculture. European farmers with political power make decisions that are not in the best interests either of producers or consumers.
The danger to the Milk Marketing Board has been touched upon. Some Conservative Members were sceptical about that danger. I believe that the MMB was in considerable danger and it would have been a disaster had we lost it, because consumers, producers and workers would have been affected. I do not think that the danger to the MMB has yet been finally removed.
Another difficulty is presented by the milk surplus and by the farmers who produced it. It is certainly not produced by British farmers, though I fear that our producers and consumers may be made to foot the bill for that surplus. The import of liquid milk into Britain has also been recognised as a danger. I believe that such imports would threaten our doorstep delivery of milk. That would be bad for the industry and for the consumer.
The hon. Member for Grantham cited the example of Scotland. The answer to his question is that Scotland has never been as committed to the doorstep delivery of milk as we have. The consumer organisations are in favour of liquid milk imports because milk would be cheaper in the shops. I believe that such imports would create a two-tier system. Those who could afford it would have the doorstep delivery and those who could not afford it would get their milk from the shops, if they were able.
Such a system would militate against the old, the poor and large families. Such families consume a lot of milk and would thus be tempted to buy at a cheaper rate in the supermarkets. I believe that it would also militate against the rural population, because if people in the country lost their doorstep delivery how would they buy milk in villages and hamlets where there are no shops? I oppose the importation of liquid milk.
I am sorry that the hon. Member for Harrow, East (Mr. Dykes) has left the Chamber. He claimed to be objective. None of us can be objective. It became clear from the hon. Gentleman's speech

719
that he is pro-Market. I am anti-Market. It is all very well to make academic speeches in this House, but the fact is that people are now suffering as a result of our entry into the Common Market. It is not only the Labour Party that is going down the anti-Market road. The people of Britain are also going down that road.
Mr. Geoffrey Johnson Smith: I know that the hon. Member for Sheffield, Brightside (Miss Maynard) would wish to be fair to my hon. Friend the Member for Harrow, East (Mr. Dykes). I cannot be truly objective, because I warmly agreed with almost everything my hon. Friend said, but I believe that he was objective. By using facts clearly, objectively, honestly and accurately, he tried to demonstrate to the House that it was wrong to attribute so many of our ills—particularly in relation to food prices—to the CAP. Whether my hon. Friend is pro-Market or not is beside the point. Was what he said true? I believe that by any objective yardstick his facts were correctly stated.
Miss Maynard: I think that the hon. Member for Harrow, East was incorrect in apt least three instances. If we were not in the EEC, we could buy food more cheaply elsewhere. The hon. Gentleman accused those of us who are against the EEC of being anti-foreigner. I am certainly not anti-foreigner. I do not understand the term "foreigner". To me, people are people whatever their colour, race or creed.
I am anti-Market because I believe that the purpose of the Market is to facilitate the operations of the multinational companies which are against the interests of working people. I also believe that the EEC is a politial grouping designed to make it more difficult for the forces of the Left to advance in Western Europe. In other words, the EEC is the political and economic reflex of NATO, the military alliance that encircles Western Europe.
I repeat that it is not only the Labour Party that is now going down the anti-Market road; the people of Britain are also going along that road. Even the press is moving in that direction, so great is the pressure now building up against the Market.
The Government must refuse to pay the ridiculous amounts now being demanded
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by the EEC. Why do we not try the French tactic of refusing to give in? The French seem to have done very well by using that method. However, in our efforts to avoid paying the huge amounts demanded by the EEC we must not trade off our oil or our fisheries. We should give a straight "No" and say that we are no longer prepared to make this huge contribution. That should be the first step. The second step should be to bring Britain out of the Common Market. I believe that that would be in the interests of most people in this country.
7.8 pm
Mr, David Price: I resist the temptation to follow the hon. Member for Sheffield, Brightside (Miss Maynard) in the deployment of her well-known views, because I wish to be brief. I trust that the House will forgive me if I do not attempt to discuss the large bundle of documents which is the subject of the debate. If any of us had devoted even a short part of our speeches to each document, nobody else would have been able to get in.
I wish to re-emphasise that British farmers have done badly out of the CAP and that they continue to do badly in spite of the success of my right hon. Friend the Minister in totally eliminating the green pound gap. I fear, however, that there is every sign that if these proposals are implemented our farmers will continue to do badly. That is my simple proposition.
I am confident that the House will agree that the proposals contained in these documents are the most anti-British that have yet come out of the EEC. Luckily we have, in my right hon. Friend and his team, doughty fighters for our farmers and consumers. I do not apologise for telling the House that I retain the old Tory view that the long-term interests of the British people will be best served by a strong home agriculture industry. Those interests also require appropriate access to some of our traditional suppliers from overseas, and I have in mind New Zealand in particular.
The hon. Member for Cardigan (Mr. Howells), who is no longer in the Chamber, will agree with me, although in the old days the Liberal Party did not hold those views. It believed in free trade. As the House knows, I am commercially involved in the meat trade, and I was

721
tempted to take up some of the points about lamb made by the right hon. Member for Barnsley (Mr. Mason). I resisted that temptation in the interests of brevity, although I hope that the right hon. Gentleman will have a private discussion with me so that I can tell him more about the trade.
I wish to concentrate the attention of the House solely on the plight of the British farmer. One of my farmer constituents wrote to me yesterday and said:
"Ever since our entry into the EEC, we have never had a fair deal that has been comparable with other members of the EEC."
Let us look at some of the facts.
Paragraph 2 of my right hon. Friend's "Annual Review of Agriculture 1980" states:
"The prices of the industry's inputs increased by about 13% but this increase was not matched by output prices. Net income at current prices is expected to fall by about 5½% in 1979, a reduction of about 17% in real terms."
That is the story of 1979. I make no party point, because for part of that year the Labour Party was in power and for part the present Government were in office. If there be blame, let it be shared.
Let us carry that further. According to evidence from the National Farmers Union, the average United Kingdom farm income for the years 1977 to 1979 was 79 per cent. of the average for 1972 and 1974. I ask hon. Members who have trade union interests how many industrial workers today would accept an income which is only 79 per cent. of what they received at the beginning of the decade. That is the position of our farmers.
The objectives of the CAP as laid down in article 3 of the Treaty of Rome are not at fault. The objectives are impeccable, although it is arguable whether they can all be achieved at once. Objective (b) of article 39 is
"to ensure a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture".
The individual earnings of farmers are falling simply because the input costs in farming are rising much faster than output prices, and faster than the input costs of most other EEC countries.
I shall use two figures to illustrate my argument. The Library has supplied me with figures for 1979 which show com-
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parative rates of inflation, measured by the retail price index. There might be some variation if we used a separate price index relating to fertilisers, farm building materials and agricultural machinery prices. In 1979 inflation increased by 17·4 per cent. in the United Kingdom. Only one other EEC country, Italy, experienced a higher rate—18·6 per cent. The rate in West Germany and the Netherlands was 5·4 per cent. and in Denmark and France 11·8 per cent. Those countries are our major competitors.
Let us examine the rate at which farmers can borrow money. That is usually determined by the prevailing interest rates in the individual country. According to yesterday's Financial Times, the commercial rate in the United Kingdom is about l8½ per cent. Many people borrow at even higher rates of up to 20 per cent. In Germany the discount rate is 7 per cent. That means that one can borrow at 7½ per cent. or 8 per cent. The discount rate in France is 9½ per cent., so borrowing takes place at 10 per cent. or 10½ per cent.
The fundamental flaw in the CAP structure is that it assumes, by definition, comparable input costs in order to produce comparable prices which it tries to guarantee by various means. We cannot go on as we are. We could move a great deal further and develop common input costs—and that could be achieved only by moving to a federal Europe, which is not the wish of most hon. Members or, indeed, of member Governments. Alternatively, we must withdraw from attempting to have such a detailed structured marketing and price support policy for the whole of European agriculture. I do not believe that we can continue with a common pricing policy when there is an uncommon input cost policy, or absence of such policy. There is thus a fundamental inconsistency.
I do not wish to be totally negative. If I am right, and if it follows that it is correct to play down the CAP and to reduce its impact, a number of actions should be taken. We should not attempt within the CAP more than to underpin the various product markets. We should look to national Governments to make up more of the income of farmers. There are strong social and regional reasons for keeping the small farmers of Europe, who are sometimes said to be inefficient,

723
in their farms in order to keep rural communities together. The appropriate measures should be the main responsibility of the national Government and not of the Community.
Many small Bavarian milk farmers work in industry and run a smallholding as a part-time activity. If the German Federal Government wish to support them in that, I wish them good luck. It should not be for the CAP to provide such help.
Much has been said about surpluses. If there is to be a sufficiency of agricultural products every year, there will be surpluses in good years. Thus we should not be frightened of surpluses. Obviously, there is an upper limit beyond which they become an embarrassment. We must accept that, because of the vagaries of nature, if we are always to have sufficient, in some years we shall produce surpluses. That is inescapable.
We must have a sensible method of disposing of those surpluses. There is general agreement that the most sensible way of disposing of them is certainly not to sell them at bargain basement prices to the Soviet authorities. There are many social customers to whom the surpluses could be sold cheap. Some years ago there was a beef mountain and the Minister, now Lord Peart, introduced beef tokens. They seemed to work well. We should consider introducing more such schemes.
We must consider the question of interest rates and of money capital invested in agriculture and horticulture. We should follow a number of the European countries and have agriculture banks which offer much lower interest rates. That is another unfairness in the costs of British agriculture. In Denmark and Holland, farmers can borrow money at a cheaper rate than farmers here. That is no fault of our banks.
We must be prepared to behave more like other Europeans. Hon. Members have said that the French cheat. I prefer the phrase the French use, il faut arranger—things have to be arranged. The French are good at arranging things. They do what is in the national interest. They arrange and then look up the appropriate article of the Treaty to see how it can be interpreted to fit national policy. The Dutch do that with their subsidies to the glasshouse growers. Glasshouse growers
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in my constituency had to face a 100 per cent. increase in the base price of oil last year. The Dutch grower does not have to carry that.
If we are to stay in the CAP—and I shall not be led into the argument that we should get out—we must behave like the Dutch, French, Danes and West Germans. I leave that thought in my right hon. Friend's mind.
The farmers in my constituency are typical of farmers throughout Britain. Time is not on our side. It is running out for many of our farmers. We need urgent remedial action. I regard the future of our farmers as infinitely more important than the legal integrity of the common agricultural policy.
7.22 pm
Mr. Robert Maclennan: I reflected when listening to the hon. Member for Eastleigh (Mr. Price) how times have changed. His forebears would not have thought it appropriate, when colonising and building the British Empire, to ape the ways of those with whom they were living. It is a strange idea that we should be more like the French, the Germans or anyone else in order to succeed when, in the past, we have ourselves been proved so successful.
I differ from the hon. Gentleman in not refraining from referring to the documents under consideration. The tone of the Minister's speech was strangely complacent. He is by nature a somewhat cocky individual. Like other Agriculture Ministers before him, he seeks to present each step in his policy as a major triumph. He refrains from commenting upon its effect. It is about time that Ministers were a little more modest about their achievements. They have a strange habit of returning from Brussels with a beef premium scheme, a butter subsidy or a nil price increase as though by so doing they have transformed the parameters within which agriculture operates when all that they have done has been to tinker at the margin.
I do not intend to belittle the achievements of Agriculture Ministers. But in this industry, which develops from year to year and is affected by the seasons and external economic conditions, it is perhaps not possible to make more than a marginal impact at any given time.

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The Minister's speech did not reflect the sense of crisis that prevails in the industry. He spoke with self-approbation of his achievement in devaluing the green pound. My right hon. Friend the Member for Battersea, North (Mr. Jay) indicated that the strengthening of sterling—which has created substantial problems for the farming community because of its association with inflation—played a large part in the devaluation of the green pound.
The Minister does not deserve the credit that he gave himself for his achievement in a time scale which was much shorter than he anticipated on taking office. It was shorter because of the substantial strengthening of sterling.
I do not ask the House to accept my word that there is a sense of crisis in agriculture. One needs only to look at the White Paper, "Annual Review of Agriculture 1980", to see what is happening. Input prices increased by 13 per cent. during the past year, but that was not matched by output prices. Net income was expected to fall by about 5½ per cent. in 1979, a reduction of about 17 per cent. in real terms. The effects are grim, and they will not disappear because the Minister has devalued the green pound four times during the past 12 months.
The agriculture editor of a newspaper well known to the Minister of State, The Press and Journal—it speaks with some authority on agriculture matters in Scotland—referred to green pound parity being a let-down. I quote from an article published last Thursday:
"What worries farmers is that they are not visibly better off as a result of achieving green £ parity. Indeed, the recent government White Paper showed that farm incomes fell by 18% in real terms in Scotland last year—on top of a 33% drop in 1978—and there is every indication of a further drop this year."
That is the background against which the deliberations are taking place in Brussels. It is right that we are concerned not only with the macro-economic consequences to Britain of the CAP but with its effect upon those who work the land.
I was pleased to hear the Minister say that he proposed to increase the guaranteed price of fat lamb. That may help to strengthen the market. I hope that it will carry the farmers through to the
726
summer and the autumn store sale season. A repetition of last summer would have disastrous consequences in those parts of the country that depend upon a buoyant store lamb trade, including my constituency and many constituencies in the north of Scotland.
Primarily this debate is about the documents before us. I turn to the reform of the CAP. There are many hon. Members on both sides of the House—I make no party point—who start from the premise that the CAP is a total disaster. It is not so viewed by our eight partners in the European Community. If we are to achieve any changes in the structure of the policy, we must begin by facing that reality.
The CAP has worked well for most member countries of the European Community. As our industrial development policies were directed towards transforming industrial activity, so has the common agricultural policy been directed to bringing about a transformation of activity in rural areas of Europe, together with a greater equality of incomes. The CAP brought prosperity to eight member countries where abject poverty prevailed in the past. It is for that reason—not the sheer perversity of the French or anyone else—that we face an uphill battle in seeking to redirect the CAP. Although there has been much talk about redirecting the policy and tearing up the existing policy, the debate so far has been somewhat scant of positive suggestions as to how that might be achieved. The Minister gave little indication—perhaps the right hon. Gentleman's speech stands as the most significant so far—of how he would deal with the heart problem of surpluses.
The right hon. Gentleman took a strictly nationalistic point of view on milk. He said that he rejected the Corn-mission's proposals on the super levy because it was against British interests. He told us that he rejected the Commission's proposals on co-responsibility levies. We were told that he did not like the suckler cow scheme because it is limited to 15 cows and that does not suit Britain.
I do not deny that all those contentions are true. However, if we approach negotiations in such a negative manner, I question whether at the end of the day we shall get anything out of them that

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we can boast about. The Minister concluded somewhat without hope. He said that it would be a long haul. I suppose that he would describe his practical suggestions as being restraints on the common price front over a long period. Restraints on that front over a long period will be exceedingly difficult to achieve. It will be a long time before such a policy delivers any beneficial results to Britain.
I was glad to hear the short intervention—it was one of many, but I say that in no spirit of criticism—of the hon. Member for Grantham (Mr. Hogg), who said that the policy was at fault because it attempted to achieve through the price mechanism the reform of Europe's social problems. That is right, but how does that perception reflect itself on the Treasury Bench? It is not reflected with any reality or any sense of purpose.
One of our major disputes concerns sheepmeat. It is essentially a social issue for the French. The Minister is utterly dismissive of the French case. I have made plain in the House on a number of occasions my total disagreement with the way in which the French have acted, the illegality of their policy and their tenacity in pursuit of illegality. However, it is not a wholly unreasonable objective to seek to obtain Community assistance to deal with a social problem which would be created by the implementation of a Community policy. The Minister has said that he is wholly unsympathetic and that it is a matter for the French. If the right hon. Gentleman is a European— he sometimes proclaims that he is more European than others of his colleagues within the Cabinet—he owes it to us to explain why he is so insensitive to the difficulties that the French face.
The Minister should not adopt a "holier than thou" attitude in respect of Mr. Chirac's comment "If you cannot keep the rules, you had better get out". The Minister's comment was a strange one bearing in mind that it was made within two hours of his right hon. Friend the Prime Minister saying that the Government were prepared to contemplate the withholding of the Community's own resources in blatant defiance of Community law. Such comment does not fall well from the lips of a Minister of the present Government.
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I recognise the real achievements of the right hon. Gentleman during the past year. However, it is right to make critic isms because I believe that the Community's common agricultural policy could burst the Community. The right hon. Gentleman and his colleagues in the Council of Agriculture Ministers must stop this absurd dialogue of the deaf. I have sat through sessions of the Council of Agriculture Ministers. I have listened to national interests being dressed up by one Minister after another as Community policy. That is what the hon. Member for Eastleigh calls "arranging things". It is not arranging things. It is causing things to come apart at the seams. It is pure self-deception to pretend that it will be blessed with any sort of success either for the Community or for Britain.
I have more respect for those who say that Britain should withdraw from the Community than for those who pursue policies that make it virtually inevitable that the Community will fall apart.
Mr. Maxwell-Hyslop: Will the hon. Gentleman give us his views on the proposition that time is not in this context a healer, and that unless we can get a workable CAP within the next few months rather than within the next few years it will be more and not less difficult to do so after the accession of Spain, Portugal and Greece?
Mr. Maclennan: I sympathise with that point of view. I accept that the Government are under considerable pressure of time. That is why I deeply regret the Government's approach, especially their approach to the budgetary problem. In the autumn of 1979, prior to the Dublin summit, the Prime Minister presented the rest of the Community with a demand. She indicated that she would accept nothing less than virtually the whole of it. It is now a matter of national pride that she should succeed. The obverse is that every other country in the Community with which we are supposed to be doing business considers that it will be a national defeat if we succeed. That makes the task 10 times more difficult of achievement.
Mr. Marlow: How does the hon. Gentleman believe that the French would react if they had a budget deficit with the Community of £1,310 million?
Mr. Maclennan: I find it not particularly fruitful to speculate about how the French would behave. Successive attempts by British Governments to adopt a wholly nationalistic approach to the resolution of our Community difficulties have brought us no further forward. In that approach lies part of our difficulty. The original six member States learnt to live with one another. They had a working relationship. They have a real suspicion—in my view, a justified suspicion—of our commitment.
I have said enough of a general character about the wider issues. I merely say that each of the documents that we have to consider—including the Government's interpretation of the Commission's proposal—betrays the same stamp of narrow-minded nationalism. I do not understand how that will produce any reform of the attitudes of other members of the Community to our problems.
Mr. Dykes: Will the hon. Gentleman tell us why he thinks that the attitude against the EEC has grown up in the Labour Party? It would be useful for us to know. Is it because of the economic failures of the previous Labour Government? Is that why Labour Members are anxious to find a scapegoat? Is it because they consider that it is better to look abroad rather than internally?
Mr. Maclennan: Rather than speculate about the motivations of my colleagues, I would speculate about the motives of about 120 Conservative Members who signed a motion suggesting that the Government should act illegally. They suggested that the Government should withhold payments to the Community. That reflects a substantial switch of opinion within the Conservative Party in an anti-communautaire direction.
I have tried to avoid making narrow party points. The problems facing us are not particularly party problems. One of the many documents before us is document No. 4648/79. It deals with policy on agricultural structures. The document was put forward by the Commission with a view to tackling the social problems mentioned by the hon. Member for Grantham albeit in a marginal way. It sought to deal with social problems by means of direct income aids. Britain stands to benefit from this document under the provisions that
730
establish aid to the Western Isles. In passing, I shall make a party point. I notice that the right hon. Member for Western Isles (Mr. Stewart) has been absent for the whole of the debate. He has not taken this opportunity to press his constituency's interests. However, I shall press mine.
The aid would provide some 50 million units of account over a period of 10 years for the benefit of the Western Isles. The Highlands and Islands Development Board strongly backed the proposition that aid should be made available to Scotland. However, it would like that aid to be spread over a wider geographical area. Throughout the Highlands, the problems of remoteness from markets are comparable with those of the Western Isles.
There are other provisions in the proposal. It is proposed that aid should be given to the Mezzo Giorno and the West of Ireland, and even to establish a sheepmeat industry in Greenland. What is the Government's reaction? In no part of the British Isles is the farming industry in need of more help than in the far north of Scotland. The Minister congratulated himself on the hill livestock compensatory amounts. However, that compensation was of less benefit in those areas than in other nominal hill areas. Where the flocks are much larger, the cash value of his action was of course much greater.
The possibility of such regional development assistance from the European Community is dismissed. It is not wholly rejected, but it is clear that the Government do not intend to press for that aid in the negotiations. The Minister states:
"Even taking into account certain proposed benefits in the pig sector and for the Western Isles of Scotland, the Commission's proposals would be very costly to the United Kingdom. Moreover, there seems to be a shift of emphasis away from helping farmers who can, with aid, become fully viable towards measures which are designed to channel aid to poor areas with little concern as to whether viable farms will be created."
If the Minister is concerned only with aiding farms which are viable and prosperous, he will exacerbate the problems and differences that persist in the condition of the industry.
Part of the purpose of the guidance fund should be to eliminate those differences. This particular measure deserves

