EUROPEAN COMMUNITY (AGRICULTURE)

HC Deb 20 March 1980 vol 981 cc651-700

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.

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 (Battersea, North)

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 (Crewe)

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 (Dunfermline)

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 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- 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 (Wrexham)

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" 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.

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 (Newham, South)

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 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 (Cardigan)

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 (Northampton, North)

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 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 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. 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 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 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 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- 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 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 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: (Barnsley)

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 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.

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 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 (Harrow, East)

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 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.

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 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 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 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 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 (Grantham)

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 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 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 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 (Devon. West)

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 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 (Bradford, South)

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- 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 (Tiverton)

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.

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 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 (Feltham and Heston)

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 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 United Kingdom, including the interests of farmers, farm workers and consumers.

5.18 pm

Mr. Thomas Torney (Bradford, South)

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 Hogg

rose—

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 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 (Eye)

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.

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 (Edinburgh, East)

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 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 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 (Croydon, South)

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 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.

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 (Durham)

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 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 (Liverpool, Scotland Exchange)

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 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 (Cardigan)

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 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.

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 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.