HC Deb 18 February 1982 vol 18 cc414-20

4.7 pm

The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker)

With permission, Mr. Speaker, I should like to make a statement on the Council of Agriculture Ministers' meeting in Brussels on 15 and 16 February.

The Council began its consideration of the Commission's price proposals for 1982. Reactions varied widely. The United Kingdom urged the need for prudent price increases on products in surplus, and Germany adopted a similar approach. Other countries called for much higher increases than the Commission's 9 per cent. average.

I expressed our rejection of the Commission's present proposal for a revaluation of the green pound that would, taken together with its other proposals, result in British farmers obtaining price increases of less than 4 per cent. on average, with severe consequences for their income levels. The United Kingdom made it clear that the price settlement would have to keep the growth of guarantee spending below that of the increase in the income of the Community under present arrangements.

The Commission recognised the importance of taking early action to deal with the preferential gas tariff available to Dutch glasshouse growers. On United Kingdom insistence, supported by Denmark and Germany, the Commissioner undertook that he would take proposals to the Commission next week. The Dutch Minister implied that, prior to this, he would endeavour to put proposals to the Commission that could result in an agreement without resort to the European Court.

In accordance with his promise made to the United Kingdom at the last Council meeting, the Commissioner reported on the question of recent French national aids. He stated that France had not supplied the information required and that he would have to take legal action if this was not forthcoming.

The French Minister promised that the information would be forthcoming and I obtained a declaration from the Commissioner that if any of the cash announced in this aid was paid prior to being cleared by the Commission, such payments would be illegal and the Commissioner stated that he would be recommending to his colleagues next week action under articles 92 and 93 of the Treaty for those elements of aids that were not legal.

In a discussion on Mediterranean products, we urged the need for effective measures to deal with a surplus of table wine in a way that would not add to the Community budget or harm the existing alcohol producers.

On olive oil, we, together with Germany, the Netherlands and Denmark, made it clear that we were opposed to any tax on competing oils and fats in order to make the market easier for olive oil.

The Council will resume its consideration of the price proposals at its meeting in March.

Mr. Norman Buchan (Renfrewshire, West)

I must say that, considering the problems at present facing British agriculture, with the increase in indebtedness and the high interest rates brought about by this Government and the fall in capital investment of 23 per cent. in plant and machinery alone, together with the sound and fury coming out of Brussels, this is a very, very small mouse of a statement.

There is apparently one significant change from the earlier versions in that there is to be no revaluation of the green pound. This will be unwelcome news for British consumers. How does the 9 per cent. tie up with the Minister's comments in the statement on the need for prudent price increases when he has apparently wiped out the revaluation? What does he mean when he talks of the "present" proposal for a revaluation? What has he in mind for that?

Those of us who support an expanding home agriculture recognise the dilemma we face on prices but we do not believe that the Government have the answers. Certainly, continually escalating prices have not solved the problem for the farmers, as the borrowing figures have shown, and have positively harmed all other consumers and taxpayers. What were the reasons for the breakdown? Was it because of the French desire for higher prices, along with their own individual actions, or was it because it was tied up with the general budgetary arguments that are taking place? Will the right hon. Gentleman give a commitment that there will be neither a general trade-off in relation to that nor a sell-out on either the agricultural front or the budget argument?

The right hon. Gentleman will also have seen from the price review this week that, as opposed to the 14 to 15 per cent. increase in farm income, farm workers have obtained an increase in real terms of only 1/2 per cent. It might be useful if he would now tell us what steps he is taking to ensure that that can be rectified in the light of the 9 per cent. increase that he is negotiating.

Were the variable beef premiums discussed and will the Minister will give us a commitment that they will continue? The same question applies to the butter subsidy.

The Minister will have noticed that an election took place in Brussels in the last week or two and that Sir Henry Plumb has now been elected leader of the Tory group. Will this help him in his search for prudent price increases? Will it help him in any way in trying to reform the common agricultural policy?

We believe that this continual reliance on end prices, cash prices, at the necessary expense of the consumer and taxpayer, is no solution to the problems caused by the need to expand British agriculture. As events have shown, it is not, in the long run, beneficial to whole sectors of British agriculture either. We require national aids, if only to restore the balance between different sectors of our agriculture. I hope the Minister agrees with that and also agrees that perhaps the best national aid we could devise, after the events of the last few weeks, is that of coming out of the Market.

Mr. Walker

As to the opening remarks of the hon. Member for Renfrewshire, West (Mr. Buchan), I find it extraordinary that he in any way should criticise the position of British agriculture and its problems with borrowing and so on, as the only two proposals from the Opposition since the last election have been that we should not go into a positive position on the green pound—which would have been absolutely disastrous for British farming—and that we should rate agricultural land, which would be equally disastrous for British farming.