731
the Government's full support. It should be widened in the way suggested by the Highlands and Islands Development Board. I hope that the Minister of State will show an awareness tonight, which was singularly absent from the Minister's speech, of the predicament of the farming industry. I hope that he will show a positive willingness to do something more about the industry's problems.
It was notable that in the course of his speech the Minister did not once refer to the level of interest rates that now faces agriculture. He did not refer to that most pressing problem faced by farmers, a direct consequence of measures taken by this Government. It is the obverse of the green pound devaluation in which he took such satisfaction.
Such debates are all too few. Those who are deeply concerned about the condition of agriculture in Britain wish that such debates were more frequent. However, we are grateful for the opportunity to speak when such debates arise.
7.46 pm
Mr. Richard Body: I am sure that the hon. Member for Caithness and Sutherland (Mr. Maclennan) is right to say that the pressures on farmers may be only beginning. He was also right to draw attention to the increased costs. His integrity is respected in this House. I am sure that he does not blame the Government for the fact that almost everything that is purchased by farmers now costs 10 per cent. or 20 per cent. more than a year ago. Many farmers must have doubts about their future prosperity.
Several hon. Members have argued in favour of a greater degree of self-sufficiency. I normally agree with the hon. Member for Cardigan (Mr. Howells). As always, he spoke with great eloquence. My hon. Friend the Member for Harrow, East (Mr. Dykes) also argued in favour of self-sufficiency. I regret to say that I do not always agree with him when discussing this subject. I was worried about his argument. My hon. Friend said that if we were to return to the old system of deficiency payments, instead of relying upon the support of the CAP, the cost of supporting British agriculture would be twice our net contribution to the budget. It would, therefore, cost
732
about £2,000 million a year. That is an enormous sum of money.
Mr. Spearing: It would cost £2,600 million.
Mr. Body: I had thought that my hon. Friend had suggested that the net contribution would be a little less. Perhaps my hon. Friend will suggest how much more it would cost to support our agriculture if we were to embark upon his policy of self-sufficiency. Of course, we can produce more food. I agree that we can grow more food. He and I used to live near each other. He must know that in that area wheat is grown on grade 3 or 4 land at great cost. More wheat could be grown on that type of land. However, it would cost almost twice as much as using more suitable land, such as that found in North America.
It is unwise—I am trying to use a tactful word—to induce our farmers to grow wheat and other commodities at a high cost if they can be bought at half the price from other countries. Therefore, I ask those who argue for more self-sufficiency to ponder how much it would cost the taxpayer to induce our farmers to achieve the level sought.
One commodity in particular has been referred to—sugar. The level of self-sufficiency within the Community in sugar is 123 per cent., which does not include the 1·3 million tonnes imported from ACP countries under the Lomé convention. We have, therefore, a considerable surplus of sugar in the Community, and it is right that the documents should deal with that.
I am sorry that the explanatory memorandum issued by the Ministry of Agriculture, Fisheries and Food is so uncritical about that surplus, whereas in dealing with the milk surplus it is constructively critical. I pay tribute to those responsible for drafting the explanatory memorandum on milk.
On the basis of these documents it appears that we shall have to put on to the world market in the current year more than 4 million tonnes of sugar. Some 1·4 million tonnes will come out of the C quota, which is not eligible for export subsidy, but none the less there will be a serious effect on the world market. Every ounce of that 4 million tonnes will displace exports of sugar from cane-producing countries. That is of great concern

733
to impoverished countries which are getting poorer year by year and which depend for their foreign exchange on exporting cane sugar. They produce sugar more cheaply than beet-growing countries.
The hon. Member for Durham (Mr. Hughes) looks dubious. The natural cost of producing cane sugar is invariably cheaper than beet sugar. However, when one throws into the equation the large number of grants, subsidies and tax allowances available to almost every sugar beet grower in the West, the statistics are somewhat different. I am well aware of the case argued by sugar beet growers on the Continent that they can grow sugar as cheaply as cane-producing countries. However, the hon. Gentleman will be aware that nearly all cane growing countries make restrictions on mechanisation. They tell those who control plantations not to mechanise. It may enable sugar to be grown more cheaply but it will cause unemployment. Cane-growing countries have to do that, and we should all—
Mr. Mark Hughes: Does the hon. Gentleman accept that in the world context the advantage that cane has over beet is in the consumption of energy in the form of fertiliser, tractors or whatever? Once that is thrown into the equation, the use of the sun to produce cane sugar makes it absolutely clear that cane sugar has a massive advantage. The hon. Gentleman looked at me when I appeared to query his comments. Considered in purely monetary terms, it is different. However, once one considers the energy requirements, primarily of petrochemical energy, cane sugar wins by something in the order of 1½: 1 to 2: 1.
Mr. Body: I accept that entirely. I would say that it wins on every argument. The outstanding argument is a moral one. Long ago our forebears caused many parts of the world to be peopled for the express purpose of growing sugar cheaply for us on land which, in most cases, cannot grow anything else. These people are totally dependent for their livelihood and for such prosperity as they enjoy on being able to produce cane sugar and having an export outlet for it.
Australia is more happily placed. As a developed country it is not so depen-
734
dent on cane sugar, but it has had grave trouble finding a niche in the export market for its sugar, which is among the cheapest in the world. That failure is due entirely to the way that the Common Market has dumped £400 million worth of sugar on the world market. Australia took the EEC to the GATT panel on a complaint that it was behaving unfairly. The judgment of that panel is worth quoting. It said:
"the Community system for granting these funds on sugar exports and its application had contributed to depress the world sugar prices in recent years and that thereby serious prejudice had been caused indirectly to Australia".
It is one thing to cause hardship to a small number of Australian cane growers. It is much worse to do so to the many hundreds of thousands in developing countries who depend on sugar cane.
Mr. Maxwell-Hyslop: Before my hon. Friend leaves the subject of sugar, will he turn his mind to what is rapidly becoming an alternative use for sugar cane—the production of liquid hydrocarbon fuel? Brazil produces 20 per cent. of her liquid hydrocarbon fuel principally from sugar and to a lesser extent from sorghum. How long does my hon. Friend see the dominant use of cane sugar being for human consumption as opposed to the production of liquid hydrocarbon fuel?
Mr. Body: There is not much optimism in Brazil. Brazil has also taken the EEC to the GATT panel, and submitted figures much worse than the Australian ones. We must await the result of the judgment on the Brazilian complaint. In Brazil people feel particularly sore about the matter. There is no complacency in Brazil about the future of the sugar industry because of dumping. However, I am not in a position to answer my hon. Friend's specific point.
Mr. Maxwell-Hyslop: Perhaps I did not express myself clearly. The thought I wanted to put into my hon. Friend's mind is, how much further does the price of oil have to increase before it becomes more profitable to produce sugar for alcohol fuel rather than for human consumption?
Mr. Body: My hon. Friend expresses himself in the clearest terms, but I do not know the answer. I shall delve into

735
the matter. The answer is of interest to all concerned with the sugar industry and its future.
I emphasise that not only do these 4 million tonnes displace 4 million tonnes of cane sugar but they have a depressing effect on the world market. Countries that belong to the ACP have guaranteed access to this country for 1·3 million tonnes. However, the total that they managed to sell on the world market last year was 2·5 million tonnes. It therefore follows that almost half their exports on to the world market have to be at the so-called world price. That is determined by the amount of dumping by the EEC, which is considerable, because it costs us some £400 million.
The developing countries that produce cane sugar and whose fortunes depend entirely on cane sugar have had such a poor rate of return that many thousands of workers have had to leave the plantations. In Jamaica, more than 30 per cent. of the workers are unemployed and have no prospects of finding other work. It is serious when 30 per cent. of a country's male population is out of work and there are no prospects of finding other work. People who are anxious about the political future of those countries must be concerned that Cuba is only 60 miles from Jamaica. I hope, therefore, that the Minister will be adamant in opposing any increase in the price of sugar and that he will support the proposals for revised quotas, so that we can bring down the quantity of surplus sugar to manageable proportions. It is not only wrong economically but it is wrong morally to dump such large quantities of sugar on to the world market in such a way as to make so many tens of thousands of people so much poorer than they should be.
We now enjoy the effects of a strong pound. Britain should be grateful and glad. We should be celebrating the fact that we have a strong pound and that we are able to take advantage of it. A strong pound should provide lower import prices. Food that is available on the world market should be able to come into Britain at lower prices than we have obtained for several years as a result.
That cannot happen, however, because we have a system of import levies which has the effect of undoing all the good of
736
a strong pound. The stronger our pound becomes, the higher the burden of import levies becomes. Therefore, we are obtaining none of the benefits of the strong pound, and we are acquiring some of the difficulties. Worse still, as a result of our inability to buy that food, there are still tens of thousands of efficient and low-cost farmers going out of business. They are also curtailing production. That is the case in Latin America, in Australasia and in other parts of the world. It is as crazy as it is indefensible that, at a time when so many hundreds of millions of our fellow human beings are going hungry every day, so many food producers are being forced out of business. That is the undoubted consequence of the high level of protection that exists throughout the developed countries.
There need be no shortage of food in the world. The point was made that if we were not burdened by the CAP, we would be able to buy our food elsewhere. My hon. Friend the Parliamentary Secretary disagreed. Only 44 per cent. of the world's arable land is now being cultivated.
In Africa recently, I flew over hundreds of miles of land where there was alluvial silt—land comparable to our grade I and grade II land—which was not being cultivated. Many thousands of people in that country are going hungry because they cannot afford to buy the food that they need. No farmer embarks upon the extensive and laborious process of cultivating his land and growing food unless he is satisfied that when he markets it he will get a reasonable return. That example is repeated in countless countries where good land is not cultivated, and, at the same time, poor people are not able to eat. That one country would be more than willing to send good-quality cereals to Britain—which we would be willing to buy if we were allowed to do so.
Many hon. Members, including the hon. Member for Cardigan, argued for self-sufficiency and said that we should not buy food from other countries. They should understand that unless these countries are able to sell produce to us and to the rest of the developed world they will never get on to the launching pad and they will never be able to develop. They will never get away from the

737
poverty that currently they endure. They could produce food at a low cost, and we could import it if it were not for the severe policy of protectionism that we have built up in recent years.
I do not go all the way with the hon. Member for Caithness and Sutherland in describing the CAP as a total disaster. However, I say to him, and to other hon. Members who have espoused the cause of what they call "Europe", that this must be the worst possible way of trying to pursue any kind of European co-operation. The sooner that we can lick the CAP into shape, the sooner we may be able to co-operate more sensibly.
I pay tribute to my right hon. Friend the Minister for what he has done for agriculture so far. However, there are dangers ahead. Costs are rising, and they will continue to rise for some years. I do not see how we can make good those increased costs so long as we are committed to our present policy on the CAP. I look forward to the day when we can return to a national policy and decide for ourselves to what extent our farmers should be supported.
8.9 pm
Mr. John Home Robertson: I shall resist the temptation to pursue what the hon. Member for Holland with Boston (Mr. Body) said about sugar, for fear of embarrassing the Minister of State. In an earlier incarnation the hon. Gentleman closed the last sugar factory in Scotland.
I declare an interest, as a farmer. I do not think that other hon. Members have declared such an interest, but perhaps they should have done so.
There is a temptation in debates such as this to knock the European Community and to talk solely about farmers' or consumers' interests and overlook the vital interests of the workers in the farming industry and its associated industries—contractors and so on—who make up our rural communities. Those people—tractormen, stockmen and their families—have suffered over a long period.
These days, we tend to talk about the difficulties of restructuring the steel and shipbuilding industries. Since the war, agriculture has been restructuring itself dramatically. We have seen a dramatic reduction in the number of people employed by the farming industry, with con-
738
Sequent pressures on remote areas and communities.
These rural communities have had fairly rough treatment from this Government in the past year. There have been threats to housing in small villages which could flow from the decision to slow down council house building and sell off council houses. There are further pressures on the cost of transport and fuel, partly because of inflation and partly because of VAT. We have seen a slowing down of industrial development as these areas have lost their regional development area status. All this means that constituencies such as mine find that it is much more difficult to provide jobs in industries other than agriculture.
Also, rural areas are faced with ridiculous proposals for rural sub-post offices and for education. There are threats to school meals, milk and transport. It seems ironic that farm workers should have to rely on the Duke of Norfolk to rescue school transport in rural areas.
The Government must remember that large areas of rural Britain rely entirely on agriculture. It is worth pointing out that last December Scottish farm workers received a 16 per cent. increase in their minimum wage, bringing it up to £62.45. It is worth pointing out also that that increase will not cover the 20 per cent. rate of national inflation or the far higher costs of rural inflation. We are nowhere near paying for the real worth of British farm workers, who are among the most valuable and productive workers in this country.
If farm workers and people in associated industries—the agricultural engineers, contractors and food processors—are to make a reasonable living, we must ensure a healthy farming industry in the United Kingdom. The trend has been pretty good since the war, and production has expanded. Sadly, the amount of employment has been reduced, but as a result the industry is the most efficient in Europe, if not in the world. Before the war we were producing 50 per cent. of our needs in temperate foodstuffs. That proportion has now risen to 70 per cent. According to the principle of the White Paper, "Food from Our Own Resources", we should be aiming to increase home production much more in order to save on imports and ensure, wherever possible, that our economy and our people can

739
reap the benefits of what we spend on food. Sadly, this is not happening. That is the fault not of this Government or the last Government alone but of both Governments.
In past years, particularly in 1979, we have begun to see a levelling off in the increase in production from farming. Beef production was lower last year than at any time since 1973. Pig production was 20 per cent. below the 1973 level. The numbers of dairy cows were at their lowest since 1966, and the number of pigs was lower than at any time since 1961. Last year net farm incomes were 17 per cent. lower in real terms than they were in 1978. Also, we have had the particularly worrying factor that borrowing by farming businesses has increased by 32 per cent. up to £90 million, despite the high interest rates.
Mr. Myles: Will the hon. Member accept that the figures he has presented to the House are a sad reflection on the agricultural policy of the last Government?
Mr. Home Robertson: It is not my intention to make easy political points, or even difficult ones. It is sad that we have reached this position, regardless of who is responsible. The Government must do their best to get us out of this situation.
The problems that I have illustrated culminated last year in a serious squeeze of increasing costs for the inputs for the industry and a depression in prices. In addition to the fact that agricultural overdrafts are going up, there are now dangerous signs of a cutback in production. About 26 per cent. more bulls and cows have been slaughtered in the first few months of this year than in the corresponding period last year. This means that the breeding herd has been cut back seriously, and that has dangerous implications for the future. A cutback in investment is bad news for all industries associated with agriculture in our rural areas.
This is a sad picture, but nowhere is it sadder than in the uplands. Lowland farmers can tighten their belts. They can cut back on expenditure and production and get by. Hill livestock producers rely on the confidence of lowland farmers for all their incomes, and that confidence is sadly lacking now. It will be only a mat-
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ter of time before there are bankruptcies in the hills, with the resulting unemployment, depopulation and depression in these remote areas.
I have the impression from press reports that the Minister of State, Scottish Office failed to grasp this message at the National Farmers Union annual general meeting in Aviemore last week. I hope that the Minister of State, Ministry of Agriculture, Fisheries and Food has now got the message. Lord Mansfield said then that he intended to resist the removal of the variable beef premium. I hope that he will do more than that. If the variable premium goes and intervention stops next month, as has been threatened, for the first time since 1973 the beef sector will be without any kind of support whatever. I hope that the Minister can tell us that there will be some kind of support, and I welcome what has been said already about support for the sheep sector.
My hon. Friends have rightly emphasised the interests of consumers. We have supported the efforts of the Commission to freeze consumer prices and cut production of expensive surpluses, particularly in milk and sugar. I am surprised that my hon. Friends have not mentioned the failure of the Government to take advantage of the school milk subsidy which is available from the Community, under which it is possible to recover four-fifths of the cost of the milk. I hope that the Government will address themselves to that wasted opportunity, for the sake not only of farmers but of children in our schools.
Nobody can quarrel with the basic objectives of the Commission. In my opinion, the danger is that the means of achieving those objectives could do further damage to our agriculture industry, which is already relatively efficient and is not generating surpluses. At the same time, these means could further encourage the French, Dutch, Danish and New Zealand producers to take an even bigger share of our market. That would have damaging consequences for our balance of payments and would constitute a further serious threat to our farming and rural communities.
I mentioned New Zealand quite deliberately. I give a friendly word of warning to our Commonwealth friends. If they

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get into the habit of flooding our market with lamb in October just when Scottish producers are marketing their lamb, as happened last year, and if they do not make a genuine effort to import more United Kingdom manufactured goods, they will lose many faithful friends in this country.
Having made that quick remark about our Commonwealth kith and kin, I pass on to our European Community partners. It really is absurd to impose the same penalties and disincentives on United Kingdom agriculture, which generates no surpluses, when the real objective should be to shake up mainland European producers, who appear to think they have some kind of God-given right to be paid exorbitant prices for anything and everything that they produce whether or not it is wanted. The message should go out from this House that if any producer anywhere within the Community cannot sell his produce he should not be producing in the first place. The Minister of Agriculture, Fisheries and Food would do well to preach the same message on mainland Europe as he preaches here, which is that agricultural producers should be better at marketing what they produce.
I look forward to the real, free common lamb market that we should be able to achieve if the European Court gets its way, although I realise that we will have to face the consequences in terms of milk imports which lie at the other end of that problem.
The House knows that there are two ways of getting rid of food surpluses, or any other surpluses for that matter. The first way is to reduce production and the second is to increase consumption. I think that what our friends—perhaps not our friends but friends of Government Members—in the European Parliament are suggesting would have exactly the opposite effect. Further increases in farm produce prices would obviously reduce consumption and increase production, which surely is the one thing that we should be trying to avoid.
These proposals would do neither. In the United Kingdom we would probably get the worst of both worlds because our inflation-ridden consumers would not be able to afford the increased prices and, at the same time, our farmers would continue to lose out against competition from
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foreign producers because of unfavourable exchange rates, our unparalleled inflation rate and our unparalleled interest rates.
In my opinion, these proposals are of relatively limited value to anyone, because no amount of tinkering with the existing machinery can do that much good. What we need to do is to overhaul the CAP radically; that would be in the interests of all concerned.
It may be necessary to scrap the intervention process altogether. I see my hon. Friend the Member for Durham (Mr. Hughes) cringing at that thought. But we have to approach this problem in a radical manner. It may be necessary to consider a different kind of support for the agriculture industry in the Community based on some kind of payment for small farmers out of a social fund, perhaps combined with some kind of deficiency payment system again, though I recognise that if the target prices are too high that would be ridiculously expensive.
As a committed European I take no pleasure whatever in criticising the Community, the political objectives of which I suport wholeheartedly. If the Prime Minister or any of my right hon. or hon. Friends choose to exploit this situation and the unpopularity of the CAP in order to wreck the European Community, they will have to do so without my support.
Surely we all recognise that the existing CAP is based on an entirely absurd economic premise. If the Minister will get to work with our friends in the Community on an urgent reappraisal of the objectives and budget of the CAP, he will find that he has widespread support in the House.
In the meantime, and in conclusion, I implore the Minister not to forget those who make their living working on the land in the United Kingdom. They have had some rough treatment in recent years. They have had some rough treatment at the hands of this Government in recent months. They badly need an effective advocate within the Cabinet.
8.25 pm
Mr. Tony Marlow: I own a few cows, a few sheep and four geese. It is for you, Mr. Deputy

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Speaker, to say whether you would like me to declare an interest. I do not think that I have a significant interest in the debate.
I am happy to follow my hon. Friend the Member for Harrow, East (Mr. Dykes). I am sorry that he is not now present. It is some time since he spoke. We are both convinced Europeans. We are both keen to work together with Europe to the mutual benefit of Europe and this country. But there is a problem. It concerns the existing institutions of the European Common Market.
We joined the Common Market too late. We joined at a time when the Market had established regimes in agriculture and trade which were disadvantageous to the interests of this country. The agricultural economy of the rest of Europe is different from the agricultural economy of Great Britain. In trade, we had, and still have, a great deal of contact with the British Empire and the rest of the world. They were not the same contacts as those established by the rest of Europe. We have combined with Europe over the very issues that divide us. We have to bring about some fundamental changes in our relationship with the Community so that can unite on those areas of policy that we should hold in common.
As we stand, the problems prevent us uniting in those spheres where we should unite. I should like to make a simple but obvious point. My hon. Friend the Member for Harrow, East has a great deal of my sympathy. His back is rather to the wall. I get the impression that he takes upon himself the duty to represent, to the House and to the people of this country, Europe and the interests of Europe. I feel that I am right in believing that it is our job to represent primarily the interests of our constituents and, through this House, the interests of the country as a whole.
I was appalled by the speech of the hon. Member for Caithness and Sutherland (Mr. Maclennan). I am sorry to have to say, in his absence, that he gave me the impression that he was telling the House that we should not rock the boat because the rest of Europe is doing very nicely, thank you.
It is normal for hon. Members to prepare for a speech to be made in this Chamber. To prepare for this debate, one should have read, inwardly digested
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and understood all the papers that I hold in my hand. I have to admit that I have not read them. I have not even had time to weigh them. This is one of the problems that we face about the institutions of the Community and particularly the common agricultural policy.
An awful amount of paperwork is generated. The reason is that, unlike Britain, which is a democracy, the Community is a bureaucracy. It is a Eurocracy. It is run by bureaucrats with little democratic control. Those bureaucrats devise schemes for the rest of Europe based on the lowest common denominator or the highest common factor. I am not sure which applies. All the complex policies in all the countries of Europe are put together in some super-complex policy and dished around Europe. In this House, late one evening, there will be an opportunity to take note. The fait accompli will take place later. This makes people and many hon. Members resentful of the way in which matters are progressing within the European Community.
I should like to give one example. It is not concerned with agriculture, but it demonstrates strongly what I mean. There was a debate in the House not long ago about the introduction of the tachograph. Left to ourselves, we would never have introduced the tachograph. In present economic circumstances, the £300 million cost to the people of this country is unjustified. This is one of the problems emanating from Europe.
The common agricultural policy is very much the tail that wags the dog of Europe. It is the bath water that surrounds the baby of European unity. We are told that the common agricultural policy is the great policy produced by Europe and that we must not throw out the baby with the bath water. However, if we do not get rid of the bath water I am afraid that the baby may drown.
When we joined the Community we were told that the CAP was part of the price that we must pay. We are now told by the French that we should not complain about it but get on with it and enjoy it. When we joined the Community, the CAP took up 60 per cent. of a much smaller Common Market budget. We were also told that the 60 per cent. would be reduced to 40 per cent., or whatever the level of the Common Market budget was. As we all know, the CAP

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budget is increasing and will continue to increase. It now accounts for approximately 75 per cent. of the European budget. The structural reason for that is the political and social imperatives of most countries in Western Europe. On its own, without strong pressure and reasons, Europe cannot do anything to reform the CAP.
Let us consider what came out of Europe yesterday. The Committee of Professional Agricultural Organisations is asking for roughly an 8 per cent. increase in agricultural prices. I would not be surprised if that happened. I know that my right hon. Friend will do all that he can to stop that. The CAP is out of control. The continuing lack of control of expenditure on the CAP has led us to the present situation. We in Britain are faced with a budget deficit of £1,310 million in the coming year. That is £100 for every family of four in the country.
I wonder whether it is realised that when the Prime Minister goes to Brussels next week she will fight—I am sure that many people will support her—to the extent of £100 for every family of four in the country. I put that figure into context in a different way. Government supporters sweated blood over school transport charges. I think that we intended to save up to £30 million. That is one week's expenditure on our net contribution to the Common Market. We spoke as though it were a cut. In fact it would have been a charge to the public. There would have been a charge on parents as opposed to ratepayers. Different people would have paid for the transport. There would not necessarily have been a cut in public expenditure. That is one week's cost of our membership in Europe.
Last weekend, one of the Sunday papers suggested that the Government were considering taking £300 million out of social security. That is less than one-quarter of the figure that we are discussing. That again would be a transfer payment. I am not suggesting that it would have happened, but if it had there would have been a great deal of opposition from members of the Labour Party. If it happened, money would go into one set of pockets, or industries, as opposed to another set of pockets. The money would still be spent. There would still
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be the consumption and the standard of living. The factories would still be at work.
The £1,310 million arising out of the absurdities of the CAP is basically lost to the country. It could be spent elsewhere. It will be spent in the richer countries of Europe while the social problems of our inner cities remain unresolved. To this country, the money will be wasted. We shall not have it for our standard of living and consumption. It will not be spent on United Kingdom demand. Therefore, ii will not improve the number of jobs. Parliament has almost no control over that money. The expenditure of the European budget is not decided by this House, I am ashamed to say. It is decided by the Council of Ministers, in which the United Kingdom is in a minority of one, and there are eight other people.
Mr. Mark Hughes: We have a veto.
Mr. Marlow: I accept that we have a veto, but how often do we use it? There are many people—probably the hon. Gentleman included—who would not wish us to use it.
Also, the amount of democratic control that we have over this immense amount of money is very limited. I am horrified that some hon. Members have suggested during this debate that we should increase the amount of money available to the European budget, increase the amount of money over which this House has no control at all, putting taxpayers' money into other people's hands.
The common agricultural policy, as many hon. Members have said, masquerades as a system of agricultural support, whereas what it is in effect—although there is a certain amount of agricultural support about it; I accept that—is basically a means of dealing with the social problems of the richer countries of Europe, at the expense of a country with even greater social problems, I am sorry to say, which gets very little from it. It is used in two ways. First, small farmers get extra money, and we have very few in this country; and, secondly, prices are kept at such a level that small farmers can make a reasonable living. One of the effects of this, of course, is that a large, efficient, successful farmer becomes a millionaire while at the same

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time the poor and needy find that their food prices are going through the roof.
I wonder whether we can compare the existing system of the CAP with the system of deficiency payments that we had in this country, which worked satisfactorily for years and years.
Mr. John Townend: I do not quite understand the tenor of the argument. Is my hon. Friend saying that large farmers in this country are making such high profits that they are getting an excessive return on their capital?
Mr. Marlow: I do not think I said that, but I think my hon. Friend will agree with me that there are some very large farmers, in the Paris basin in particular, who are making a great killing out of the common agricultural policy as it is at the moment. Large farmers in this country are quite well off, as I think my hon. Friend would agree, but this policy at the moment benefits large farmers in other countries disproportionately.
I return to deficiency payments. We have got to have a system of agricultural support because farmers must have the security of knowing that if they sow their crops they will get something for them and if they put extra cows into calf they will get something for the end product. I think we would all agree that there must be a system of agricultural support. But when my hon. Friend the Member for Harrow, East says that if we came out of the Common Market it would cost us more because of agricultural support I can only say that within what we are paying at the moment we have got agricultural support. We are getting £439 million back from Europe at the moment—peanuts compared with what we put in—and that is our agricultural support.
But, as well as that, we are paying for the privilege of buying European food at very inflated prices. Indeed, it is increasingly becoming realised as one of the problems arising from the Common Market that everyone in this country has to pay £35 per head per year over and above the level of world prices for his food. That amounts to £3 per family per week, and it is a lot of money. And, of course, there is the great fallacy—which I am sorry to
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say my right hon. Friend the Minister mentioned during his speech—that, if we started buying our food on the world market at world prices, world prices would go up. But that is not true, because if we were not members of the Community—and I have not got round yet to suggesting that we should not be members of the Community—the Community surpluses would go on to the world market. There would be no difference in supply and demand, we would not cat any more, and the Community would not produce any more. The supply and demand situation would be exactly the same. So, in reality, we are spending £35 per head per year over and above the odds for buying food through the Common Market.
Since we have gone off deficiency payments and gone on to this absurd system, we have been faced with the obscene fact that we are having virtually to give away money to the one country in the world that is our potential enemy, a country that is rampaging around and has just invaded a free, peace-loving country, Afghanistan.
At one time I worked in the grain industry. Just as we were going into the Common Market, we all went rushing round in circles trying to find hangars and odd spaces for the intervention agency. It was probable that nothing would be put in that space, but we would get money for setting it up and making it available. That was money wasted on something that might never be used. We did not have that absurdity with the deficiency payments system.
Mr. Mark Hughes rose—
Mr. Marlow: No, I am not giving way. I must get on.
Mr. Hughes: It is just a small point—
Mr. Marlow: No. I am not giving way. I insist.
Instead of the deficiency payments, which we all loved and enjoyed so much, we are faced with the bloated budget, swollen by the absurdities of the CAP.
I will give some examples of how we stand. We pay £2,200 million a year into the European budget, and we receive £900 million. So we lose £1,300 million. The French, God bless them, pay the same as

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us—£2,200 million a year—but they receive £2,100 million. Our net contribution is 13 times as great as the French contribution. No wonder the French are satisfied.
As a percentage of our gross contribution to Europe, on the CAP we receive 20 per cent. The Irish Republic, as a percentage of its gross contribution to the EEC, receives on the CAP 280 per cent. I was interested to note that during the week before last the Taoiseach, Mr. Haughey, said that he would be happy for the United Kingdom to reduce its contribution to the Common Market budget provided that Ireland could do the same. He has some cheek to say that. The country that we are told is the most communautaire, the keenest on being a member of the Common Market—the Netherlands—receives a total contribution from the Common Market that is greater than ours, although our population is five times as large. Denmark, with a population roughly one-tenth of the population of this country, on CAP alone gets as much as we do. It is a ridiculous situation.
My right hon. Friend the Prime Minister will be involved in negotiations in Brussels next week to right our wrongs. It must be obvious to everyone that it is impossible to get the situation put right until we dismantle the CAP. I say that for two reasons. First, as long as the CAP continues we shall pay an absurdly high price for our food. Secondly, because of the structure of the Community and the political facts of life of the Community, as long as the CAP continues it will take an increasing share of the European budget to which we are such large subscribers.
Hon. Members have said that we must be positive, not negative, in the negotiations. I do not know whether it makes any difference whether we are positive or negative. What makes a difference is the strength of our position, and we have a very strong position. Europe is dependent on us as a market for its food. Where else would it get rid of its agricultural surpluses at such high prices?
Europe is dependent on us as a market for its manufacturers. Its industry is dependent on being able to sell goods to the United Kingdom. Front Bench spokesmen have told us on several occasions
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how much our trade with the Community has grown, but they have not said how the balance has changed between our imports from the Community and exports to it.
In 1972, before we joined the Community, we exported more manufactured goods to the Community than we imported from it. Last year, for every £5 worth of goods that we exported to the Community we took back £6.40 worth. It is salutary to make a comparison with the rest of the world. In 1973, when we joined the EEC, our imports, as a proportion of our exports, were 75 per cent. If we take 1978 and 1979 together, our imports as a proportion of our exports of manufactured goods to the rest of the world, were again 75 per cent. The factor has not changed in relation to the rest of the world, whereas European-manufactured goods have flooded into this country. We should bear that in mind.
We are in a strong position. Europe needs our market and Europe covets our North Sea oil. For that reason, other European countries wish to be associated with us. Who knows what will happen to energy resources as the years go by? We own the waters that contain 60 per cent. of European fish. Europe might consider that to be of benefit if only we could find a solution to the underlying problems between us.
Even if we had equity, the institutional and overhead costs of Europe would still need to be paid. As we pay our contribution to those costs, so the costs of other members will be reduced. The Europeans benefit from us there as well.
As the Daily Express so wisely said today, the French need us but we do not really need the French. If we left the Community, the French would have to find another £400 million a year at least. I believe that we are in a strong negotiating position and I am sure that my right hon. Friend the Prime Minister will take advantage of that to the height of her extreme ability.
However, alongside the strength of our bargaining position we have some problems. When we are striking a bargain over the CAP and other aspects we must take those problems into account before we even agree to accept what Europe has to offer us. There is a problem with

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the CAP, there is a problem with trade, and there is the problem of dumping.
Certain of our industries suffer from dumping. Dumping regulations and trade negotiations are all controlled from Brussels. If clothing and footwear are dumped in Europe, it may not alarm the Germans or the French but it may have a devastating effect on the United Kingdom. But Brussels is not over-concerned about what happens in the United Kingdom. Brussels is concerned with Europe as a whole. If there is a dumping problem and the matter has to go through Brussels to be sorted out, it can take from 45 days to two years to do so. That is far too long. Industries can be destroyed in that time.
There is also the absurd problem of bureaucracy. These wretched measures from Europe come up for discussion in this House late at night. They impose problems and costs on our people, and because we signed a treaty at some time in the distant past we are forced to push these regulations through the House. There is nothing that we can do about it. These problems must be taken into account when we are renegotiating the CAP and the budget deficit. They must be weighed in the balance before we decide whether we proceed.
We must not adopt a narrow or blinkered approach. If we cannot attain what we set out to achieve in the interests of our people, there are hon. Members who will say that having made our bed we mast lie on it and that we must grin and bear it. I do not believe that that is the attitude of the British people.
I was in the Army. In the Army, even before being trained to shoot, one is taught to decide that prior to setting out on a course one must have an aim. We must now define our aim. We live in a dangerous world. It would be nice to depend upon America as an ally, but that becomes increasingly uncertain. Russia is becoming increasingly aggressive. There are real and important defence and foreign policy roles that the countries of Europe should play together.
Let us examine foreign policy. We seem to be members of a united Europe, but can we combine on the issue of Afghanistan or that of the Olympic
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Games? We cannot. The reason is that we are divided on the issues that should unite us. We must unite on the important issues—defence, foreign policy and our approach to the Third world. At present those matters are neglected dismally because of the other problems.
We want to unite Europe in many spheres, but at present we are divided. As the European zealot, my hon. Friend the Member for Harrow, East, said, we must not be hypnotised by the current situation. Our membership of the EEC may continue but it is not immutable. The nature of the EEC is not immutable. It can change. We signed a treaty and to that extent we have obligations. However, our membership should not and cannot constrain us from taking action that we know to be in the interests of the country. The signing of the treaty was the starting point. We had to start from there in order to go where we want to go and achieve our objectives.
We should not be hidebound and think in terms of pro- or anti-Marketeers. We must do what is best for Britain. Either we change the EEC—and we are in a strong position—or we change our relationship with the EEC. We must be in the best position to combine with Europe on those issues on which we should combine. It is said that we must stay in the EEC because otherwise we should not be able to co-operate with it. The reverse is the position. If we sort out the problems to our satisfaction, we shall be better able to co-operate with Europe. I am sure that Opposition Members are keen to co-operate in these necessary spheres.
It is not only a question of being a member of the Common Market or not. There is a third option. It is a positive alternative. It is European and British. If we in Britain were without the incubus of the CAP, without the wretched harmonisation directions that cause us so much trouble, without an inadequate policy for controlling trading relationships with the rest of the world, a Europe with nation States, with the right institutions in which we could combine, would result in Europeanism in its proper sense. Such a combination would produce a Britain in its proper sense. "Alliances may come and alliances may go, just as rain can follow wind and snow, and answers