As regards the effects on the consumer, in contradiction of the opening remarks of the hon. Gentleman, the 9 per cent. increase without any green pound revaluation—and I am totally against a green pound revaluation that would mean that British farmers would get lower price increases than all the other farmers in Europe—would add 1 per cent. over the course of a year to the food index. Since the Labour Party, during its period of office, increased the food index by 120 per cent.—an average of 2 per cent. a month—I would not have thought they would be particularly concerned about a 1 per cent. increase over a year.

As to the beef premium scheme, I am glad to say that those proposals are part of the Commission's proposals and, of course, we shall insist that they continue. On the butter subsidy, I made it perfectly clear at the meeting that we could not possibly agree to price fixing without the continuation of the British butter subsidy which, I am glad to say, is twice as high as it was when I took over.

As to the point about Sir Henry Plumb, I think he will give very good leadership to the Tory group in the European Parliament.

Mr. Buchan

We seem to have drifted on to a slightly more general view. The Minister referred to the revaluation of the green pound. Does he not agree that this merely emphasises the difficulty, which is that every time he seeks to support British agriculture, it must be at the expense of the consumer and taxpayer? He then referred to a 1 per cent. increase in the food index figure as being minor and unimportant. I suggest that he goes to the Central Lobby and tells that to some of the old age pensioners.

Mr. Walker

I suggest that the hon. Member should have gone to the Central Lobby every month that the food index went up by 2 per cent. We do not see him doing that very often. As to the green pound, it has been of immense advantage to British agriculture. It has meant that we have saved £1,000 million worth of imports and it has saved jobs. I am sorry that the Labour Party is still so wrong in its thinking as to support the other policy.

Mr. Peter Mills (Devon, West)

Will the Minister bear in mind that British agriculture and the consumer are proud to have a Conservative Minister of Agriculture, both as regards the protection of food prices and the supplying of their needs? Will he bear in mind, too, that the industry is right behind him in his desire not to revalue the green pound and that the scandal of the French national aid must be dealt with? In the interests of the consumer—and most agriculturists accept this—9 per cent. is about right.

Mr. Walker

On the last point made by my hon. Friend, if one takes an average over all commodities one can give a wrong impression, because there must be a variation in the price increases between those items seriously in surplus and other items the production of which needs to be encouraged.

I note the views of my hon. Friend on the question of the green pound. On French national aids, I am pleased to say that we forced out of the Commission a firm declaration that any cash paid by the French Government under these aids before obtaining the permission of the Commission will be illegal and, in the event of such aids being paid in such circumstances, the Commissioner will take the French Government to court.

Mr. Stephen Ross (Isle of Wight)

The Secretary of State is obviously in for a long, hard haul. Can he give us some idea when he thinks he might reach agreement? We support the stand he is taking on Dutch gas prices. We are absolutely sick of being fobbed off. Can he assure us that this time we really will get somewhere?

Mr. Walker

I can only say that the hon. Gentleman is nowhere near as sick of it as I am. I did recite to the Council of Ministers the 16 occasions on which this has been raised at the Council of Ministers. All I can say is that we now have a firm declaration by the Commissioner that next week he will be going to the Commission with proposals unless the Dutch Government have put to him proposals that he believes are acceptable to all member countries. I therefore hope that within the next week we shall have firm proposals that will at last bring to an end the very unfair disadvantage that British glasshouse growers have suffered.

Sir Marcus Kimball (Gainsborough)

Will my right hon. Friend bear in mind the great confidence, based on his past form in these negotiations, that the whole agricultural industry places in his ability to come to a satisfactory conclusion during the course of the next month? Will he also bear in mind the growing need in the English countryside for the background to the present settlement to be clarified?

Mr. Walker

The hon. Member for Renfrewshire, West mentioned farm incomes and the incomes of others, but during the past few years it has been almost impossible to identify any sector that has contributed more to the battle against inflation than farming, with the very low level of farm gate prices during the period. The retail price index has risen by about 45 per cent., the food index has gone up by about 28 per cent., and farm gate prices have increased by only 19 per cent., which illustrates that fact.

Several Hon. Members


Mr. Speaker

Order. I propose to call those hon. Members who have been rising and then to call the Front Bench speakers to conclude.

Mr. John Home Robertson (Berwick and East Lothian)

Is the Minister aware that in real terms the income of Scottish agriculture has been almost halved since the Government came to power? While the industry will no doubt welcome his efforts to ensure that United Kingdom agriculture receives its fair share of any European price rises, is he aware that the Commission's present proposals fall far short of what will be necessary to re-establish confidence and get investment going again in British agriculture? In such circumstances, are there not strong arguments for national aids, particularly in the marginal, upland and highland sectors?

Mr. Walker

The hon. Gentleman might like to compare my record on national aids to Scotland with that of his party when it was in power and measure the percentage increase in hill farm subsidies over the period. If he does, he will realise the present Government's very good record. If the hon. Gentleman feels as he does about the importance of agricultural incomes and the fall in them, he should persuade his party to drop its proposals for rerating agricultural land and doing away with the positive green pound.