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change from 'Yes' to 'No', while underneath the varying show the national soul remains aglow."
8.53 pm
Mr. Mark Hughes: It would be indelicate to suggest that I am referring to the hon. Member for Northampton, North (Mr. Marlow) when I say that the quotient of twaddle that is delivered in some of our Common Market agriculture debates is a bit high. We are discussing the peculiarly narrow issue of how to transfer from the non-agrarian sector or group of people—whether a nation State or a group of nation States—to the agriculture sector certain funds to enable the income in the agriculture sector to remain broadly in line with the income achievable in the industrial sector.
Whether we are discussing deficiency payment schemes, a common agriculture policy, an internal national regime or a Community regime, that is what we are on about. We frequently confuse that with a succession of chauvinist positions. We often assume that there is a particular, monumental male muscularity about objecting to something—even if it is good—if it comes from Europe, and we support projects only if we suggest them ourselves.
Ten years ago, two members of the Community—Ireland and Denmark—were in a state of economic colonialism vis-a-vis Britain. We held them in thrall. We depressed the agricultural income of Denmark—the only nation State to go bankrupt in the nineteenth century—because we imported too much bacon at too low a price. We held down incomes in Denmark and Ireland because of our trading power as the major importer of temperate zone dairy products and bacon, and we got away with it. That option was no longer available to Britain in the late 1960s, whether or not we joined the Community.
The decision to abandon deficiency payments and replace them with intervention prices was taken by the previous Conservative Government in advance of and independent of Britain's entry into the Community. Let no one pretend that the decision to move away from buying at world prices and supporting our farmers by deficiency payments was a consequence of joining the Community.
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It was a conscious decision by the Conservative Party. The right hon. Member for Lowestoft (Mr. Prior), who was the Minister of Agriculture, Fisheries and Food in the previous Conservative Government, said that our farmers needed a return from the market. The previous Conservative Government used intervention prices to raise the price level.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith): I am tempted to go one small step further. The first change in the system occurred with the introduction by the previous Labour Government of minimum import prices for cereals.
Mr. Hughes: I accept that. Both Labour and Conservative Governments, under pressure from the Treasury to minimise fiscal support, decided to use non-Treasury means to raise the incomes of our farmers. Britain moved to intervention prices under the previous Conservative Government. Consequently, the price of a product to the consumer was raised according to the intervention price level. Exactly the same applies to the taxpayer if deficiency payments are set too high.
Let us make no pretence that if the deficiency payment price is set at the same level at which the Community sets the intervention price the taxpayer will have a heavy burden to bear. If we offer farmers lower guaranteed prices via deficiency payments than they are being offered currently under the intervention scheme, let every hon. Member collect the political outrage of the farming community. That is the choice with which we are faced. If we pretend that there is a cheap way of reforming the CAP, we delude ourselves.
As a Socialist, I cannot be party to any scheme that lowers the income level of farmers in Southern Italy, in the deprived parts of France, in Western Ireland or in the western parts of this country on behalf of a pseudo consumer belief that lower prices help. The tragedy of the CAP is that it has used price as the sole mechanism of organising both production quanturns and the levels of incomes of individual farmers.
I quote not from a wild British Socialist but the French Minister of Agriculture, Edgar Pisani, who signed up for

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the original Mansholt-type starting of the CAP. On 10 May 1979 he said:
"I think it is absurd to want to keep the same system of guarantees for all products."
That is the first step. Intervention may be right for one product and hopelessly wrong for another. I hope that the Government will keep to their line on sheepmeat. Intervention for sheepmeat is the wrong answer, because of the ratio of self-sufficiency, whereas I happen to believe that an intervention price for cereals is the right answer for the whole Community because of the level of sufficiency that obtains in those products.
Edgar Pisani continued:
"The financial burden on the Community and its budget resulting from the CAP is in itself an argument both against the Community and against the common agricultural policy. Something must be done to avoid any increase in the cast of the CAP since any such increase would detract from the Community's credibility."
That is a French ex-Minister of Agriculture. Let us not believe that in the pursuit of a modification of the common agricultural policy we are without allies. I am worried because the posture of successive Governments in seeking that modification has deprived us of allies without winning us the reality of change.
Mr. Tom Ellis: Absolutely right.
Mr. Hughes: Pisani also said:
"A price system in Europe must be based on intervention that is so set that the cost of the last hundredweight of production approximates to world prices."
Once that stage is reached, intervention of itself is a perfectly proper way of supporting production. Once we reach that stage, much of the burden will be diminished.
If prices are set at that level, a difficulty will be posed by farmers who cannot secure an adequate income from their produce, from the quantums that they can produce. This is where the reform of the CAP must go down the line of direct income support for farmers who are in a structural position of being poor—not poor because they are bad farmers but impoverished because of a structural position. We must accept that that means the perpetual pauperisation of a significant number of our fellow citizens and reducing them to being the clients of, effectively, a Community social service fund.
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So be it. Let us acknowledge that we are doing that. Let us not pretend that we can do it by playing about with the prices of agricultural products. That would be wrong. Over a period of between 15 and 20 years it has become clear that regional differences in farm incomes have widened. The rate of divergence is increasing. There is a wide gap between the most disadvantaged parts of the Community and the most advantaged. The most advantaged are becoming fat cats, while the impoverished lose out.
Although the CAP purports to inhibit rural depopulation, the rate of rural depopulation in France—supposedly the great beneficiary—has increased faster than ever. The CAP does not satisfy the needs of the improverished peasant farmer in France. It does not prevent depopulation in that country. It does not satisfy the consumer or the majority of farmers in Britain. It has driven a wedge between our grain and livestock producers. At constituency level, all hon. Members know that that wedge exists. Any change in the price ratio can only exacerbate the problem.
I close with the following wicked thought. Most Opposition Members would agree that it was an insult to offer the steel workers a 2 per cent. pay increase when the rate of inflation was 18 per cent. or 19 per cent. Steel had to be stockpiled because of the problems involved in selling it. In recent years we have spent more on stockpiling coal than on stockpiling butter in the Community. We have spent more on stockpiling steel than on stockpiling beef and wine. Is it so wicked to offer a freeze to the dairy farmers? Is it not legitimate to offer our dairy farmers an institutional freeze if there is no market for their commodities? Under the regulations of the European Coal and Steel Community, the price of steel is only slightly less institutionalised. However far-fetched, an analogy can be made. I accept that there are major points of difference.
Mr. Body: The hon. Gentleman used the word "wicked". Is it not wicked to resort to dumping such surpluses on the world market? Many efficient people are thereby improverished and driven out of farming. That has happened in Australia, New Zealand and several other countries.
Mr. Hughes: I shall turn to the problem of how to get rid of surpluses. The Minister recently came back from Europe with a large and increased butter subsidy. When the previous Labour Government first came to power, they introduced a consumer subsidy on butter. It is disconcerting to discover that if one traces the per capita consumption of butter over the past 20 years one finds that the periods in which consumption fell most rapidly were those when artificially low prices had been introduced. The moment that the price of butter is artificially lowered, per capita consumption goes down. It cannot be argued that people change to margarine, because its price went down rather more than that of butter.
When EEC funds are used to subsidise butter, per capita consumption in the Community does not increase. For example, selling 100,000 tonnes of subsidised butter in the two weeks before Christmas does not prevent 98,000 tonnes of butter having to be bought in at full intervention price, and that butter has to be stored until another market is found. Total consumption does not increase.
The appalling problem is that, however unacceptable on every other ground, the best solution for the taxpayer is to burn that butter on the spot. That is cheaper than storing it, when it will deteriorate in quality and we shall then have to spend £200 or £300 a tonne exporting it to Russia.
Mr. Geraint Howells: Give it to the needy.
Mr. Hughes: The hon. Member for Cardigan (Mr. Howells) says that it should be given to the underdeveloped world. Most underdeveloped countries cannot use it. They do not have storage facilities. If it is turned into butter, oil, it still costs more and is still not wanted.
Mr. Howells: The hon. Gentleman misunderstood me. I suggested that a butter surplus such as we have at present should be given to the elderly, the needy and the young in the Community. That would be preferable to burning it.
Air. Hughes: If we give 200,000 tonnes to the elderly, the infirm and children, we still have to buy 198,000 tonnes into intervention because consumption has not increased. With a guarantee to buy
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everything produced, if consumption does not increase, no matter to whom the commodity is given, the surplus is not removed. Even if it is given away one week, the same week's production still has to be bought in. It is of no benefit to the taxpayer. It may be politically more acceptable to run the surplus around in that way, but it does not help to offload much, unless the per capita consumption increases.
The evidence is that consumption does not go up; it goes down, which is aggravating. One wishes that it did not. Political life would be easier if consumption increased, but that is the problem. If the surplus is offered to the elderly, the infirm, prisoners in gaol and soldiers, they will not eat more butter. They will merely get it cheaper. The same amount of surplus butter still has to be bought into intervention. The problem is to sell it outside the enclosed market.
Mr. Howells: In 1974 we had a surplus of beef in this country. The Labour Government introduced beef vouchers for the elderly in 1974–75. That did the elderly a power of good and got rid of the surplus in that year.
Mr. Hughes: It also terribly depressed the market for lamb, chicken and pork. It was detrimental to the producers of alternative products.
It is difficult to argue for a straight freeze on dairy farmers without allowing enormous value to the time lags in the green pound devaluations. It is said that it is impertinent to suggest to steel workers that they should have only a 2 per cent. wage increase. It is therefore difficult to argue that the price stick is the only weapon when a commodity is in surplus. We know in advance that using the price mechanism to regulate supplies is wholly inadequate. That is where I beg to differ in part from some of my right hon. and hon. Friends.
The position for dairy products is different from that for cane sugar. We must be careful to distinguish between an absolute freeze and a decline in real earnings per gallon for British farmers. If the Government are saying that they wish to diminish real earnings per gallon of milk produced, that is one thing, but if they go for a price freeze, given the high level of the pound, they will overkill the

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British dairy industry and impose on it a major disadvantage. But, given that the pound is at least 10 per cent. overvalued, if a price freeze is inflicted upon our dairy industry when, in cost terms, inflation is so much higher, that will force it out of business differentially faster than the German, French, Irish, Dutch and Danish industries. My hon. Friends say that those countries produce the surplus and that they should be penalised, but a price freeze will force our farmers out of production faster than the wicked Continentals.
9.16 pm
Mr. David Myles: In the weight of the documents that we should have examined prior to this debate, and amongst the welter of words that we have listened to during the debate, I was impressed by the speech of the hon. Member for Durham (Mr. Hughes). I congratulate him on the logical way in which he presented his case, and I wish that more hon. Members would stick to those logical and constructive terms.
I was also impressed by the logical argument of the hon. Member for Caithness and Sutherland (Mr. Maclennan). I was surprised that those hon. Members and the hon. Member for Berwick and East Lothian (Mr. Home Robertson) advanced their arguments so strongly and well. My right hon. Friend the Minister of Agriculture, Fisheries and Food is trying to make the CAP workable. Why did the hon. Members not shout a little louder when the previous Government were in office, and when so much damage was done?
Following that welter of words, it is necessary to mention a few realities. I declare an interest, as a farmer, as did the hon. Member for Berwick and East Lothian. Far from being the lowland type of farmer that he is, I am the upland hard-up type of farmer who gets the hill livestock compensatory allowances. Therefore, I benefit from the product—if there is a product—of this debate.
The problems associated with the EEC budget and the CAP must be solved. The level of Britain's contribution must be reduced. It should be remembered that the major purpose of the CAP is to guarantee adequate supplies of food at a fair price for around 260 million con-
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sumers. Some hon. Members have suggested that the price that consumers pay for food is not a fair one. If that is so, why is the percentage of its budget that the average family now spend on food less than it was a number of years ago? Why is the percentage of the average family budget spent on food less than that of the average family in almost all our European neighbour countries?
Under the CAP we also wish to guarantee a fair return to producers. That has been achieved. The surpluses of food in Europe are not a sign of failure but a sign of success. One of the great strengths of the Western world is its ability adequately to feed its people. One of the great strengths of Rhodesia, now Zimbabwe, is the fact that that isolated country in Africa can adequately feed its people, unlike its neighbouring States. That is one of the greatest stabilising influences in that country.
When history is written—and I do not mean memoirs, but real, objective history—it will show that the right hon. Member for Deptford (Mr. Silkin) did a great disservice to our society by creating a rift between producers and consumers, as if the one group was not entirely dependent upon the other. It has been said that the Tory Party means that man exploits man, and with the Socialist Party it is the other way round. Whatever way round it is, I suggest that producers and consumers are entirely dependent upon each other. If I. as a farmer, ignore the market and the interests of consumers, I cannot prosper. But, equally, consumers should realise that if food is not realistically priced it will not be produced.
If the documents that we are discussing do not inspire sufficient confidence for farmers to sow, the consumers will not reap. No maximum price of any commodity is proposed in this package. There is an intervention price or a floor in the market—the withdrawal price. That is the price above which the market should operate.
In regard to the disposal of surpluses, I quote one of the leaders of the fishing industry after there was an injection of capital into that industry last week:
"If we use it for withdrawal prices, the £1 million that is used in Scotland could be worth £10 million to the industry."
Using intervention as withdrawal prices means that we get better value for money

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than we would receive under any deficiency payment scheme. There is no doubt about that.
Taking the analogy of fish even further, it is interesting that the fishermen understand that the fish that are withdrawn must be used for fishmeal. They must not go back on to the market, or the market will be destroyed. We must learn the same lesson as was eloquently described by the hon. Member for Durham. If the intervention products go into intervention, they must be burned or removed from existence in some other way.
It seems slightly funny to me that we complain about the dumping of goods in this country but that when we sell cheap butter to our so-called enemies in Russia we are giving them a present. That does not seem logical or fair to me. I am not advocating that we should give them the butter cheap, but I wonder about the logic of the argument that we must not allow dumping in this country to distort our market—
Mr. Mark Hughes: Will the hon. Member also consider the moral problem in a hungry world? If wheat is bought into intervention and is so maltreated that it cannot be used for feeding anything or anyone, is there not the moral predicament of the destruction of good food which all but a very few of us in the House, of whatever political persuasion, find it difficult to accept? Economically, and for someone involved in the Treasury, the answer might be different, but morally the destruction of good food, the denaturing of wheat or whatever it may be, is repugnant in a hungry world.
Mr. Myles: I agree with the hon. Gentleman. We should remember that this is a hungry world. While we cannot get the butter into Africa, Ethiopia and other such places, we can get it into Russia. Why is it wrong to sell cheap butter to the poor, starving peasants of Russia when we give aid free to the Marxists in Mozambique? There is something funny about our logic, and I suggest that there are a few questions that need to be asked.
In the working of this package, let us assume that the surpluses will continue and that the resulting prices will therefore be modest. Does no one remember
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the potato scarcity in 1976? The guaranteed price for potatoes was £40 per ton then, but the price on the market rose to over £200 per ton. That was because of a small scarcity. A scarcity is the worst friend a consumer can have, a surplus is the best friend a consumer can have. So do not let us confuse the issue.
For years it has been assumed—often rightly—that if farm product prices were squeezed production would go up and efficiency would increase. To a large extent that has happened. However, I doubt whether that is true now. With inflation, high interest rates and a low return on capital, I now detect contraction.
I draw the attention of those who say that the interest rate at present is the worst problem a farmer has to face to a chart that I prepared a year or two ago and have kept up to date. On that chart I made the output of a hill farm pay for the inputs. It is interesting that in a comparison of 1973 with 1979 the only item that required fewer lambs to pay for it in 1980—at present interest rates—compared with 1973 was the interest on a £10,000 overdraft. But I will highlight what has hapened in between. Because of inflation and because the profit in agriculture, especially in livestock farming, has nearly all been on paper, the man who was borrowing £10,000 in 1973 is possibly borrowing £30,000 or £40,000 today. That inflation must be got out of the system. The interest rate, sadly, is the only weapon that can be used to drive out the evil of inflation.
I should like to give an example of how contraction might take place. A hill farm, with cattle and sheep in equal proportions, might have a tenant's capital of £100,000. Let us assume that this average farm got the average return on capital last year of 11 per cent. That is a high figure. It means that for the £100,000 invested the return was £11,000. If half the £100,000 was borrowed at 20 per cent. interest, the net amount left would be only £1,000. That is not a good return. But farmers have managed their businesses for years. They are flexible.
If the farmer decided to get rid of the overdraft by selling off £50,000 worth of stock, he would be left with a tenant's capital of £50,000. He still gets 11 per cent. on tenant's capital. That would

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then be easier as he had deintensified. The farmer would find that his return was £5,500 rather than £1,000. I fear that this could be happening. It is a sensible action for a hill farmer to take. It is not a sensible action for the country to condone.
Mr. Geraint Howells: I wonder how many hill farmers in Scotland, or in Britain, fall into that fortunate category where they earn 11 per cent.
Mr. Myles: I agree with the hon. Gentleman. There are not many. I selected one in a high category. I was demonstrating that the return on capital was 11 per cent. If half was borrowed, the farmer had only £1,000 left. I intend to refer to the poor state of the hill farming industry. That affliction is shared. There is the added advantage of a salary in this place, but I shall not go into that aspect.
I believe that my right hon. and hon. Friends were right in speedily ridding the industry of the green pound distortion. The main benefits should still lie ahead. The House may be interested in my own experience. Like a number of farmers, I was sceptical about how this decision would percolate through to the man at the end of the line, the hill farmer. My hon. Friend the Minister of State told me that the guaranteed price of beef was 19 per cent. higher now than at this time last year. I said that I would believe him when I got a 19 per cent. increase in the price per kilogram for calves sold in the spring of this year.
I must be honest with the House. I sold 86 calves, heifers and steers about a fortnight ago. I had them weighed. I worked out, as I had done the previous year, the price per kilogram that I received for those calves. To cheer all hill farmers with calves to sell, I have to say that I got exactly a 19·03 per cent. increase in price per kilogram. Instead of getting an average price of 84p per kilogram, as last year, I got an average price of just over £1 per kilogram this year. They were good calves.
The Government made a courageous decision to raise the price of liquid milk. However, the Opposition condemned that. I commend the Government on their decision. In addition, the 37 per cent. increase in hill livestock compensatory amounts was most welcome. Possibly it
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was not enough. Those who are desperately in need never seem to get enough. However, that was a good gesture in the present economic climate, and I welcome it.
The change in the ceiling on capital grants and other changes in this area were mostly sensible. No Government have ever tackled the problems of agriculture as quickly as this one. That should be recognised. I commend them for increasing the guarantee. In reply to my strategically placed question, the Government announced that they had increased the guaranteed price for sheep-meat from 140p to 155p per kilogram from 31 March. They increased the price of wool from 112p to 115p. That is to be welcomed. It is a courageous step.
I turn now to the detail. I shall limit my remarks to the areas with which I am best acquainted. I refer to the hill and marginal areas. It is vital that agricultural production should continue in those areas. It is not necessary for me to repeat the reasons. Those areas are most in need of an injection of confidence. We therefore require the ceiling on hill livestock compensatory allowances in Europe to be raised to a more realistic level so that my right hon. Friend may raise the amounts when the winter winds blow, as they did in the last three years. Luckily, they did not blow so hard this year.
We also need confidence in the beef and sheep markets. Today's announcement will go some way towards helping the sheep market. We must retain the beef premium scheme, as it does not cost much. We must also strive for a sensible common policy for sheepmeat, although I am inclined to agree with the hon. Member for Cardigan (Mr. Howells) that we could go on as at present provided that the Government understood the necessity to maintain the guaranteed floor price at an adequate level.
Any sheepmeat policy should not destroy the luxury trade for lamb in France. That would not benefit either the French or the Community. We must promote our products to the peak of their potential. I highlight the tie of the Meat Promotion Executive that I am wearing today. We should encourage that body to sell more to the people in this country. The consumption of beef has gone up. Meat consumption has

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gone up since the inception of that executive, despite the fact that in real comparative terms the price of meat has increased. We must promote the consumption of our meat in Europe.
With regard to milk, we must ensure that we do not throw away the great advantages we possess in a number of ways in this country through the efficiency of our milk producers. The milk-to-beef scheme is being more widely taken up in the Aberdeen Milk Marketing Board area than in almost any other area in Europe, and that area has the highest average herd size. So if we get rid of all the big herds we shall not have the surplus, and we may have a scarcity. We must not throw away the advantage we have in herd size, our market for liquid milk or the high standards of health and hygiene that we maintain.
In addition we must not forget the valuable contribution that is made by milk producers to the beef supply, because every milk cow has a calf, we hope, every year and very many of those calves come on to the beef market. So, if we get rid of the milk producer and make him grow barley or wheat or whatever, we are liable to depress the beef supply.
Our very well-organised structure of milk marketing has been spoken of, but I must voice my slight doubts about the efficiency of our distribution network. But let the distributors look after their own affairs.
I leave it to others to speak on the problems of other products, such as potatoes, sugar, cereals, olives and even wine, which has been dealt with so eloquently. But, seeing that another hon. Member was allowed to speak at such length about wine, I might, since I come from Banff-shire, just connect the whisky industry with agricultural products, because it not only uses barley but we also use the draff in the hill areas. Therefore, we must maintain our whisky industry. That is just a word for my constituents. I have not made a speech in this House yet without mentioning whisky.
What concerns us all is the structure of our industry. We look to the wisdom of my right hon. and learned Friend the Chancellor of the Exchequer to take fiscal action next week that may encourage people to put farms up for rent so that
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young men or farm workers can again be allowed to get a foot on the bottom rung of the farming ladder. I believe that that is desperately important, and it seems ironical that the party that tries to speak for equality and all sorts of things like that actually cut off the four bottom rungs by sheer fiscal incompetence. I suggest, I hope sincerely, that my right hon. and learned Friend will go some way next week towards rectifying that mistake and encouraging lairds to let their farms again.
In case it is thought that I have a bias, I recall that another hon. Member spoke about the steel workers, and I believe that only the steel workers can destroy the steel industry, by asking for money where it is not to be had. Equally, the lairds can destroy the landlords of this country by seeking money from poor depressed tenants such as I am when the production is not there. I believe that they must be responsible—as responsible as I hope the steel workers will be.
Let us recognise the success story of British agriculture and encourage it to realise its full potential for the benefit of the whole nation.
9.45 pm
Mr. Ron Leighton: I congratulate the hon. Member for Banff (Mr. Myles) on his agricultural success. Although I was able to hear only part of the Minister's speech, I agreed with most of what I heard. I was unavoidably detained in Standing Committee for part of the debate.
We have been in the EEC for seven years, and throughout that period I have heard people speak of the reform of the CAP. People even spoke of it before we joined. I do not know whether the Minister can recall speaking at a meeting in Kensington town hall with his right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), when he put forward ideas for the reform of the CAP. Ideas for reform have been put forward for at least a decade. After the experience of those 10 years, it must be admitted that the attempts at reform have been a complete failure. Indeed, the CAP has got worse. It has increased in cost year after year, and now it gobbles up a far greater percentage of the Community budget than ever before.
We should, therefore, shed our illusions and admit that there will be no major reform of the CAP. It is virtually

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the ark of the covenant of the Common Market, it is the core of the EEC and the only major common policy it has. It is immune from any change or reform, it is inviolate, untouchable. Political parties depend upon the support of the beneficiaries of the policy. Whatever we in the House say or do, the CAP in its present form will remain. In the GATT negotiations it was made clear in the remit to the Commission that it could negotiate about anything else but the CAP was not to be touched. There could be negotiations about freeing trade and industrial goods, but the rigid, inflexible protection of agriculture was to remain.
This policy is hopelessly and disastrously unsuitable for Britain. The reasons go back in history to the repeal of the corn laws. After the American Civil War, when the prairies were put under the plough, cheap grain became available and the countries of Europe had to decide what to do about it. There was a conflict between the landed interests and the manufacturing interests. In this country, the manufacturing interests gained the upper hand, the corn laws were repealed and cheap food was allowed in, which gave the manufacturing interests cheaper labour. On the Continent the reverse policy was adopted. Cheap food was kept out, and a regime of high prices was maintained internally and has been maintained ever since. As a result, a far greater percentage of the population is engaged in agriculture.
By joining the Common Market, we have had that regime foisted upon us. It is wildly inappropriate to this nation, which still imports roughly half its food, that we should be linked to the market with the highest food prices in the world. As a result, every British family pays more for its food than it need, which lowers its living standards. That is reflected in labour costs and it works through into export prices and affects our export trade.
The rationale of the CAP is to maintain the income of the rural population so that there should be some relationship between their income and that of the urban population.
Mr. Maxwell-Hyslop: Will the hon. Member distinguish between what he is describing, which is the CAP as it has
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become perverted, and the CAP as it is written into the Treaty of Rome? The latter is most certainly not what he is describing.
Mr. Leighton: The Treaty of Rome is a kind of bran tub. I am talking about real life and about the CAP as it exists, as it has existed and as it is developing. I am not talking about the texts of the Treaty. I am talking about the facts of life and about vested interests in the CAP as it now is. If the hon. Member for Tiverton (Mr. Maxwell-Hyslop) wishes to take refuge in the texts of the Treaty, so be it. I do not know whether we can bring legal action to change the texts. People have been saying to me for 10 years what the hon. Gentleman has just said, but I have seen no material success resulting from any attempt to alter or remedy the practical workings of the CAP.
Mr. Tom Ellis: Does my hon. Friend agree that during the last 20 years there has been a rapid and substantial drift of population away from the land in the Community towards manufacturing and other urban industries?
Mr. Leighton: There has been some slight movement in that direction, but the only reforms proposed militate against this country. For example, the co-responsibility levy on milk is seriously put forward as a reform, but it would bear most heavily on the farmers of this country who do not produce a milk surplus. Through the reduction of sugar quotas, we are expected to endure a greater cut than any other country although we have no sugar surplus.
The only proposals for reform of the present ludicrous, monstrous and ruinous CAP are damaging to Britain. It is true that there has been a shift of population from agriculture into the cities, but I think that it is indisputable that the CAP gets more expensive every year and more costly for this country and that it pushes up food prices far beyond what they would otherwise be.
The rationale of the CAP is to maintain the living standards of the rural population, which is the least efficient section of the European Community. That section asks to be guaranteed a certain standard of living, so prices are pegged at that level. With prices at that level, efficient farmers have a huge incentive to

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produce, so they pile up the great surpluses and food mountains with which we are familiar.
I understand that the Commission is proposing an increase in prices of 2·4 per cent. I think that prices should be reduced. We understand from the Minister that the Government are still adamant in maintaining a price freeze on commodities which are in structural surplus. I commend the Government for that stand, but I read in the press today that the agriculture committee of the EEC Assembly favours an increase of 7·9 per cent. The Conservative members of that committee voted in favour of that proposition. They want to push up the prices. Perhaps there should be some liaison between the Government Front Bench and party members in the Strasbourg Assembly.
Currently, £320 million is being spent on surplus olive oil. We have heard about the butter and beef mountains and the wine lake. We do not often hear about the olive oil lake, which is financed largely by British taxpayers. I am assured by the experts that should Greece, Portugal and Spain enter the Community the surplus olive oil will cost about £1 billion, because extensive planting is being organised in readiness for membership.
A high price has to be paid for political unity. The object of the enterprise is to achieve political unity in Europe. My hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) is nodding cheerfully and enthusiastically. Where is the political unity? Relations with France have not been so bad since the battle of Waterloo—the last time that the minimum lending rate was 17 per cent.
If we were not a member of the Community and did not participate in the CAP, about which we are in dispute with the French, we should have good relations with the French. Our membership and our conflict over agriculture make us bad friends with the French.
According to a written reply, general wholesale prices have increased by 250 per cent. since 1970. That is far less than the landed prices of food imports from the EEC had gone up by December, before the latest devaluation of the
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green pound. Sugar had gone up by 566 per cent., butter by 529 per cent., beef by 440 per cent., barley by 408 per cent., cheese by 383 per cent., wheat by 345 per cent. and maize by 286 per cent.
The 1978 report on the CAP showed that butter was four times as dear as the world price, that sugar was 250 per cent. dearer, and that wheat was double the world price. Let us translate that into terms that the housewife will understand. On 17 December 1979 the levy on food coming into Britain—and the levies go not to our Exchequer but to subsidise the richest countries in Western Europe—meant that the housewife was paying a levy of 67p per lb on butter. On boneless beef she was paying a levy of 47p per lb, on cheese 53p per lb, on sugar 5·2p per lb and on bacon 13p per lb. Our food prices are being forced up unnecessarily. I am glad that the hon. Member for Northampton, North (Mr. Marlow) was returned, because I agree with so much of what he said in his speech.
What does that policy mean in global figures? I am indebted to the Financial Times of 14 March for certain figures. Holland receives £379 million from the CAP, Italy receives £292 million, Denmark £278 million, Ireland £255 million, France £205 million, and Belgium and Luxembourg £38 million. The only other member State with an adverse budgetary effect is Germany, with an estimated net deficit of £228 million. Britain has a deficit of £1,000,170,000, a staggering figure. What rhyme or reason is there in that? Is it not absurd?
If we want to reform the CAP, we should reduce prices. All prices are too high. It is not enough to freeze them; we must reduce them. We should have free trade. We should open our ports to the rest of the world and import food, without tariffs, from the rest of the world. If, as a result, farm incomes are reduced, we should institute a system of deficiency payments.
It is argued that deficiency payments would cost as much as we are putting into the CAP. But there is a difference. That money would be paid to our farmers to keep prices to the housewife as low as possible. Presently, we pay that money across the exchanges to the detriment of our balance of payments, to keep prices high. Deficiency payments would have

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a redistributive effect, because the wealthy pay more in income tax and the less-well-off get cheaper food.
One added justification of the CAP is that it has social benefits. If hill farmers in France and Germany receive the benefits of that social policy, I have nothing against that. But it is for the taxpayers of France and Germany to subsidise their own inefficient agriculture and not the taxpayers of Britain.
Mr. Tom Ellis: Was my hon. Friend present during the brilliant exposition by my hon. Friend the Member for Durham (Mr. Hughes), who pointed out that Governments of both colours were pledged to abandon the deficiency payment system well before our entry to the Community?
Mr. Leighton: Those Governments were not pledged to do any such thing. It is as simple as that. If my hon. Friend the Member for Durham (Mr. Hughes) said that, he was wrong. I can say after 10 years' experience that it is illusory to expect any reform of the CAP. Its effect is completely anti-British and
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the only sensible policy for Britain is to leave this aspect of the Community's institutions. Britain should seek exemption from or a derogation of the CAP. We should leave the CAP. It has brought us no good. The only result of Britain remaining in the CAP is the postponement of its reform. If we had not been in it as a second stomach to absorb its surpluses, it would have broken down. Were it not for the subsidies of our taxpayers' money, it would have gone broke before now. If we had been outside the CAP, the other States would have been obliged to sell us their surpluses at the preferential prices at which they are sold to Russia.
If we believe in reform of the CAP, the best way of achieving that is to exempt ourselves from it. If we take that course, the other member States will be forced to reform it. As long as we remain part of it and foolish enough to subsidise it by massive subventions of British taxpayers' money, we shall prop it up and keep it going longer than is necessary.
10.6 pm
Mr. Robin Maxwell-Hyslop: There is a considerable amount in what the hon. Member for Newham, North-East (Mr. Leighton) said that is undeniably true. There are many hon. Members who say that the CAP will never be reformed. I think that they are wrong. It will be reformed for one of two reasons—either because Britain leaves the EEC, in which case the CAP will of necessity have to be reformed, because the £1,000 million—the ever-increasing yearly sum that we pay—would not be an acceptable burden on the remaining countries of the EEC; or else it will have to be reformed if we stay in, because if the £1,000 million burden is removed from us the other members of the EEC will presumably have to return to the Treaty of Rome.
The object of the common agricultural policy of the European Economic Community, as written into the Treaty of Rome, is completely different from what it has become perverted into. The Treaty of Rome aimed explicitly at bringing about a position in which not only motor cars but food would be manufactured or produced by the most efficient producers. It is undeniable that for a large range of agricultural production the most efficient producers are in Britain. I say that not as a jingoistic recommendation but as an ascertainable fact by any criterion—for example, by the criterion of output per acre or per unit of capital. It is not a subjective judgment: it is an observable fact.
There is the paradox in that Mr. Chirac says that we should either abide by the Treaty, or get out. If the Community abides by the Treaty, there is every reason why we should be enabled to stay in the Community. I believe that my right hon. Friend the Prime Minister is right to be urgent—there is no real difference between urgency and stridency—about bringing home to other members of the EEC the necessity to deal with the problem in months rather than years. If the issue is not dealt with before Greece, Spain and Portugal join the EEC, it is highly improbable that it will ever be resolved. They are not in an economic position to accept a disproportionate part of the burden. Indeed, the reverse is true of Portugal and Greece. They will
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be an additional burden, not an easement on the EEC budget.
Mr. Maclennan: The hon. Gentleman intervened in my speech on the same point. Does he not agree that our bargaining position will be stronger than in the past? Hon. Members have focused on the past tonight. Our position is improved, because the Community will soon bump against the own resources ceiling. That will certainly happen before any enlargement takes place. As a result we shall be better able than before to renegotiate our contributions.
Mr. Maxwell-Hyslop: Unfortunately, I did not hear all that the hon. Gentleman said, as a result of "noises off". Britain may have to leave the EEC not because it wants to but because the Treaty that we signed no longer represents the regime that we joined. We are not seeking a fundamental alteration to the Treaty. We ask for the whole of that Treaty to be put into practice.
We are not saying that the contribution formula should be looked at in isolation. If the agricultural policy contained in the Treaty of Rome were executed our contributions would be much lower. The hon. Member for Caithness and Sutherland (Mr. Maclennan) said that the CAP suited everybody in the EEC but us. He argued that, as a result, it would not be changed, and that we would therefore waste our breath, our time and other people's hopes if we were to try to change it. I do not accept that argument. If we leave the EEC, or if we withhold our contributions—the one is half way to the other—the member States will have to grasp the nettle. The consequences on taxation will be unacceptable if they do not do so.
I am profoundly worried by the deplorable evidence given by a civil servant, Mrs. Jean Archer, to the Select Committee on agriculture. I am not criticising her; I am criticising the evidence that she gave. That evidence was totally negative and contained not a peppercorn of constructive policy on the subject of milk. The view that she expressed on behalf of the Department was fallacious, unimaginative and unconstructive. She said that the only way of dealing with the excess in milk production was to

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freeze the price while costs were rising. Unspecified producers would therefore be driven out of production until supply and demand balanced.
The defect in that argument is that the most efficient producers are driven out. The most efficient producers are in Britain. Many of them are laden with debts and high interest rates. That is why they are among the most efficient producers. If they are driven out, less efficient producers will he left. Paradoxically, the average cost of production per unit will then be driven remorselessly up. As a result, the cost plateau will be considerably higher, and higher prices will result. One therefore gets higher prices without a surplus, instead of higher prices with a surplus.
I should like to inject this thought into the question of surpluses. Instead of referring to them as mountains, pools or lakes, we should adopt the discipline of referring to them in terms of days' consumption, which is more meaningful. Some of us may remember the so-called cheese mountain that was expected to be with us for years. It disappeared in two and a half months, because at its worst it represented only about 16 days' consumption. Many so-called mountains merely reflect the fact that production is not predictable. It depends on rainfall, the number of days of sun, storm damage, and other contingencies.
However, we know that world supply in the relevant period is inelastic. A shortage in any major commodity of only 1 per cent. or 2 per cent. has a dramatic effect on prices. We then hear loud protests from housewives and other consumers. I remember Ministers, who may be in Rhodesia at present, coming to the House in the days of deficiency payments for supplementary votes to support beef because of that.
Mr. Dykes: It was standard practice.
Mr. Maxwell-Hyslop: Exactly. We must not believe that by abandoning the CAP system we shall enter a world in which everything is painlessly self-regulating. It was not, and will not be.
Unless the world produces, on average, slightly in surplus, there will be regular periodic deficits. For developed countries such deficits mean disproportionately high prices. For underdeveloped coun-
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tries it means additional starvation. I prefer a world not of uncontrolled surpluses but one that, on average, has surplus production and adjusts its system to compete with that, rather than one that aims at the unattainable exact matching of supply and demand when crop and livestock production is cyclical and depends on weather. That needs to be said. Agriculture is not like producing motor cars, where one can set a target of, say, 100,000. In agriculture we do not know what the output will be.
Lest I be accused of dodging the milk issue and merely pointing out what is demonstrably true, that the Ministry of Agriculture, Fisheries and Food is at present bankrupt of constructive policy, I assert that one of three things will have to happen.
We can move to a national standard quantity system. A country may be able to lower the cost of production in real terms—and I am not talking of inflation accounting—by increasing its efficiency through increasing the production of each productive unit, each farm. In an era of rising fuel and labour costs that will spread overheads over a greater through-put. That can be achieved in a country of efficient producers, producing far less than the total quantum of milk and milk products that it consumes if milk is deinternationalised—if I may use that word. It may be said that this is what the CAP is about. If the CAP cannot produce an answer other than that the producers should be starved out, this is a better alternative.
A second alternative is a two-tier price system, whereby producers who exceed a standard quantity get a return on the additional gallonage which does not cover the cost of producing that additional gallonage, produced using high input concentrates. It is ridiculous that a large proportion of the surplus milk that is causing the problem in the EEC has been produced as a direct result of increasing the amount of concentrates. That happens particularly in Southern Ireland. Those concentrates have a high imported grain content, and it is absurd to have a system whereby it pays to feed more and more concentrates, in order to produce more gallonage per cow, in order to produce a greater total that is not needed.
If there is a two-tier price system, where increased gallonage does not cover the

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cost of feeding the concentrates used to produce the excess output, there is no longer an economic incentive to spread overheads over an increased gallonage by feeding more and more concentrates. That cycle needs to be broken.
I offer those alternatives, neither of which has been invented by me, because unless a different system is adopted—it will not be adopted unless one of the major Governments adopt it first—the milk problem will continue to get worse rather than better, unless we leave the EEC. I hope that we will not have to leave the Community.
I therefore recommend to my hon. Friend the Minister of State that the Government should disown the policy put to the Select Committee on Agriculture on their behalf by Mrs. Jean Archer from the Department. That policy is not a runner. It will not drive out of production part-time German farms where sufficient income is produced by the farmers' non-farming jobs. Those producers are not driven out of business by lower prices. The only people who are driven out of production are, as a representative truth, the people who are in hock to the bank.
My hon. Friend the Member for Croydon, South (Sir W. Clark) made an interesting speech about sugar. Sometimes it is easier to see a trend than to gauge when that trend will become a major factor. At present, Brazil produces 20 per cent. of the liquid hydrocarbon fuel that it uses from vegetable matter—principally sugar but to a lesser extent sorghum and, to a lesser extent still, manioc. But sugar is the principal ingredient.
As I see it, the danger in the future is not of people being unable to drive around in motor cars because oil has run out. It is of agricultural land in tropical areas being bespoken by the developed countries in order to produce liquid hydrocarbon fuel, with the result that the underdeveloped countries, with less international purchasing power, starve. They are unable to bespeak the produce of the countries that have a lot of sun, for producing food instead of fuel.
This is an additional reason, and an economic reason, quite apart from the moral reasons, why we should try to ensure that the world's sugar production
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capacity is retained rather than devastated by low prices, which will end in the foreseeable future when sugar for liquid alcohol fuel is grown in competition with sugar for human consumption.
If that analysis is correct, it injects into our policy formation—internationally, not just within the EEC—the advisability of so organising our affairs that we can live with a greater temporary sugar surplus for a few years than would otherwise be the case.
I hope that when the Minister of State replies, instead of being fascinated by the Opposition amendment, which calls upon the Government to press for a price freeze on milk and sugar, he will say that he recognises that a price freeze is not the answer. If it is not the answer—and it is not—I hope that he will tell us which of the available alternatives to a price freeze, two of which I have described, the Government will recommend to the EEC. That is why I object strongly to the Opposition's ill-considered amendment to the Government's much less specific motion being accepted tonight.
10.27 pm
Mr. Tom Ellis: I understand that the Front Bench speakers are anxious to begin the winding-up speeches, at around 10.40 pm, and I know that other hon. Members wish to speak, so I shall be brief. I was most impressed by the speeches of my hon. Friends the Members for Durham (Mr. Hughes) and for Caithness and Sutherland (Mr. Maclennan). Both made objective, considered and studious speeches which would well repay careful reading. I cannot speak from a position of their considerable knowledge in these matters. Therefore, I shall speak in general terms.
I begin by agreeing with one of the comments made by my right hon. Friend the Member for Barnsley (Mr. Mason). He said that he felt that it was time for the Labour Party's policy and attitude to Europe to be redefined. I agree with him, but I suspect that my redefinition might be very different from his. Later in his speech he said that, if certain things did not transpire, the Labour Party would reconsider whether Britain should stay in Europe. I was horrified to hear that. If that becomes our policy, it will be undertaken by the Labour Party without my support.