Mr. David Myles (Banff)

I must declare an interest with regard to my question. The beef cow herd in this country has continued to decline—witness my right hon. Friend's White Paper. Will my right hon. Friend resist the Commission's proposal to reduce the suckler cow premium and press for its increase?

Mr. Walker

We are against the reduction of the suckler cow premium. We favoured the introduction of the premium and have operated it in this country. As my hon. Friend well knows, we have substantially improved the hill farm subsidies for the suckler cow, an improvement which has been of considerable advantage in the constituency that my hon. Friend represents.

Mr. Stanley Newens (Harlow)

I welcome any progress towards the harmonisation of the energy costs of glasshouse producers, but does the Minister recognise that it will still be a considerable time before the objective is achieved? Has he therefore considered introducing in the interim what the industry requires, which is restrictions on imports or an increase in the subsidy to enable the industry in Britain to survive until it is placed on a fair basis alongside Dutch glasshouse growers?

Mr. Walker

The hon. Gentleman, with his considerable knowledge on the subject, will know that I have announced a subsidy for the present year. If there is any deferment of the bringing of prices into alignment beyond that period I shall consider it necessary that the Commission allows the continuation of national aids for the interim.

Mr. Christopher Brocklebank-Fowler (Norfolk, North-West)

In view of the widespread interest of the horticultural industry at home in the outcome of the current dispute with the Dutch over fuel prices, will the right hon. Gentleman undertake to report back to the House next week when he knows the contents of the Commissioner's report, to enable us to discuss further the future of horticulturists in this country?

Mr. Dennis Skinner (Bolsover)

The SDP wants time for a ballot.

Mr. Walker

I do not know in what form the Commission's proposals will eventually see the light of day. The normal procedure is that after a Commission meeting the proposals agreed by it are made by the Commissioner at the next Agriculture Council meeting. If that normal procedure is followed I shall of course make a statement in the normal way.

Mr. Tony Marlow (Northampton, North)

Has my right hon. Friend seen the interesting article in one of today's newspapers saying that a settlement of the agricultural prices problem, together with our budget problems, will require an increase in the VAT ceiling of 1 per cent.? Will he confirm that the Government will set their face, as flint, against any increase in the ceiling?

Mr. Skinner

Of course he will not.

Mr. Walker

Yes, Sir, and I would point out to the hon. Member for Bolsover (Mr. Skinner), who takes a keen interest in European affairs, that since the present Government have been in power the proportion of the European budget devoted to the common agricultural policy has fallen from 80 per cent. when the previous Government were in power to 66 per cent.

Mr. Douglas Jay (Battersea, North)

Does not the further deadlock in Brussels on prices prove yet again that no real reform in the common agricultural policy acceptable to this country is remotely possible?

Mr. Walker

The drop from 80 per cent. to 66 per cent. in three years in the CAP's share of the budget and the fact that the rate of increase in expenditure on the CAP in the last four years of the previous Government was 350 per cent. compared with 35 per cent. in the first three years of the present Government show that considerable reforms have taken place.

Mr. Speaker

Am I mistaken in thinking that the hon. Member for Bolsover (Mr. Skinner) was trying to catch my eye? I see that I made a mistake.

Mr. Mark Hughes (Durham)

It is with great reluctance, Mr. Speaker, that I intervene between you and my hon. Friend the Member for Bolsover (Mr. Skinner).

Will the Minister confirm that he will not allow a tax to be imposed upon rice imports into this country in order to support a minuscule Italian rice industry?

Does the right hon. Gentleman accept that his statement contained areas of mutual incompatibility? One cannot use the price mechanism as one's sole mechanism to control agricultural incomes and simultaneously argue that a price settlement will have to keep the growth of guarantee spending below that of the increase in the Community's income under present arrangements and satisfy the proper requirements of British farming. The right hon. Gentleman is put in an intolerable dilemma. He cannot satisfy simultaneously the British taxpayer as a contributor to the European Community's budget, the British consumer and the British farmer, so long as the price proposals are the only mechanism for controlling agricultural activity.

Mr. Skinner

Sort that out.

Mr. Walker

We did not discuss any proposals on rice at the last meeting. If any proposals are made I shall look into them carefully and consider their importance to the exporting countries for which we are a traditional market.

My answer to the hon. Gentleman's general appraisal of the situation and the difficulties is that in any system of agricultural pricing there are balances and difficulties in reaching the overall balance and assessment. The position of the British taxpayer has been substantially improved in the past few years by the big transformation in budgetary contributions that my right hon. Friend the Prime Minister achieved two years ago. The cost to the British taxpayer has been substantially reduced.

As for the consumer, the rate of increase in food prices is massively below what it was when the previous Government were in power.

As regards the farmer, I am glad to say that, with all the difficulties of recession, we are now seeing some upturn in farm incomes, which I hope will continue.