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Having said that and having put my position clearly on the record, I wish to comment on the need for reform of the CAP. Every speaker has mentioned this. Some have said that it will never be reformed, and others have said that it is bound to be reformed. I agree with the latter view. The most obvious manifestation of the need for reform is the surplus of various products. These surpluses should be considered with more care and perspective. There are some hon. Members who use the words "butter mountain" as a slogan. The word "butter" seems to cause near-apoplexy among some people in this country.
I can remember that as a boy, living in a mining village in Wales, I appreciated the fact that we never had coal mountains. There was a breed of man—the "coal owner" we used to call him—straight out of the ninteenth century. He had solved the problem of coal mountains. He put the pits on a one-day or two-day working week. Every day the hooter would blow if there was no work: if the hooter did not blow there was work. But that is not a policy—it is certainly not an international Socialist policy—to deal with surpluses.
We have heard a lot tonight about the butter mountain and about its being measured in so many weeks' consumption, whereas it might be as it once was—less than 17 per cent. of production. Now there is about 10 weeks' supply. As the same time this country had a coal mountain of about 16 weeks' supply, and no one said a word about that. I do not want to close coal mines any more than I want to put Italian peasant farmers on the scrap heap. I speak entirely from the point of view of a person who cherishes what I believe are the ideals of international Socialism, so I am glad to see that we are getting this problem into perspective.
Having said that, I do not mean that I support surpluses. There are problems in trying to gauge supply and demand to the last ounce. Not only is consumption variable; in the farming industry production varies enormously. There are major problems. Indeed, the President of the Commission has said that if we cannot reform the CAP it will collapse under its own weight. Those were his word and I think that he was right.
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Many suggestions have been made to deal with this problem. Many have been made tonight by my hon. Friends the Members for Caithness and Sutherland and for Durham, the hon. Member for Tiverton (Mr. Maxwell-Hyslop) and others. The Commission has put forward proposals. The trouble is that they never seem to be accepted. The reason why they are not accepted is precisely that there is not the political homogeneity in the Community. Various Governments attempt to introduce national solutions. That is why I disagree with my right hon. Friend the Member for Barnsley, who said in his opening speech that the answer was a national support policy. That is the wrong policy. It is precisely because of the illegalities of the French, and so on, that the CAP will collapse and we shall lose the benefits.
Mr. Leighton: Seven years.
Mr. Ellis: Seven years, my hon. Friend the Member for Newham, North-East (Mr. Leighton) says. In the historical sweep of things, when one is considering whether a country's destiny is within Europe or not, seven years is neither here nor there.
I remember distinctly, in 1947, running up the flag in the Hafod coal mine on 1 January. We nationalised the mines. Manny Shinwell did it. It began to snow and continued to snow, and we had a terrible winter in 1947. Four months later, by April, the pit wheels ground to a standstill. What did we do? We sacked Manny Shinwell. That was the absurdity of it. The whole problem needs to be discussed more thoroughly.
I am sure that you will appreciate, Mr. Deputy Speaker, that I am a little disappointed that I have had to curtail my remarks, but I did signify to the hon. Member for East Grinstead (Mr. Johnson Smith) that I would give him just a few minutes. Therefore, with those rather hurried and garbled words, I give way to him.
10.33 pm
Mr. Geoffrey Johnson Smith: I am obliged to the hon. Member for Wrexham (Mr. Ellis), who has been more than generous. I hope that he and the House will forgive me if I am somewhat parochial in my comments, but in anticipation of this debate I received a number of letters from constituents who are farmers. My hon.

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Friends on the Front Bench should not leave today's debate—maybe people in East Sussex are too pessimistic—without understanding the degree of apprehension that many farmers in East Sussex have in regard to their future in respect of the CAP and the general economic conditions.
There is possibly a danger of attributing too many of our ills to the faults of the CAP. I believe that it is in a mess; I do not think that anyone can deny that. But it is capable of being reformed and it should be reformed. But the letters that I have received should give an indication to the Minister of the sort of problems that my constituents face. The first letter states:
"Since our entry into the promised land of the EEC, I have seen the profit on our pigs disappear, lamb prices have gone down over the last three years, thanks to our French partners, and now, whilst facing 20 per cent. plus inflation—"
which is nothing to do with the CAP—
"we are to be awarded 2½ per cent. increases in our milk prices."
A further letter points out the dire straits of the dairy industry at present. It says:
"We are having to absorb increases on average of 25 per cent. on most items: wages increased by 21 per cent.; up to 40 per cent. increase on machinery costs and what do you get?"
The writer adds that what we get is an increase of 6 per cent. on milk.
A further letter says this:
"It appears that we are being the only 'good Europeans' in that cow numbers are being cut here, in France AI figures show that an increasing number of dairy heifers will come into production in the next nine months whilst United Kingdom slaughterings continue to rise…I feel that the Government does not realise that if our dairy herd goes, the beef calves will not be available. Then what eats all the cereals that will be grown? You know what has happened to the pig industry."
Finally, there is a letter from the East Sussex county chairman of the NFU. Referring to increases in costs, he says:
"We blame the French for our troubles, but it seems to me that they are prepared to look after their farmers and you, as a Government, are not.…Let us perhaps be more nationalistic and help an industry that has the best record of any country for its productivity.…The EEC price proposals are totally inadequate and just will not do in this day
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and age, and this is what I mean by the collapse of British agriculture.
If something is not done, you will hand the British market on a plate to foreign competition and then be at the mercy of whatever they like to charge."
To some extent, the problems are caused by the general economic conditions which exist at present. I believe that the difficulties of having a fair common agricultural policy are immense and daunting, not least because we have wide variations in climatic conditions exacerbated by the fact that each agriculture industry lives in a different economic climate. The rates of inflation are different, the rates of interest are different and there are differences in the way that Governments support their own individual national agriculture industries.
We have all heard about the way the Germans milk the CAP of funds to help what is basically a social policy in Bavaria. Then, of course, we tend to emphasise the value of grants as opposed to certain countries, such as Holland, which emphasise the importance of lower rates of interest through agricultural banks.
Despite those differences, we are expected to live within a uniform system of agricultural support. It does not surprise me that we find it very difficult indeed. Certainly, my farmers see no advantage in the present proposals which involve our accepting a suckler cow subsidy. Nor do they see any virtue in ending the United Kingdom beef premium scheme. Nor can the dairy farmers see much sense in supporting a proposal to increase target prices for milk while at the same time agreeing to a co-responsibility levy, which puts a tax on the increased production that is bound to follow. I could say more about those involved in the horticulture industry, but time does not permit.
How, then, are the Government proposing to go about the matter? Quite clearly, it would be wrong to respond to the growing pessimism expressed in some quarters today that we should behave in a more nationalistic way. Somebody even argued that we should leave the EEC altogether. On general political and economic grounds, the case for membership, quite clearly, remains strong. So does the need, I believe, for a common agricultural policy, a modified CAP.

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A system under which some countries have obviously built up a vested interest in building surpluses would take time to reform. My right hon. Friend the Minister outlined two steps that he would like to see taken: first, in the short term, to make overall changes in the Community budget to compensate for the high cost of the CAP; and, second, to press for and encourage countries to pay for surpluses which they produce themselves. They are sensible objectives. My plea to Ministers is that I do not think that they have that amount of time. There should be a greater sense of urgency on the part of the Government. We must convince others that time will not wait. There is no reason why we should expect that. There is no reason why the farmers in this country should be expected to show a degree of patience which it is less than likely would be found in any other industry in any other country.
How, then, are we to survive and prosper in this country? That is a question to which the British Government must increasingly address themselves. I realise that the answer does not lie wholly with my right hon. Friend the Minister of Agriculture.
The prosperity of agriculture is linked, of course, to the prosperity of the country generally. High interest rates are not a consequence of EEC membership. The lower prices and lower wages that prevail here are not a consequence of EEC membership either. They are a consequence of the lower living standards in this country and the ability of this country to be efficient economically.
So the feeling that exists in East Sussex, even if my analysis is accepted, is that the United Kingdom Government tend to play the game and keep to the rules and the spirit of the CAP more strictly than do our EEC partners and that, therefore, we must play it rougher.
Be that as it may—and it is not for me to advise the Government not to stick to the rules—I am sure that we must look rather more to our own Government to do all that can be reasonably expected out of our own national funds as well as non-farming EEC funds to maintain a fairer framework, in which British farming can rightly continue to play its proud part in maintaining the nation's prosperity.
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We should like to know from my hon. Friend the Minister of State when he replies to what extent he believes that it is possible to obtain more help overall from non-farming EEC funds to help us over our present difficulties. I believe that if we do not do so we shall find increasingly that the heart will go out of the British dairy industry.
I hope that my right hon. and hon. Friends will, in these most difficult circumstances, apply themselves with even more vigour to improving the system which exists in the CAP and especially to improving conditions out of our own national resources for the British farm industry. I think that they have made a good start and I wish them well.
10.42 pm
Mr. Gavin Strang: I am glad that my hon. Friend the Member for Wrexham (Mr. Ellis) and the hon. Member for East Grinstead (Mr. Johnson Smith) were able to take part in this debate—my hon. Friend because I think that he added a valuable European and historical perspective to our deliberations and the hon. Gentleman because he injected a note of realism into some of the remarks which have come from his side of the House today on the current state of the agriculture industry. I am grateful to both hon. Members for speaking briefly to enable the Minister and myself to reply to the debate.
This debate has become the main agricultural debate of the year in Parliament. Prior to entry into the Community, we did not always have a debate after the price review White Paper. Certainly the decisions were invariably taken before the debate took place. The fact that more than 20 hon. Members will have participated in our deliberations this afternoon is ample justification of the Opposition's insistence, if I may use that word, that we should not debate budgetary matters at the same time. I hope it has now been firmly established for the future that this is the key agricultural debate, because the decisions which are taken in the Community in the discussions on the annual prices settlement are almost invariably the most important decisions taken for agriculture throughout the whole year.
Before I turn to the state of the industry and the Commission's proposals that are before us. I must take a little

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time to respond to the opening remarks of the Minister. The right hon. Gentleman has been making reference at Question Time for some months, and has done so at some length today, to the last prices settlement. The position as we see it is that the Commission put forward last year a proposal that there should be a freeze on all agricultural prices, and there is no doubt that that proposal—it was the first time it had been put forward—was largely in response to pressure from the British Government. And the British Government were absolutely resolute in their determination to hold the Commission to that freeze. Indeed, with great difficulty we insisted that the freeze should continue into the next marketing year, against the will of our partners.
That is one of the reasons why we felt that the right hon. Gentleman let this country down when he not only conceded on that freeze but conceded an increase in the price of sugar—a product of substantial structural surplus—and allowed the increase to rise to 1.5 per cent. That is an important point which I will deal with later. That is why we believe that the right hon. Gentleman was wrong last year.
The right hon. Gentleman is sensitive on this issue. Last year, he went so far as to complain of being hounded by the press after almost every national newspaper had criticised that settlement in its editorial columns. The right hon. Gentleman is perhaps understandably sensitive, but let us not forget that the Commission, for the first time, dissociated itself from that settlement. It felt badly let down by the British Government, because it was relying on them to fight for a freeze and for action to tackle the surpluses.
The right hon. Gentleman referred to the earlier settlements. He knows that the Commission puts forward proposals, and it is up to the Council ultimately to take the decisions. In the previous prices settlement, the difference between the average price increase put forward by the Commission and the actual settlement was very much lower than the 1·5 per cent. difference which we ended up with last year. In 1978 the difference was 0·1 per cent.—a 2·1 per cent. settlement compared with a 2 per cent. settlement. In 1977, it was an increase of 0·9
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per cent., and in 1976 it was 0·1 per cent. We have to go back to 1973 before we get so big a discrepancy between what the Commission put forward and what the Council of Ministers finally agreed.
That is why we believe that the Minister did not fight hard enough to hold down the price of these products. Furthermore, he failed to secure the reduction in the sugar quota. I accept that we failed to hold the Commission to that in previous years, but we had fought in the previous year. Finally, there was a clear-cut recognition by our EEC partners that we were determined to hold prices and secure effective action to tackle the sugar surplus.
Mr. Peter Walker: Is the hon. Gentleman aware that the Commission's proposals for a price freeze were made six months before I attended a Council meeting, and the Commission agreed that the figures on which the proposals were based had to be totally revised? The Commission did not press for a price freeze thereafter on all the goods not in surplus. The Commission withdrew its proposals on the sugar quota. How does the hon. Gentleman defend his action when he was Minister, with all the items on which there was a massive surplus, in failing on two occasions to veto the Commission's proposals for substantial increases and agreeing to increases beyond the Commission's proposals?
Mr. Strang: The Minister agreed to a much greater increase beyond the Commission's proposals than we ever did. Of course, the Commission put forward proposals for no increase. If it had not been for our opposition, for which we were pilloried by Government supporters, there would have been concessions before the right hon. Gentleman became Minister. He is absolutely right. We had a price freeze for about three months because the previous Government refused to agree to any increase.
When the right hon. Gentleman was fighting a rearguard action from the Back Benches, sometimes in very readable speeches, to prevent the Conservative Party being taken over by the Right-wing grip of extremism and reaction—I have been here for some of these debates in recent years and have taken part in four or five—his hon. Friends were attacking us for taking too tough a stand

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on prices and trying to tackle surpluses. I shall quote what was said by his hon. Friend speaking from the Front Bench, the former Member for Derbyshire, West, Mr. Scott-Hopkins, who now leads the Conservatives in Europe. In the prices debate in 1978, the last one for which the Labour Government had responsibility, he said:
"In turning to the question of surpluses and the milk sector we come to the Commission's main proposal for 2 per cent. The right hon. Gentleman knows that I am one who believes that the Commission made the right proposal."
May I say in parenthesis to the hon. Member for Harrow, East (Mr. Dykes) —whose speech was interesting and was put forward in a genuine manner—that his hon. Friend said early in that speech:
"I hope that the Minister will resist this proposal. This is the key to the whole problem, because the Milk Marketing Boards are of the greatest importance to this country."—[Official Report, 21 March 1978; Vol. 946, c. 1436–41.]
In that prices package, we had to fight to secure the boards and we fought to hold down prices as best we could.
I concede, however, that the right hon. Gentleman is right. We were not as successful as we would have liked to be. But that was not because we did not try. It was certainly not because we failed to do what hon. Gentlemen wanted us to do. They were urging us to accept price increases.
As the right hon. Gentleman has rightly pointed out, this milk surplus did not arise last year. In the year before last, there was a very substantial surplus. One must go back to 1975 before we reach the situation where the proportion of the cost of the CAP attributable to milk was much smaller than it is today.
I quote the Minister of State, the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith), who at that time was also languishing on the Back Benches because of his commitment to moderation. In the debate on the 1977 price proposals, he said:
"We can get far too emotional, in some cases hysterical, about surpluses. I strongly endorse what my hon. Friend the Member for Mid-Oxon (Mr. Hurd) said. If we had not been working the surpluses, if we had not had the CAP in 1974–75, and, through our membership of the Community, access to its food supplies, we should have paid far more for our food.
As my right hon. Friend the Member for Yeovil (Mr. Peyton)"—
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it should be remembered that his right hon. Friend opened the debate for the Opposition—
"said, we must get the matter into perspective. The so-called mountains"—
the Minister should listen to this, because this was what his right hon. Friend said when speaking from the Opposition Front Bench—
"The so-called mountains amount only to a few days' or weeks' supply when set against the total resources of the Community."
The hon. Gentleman went on to say:
"Yes, I do believe that it contributes and that the basis of the CAP in budgeting for a surplus is correct."—[Official Report, 16 March 1977; Vol. 928, c. 468–9.]
I put it to the Minister that what we are saying and what my right hon. Friend the Member for Deptford (Mr. Silkin) was saying throughout those years—and we were being pilloried for saying it almost up to the general election—is right. As I understand it, that is also the stance that the right hon. Gentleman has adopted. I support him in that—[HON. MEMBERS: "What about the green pound?"] I wilt come to the green pound and put hon. Members right, because they are under an illusion. It has taken me longer than I intended to set the record straight.
I turn now to the state of the industry. I can understand that the right hon. Gentleman, like most Ministers when they take over, seek to portray the industry as being in a somewhat worse state than it is because it is then easier to make a case for their own achievements in a few years' time.
Let us not overlook the fact that in the White Paper published earlier this year we saw that cereal production in 1979 was at a record level for the third year in succession. Milk production—far and away the most important commodity—was at a record level and sugar production was recorded as being at a record level.
I do not suggest that the Minister did not inherit problems. Of course he did. But we had a record level of sugar beet production in 1979, and I suspect that we may well have a good planting this year.
I acknowledge that the pig industry was in a severe state when the right hon. Member for Worcester (Mr. Walker) took over. I congratulate him on the action

789
that he has taken to support the sheep industry. He has taken action to help the hill farmers with a significant increase in the compensatory allowances. The announcement today about the guarantee for lamb and the increased price for wool represents a significant improvement, although it might not be as substantial as the trade unions wish.
Let us put the matter in perspective. One of the paradoxes of the debate is that, despite there being no MCAs, there is anxiety in the industry. Although there were three 5 per cent. devaluations last year—one by the Labour Government—the main reason why we have no MCAs is the depreciation of sterling. If the green pound is devalued in order to decrease the MCA, farmers' prices are increased in relation to other prices in the economy. If the MCA is cut because of an increase in the value of sterling, the price of foreign competition in the United Kingdom market is cut. The only benefit to the producers—and it is marginal—is a reduction in the input costs of imports.
A strengthening of the pound is against the industry's interests. The agriculture industry, particularly as its prices are fixed, will be crucified on the strong pound, as is a large section of manufacturing industry. On top of that are the associated high interest rates which are part of the Government's policy. Agriculture and other industries will be ruined if nothing is done.
Sir William Clark: Will the hon. Member give way?
Mr. Strang: No, I cannot give way. I want to give the Minister of State time to reply.
There is wide agreement on the proposal for a sheepmeat regime. We want to protect New Zealand's interests. I agreed with my hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) in most of his remarks. We have an agreement with New Zealand. We have to protect consumers. It is in no one's interest to allow a sharp increase in lamb prices. We want to improve the position of producers. We can develop and sustain a substantial trade in lamb, to the benefit of our agriculture industry.
The Minister is right to refuse to contemplate an expensive regime which
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would involve Community-financed intervention buying. He has been insistent and categorical on that. Britain produces and consumes as much lamb as the rest of the Community countries put together, and it is reasonable that we should insist on a regime which represents an advance for the British people rather than an additional costly burden.
I turn to the proposals on prices and on achieving a better balance on the market. Much attention is focused on the monstrous and unacceptable high cost of the CAP to the British people. We should not lose sight of how damagingly protectionist the CAP is to us. I know that the Government cannot achieve everything any more than we achieved everything in the price negotiations. It is proposed to phase out the starch refunds. We have an important maize refining industry. Because of the levy, which represents an increase in raw material costs, that industry is a substantial net contributor to Community funds. We must fight to avoid any further imposition on that industry, which creates employment and makes a contribution to our economy.
We thought hard about the original proposal for controlling iso-glucose production. In the end, we had to settle for half of what was proposed. I hope that the Government will resist this further straitjacket. Surely they recognise that it is technological progress. The Americans now prefer to use iso-glucose to produce Coca-Cola. It is not in Europe's interest to follow a Luddite policy. We shall find that technological progress is made but that we shall lose out because of highly protectionist policies.
There is a structural surplus in wine, although in recent years the position has improved because the weather has not been good. I accept the Minister's intention to secure a freeze. A report in the Financial Times suggests that the right hon. Gentleman is attempting to extract the refunds on cereals used by our whisky producers out of the alcohol regime. That would be a significant bonus.
My hon. Friends the Members for West Lothian (Mr. Dalyell) and for Stirling, Falkirk and Grangemouth (Mr. Ewing) said, quite rightly, that there is concern in Scotland because British Petroleum wants to make a major investment in the area but cannot do so while

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uncertainty persists. It would be nonsense if the subsidy on agricultural alcohol prevented British Petroleum from making a valuable investment. These are some elements of the protectionism of the CAP that I hope the Government will take into account in the negotiations.
I turn to some of the main commodities. On cereals, I noted with interest the Minister's remark that the proposed 2 per cent. increase is too high. If that cannot be reduced, I hope that he will do his best to obtain a reduction in the levy on hard wheat, which is preposterous. There is no substitute for hard wheat in our bread production, and the high levy on imports is unacceptable.
I pressed the Minister about the variable premium on beef. He will not need to exhaust a great deal of negotiating capital to persuade the Commission to put forward this proposal. In its 1977 report on the beef sector, the Commission recommended a mixed system of premium and intervention. The Minister should oppose full-scale intervention in beef. We do not want beef mountains in Britain. We have already 30,000 tonnes of beef in store. Ireland has 80,000 tonnes of beef in intervention. In the Community as a whole, there is 125,000 tonnes of beef in intervention. We know that much of that beef comes out of intervention in a much worse condition than when it went in. It does not make sense to move to a policy of full-scale intervention.
There may be a case for intervention buying in cereals, which can be held over to the following year. It would do this country no service at all if we lost the variable premium. That premium should be 100 per cent. financed because intervention buying is 100 per cent. financed.
As regards sugar, we attach the highest importance not only to the price freeze but also to measures to reduce the surplus effectively. The Lome commitment is sacrosanct. Our fear is that the surplus will de facto weaken the position of our cane refineries. My hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry) said that the sugar industry must not be forced into further decline. I am sure that hon. Members would support that. That means that effective action must be taken to tackle the surplus.
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Let there be no nonsense about the increase in the price of sugar. At the beginning of March it reached the intervention price in the world market, but that does not justify a failure to take action. I recognise that we must endeavour to make it non-discriminatory. However, there must be a price freeze and effective action. It is in our interests in terms of our budget contribution, employment and production in our cane refineries.
As to the milk sector, I think that we are all agreed on the monstrous misuse of resources in a sector that accounts for over one-third of total Community expenditure. About 40 per cent. of that expenditure goes on export subsidies. As my right hon. Friend the Member for Barnsley (Mr. Mason) said in his speech to the Oxford farming conference, that represents a net transfer of resources out of the Community. That is about one-twelfth of the Community budget involved in a straight net transfer to the Soviet Union and elsewhere where we are exporting.
We want effective action. I suggest that consideration be given to a levy on intervention buying. That would square with the right hon. Gentleman's thinking. In practice it would be a reduction of the intervention price, but it would be presented as a levy on the intervention price. If there is a reduction of the price, that may make it more acceptable.
I make a plea for subsidised milk, butter and cheese for schools. Last year the Government spent about £15 million on the school milk scheme. If £15 million from the Government were transferred to the intervention board under the EEC scheme, it would be matched by £60 million from the Community. That would be a net improvement in our budgetary position. It would also mean that our children would get milk for their school meals—school meal provision is being undermined by the Government—at about 6p a pint. Cheese and butter would be available at massively reduced prices.
We know that the dairy industry is to move into some difficulty. I hope that the 5 per cent. devaluation of the green pound, the effect of which will work through, will provide some significant improvement. Perhaps the outcome of the Binder-Hamlyn report will provide some

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further improvement. However, the transfer from the Government to the intervention board would represent a significant improvement. It could represent about 440 million litres of milk at the higher liquid price. I hope that the Government's doctrinaire stance on public expenditure will not prevent our taking advantage of a scheme which is in the interests of Britain in so many ways.
The common agricultural policy represents a real burden on the British people. It leads to higher prices for consumers, higher-priced imports and additional cost to our balance of payments as a result of the higher price that we pay for liquid imports. Above all, there is a burden in respect of our net contribution to the EEC budget. That is why we welcome the Government's decision to accept our amendment. That acceptance is a commitment to withhold agreement from any proposed settlement that does not include effective measures to tackle the surpluses in milk and sugar. In taking that stance, the Secretary of State has the support of Parliament.
11.9 pm
The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith): I agree with the hon. Member for Edinburgh, East (Mr. Strang) that this is an extremely important debate. It gives us the opportunity annually to review agriculture and farming, one of the most important industries in Britain in terms of output, employment and productivity. It also gives the House the opportunity to discuss the relationship of the industry and our food policy with the European Economic Community. It enables my right hon. Friend the Minister of Agriculture, Fisheries and Food and myself to enter into discussions and negotiations at Brussels with the strength of the views of the House behind us.
The debate has indicated that in most parts of the Chamber there is broad agreement about the general lines that we shall follow in the interests of the United Kingdom in the discussions and negotiations that take place.
I thank all right hon. and hon. Members for such a constructive debate. However, I have some reservations about the speech made by the hon. Member for Edinburgh, East. It is significant that, although he spoke for 26 or 27 minutes,
794
15 minutes were spent fighting old battles. I had thought that the purpose of the debate was to prepare for the battle to come about this year's price negotiations. I shall not discuss the content of that speech. As my right hon. Friend said, his record speaks for itself. I am concerned about what lies ahead. Therefore, methinks he doth protest too much.
Many points have been raised. I wish to deal with as many as possible. I apologise to hon. Members if I do not deal with their points. The debate has been long and each speech has raised many points. I shall start by dealing with the more minor points in relation to the overall CAP. However, I recognise that the points are of major importance to those who raised them, and to the interests concerned.
My hon. Friend the Member for Harrow, East (Mr. Dykes) raised the specific question of interest in British fortified wines. It was right that he should raise that point. I assure my hon. Friend that the proposals concerning liqueur wine apply only to the fortified wines that are made from fresh grapes. They do not apply to British wines. They pose no problem for this product. or for the designation of British sherry.
I acknowledge my hon. Friend's point about the designation of British sherry. That is a battle for another day. However, it is a battle for which our loins are already girded.
The hon. Member for Caithness and Sutherland (Mr. Maclennan) raised an issue of more limited geographical importance. However, it is an important point. The hon. Gentleman is aware that I know the area well. He discussed the development programme for the Western Isles. I acknowledge the importance that would attach if money were made available to that area of Scotland. This is part of a bigger package. I emphasise the word "package". There are certain elements that are very much opposed to the interests of the United Kingdom. Although there are elements that could be of advantage to the United Kingdom, the package must unfortunately be considered as a whole. Sadly, we feel that insufficient work has been done on the package. We shall contribute as much as possible towards making that package better.

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My hon. Friend the Member for Devon, West (Mr. Mills) raised the important subject of horticulture. That will be the subject of an Adjournment debate later tonight. I do not wish to trespass on what may be said then. However, I shall make two points. First, we were conscious of the competition arising from French apples particularly Golden Delicious. However, it was impossible to establish that dumping had been taking place. We should turn the situation round. The issue has demonstrated that British agriculture and horticulture must be prepared to adopt the development techniques, market promotion and presentation techniques that the French have so successfully developed. As my hon. Friend knows, my right hon. Friend is endeavouring to encourage and help our industry to meet that competition, beat it and take it on to our own ground by means of his marketing advisers and the report of Lord Selborne's top fruit working group.
My hon. Friend also raised a question of vital importance to horticulture—unfair competition from overseas. There is particular concern over fuel cost aids for the Dutch industry, which does not get fuel below cost but at tariffs that are favourable because of the availability of natural gas. I assure my hon. Friend we are conscious of what that means for our horticultural industry. About 45 per cent. of glasshouse costs are for fuel, and our producers are at a disadvantage if those in other countries are given that subsidy.
At the Council meeting a few weeks ago, at the instigation of our colleagues from Denmark and through the intervention of my right lion Friend the Commission agreed to study the aids available. It acknowledged that there might be unfair competition and will report as soon as possible to the Council of Ministers. I hope that something useful will result.
Beef was mentioned by a number of hon. Members, not least by the hon. Member for Berwick and East Lothian (Mr. Home Robertson) and my hon. Friend the Member for Banff (Mr. Myles). I should like to make our position clear. The hon. Member for Berwick and East Lothian may not have heard my right hon. Friend earlier in the debate, when he made clear, as he has previously, that he will not accept an end to the beef
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premium unless there are better alternatives. If there are better alternatives, it would be foolish for the Government not to consider them and adopt them if they are of advantage.
We are concerned about two matters in relation to the proposals. First, we must make sure that no harm is done to our production and marketing. We must exercise the greatest possible care over the proposed suspension of intervention in the summer months and over our relationship to the market in Eire and the effect that Eire marketings of beef have in this country.
Secondly, the suckler cow subsidy has enormous attractions, because we have 25 per cent. of the total specialist beef cow herd in the Community. If properly distributed, aid there will give us the greatest advantage. However, as proposed, it is confined to 15 cows per herd, which will not give us that advantage. With 25 per cent. of the specialist beef herd, we receive only about 19 per cent. of the cash benefit available. In its present form the proposal is not acceptable.
Beef is critical. There has been a tendency to move out of beef, particularly in hill areas. If there is a contraction in milk production throughout Europe, which many of us believe should happen because of the surplus, it will mean a decline in beef production. A high proportion of beef comes from the dairy herd.
We must pay attention to specialist beef production. It is not only important for the housewife and other consumers in Britain; it is particularly important to British agriculture. We shall be fighting for it in the weeks ahead.
Sugar has perhaps received more attention this evening than any other commodity. It has been mentioned by a number of hon. Members, including my hon. Friends the Members for Croydon. South (Sir W. Clark) and for Holland with Boston (Mr. Body), as well as some Labour Members. I say to my hon. Friend the Member for Croydon, South that we are pressing for Community accession to the international sugar agreement, provided that the accession is granted on suitable terms. I wish to make clear—points have been raised on the matter at Question Time—that I do not believe that Community accession

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to the ISA will be easy until the Community can demonstrate that it is prepared to take a cut in its total production. If that is done, the accession to the international sugar agreement would be more easily facilitated. There must be a settlement of the Community's internal regime before that will become a practical possibility.
My right hon. Friend and I met Ministers from ACP countries this week, and we understand the problems. The commitments that were given under the Lomé convention were not simply given by Britain but by the Community as a whole. Those commitments are of indefinite duration, and to that extent they are commitments to which we must hold, and that we must support. The fact that the Community supports them gives them additional strength.
My hon. Friend the Member for Croydon, South tried to draw up a balance sheet of the amount of sugar that is available to Britain from ACP countries as well as from our own production. He also pointed out that Britain sometimes imported the balance of its requirements from the EEC. There is no time now to go into the details of the balance sheet, but I shall be happy to discuss the figures with my hon. Friend. He was concerned about the surplus, but that can be taken care of in the normal course of trade. There is a delicate balance between cane and beet sugar, but it can be properly struck in the interests of both cane and beet producers. I am concerned that too often the argument between cane and beet sugar is polarised, and is seen as a conflict of one against the other. There is a place for both, and with the proper judgment we can keep the balance.
I turn now to milk. I should like to deal specifically with the import of liquid milk, and I am sorry that the hon. Member for Bradford, South (Mr. Torney) is not present. It is our intention to stick by the commitments that we have given, and which were given by the previous Government, that the high standards that we have set are to be maintained. We believe that these health standards are totally justified, particularly having regard to the support that the European Court Advocate-General gave us in the case last summer. We are con-
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fident that if this issue comes to the court again the verdict will be in our favour.
I turn to the points raised initially by the right hon. Member for Barnsley (Mr. Mason). The kind of link that he tried to make between sheepmeat and imports of milk is incorrect. In the case of imports of lamb into France, the French Government are acting illegally and in contravention of the judgment of the European Court. On the question of milk, the United Kingdom is maintaining the legitimate regulations to protect the public and the health aspects that I mentioned earlier. We could not do this if we allowed free imports of liquid milk.
We allow ourselves to go on to the defensive far too much over the question of milk. We put a halo around our heads and tell ourselves how wonderful we are because our consumption of liquid milk per head is nearly double that of France. We think that we are such good boys. But we should be doing far more in other areas. We should look at the fact that consumption of cheese in this country is precisely half of that in France. Instead of patting ourselves on the back for our consumption of liquid milk, we should decide to do much better in consuming milk products, such as butter, yoghurt, cheese or anything else. Now that MCAs have been removed, there is scope for the British industry and the Milk Marketing Board to try to replace some of these imports.
Our agriculture is efficient. We can stand up to any other producers in Europe, and we do not need to be on the defensive. Now that the artificial obstacle of MCAs has been removed, instead of wringing our hands, as the hon. Member for Bradford, South does all the time, and crying "Woe", we should get off our backsides and tell the producers, the trade and the industry to try to replace imports. It is that kind of positive attitude that has been so lacking in some of the Opposition speeches today.
Many Opposition Members have been grudging in their remarks today. I remind the House that we carried through the three devaluations of the green pound. At the week beginning 7 May last year, the MCAs were 15·6 per cent. Without the devaluations, MCAs today would have been 10·5 per cent. While the strength of the pound has helped, the direct action of the Government has

799
been necessary to give us the extra 10·5 per cent. That has added £340 million to producers' incomes. We have put £21 million towards the hill livestock compensatory amounts and we have added 22 per cent. to the returns of milk producers and distributors in the milk price. Today we have announced an increase of 15p on the guarantee for hill sheep and 3p on the guarantee for wool. I am prepared to stand up to any criticism from the Opposition about our support for the industry.
Apart from the speech of the hon. Member for Durham (Mr. Hughes) there was little in any of the Opposition contributions about reform of the CAP from which we could learn. The hon. Member for Durham was prepared to go to the root of the problem. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) also touched on this very effectively.
The question that we have to ask is whether our policy is likely to be effective. I say to my hon. Friend the Member for Tiverton that we are dealing tonight with the price review for the current year. We have injected this money into the industry. In the course of the coming year we shall be dealing with fundemental reforms of the CAP. I believe that on our record, with the confidence that we have shown in the farming industry, we and not the Opposition have the qualifications to do this job.
It being half-past Eleven o'clock, Mr. Deputy Speaker put the Questions necessary for the disposal of the proceedings, pusuant to Standing Order No. 3 (Exempted business).
Question, That the amendment be made, put and agreed to.
Main Question, as amended, put and agreed to.
Resolved,
That this House takes note of the European Community documents 4896/80 with addenda I and II, and 5069/80 on agricultural prices and markets; 11337/79 with Addendum I, and 4885/80 on Common Agricultural Policy economy measures; R/769/78 on sheepmeat, and the Ministry of Agriculture, Fisheries and Food's supplementary explanatory memorandum; 5720/79, with Corrigendum I, and 8611/79 on agricultural structures; and 8248/79 on liqueur wines; Calls upon the Government to press for a price freeze on milk and sugar, and, noting that these two commodities which are
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in structural surplus account for over half the total cost of the Common Agricultural Policy, urges the Government to withhold agreement from any proposed settlement which does not include a plan to achieve a steady reduction in these surpluses and on sheepmeat, structures and liqueur wines, to agree to changes in existing policies and new policies only if these are fully consistent with the essential interests of the United Kingdom.

APPLE AND PEAR INDUSTRY
Motion made, and Question proposed, that this House do now adjourn.—[Mr. Peter Morrison.]
11.30 pm
Mr. Roger Moate: On 6 March The Times reported my right hon. Friend the Minister of Agriculture, Fisheries and Food, when speaking in Paris
"in the temporary British pub…still reeking from a stink bomb thrown…by irate French sheep farmers"
as having
"stood up for Britain on an upturned beer crate"
In those remarks, my right hon. Friend said that the British apple trade had virtually been destroyed by cheap Golden Delicious apples. He was clearly angered on that occasion by the French belief that they could keep out English lamb but were entitled to their pound of flesh when it came to our home trade in apples. His anger on that occasion is certainly matched now by that of the British people on this point, certainly by the anger of the people in Kent and certainly by the people in the apple and pear industry.
The question is: how real is the threat to the British apple and pear industry? Before our entry to the Common Market, under the then quota system French apple imports in the season up to Christmas were less than 15,000 tonnes. Last year the figure was about 100,000 tonnes. I understand that for the full year 1979–80, the French were, and probably still are, aiming at a total sale of apples in the United Kingdom of 300.000 tonnes. That is roughly equivalent to the whole of the United Kingdom production of apples.
Only seven years ago the import figure was less than 80,000 tonnes. As my hon. Friend the Member for Maidstone (Mr. Wells) stated in the Adjournment debate which he initiated on 24 January:
"The fundamental problem"—

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—facing the apple industry today—
"is the over-supply of apples."
In replying to that debate, the Minister of State reminded consumers that in Coxes and Bramleys we in this country had varieties of unsurpassed excellence. He also said that many of our growers achieved extremely high standards of grading and marketing. He believed that the industry had a future but recognised the difficult period through which it was going. We can, I hope, all agree with all of that. But there should be no disguising the fact that today the industry is facing a threat to its continued existence.
I believe that we have to ask whether we are prepared to see this Continental onslaught on our market denude our countryside of our orchards and deprive the consumer of British fruit. It is against that background that the Selborne report has been published. It has been produced by the top fruit working group, chaired by the Earl of Selborne, and is, in my opinion, one of the best pieces of work on this subject that we have seen for many years. We should all be immensely grateful to the group and to Lord Selborne for a report that is workmanlike, challenging, realistic and backed up with many more facts and figures, statistics and analyses than we have been used to in the recent past. It is valuable and important.
I hope that tonight my hon. Friend the Parliamentary Secretary will be able to deal with some of the points raised in the report. I appreciate that he cannot deal with all of them. It is a major and wide-ranging report. More important, I hope that the report will stimulate continuing debate on the key issues and will also stimulate longer-term action by the Government and the industry. As the Minister of State, Ministry of Agriculture Fisheries and Food said in that Adjournment debate of 24 January:
"Debate is no substitute for action".—[Official Report, 24 January 1980; Vol. 977 c. 785–792.]
The Selborne report accepts the point constantly made by my right hon. Friend the Minister that the industry must do much to improve its marketing. There is no dispute about that general proposition, but—and there are many "buts" to this—experience has for many growers been
802
dispiriting. Most growers have acted to prevent substandard fruit from reaching the market. Many growers have invested substantially in better equipment, machinery and the like. But, whilst they have been doing that, year after year greater volumes of imports have led to even lower returns and frequently to substantial trading losses.
It is against that background, too, that growers are now being encouraged to invest even more and to improve their marketing techniques. The Selborne report goes on to conclude that the Common Market
"system of intervention discriminates against us".
If we have to have intervention—it is a system that I do not like at all—that system must be fair. It is not fair—I quote from the report—that
"in a given set of circumstances a grower of French golden delicious would receive £1,529 per hectare. In comparable circumstances the Cox grower would receive £599 per hectare."
I ask my hon. Friend whether the Government will take action on that point. Will he at least take it up with the Community?
The report also concludes that French national aids distort competition between member States. The report gives impressive evidence of subsidies—subsidised publicity campaigns, subsidised insurance. These capital subsidies distort production costs over the whole lifetime of an orchard; and that distortion reduces actual costs to the grower to a very substantial degree over, perhaps, a 25-year lifetime of a modern orchard.
On the basis of that evidence, the report goes on to conclude that short-term measures to limit imports from France are justified within the terms of the Treaty of Rome, article 92, which states that measures which distort competition are incompatible with the Common Market.
I appreciate the extreme nature of the proposal and the difficulties that it poses for the Government. May I say at this stage how grateful I am to my right hon. Friend for being present to listen to this debate. I recognise his concern for this industry. I ask my right hon. Friend: will the Government at least undertake to consider this question in the longer-term context and to report back to the House in due course? I do not pretend

803
that there is a simple answer to that, but I do not believe that it should be rejected out of hand.
The report also suggests that the Ministry and the inspectorate should direct their attention to a more stringent inspection of foreign fruit at the actual ports of entry. I must ask my right hon. Friends and the whole nation this question: why do we seem to go out of our way to make it very easy for our competitors' products to come into this country when we never get that same sort of treatment when we are exporting to them?
Obviously, we must be fair about this and we must apply the same rules to importers as we apply to ourselves. However, as I understand it, our very limited inspectorate—I appreciate that it is limited in number and has a major task to perform—concentrates its efforts at the markets. Should it not direct much of its attention to the ports of entry and subject imported fruit to very close scrutiny indeed?
Again, I hope that my right hon. Friends will give consideration to that proposition and answer it tonight, if possible, but at any rate at some later stage after they have given it their consideration.
The report goes on to give strong support to the National Farmers Union case for new restructuring grants. Again, I recognise the difficulty of asking for money at a time like this, but we must consider this matter in the context of an industry that is being urged to change its structure in many ways in the face of what I call unfair competition. It urges a key role for a reconstituted Apple and Pear Development Council supported by the Government. I hope that my hon. Friend will have something to say about that tonight.
I am anxious to leave sufficient time for my hon. Friend the Member for Maidstone (Mr. Wells) to say something on this subject, because the whole House recognises the important role he has played over the years in supporting this vital industry. Therefore I have picked on only a few points from this excellent report. But all these points and the many others in the report require answers from my right hon. and hon. Friends in the Government in due course.
I conclude my brief remarks by returning to the basic but fundamental point.
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We are kidding ourselves if we think that better marketing alone or sheer quality—both of which are there or need to be developed—will win the day against the determination of the French to dominate this market. They demonstrated their determination to dominate this market before we joined the Common Market, but they have developed it ever since. That determination has been backed by State assistance on a scale that we have not matched and perhaps cannot match today.
I believe—perhaps I am making a point that I made many years ago—that it was wrong for us to accept free trade in apples and pears until such time as the structural surpluses had been eliminated. They were deliberately created by subsidies, they constitute unfair trade and the industry cannot deal with unfair trade on that scale. In the end, only the Government can deal with unfair trade on such a scale.
I am grateful for having had the opportunity to initiate this brief debate on a valuable and very welcome report.
11.40 pm
Mr. John Wells: I congratulate my hon. Friend the Member for Faversham (Mr. Moate) on catching your eye, Mr. Deputy Speaker, and initiating this important debate.
The most boring kind of Member that this House contains is the chap who looks up his own speeches of 10 years ago in Hansard and regurgitates them, but I cannot resist quoting my remarks on 26 April 1972. Digging at my arrogant and conceited right hon. and learned Friend the Member for Hexham (Mr. Rippon), I inquired what he was going to do about the
"structural surpluses of apples and pears and other fruit in Europe?"
He, in his usual steamrollering and arrogant way, slapped me down. I told you so, Mr. Deputy Speaker.
I join common cause, most surprisingly, with the hon. Member for Wolverhampton, North-East (Mrs. Short), who in that self-same debate caught out my hon. Friend the Member for Canterbury (Mr. Crouch) and said:
"The hon. Member for Canterbury (Mr. Crouch) has blown the gaff. He frankly said that once we go into the Common Market and have grubbed up our orchards, the poor British consumer will not even be able to buy good

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English apples."—[Official Report, 26 April 1972; Vol. 835, c. 1648–63.]
Of course, my hon. Friend wriggled, but the hon. Lady had got it right. I say this to the Minister tonight: unless something is done most urgently, within a matter of two or three years there will be no good English apples.
I believe that my right hon. Friend is full of good intentions, as my right hon. and learned Friend the Member for Hexham tried to be eight years ago. But my right hon. Friend the Minister must offer cash in one of two—if not two—forms to the industry. Either there must be cash to grub up the structural surpluses, to replant and to modernise, or there must be cash to support the newly developed Apple and Pear Development Council. I believe that my right hon. Friend is full of good ideas for reforming the APDC, and I shall touch on just three of the points from the report.
First, the new APDC will be able to obtain an income with the premium pack of about £700,000 a year, but it needs to spend about £3 million per year for two years. That is not very long. If the £700,000 could be topped up by the Government for two years, it would be enormously helpful. Secondly, the report urges that close attention should be given to Cox and Bramley apples only. These are the only apples that can be marketed. What we need is a marketing operation.
I began my Adjournment debate a month ago by referring to the good apples in the Tea Room. I must refer to them again before I sit down. I have just been along there and bought an apple. The good lady who served me said "They are very nice apples, but they come in such a rotten bad pack that far too many of them are bruised." Selborne recommends a standard pack of better-quality cardboard. It is no good our growers producing superb apples if the fruit are humped and bumped all over the place and ruined before they reach the consumer.
11.45 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Jerry Wiggin): I start by congratulating my hon. Friend the Member for Faversham (Mr. Moate) on raising tonight the subject of the report of the top fruit working group on the British apple and pear industry. He has taken a very
806
close interest in the apple industry, which is of such importance to his constituents, to all the people of Kent and to the nation, and his efforts on its behalf are well known both inside and outside this House. I am delighted that my hon. Friend the Member for Maidstone (Mr. Wells) was able to intervene.
I am also pleased that my hon. Friend the Member for Dartford (Mr. Dunn) is here. It would seem to be a rather Kentish evening. However, there is a substantial fruit industry in the county of Worcestershire. I come from that county. The importance of this subject is emphasised by the presence tonight of my right hon. Friend, who has joined us for the entire debate. We are very conscious of the feeling that exists in the horticultural industry and in all housewives' minds that this is a serious situation and is of great national importance.
I join my hon. Friend the Member for Faversham in paying tribute to Lord Selborne and his colleagues on the top fruit working group, who have produced such a wide-ranging and penetrating study of the problems facing the British apple industry at the present time. It is indeed heartening to see the industry coming together to discuss its problems, and to see in the report the extent of agreement that was reached by the working group as to what needs to be done. The report is a great achievement for the industry as a whole.
The congratulations and thanks of all of us interested in the well-being of the apple industry must go to the representatives of the National Farmers Union, the Apple and Pear Development Council, and the top fruit co-operatives, all of whom served on the working group, as well as to the representatives of the fruit retailers and wholesalers who participated in its discussions. Special thanks must go to the chairman of the group, Lord Selborne, for his energy and drive in bringing the different sectors of the industry together to produce this report.
The thoroughness of the study is illustrated by the detailed action list—35 recommendations in all—that the group sees as necessary if the apple industry is to overcome its present difficulties and equip itself for the future. The recommendations are addressed to all sections of the industry as well as to the Government. I stress that the Government

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support wholeheartedly the broad objectives of this plan of action, which is to enable the British apple industry to improve its competitive position against imports. We wish to see a flourishing British apple industry, not only in supplying apples to the domestic market but even exporting quality produce to other countries. We are willing to do what we can to achieve this, but the main initiative in strengthening the industry must, of course, come from those in the industry itself.
My right hon. Friend has already taken action to implement some of the recommendations set out in the report. Yesterday he laid before the House an order aimed at streamlining and strengthening the Apple and Pear Development Council so that it can take up the key role in co-ordinating the marketing and promotion of British apples envisaged in the report. Following the publication of the report we had consultations with the NFU, the workers' unions and the council itself on the recommendations relating to the APDC.
The draft order reflects the results of those consultations. Subject to approval, it will reduce the number of members on the council to 14, increase the functions of the council, and double its potential income. On the question of membership, the Selborne report recommended a council of nine. My right hon. Friend and I very much wanted a small council of no more than this. However, we were very strongly pressed by the NFU for a larger council. In view of the strength of its feeling we agreed to the number of 14.
This is a very positive contribution to giving the apple industry an organisation that can co-ordinate and direct its activities and so help the recovery of the industry. The order will allow much more money to be made available for the work of the council and will permit, with the usual procedures, an increase from the existing levy of £14·50 a hectare to a limit of £29 per hectare, although I should emphasise, of course, that that is not necessarily going to be charged without the appropriate procedures being gone through and recommendations being made by the council.
The council's activities will include certification of produce, promotion of arrangements for marketing and distri-
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buting produce and promotion of research into the development of new methods of handling and presenting apples.
Once the new council is functioning it will be up to the industry to make use of these new powers to enable the recommendations of the report to be put into effect. The council will be able to introduce the premium pack and the market intelligence service, to co-ordinate marketing and promotion of apples, to experiment on new packaging, to encourage regular meetings and co-operation between the different sections of the industry, and generally to act as a catalyst in promoting action for the benefit of the apple and pear industry as a whole.
On a different aspect, we are currently reviewing the recommendations in the report for changes in the Community regime for apples. This review will be carried out jointly by officials and the industry. The recommendations range from the abolition of the present withdrawal arrangements and the establishment of a marketing fund in their place to Community aid for producers of northern European varieties of apples.
Mr. Michael McGuire: I am interested in this in a very real sense, because I am one of the great eaters of good old Cox's Orange Pippins. I should like to ask the Minister if he can guarantee that he will do all in his power to see to it that we keep in this country an apple which is so far superior to the apples that are flooding in. I practise what I preach, I eat at least a couple of pounds a week, and when I go to the farmers I find that the tragedy is that not enough people are selecting Cox's. I do not know whether the reason is price, but I want a guarantee that we shall have them available at the right price and at the right times.
Mr. Wiggin: Certainly the objective of what I am putting together, which is a quite complicated and lengthy matter, is the achievement of just the end that the hon. Gentleman has described so succinctly.
The question of the coefficient for Cox's, which was a technical point raised by my hon. Friend, is one that we would like to have a look at, and indeed that we would hope to increase, in order to

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get more in compensation when produce is withdrawn from the market.
I sympathise with the objective behind these recommendations, but some of them would involve fundamental changes in the Community regime for fresh fruit. Others, such as the method of assessing compensation payments, are highly complex. We all know that procedures in the Community are slow and that it can take a long time to bring about any change. I cannot, therefore, promise such rapid action as we have taken with the APDC. As with any matter discussed in the Community, much will depend on the attitude of our Community partners and the Commission to any proposals for change that we decide to put forward, and any changes in the present regime for apples are likely to be opposed by the French with their usual tactics. The most sensible course must be to select those changes that seem most likely to be acceptable to the majority of our Community partners as being in the general interests of the Community.
I realise that our growers feel their businesses threatened by the heavily increased sendings of French apples to our market. To many growers the French action must appear to involve the deliberate dumping of produce on our market. But I must be careful; I understand that when describing Community trade "dumping" is no longer the correct technical expression. "Unfair competition" has been used correctly, but I suspect that all hon. Members understand exactly what is meant.
I can repeat the assurance that my right hon. Friend has given on many occasions. We are willing to investigate any evidence of illegal activities by French or any other exporters of apples to this country. We will carry out investigations swiftly and act quickly if necessary.
The report supports the NFU's request to my right hon. Friend for restructuring grants to assist the industry. It has been variously estimated on the basis of the NFU's request that grants could cost between £3 million and £7 million a year for a five-year period. These are substantial sums. We are, of course, willing to study any proposals for this improvement of the industry. We shall be dis-
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cussing this idea further with the NFU, and perhaps the reshaped APDC will have a view on it, but in discussing any proposal we must bear in mind the national financial circumstances which apply to this industry, as to all others.
On the question of additional funds to assist the industry, the report suggests that further aid might be given to supplement the publicity budget of the Apple and Pear Development Council. My right hon. Friend has told the Selborne working party that he will study any case put to him by the refashioned APDC for aid of this kind. If a satisfactory case has been made out in his judgment, he will do his best to support it.
The report also makes favourable comments about the ADAS advisory services of the Ministry and the Horticultural Marketing Inspectorate that enforces the quality standards for fresh fruit. My hon. Friend mentioned the ports inspectors. I emphasise that the standards applied to the ports are the same as the standards applied to the wholesale markets.
I should like to take this opportunity to reassure the industry that there is no intention that the advisory work on horticulture or the Horticultural Marketing Inspectorate should be reduced in effectiveness. Indeed, we had already acted to enforce more rigorously the quality standards as suggested in the report. We will not shrink from prosecuting in appropriate cases where offenders persistently and wilfully ignore the requirements of the quality standards.
I reaffirm our belief that quality standards have a most important part to play in the overall improvement in marketing that we hope to see in the British apple industry.
We have also announced that the Horticultural Marketing Inspectorate will be the subject of an inquiry. We are grateful to Sir Derek Rayner for agreeing to oversee this inquiry into operations of the inspectorate in enforcing the quality standards. The greater efficiency that we hope will result will enable the inspectorate to carry out more inspections and so help to improve the overall standard of produce being marketed.
I intend to ensure that work on apples and pears being done at East Mailing, Long Ashton and elsewhere will continue

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to be based principally on those varieties picked out in the Selborne report. I happen to be visiting Long Ashton tomorrow, when I shall be able to look at the work being carried out there at first hand. I suspect that my hon. Friends will think that I should have gone to East Malling instead. I shall certainly go there if they will be kind enough to invite me.
The Selborne report suggests that the Ministry might commission a study on the relative degree of support available from all sources to French and United Kingdom growers respectively. It is extremely difficult to compare different systems of aid applying to different social and economic circumstances. However, the Commission of the European Communities is attempting this task at the present time. I would prefer to see the results of the Commission's study before we consider commissioning any separate United Kingdom initiative.
I say publicly again that I support what has been said about the first-class quality of the dessert and cooking apples represented by the varieties of Cox and Bramley. I have a very low regard for Golden Delicious. It is a misnamed apple. It is rarely golden, and it is far from delicious. I would perhaps be wrong to use knocking copy, but nearly everyone I speak to prefers the very superior quality of the Cox dessert apple.
Just at this moment we are coming to the end of the Cox season, and the difficulties that have been experienced in the past few weeks have to some extent been
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due to this. I hope that critics will bear in mind that one disadvantage that the crop has is its lack of keeping capacity, which is a varietal defect, as against the Golden Delicious.
There can be no doubt that new markets for British apples must be explored. I very much welcome the initiative of my hon. Friend for Maidstone (Mr. Wells) in getting representatives of Long Ashton to come to the House recently to show us some of the juice and cider products that can be obtained from apples. That was a very useful and worthwhile exercise.
The Central Council for Agriculture and Horticultural Co-operation will give priority to co-operative ventures relating to apples and pears, and I hope that the industry will come forward with projects that will enable it to claim its share of the funds available to the council. I take note of the point made about this, which is of course part of the recommendations.
In conclusion, I should like to refer back to what I said at the beginning of my speech. The Selborne committee's report is a signpost, not an end in itself. The report indicates to us all what the industry should do. It is up to all those involved to play their part in making the industry prosper. This is a challenge that must be met by all those engaged in the industry. The Government are playing their part, and I am sure that the industry will seize the opportunity to play its role also.
Question put and agreed to.
Adjourned accordingly at Twelve o'clock.